SN Subrahmanyan, CEO and MD of Larsen & Toubro (L&T), has been appointed the Director and Chairperson of the board of L&T Finance Holdings (LTFH), an NBFC and a subsidiary of L&T. The appointment is in line with L&T’s overall commitment to strengthen its presence in the services area.

LTFH will defocus on wholesale lending and instead, focus only on retail finance. The company is present in the infrastructure and realty lending space and is among the market leaders in farm equipment finance, two-wheeler finance as well as micro loans. It also continues to be one of the leading players in financing infrastructure sectors like renewables and roads.

Subrahmanyan replaces Shailesh Haribhakti who served as the chairperson on the LTFH’s board from June 1, 2017. Haribhakti will continue as an independent director on the board. Subrahmanyan is also the Vice Chairman on the boards of L&T Infotech, L&T Technology Services & Mindtree, and Chairman of L&T Metro Rail (Hyderabad).

‘Not happy with performance’

AM Naik, Group Chairman, L&T, said, “I have been hearing from our shareholders and independent board members that we have to improve the performance of L&T Finance. Our own board members have been saying that greater L&T involvement is desirable so that we can drive the ideas and strategies that we want to implement in L&T Finance and improve its performance substantially.” During the nine months ended December 31, 2021, LTFH recorded a net profit growth of 3.6 per cent y-o-y at the consolidated level to ₹707.89 crore. The focus on retail paid rich dividends to the company during the quarter.

“We decided that this is a very important and a major decision (of focussing on the retail segment) where virtually we are changing the character and the structure of the company because more changes will follow once the chairman is appointed. I have not been happy with the performance of L&T Finance,” Naik added.

Fall in lending book

LTFH’s retail portfolio mix during the December quarter was at 50 per cent while disbursements for the segment were up 29 per cent to reach all-time high levels of around ₹7,600 crore. LTFH’s retail portfolio used to be 26 per cent in FY16. The company’s retail book size by the end of the quarter stood at ₹42,602 crore. 

LTFH’s total lending book fell to ₹85,552 crore from ₹100,099 crore, led by a decrease of 30 per cent in infrastructure finance and 22 per cent decline in real estate finance. “Both the wholesales, that is infrastructure and realty, will be less and eventually, I expect in less than two years, the company will be only retail. Then it will be structured upon various verticals of retail. And each one will have a profit centre and we think we will create value which will be visible in 6-9 months,” Naik added.

L&T is a major shareholder in BSE-listed L&T Finance with 63 per cent stake. This initiative is independent of the Vision 2026 shared by L&T earlier, Naik clarified.

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