Co aims at changing financial services business model
Piramal Enterprises (PEL) on Thursday said the total consideration for acquiring Dewan Housing Finance Corporation (DHFL) stands at Rs 34,250 crore. The company, while disclosing its December quarter earnings (Q3FY21), said the total consideration of Rs 34,250 crore included Rs 14,700-crore upfront cash and non-convertible debentures (NCDs) of Rs 19,550 crore.
DHFL’s committee of creditors had earlier approved a resolution plan by PEL’s subsidiary Piramal Capital and Housing Finance (PCHFL) by 94% votes. The National Company Law Tribunal is yet to approve PCHFL’s resolution plan for DHFL.
The company highlighted that the proposed acquisition of DHFL was in line with PEL’s strategy to diversify its loan book and increase granularity. Ajay Piramal, chairman, Piramal Enterprises said, “Firstly, we are changing our financial services business model from one that is wholesale-led to a well-diversified one, this also being one of the key objectives behind our bidding for DHFL.” We are in parallel, making strides towards creating a large differentiated listed pharma company, post the growth capital raise from the Carlyle Group, through both organic as well as inorganic investments, he added.
PEL’s consolidated net profit during the December quarter jumped 10% year-on-year (y-o-y) and 27% sequentially to Rs 799 crore. The total revenue from operations, however, declined 3% year-on-year and 4% quarter-on-quarter (q-o-q) to Rs 3,169 crore.
Talking about its financial services business, the company said it had undertaken a conservative provisioning of Rs 2,935 crore, up three times compared with Rs 947 crore in Q3FY20. This included provisions of Rs 2,027 crore against standard assets of stage 1 and stage 2.
The capital adequacy ratio improved 300 bps at 37%, compared with 34% during the September quarter. PEL mentioned that financial services has sufficient capital for growth for the next three-five years.