Srei Infra plans to scale up acquisition of stressed infra projects

Company will focus on projects that have run into troubled waters but have potential for revival

The slowdown in the infrastructure sector had made Srei Infrastructure Finance to look for scaling up acquisition of infra projects, which have run into troubled waters but have potential for revival.

“If there are some good viable projects that have got into problems because of issues in the infrastructure space and the banks are not able to support further, we will look into such opportunities whereby we can take those projects and revive them,” said Sunil Kanoria, vice-chairman at Srei Infrastructure Finance.

According to Kanoria, while the infrastructure sector constitutes 15 per cent of total advances of banks, it has a much larger share of 29.8 per cent in total stressed advances and parts of this stress might create opportunities for acquisition.

Since new infra projects are not coming up amid slow growth in the economy, the company has decided to expand in this area. “There is not much improvement in the infrastructure sector at the ground level. Though a lot of steps are being taken to resolve the issues. But the financial system resolution is not happening. The government has to resolve the financial sector because that has taken the brunt of the problems,” said Kanoria.

Kanoria said banks might not have the expertise to deal with the stressed projects in the infrastructure space. “We will continue to look at such opportunities where we can take over the management, bring in expertise in operations and revive the project. We are already working on various areas. We already have the funds through which we acquire these businesses. This is an infra fund which we have,” he said. Srei has also made certain recommendations to the Reserve Bank of India (RBI) regarding reducing bad loans of the banking system pertaining to the infrastructure sector. “Today, if I find that the sponsor of the project is not good and is not able to complete the project, I can take over the project. If I do so, it becomes my project. Now the present regulation do not allow me because if I take over the project, I have to deduct the entire exposure out of my capital as soon as I take it over. We have suggested to RBI to allow us a three-five year window, whereby we will take over this project, revive it and after that we will sell it and realise the money,” said Kanoria.