Piramal Enterprises’ Mutual Fund Borrowings Shrink

Piramal Enterprises Ltd.’s financial services arm’s bank loans rose and reliance on commercial paper fell at a time non-bank lenders are finding it tough to raise funds through market borrowings.

The company reduced funding from commercial paper to Rs 1,480 crore in the first half of the ongoing financial year compared to Rs 18,000 crore in the year-ago period, according to its investor presentation. That’s a fall of 92 percent.

Commercial paper outstanding with mutual funds fell from Rs 15,600 crore to Rs 615 crore at a time market borrowings dried up for non-bank lenders after the surprise defaults by IL&FS group subsidiaries a year ago.

That also changed the debt mix for Piramal Enterprises. Share of bank borrowings in its total debt rose to 69 percent from 49 percent a year ago. Borrowing from mutual funds fell to 4 percent from 29 percent a year ago.

Loan book remained almost unchanged over the previous fiscal at Rs 53,055 crore as of September. The company’s housing finance business grew threefold to Rs 6,393 crore, constituting 12 percent to the total loan book versus 4 percent a year ago.

Financial services arm’s gross non-performing assets stood at 0.9 percent for the second straight quarter.

Piramal Enterprises’ profit rose 18 percent year-on-year to Rs 569 crore in the second quarter. Its revenue grew 15 percent to Rs 3,604 crore on the back of 19 percent growth in the pharmaceutical business and 13 percent growth in the financial services vertical.