Demerger and eventual listing of its financial services and pharma businesses in the works
Upbeat about prospects in the current fiscal, Piramal Enterprises Ltd (PEL) is also looking to finalise a demerger plan and eventual listing of its financial services and pharma businesses.
“Post the completion of DHFL acquisition, we will be better positioned to finalise the demerging plan for the two large listed entities in Financial Services and Pharma sectors. I am confident that these businesses will emerge as two strong companies, which will have a good runway for growth in the long term,” Ajay Piramal, Chairman, PEL said in his message to shareholders in the Annual Report 2020-21.
Piramal also said the company is relatively optimistic for 2021-22 and is in a stronger position to tap organic and inorganic growth opportunities across both the sectors we operate in.
“Our near-term focus will be to effectively integrate DHFL with our Financial Services organisation, ensure that the collections and asset quality of the combined entity remain healthy and generate synergies by cross-selling our innovative products to the large customer base through the India-wide branch network, leveraging our digital multi-product platform,” he further said.
The acquisition of DHFL would fit well with PEL’s overall retail lending strategy. “The acquisition will provide us an India-wide infrastructure with a large branch network as well as a sizable customer base that can leverage our technology-driven multi-product retail lending platform for our future growth,” Piramal said.
On the pharma business, he said PEL will target a few more acquisitions to further boost growth.
“Each of the Pharma businesses has a compelling plan for organic growth with multiple acquisition opportunities. Our focus is to invest across our businesses to further enhance their growth and return on capital employed (ROCE) will gradually improve through better absorption of fixed costs as we deliver on our growth targets,” he said, adding that the Carlyle Group’s recent strategic investment confirms the business’s underlying strength and provides a war chest for the next phase of our growth plans.
“To raise strategic growth capital for the pharma business and as a step in the direction of eventual demerger and separate listing of the pharma and financial services businesses, PEL decided to undertake a fund raise in its pharma business. Accordingly, pharma businesses of PEL were integrated into a subsidiary of PEL – Piramal Pharma Limited,” the annual report noted.