L&T Finance Holdings has over the past couple of years shown its intent to go big in the financial services space, and in the process, completed three acquisitions across three businesses in last one year. While it wants to be among the top players, N Sivaraman, president and wholetime director told Sandeep Singh that size does matters in the financial services business.
He says the opportunity to become a bank is to be looked at in the context of building the business, growing it more efficiently and in a sustainable way. Excerpts:
Infrastructure lending contributes to a sizeable portion of your business. How do you see it growing amidst the overall pressure. Where are you focussing?
In terms of new projects, we see opportunity around renewable energy — solar and wind — and the other opportunity for growth will be around refinancing where developers are looking for better pricing on their operational projects and banks are looking to lighten their exposure in the infrastructure sector.
However, I think that that over the next two quarters we should see a lot more opportunities coming around road projects and thermal power projects. The government is attempting to sort the fuel availability issue for thermal projects but it may take another two quarters for some of these issues to get resolved.
How comfortable are lenders in financing these sectors?
Lenders are getting more cautious and unlike in the past, where loans were available after fulfilling certain criterias, now they are looking at basic level of comfort.
The environment now is a bit more circumspect on committing to projects than in the past. Scrutiny and review are more intense and even developers are realising that without some of those enablers firmly in place there is no point pursuing for new financing opportunities.
How do you see your overall loan book grow?
Both from an ability and opportunity point of view, 25-30 per cent growth is possible.
You made three acquisitions in 2012, including Indo-Pacific Housing finance. How do you view the housing finance business?
As of now, our HFC business has a book size of around Rs 200 crore and for us to be relevant and meaningful, we need to achieve about Rs 4,000-5,000 crore book size in about 5 years time. We have a small base and we will see aggressive growth.
Will the growth be organic or inorganic?
We can do it