Ready to sell the non-commercial activities of L&T Finance even at a loss: AM Naik

In an effort to revamp the business portfolio of L&T Finance Holding (LTFH), parent company Larsen & Toubro (L&T) may consider offloading the non-trading part of the business, even at a loss if necessary, to focus entirely on retail, AM Naik, president of L&T, said Thursday.

Earlier this year, the company announced plans to exit LTFH’s wholesale and real estate finance business altogether within two years, following repayment difficulties faced by borrowers.

reduce weight

“We are taking several steps to make L&T Finance a much healthier business. We had very bad NPAs, especially in wholesale and real estate. We have significantly reduced our weighting there and are constantly looking for some of these sectors to sell, even if necessary at a loss, and to focus more on retail,” Naik said in response to shareholder questions at the general meeting. Annual Meeting (AGM) of L&T. .

LTFH has a financing portfolio including loans to two-wheeler buyers, agricultural equipment financing, microloans, housing financing, real estate financing, infrastructure financing, SME financing and loans. to consumption. The company plans to divest itself of infrastructure and real estate financing.

Out of the total book size of ₹88,078 crore recorded in the first quarter, LTFH’s wholesale funding book size decreased by 13% to ₹39,795 crore, in line with the company’s strategy. Retail funding, however, increased by 19% to ₹47,794 crore. The company has stopped disbursing new loans in the real estate segment. “I have no doubt that once we completely get out of this wholesaling and real estate, and bring retail to 80%, the business will be much healthier,” added Naick.

Naik also reiterated L&T’s commitment to withdrawing from non-core businesses and reducing losses in not-for-profit entities. “When I became CEO, I said we would get out of the non-essential, unrelated small businesses. We continued that journey. There are a lot of businesses that we got into that are non-profits and we are trying to minimize the losses there, like Hyderabad Metro and Nabha Power. I’m sure we will have a much healthier balance sheet this year,” Naik added. This month marks the end of a year since L&T announced its intention to sell shares in loss-making companies Hyderabad Metro and Nabha Power.

Order book

Naik also highlighted the company’s growing order book despite difficult conditions in India and overseas. The company’s order flow in the last year stood at ₹192,997 crore while the group’s revenue stood at ₹156,521 crore, up 15%. As of March 31, 2022, L&T’s backlog stood at ₹357,595 crore.

“The government has declared an expenditure of ₹1 crore lakh for infrastructure this year. Compared to what a 130 crore country needs it is very less but it is more than before and the government is paying much more attention than before knowing that infrastructure is very important and it has a multiplier effect in the economic development of the country,” Naik added.

Published on

August 04, 2022