Datta New Delhi, Feb 6: L&T Finance is negotiating with some leading NBFCs to acquire a portion of their car finance portfolio. This comes close on the heels of the Rs 30 crore worth of portfolio bought from Apple Finance and Lloyds Finance last month.Says chief executive officer R Shankararaman, ``We are keen to pick up performing car finance portfolio of NBFCs as the price is very attractive. We are also talking to some manufacturing companies for a venture similar to that of ICICI-Telco. There are a couple of proposals in the pipeline''. He, however, refused to divulge the names of these companies on the ground that the negotiations were still on.
At present, L&T Finance's car finance portfolio is around Rs 45-50 crore. ``We are not looking at any target so far as our car finance portfolio is concerned. We will continue to add to our assets until a natural limitation forces us to stop. There is a quantum beyound which we will not be able to add to our car finance portfolio or else our balance-sheetwill be totally skewed,'' notes Shankararaman.
Currently, plant and machinery financing takes up 40-50 per cent of L&T Finance's total portfolio purchases. The balance is shared between commercial vehicles and car finance. ``It is not as if L&T Finance is moving away from plant and machinery and into car finance. We want to have a good mix and a broad-based asset profile. At the present moment, car portfolios are available cheap and, hence, we are focusing on this segment,'' adds Shankararaman.
According to company officials, many finance companies are selling their car finance portfolios because of pressure on their cash-flows. ``A number of NBFCs have been restricited by the RBI guidelines from raising fresh deposits and alternative resources from banks may not be forthcoming. For them selling a part of the car finance portfolio could be the only way to raise liquidity for carrying on their day-to-day business,'' notes Shankararaman, adding that the latest RBI repreive may not ease matters for theseNBFCs struggling to stay afloat. Officials also say that many car leasing firms are selling a portion of their portfolio simply because they do not have money to add to their assets.
L&T Finance has also stopped collecting fresh fixed deposits. Officials insist that this has nothing to do with the RBI guidelines as the company had put a cap of Rs 150-180 crore on its FD base. As early as Auugust last year, the company stopped collecting deposits as it did not want a single source of fund to exceed 25 per cent of the total funds raised. At present, the FD base is around Rs 130 crore. L&T Finance is, on the other hand, relying on bank loans, term deposits, preference capital to mobilise resources. The company may also issue debentures when the market conditions improve.
Shankararaman said L&T Finance had no plans to go public until the market situtation improves. ``I don't think we would get the appropriate price in the current market conditions. We would like to wait for the market to look up beforetapping the public,'' he added.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
