Tower cranes operate in a residential building construction site in Noida, Uttar Pradesh, Indi. (Photographer: Prashanth Vishwanathan/Bloomberg)

Why L&T Finance Isn’t Worried About Its Rs 1,800-Crore Exposure To IL&FS

L&T Finance Holdings Ltd. has an exposure of around Rs 1,800 crore to the insolvent infrastructure firm Infrastructure Leasing & Financial Services group, but the non-banking financial company isn’t unduly worried.

“The exposure is confined to six road projects out of which five are already begun operations,” said Dinanath Dubhashi, the lender’s managing director and chief executive officer. “And the commercial operational date has been applied for the last one.”

The NBFC has zero exposure to IL&FS Financial Services, the IL&FS entity which has defaulted on debt obligations. “Provisions are needed only when you expect haircuts or losses.”

Around Rs 722 crore of the total exposure is trapped in an infrastructure debt fund, that is backed by government guarantees, according to the lender’s investor presentation filed with the exchanges.

“There is equity value in these projects, so when the new management starts sell-off, probably these will be sold first,” Dubashi told BloombergQuint. “It can result in good refinancing and fee-earning opportunity for us.”

Key Highlights:

L&T Finance Holdings (Year-on-Year)

  • Total income from operations rose 25 percent to Rs 3,246 crore.
  • Net profit rose 62 percent to Rs 559 crore.
  • Gross NPA at 7.10 percent versus 7.93 percent. (quarter-on-quarter)
  • Net NPA at 2.79 percent versus 3.17 percent. (quarter-on-quarter)

Shares of the company fell 7.5 percent to Rs 117.20 apiece on Thursday.

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