Demerger of Piramal’s business to completed by Oct-Dec quarter

In October last year, Piramal Enterprises Ltd has approved the demerger of its pharmaceutical business – Piramal Pharma (PPL) via composite scheme of arrangement. PPL’s two wholly-owned operating subsidiaries will be also merged with it.

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Post the merger, PPL will become one of the largest pharma companies to be on NSE and BSE.

The proposed demerger of the Piramal Group’s pharmaceutical business, which received board approval last year, is on track and is expected to be completed by the third quarter of this financial year.

“It’s going as per schedule and I think by October-December quarter, we should be demerged and listed,” Ajay Piramal, chairman of Piramal Group, said on Friday.

In October last year, Piramal Enterprises (PEL) approved the demerger of its pharmaceutical business – Piramal Pharma (PPL) – through a composite scheme of arrangement. PPL’s two wholly-owned operating subsidiaries will be also merged with itself.

The demerger followed the group’s acquisition of DHFL for Rs 34,250 crore. It had also approved the amalgamation of PHL Fininvest with PEL to create a listed non-banking financial services entity.

Speaking at the FE Modern BFSI summit, Piramal stressed on the importance of a “more supportive” financial system, where more credit can be given without “unnecessary risk”.

According to Piramal, India is in a stronger position than most countries, but to reach $10 trillion economy by 2030, growth of banking and financial sectors are “really important”.

“Today, to grow at 8%, the growth in the financial sector has to be at least 16-18%. And if you see the numbers in the last several years, it has been just about 9% credit growth. The credit growth in the country has risen to 12% in the last 3-4 months, but that is not enough to fuel the aspirations the growth aspirations that the country has,” he said.

“In India, private debt to GDP is just about 54%, whereas in China, if I am not mistaken, it’s almost like 190%. These are the growth engines that are there, and my feeling is that we will have many more banks and NBFCs in the country,” Piramal said.

Today, India, for its size of population and economy, has just 45 banks, whereas the US has about 4,500 banks. Since 2015, no new licences were given for banking, as banks will only lend to certain sect of companies, NBFCs should be encouraged more to encourages to support the MSME sector.

The cost of funding is also very high in India, compared with other countries, which is also a challenge, he said, adding since Piramal being an NBFC it cannot match the HDFCs of the world.

India needs a much more supportive financial system where more credit can be given without unnecessary risk.

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