Piramal Enterprises (PEL) has received approval from the National Company Law Tribunal (NCLT) for the proposed demerger of its pharmaceuticals business and simplification of the corporate structure. The approval paves the way towards creation of two separate listed entities such as PEL, an NBFC company, and Piramal Pharma (PPL).
In October 2021, the company’s board had approved the demerger. Following this, it got consents from RBI, Sebi, the exchanges and clearance from shareholders. In July 2022, PEL also received an NBFC licence. “We are on track to achieve the completion of demerger and separate listing of Piramal Pharma by third quarter of the current financial year,” PEL chairperson Ajay Piramal said.
“The demerger creates one of India’s large-listed diversified NBFCs, with a loan book of nearly $9 billion. It will have a significant presence across both retail and wholesale financing, leveraging technology at its core. The pharma company will be a large listed entity in the pharma sector with revenues of nearly $1 billion,” he added.
The demerged entities will have a greater focus and ability to pursue accelerated growth, resulting in likely improvement in their performance in coming years. In consideration of the demerger, shareholders of PEL will get four shares of PPL for every share in PEL, in addition to their existing holding in PEL.
The demerger follows the group’s acquisition of DHFL for Rs.34,250 crore, which was completed in September 2021.
Earlier in October 2021, PEL received board approval for a scheme of arrangement between the company, PPL, Convergence Chemicals, Hemmo Pharmaceuticals, PHL Fininvest. According to the contours of the agreement, the pharmaceuticals business would be demerged from PEL and consolidated under Piramal Pharma. Post the demerger, Piramal Pharma would be listed on NSE and BSE.
The two operating subsidiaries — Hemmo Pharma (focused on peptide Active Pharmaceutical Ingredients development and manufacturing capabilities) and Convergence Chemical (setup for development, manufacturing and selling speciality fluorochemicals) — will be merged with Piramal Pharma to create a consolidated listed pharma entity.
Further, the non-banking financial company PHL Fininvest will be merged with PEL to create a large and listed NBFC. The merged housing finance company, including the DHFL acquisition, will become a wholly-owned subsidiary of PEL. The company would become a listed NBFC, focusing on retail and wholesale financing, while Piramal Pharma would become a listed pharma company offering a portfolio of services.