L&T Finance Holdings (LTFH) plans to raise up to Rs 2,000 crore by issuing preference shares through public offer or private placement, the non-banking finance company said in its annual report for FY2019-20.
The company will seek shareholders' approval to the proposal at the annual general meeting (AGM) scheduled to take place on July 28 through audio/visual mode, the report said.
The company said it will create, issue and allot 20 crore cumulative compulsorily redeemable non-convertible preference shares (preference shares), in one or more tranches, of the face value of Rs 100 each for cash at par or at premium aggregating to Rs 2,000 crore. The preference shares will allotted to various persons either through public offer or private placement, in one or more tranches.
In an explanatory note on the fund mop-up plan, LTFH said the steady growth in the operations of the subsidiaries of the company has necessitated regular infusion of equity and tier I or tier II debt in its subsidiaries.
"Being the holding company, the company would need to raise funds for such infusion. The company would also need funds for its working capital requirements including redemption of preference shares from time to time," the company said.
In connection with this, approval of the members (shareholders) is sought for the issue of preference shares, it added. The company in its board meeting held in March this year had proposed amalgamation of L&T Infrastructure Finance Company Ltd (LTIFC), L&T Housing Finance (LTHFC) and L&T Finance (LTFL) to create a single unified leading entity with appointed date of April 1, 2020, requisite regulatory approvals, it said in the report. The company is engaged in the business of rural finance (farm equipment, two-wheeler, micro-loans and consumer loans), housing finance and infrastructure finance through its various subsidiaries. It is also engaged in the non-lending business of investment management.
LTFH Chairman Shailesh Haribhakti in his message to shareholders said that the key lesson from the coronavirus pandemic has been the need to re-strategise and adapt --at the organisation as well as individual levels.
Acknowledging challenging times, he said the company was able to remain strong because of its robust business model.
On the business post COVID-19, he said FY2021 will experience the impact of the contagious disease in the areas of demand pick-up, credit culture, repayment capacity and willingness to pay. "While we anticipate strong recoveries in rural India, there may be a slow pick-up in the real estate and infrastructure financing segment. Your company is further leveraging its technology infrastructure to strengthen its data analytics and increase collections," he said.
Apart from doing stringent project monitoring, he said the company has also introduced tighter credit norms for fresh business disbursements and undertaken several cost-rationalisation measures for the overall enhancement of its business efficiencies.
On company's preparation and safeguards against the pandemic impact, in line with the prudent provisioning norms, he said the "company created additional Covid-19 provisions of Rs 209 crore and also created enhanced expected credit loss provisions of Rs 105 crore". These provisions are in addition of Rs 350 crore which highlight the underlying strength of balance sheet, Haribhakti said.
During 2019-20, the company posted a consolidated net profit Rs 1,700.17 crore as against Rs 2,226.30 crore in year ago fiscal. Total income was up at Rs 14,548.13 crore from Rs 13,301.52 crore in FY19.
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