LandT Fin to go alone on non-life venture

After scrapping its earlier deal with US-based Travellers Group for setting a general insurance venture, LandT Finance Ltd, a 100% subsidiary of Larsen and Toubro Ltd (LandT), will not be partnering with any other entity to float the venture.

Confirming the development, LandT CFO and the board member YM Deosthalee said, "We will make the announcement to foray into general insurance business in the next few months. The capital for this business would be provided by LandT," he said.

However, Deosthalee did not divulge the quantum of capital their proposed insurance business would initially require and the timing when LandT Finance would venture into areas like mutual funds and asset management activity.

He said that LandT Finance would concentrate on selling insurance policies to the firm's vast clientele base that includes farmers and the contractors operating in infrastructure sector.

"We see an immense potential in general insurance business in India. At the moment, we are not concerned with the reported NPA levels in this segment in the country," Deosthalee said.

Hee, while talking to the media persons at length on LandT Finance's first-ever public offer of 50,00,000 secured redeemable non-convertible debentures (NCD) aggregating to Rs 500 crore with an option to retain over-subscription up to Rs 500 crore, said that at an appropriate time the company could also come out with an equity issue.

N Sivaraman, executive vice president (financial services), LandT, said, "LandT Finance's tractor and consumer vehicles financing business is currently fetching annualised return on investments as high as 18-25%. Also, we may start financing the pre-used assets in the near future."

Speaking to FE on the sidelines of LandT Finance media event, Neeraj Swaroop, regional chief executive for India and South Asia, Standard Chartered Bank - one of the lead managers to LandT Finance issue, said, "The credit off-take of our bank is witnessing a gradual rise in the current quarter, although it's not a spurt." He indicated that the interest rates would harden in the days to come. "Currently, we are at the bottom of the interest rate cycle and it's very likely that we would witness an upward movement hereafter. However, it's difficult to say at this juncture as to when that would happen," he said.