Srei Infra shifts to equipment financing

In a move to slowly shifting away from risky long-term project financing, Srei Infrastructure has now decided to cater to the booming demand in the less risky equipment finance sector, said CEO (Financial Services), Devendra Kumar Vyas, adding that the player is restricting total exposure to projects at about Rs. 14,000-cr and is now looking to pick up good projects and selling the portfolio to institutional lenders as structured deals against fees. For the company, that raises finance from banks, the move insulates them from uncertainties in infra construction and is also helping banks – who had in the past suffered from balance sheet-based funding in project to identify investment opportunities.

He further adding that there is a rapid growth in equipment financing after three long years of inactivity, infrastructure equipment sales are booming this year. In April-June quarter, Srei's equipment financing portfolio grew by over 45%. The growth was 20% in the second quarter that is a lean season for construction and was expected to clock 30-35% in October-December quarter. He expects equipment sales to grow by 30-35% (CAGR) over next three years riding on hyper activity in roads, irrigation, and contract mining. The National Highway and State Highway construction together is progressing 20 km a day and the construction of rural roads under Pradhan Mantri Gram Sadak Yojna (PMGSY) is witnessing faster growth. In the emerging scenario, the coal mining is witnessing a shift towards high tonnage equipment – 100 tonne and above – indicating more efficient mining in the near future, he said.