SREI Group companies: All about their business, balance sheet, investments

In a swift move, the Reserve Bank of India (RBI) today superseded the board of Kolkata-based SREI Group companies --  Srei Infrastructure Finance Limited (SIFL) and Srei Equipment Finance Limited (SEFL).

SEFL is a wholly-owned subsidiary of SIFL. The banking regulator will now refer these two companies to the Insolvency and Bankruptcy Code (IBC) for restructuring and resolution. Under the IBC, there is a possibility of a new buyer taking over the company as the SREI Group companies are making losses and need a fresh infusion of funds. Let's look at the revenue stream of SREI Group.

Infrastructure advisory and solutions

SREI Infrastructure Finance Ltd, which is like a holding company, is in the business of infrastructure advisory and financial solutions for the last three decades. Based in Kolkata, this non-banking finance company (NBFC) has six dozen branches across the country. The company derives its strength from the segment it serves. Its key customers are small and medium-sized EPC  (engineering, procurement, and construction ) companies.  It also has a good network of global equipment manufacturers (OEMs) to whom it assists in the sale of equipment in the Indian market.

Fund based activity

The company undertakes the fund-based activity through SREI Equipment Finance Ltd. It is one of the largest financiers in construction and mining activity.

It enjoys domain knowledge in the infrastructure space, which is very crucial as the country doesn't have any infra financing institutions. The DFIs like ICICI, IDBI, and IDFC have already transformed into commercial banks whereas the new DFI, which the government has proposed in the Union budget 2021-22, is yet to see the light of the day. However, the board of SREI Equipment has also been superseded by the RBI.

Fee-based businesses

SREI  has also created businesses in the fee-based areas, especially the capital market, insurance broking, and alternative investment. In the capital market, SREI has expertise in transaction advisory and stressed asset resolution. In life and non-life sector, the company has a broking licence to sell insurance policies. Both these companies are wholly owned subsidiaries of the parent company, SREI Infrastructure. The alternative investment company, with the name Trinity is 51 per cent owned by SREI Group. This investment company deals in equity, debt, and mezzanine funds. These businesses, however, lack scale.

Investments

The company also claims to have investments in roads and highways and the energy sector. The revenue stream from these projects is not known. The company's financial performance was impacted by the pandemic because of lockdown and waning investors' sentiments. In 2020-21, it generated total revenues of Rs 3,487 crore and a net loss of Rs 7,339 crore. In 2019-20, the revenues were at Rs 6,120 crore and a profit of Rs 88 crore. The total balance sheet size of the company stands at Rs 29,004 crore.

Also Read: RBI supersedes board of SREI Infra, SREI Equipment Finance; appoints administrator

Also Read: RBI supersedes 2 SREI group firms; will it be a successful resolution like DHFL?