Bhubaneswar: Srei Infrastructure Finance Limited (“Srei”) and its wholly-owned subsidiary Srei Equipment Finance Limited (“Srei Equipment”) had approved a composite scheme of arrangement and amalgamation at a meeting of the Board of Directors on January 21, 2019. Subsequently, with the developing market conditions in the NBFC sector, the management and the Board of Directors have had several discussions and deliberations with market experts, consultants and the government. Following these discussions, the Board of Directors of both the companies at a meeting here today has decided to consolidate the lending business of Srei and Srei Equipment into one entity since the focus for last four years has been on growing equipment financing and reducing the infrastructure loan portfolio. The Board of Directors has decided to consolidate the lending portfolio in Srei Equipment as the infrastructure loan portfolio stands reduced.
The proposed step will also facilitate the lending entity, Srei Equipment, to attract strategic investors and also prepare the company for a conversion into a bank, as and when the Reserve Bank of India (“RBI”) decides to allow the conversion. The revised corporate structures will now enable the companies and their management to focus on specific areas of their expertise.
The consolidation will also enhance customer experience, bring in economies of scale, allow the companies to offer their services at competitive rates and provide greater flexibility in accessing capital. This move is expected to improve efficiency and cost reduction.
Commenting on this step, Mr. Hemant Kanoria, Chairman, Srei, said: “The congregation of lending portfolio into Srei Equipment will enable the Group to improve efficiency, profitability, customer intensity and also reduce costs substantially. Srei Infrastructure has developed wide expertise and experience in the infrastructure sector in the last three decades; so it will leverage its strength for augmenting fee-based business out of infrastructure advisory, infrastructure structuring and syndication, and other areas such as investment banking, insurance broking and fund management. The steps proposed will also enable to mitigate the risks in the present environment of slowdown in the NBFC and infrastructure sectors. Srei Infrastructure will remain as the 100% shareholder of Srei Equipment.”
Mr. Devendra Kumar Vyas, Managing Director, Srei Equipment, added: “This consolidation would have far reaching benefits for our equipment finance business. This would also help us leverage our customer relationships better and also focus our resource for maximum economies of scale. This enhanced focus in our equipment financing business would facilitate in maintaining our dominance in the sector.”