Piramal Enterprises To Carve Out Pharma Business

Piramal Enterprises Ltd. will segregate its pharmaceutical and financial services businesses to unlock the potential value of each vertical and streamline the group structure.

The company’s board, according to an exchange filing, decided in its Oct. 7 meeting that:

• Piramal Pharma Ltd., a subsidiary of Piramal Enterprises, will be demerged into a separate entity and listed on the bourses.

• Shareholders of Piramal Enterprises will get four shares of Piramal Pharma of face value of Rs 10 each for every one share held in Piramal Enterprises of face value of Rs 2 each.

• After the demerger, promoters will hold a 35% stake in Piramal Pharma and shareholders will own 45%. Its original investor, Carlyle Group, will continue to hold a 20% stake.

• Piramal Pharma’s two wholly owned subsidiaries—Convergence Chemicals Pvt. and Hemmo Pharmaceuticals Pvt.—will be amalgamated with itself. While Hemmo focuses on developing peptide active pharmaceutical ingredients, Convergence Chemical was set up for developing, manufacturing and selling specialty fluorochemicals.

• PHL Fininvest Pvt., the non-banking financial company and a wholly owned subsidiary of Piramal Enterprises, will be merged with the parent to create a large listed NBFC.

• No shares or cash consideration will be paid or issued for the amalgamations.

The scheme is subject to shareholder, creditor and regulatory approval and is expected to be completed in 9-10 months, the company said at a call with analysts.

While Piramal Enterprises has grown multifold with diverse businesses under one listed holding company structure over the years, the creation of two independent listed entities “will firmly empower both entities to be future-ready and enable them to independently pursue their growth strategies with sharper focus and identity”, Ajay Piramal, chairman of Piramal Group, was quoted as saying in the filing.

Piramal Pharma

It’s one of the top three contract drugmakers in India and the thirteenth largest globally. The company also operates in complex hospital generics, and India consumer healthcare markets and the ophthalmology segment.

Here’s how the pharma business fared in FY21:

• Revenue was at Rs 5,776 crore, excluding income from joint venture with Allergan, dealing in ophthalmology space, in which Piramal Pharma owns a 49% stake.

• The pharma business comprised 45% of the total revenue of Piramal Enterprises.

• Its Ebidta was at Rs 1,283 crore.

• Operating margin stood at 22%.

• The pharma business has debt of nearly Rs 3,200 crore and equity of Rs 6,800 crore, the company said in the call with analysts.

Financial Services

• PHL Fininvest is a non-banking financial company engaged primarily in the business of lending and investment.

• The merged housing finance company, post the Dewan Housing Finance Corp. acquisition, will continue to remain a wholly owned subsidiary of Piramal Enterprises.

• Total consolidated revenue of Piramal Enterprises stood at Rs 12,809 crore in FY21, of which Rs 7,033 crore came from financial services.