Srei JV mulls IT, agri equipment finance foray

Srei Equipment Finance (SEFL), a 50:50 joint venture between Srei Infrastructure Finance (SIFL) and BNP Paribas Lease Group (BPLG), is planning to foray into agriculture, medical equipment and information technology (IT) equipment finance.

The company hopes to disburse Rs 500 crore under the IT vertical and Rs 200 crore for medical equipment finance in the current financial year. Operations for agriculture equipment finance would begin next year, said DK Vyas, chief executive officer, Srei BNP Paribas.

The diversification was in line with BNP Paribas’ expertise in areas of IT, medical and agriculture equipment finance in Europe, added Vyas.

Srei enjoys around 30 per cent market share in infrastructure equipment finance, the market for which is slated to be close to Rs 20,000 crore. “We already have a 30 per cent market share in infrastructure equipment finance and, if we go beyond this, it will be a concentration of risk,” said Vyas.

It is to be noted, infrastructure equipment lending shrunk substantially after the global financial turmoil and the resultant slowdown in infrastructure projects.

In case of Srei BNP Paribas, between October and December 2008, there had hardly been any disbursements. However, disbursements have been gradually picking up.

“There has been a pick-up in infrastructure equipment finance as compared to the last few quarters. There has been about a 20-25 per cent increase in disbursements in recent months,” said Vyas.

This quarter, the company expects to disburse Rs 1,500 crore against about Rs 1,600 crore in the same period last year.

Also, this quarter, the company disbursed about Rs 600 crore with closure approvals for 1500 cases, during the Srei BNP Paribas Partnership Week, a marketing initiative of the company in about nine cities across India.

KK Mohanty, executive director, Srei Infrastructure Finance, said, “Owing to the global economic slowdown, the infrastructure sector contractors have had to face a lot of problems: their payments have not been getting released; their equipment is lying idle as construction activity has virtually come to a grinding halt and new projects are not taking off. As a result, some of these contractors have not been able to pay their EMI’s on time. Our effort was to reach out to our customer base in times of their crisis.”

DK Vyas, chief executive officer, Srei BNP Paribas, said, “The services offered during the week-long event were sourcing of new business and sale of used assets to our customers, besides resolving critical cases, incipient sick cases and loss recovery or closing of matured accounts cases.”