Piramal has taken several steps to reduce its debt, after its bet in the real estate sector went awry because of the slowdown in the economy even before the lockdown was enforced.
The company had raised Rs 5,400 crore as equity in the second half of FY20, and sold its healthcare insights and analytics segment for Rs 6,750 crore in the quarter ended March 31, 2020 to meet its debt obligations. Earlier, in June 2019, the company had sold 10 per cent stake in Shriram Transport Finance Company for a sum of Rs 2,200 crore.
and PEL declined to comment on the stake sale.
About 70 per cent of the company’s loan book in FY19 comprised the wholesale real estate book, and was raising high cost funds. Besides, almost half of PEL’s revenues and profit from its financial services business are carried out by its NBFC and HFC subsidiaries, which are facing disruption on account of the lockdown.
Bankers said the company will have to speed up the stake sale process, given the lockdown is likely to impact overall growth and collections of NBFCs/HFCs, and may impact its credit profile.
The pharma division — with a presence in 100 countries — has 13 manufacturing plants across India, North America, and the UK. The company grew its global pharma and over-the-counter businesses mainly via acquisitions worth $500 million, which are yet to contribute materially to profitability.
Higher debt has led to modest credit metrics and return on capital employed (RoCE) for FY20, say bankers.
Bankers said Piramal Enterprises
had cash and cash equivalents of about Rs 2,974 crore as on March 31, 2020, compared to Rs 811 crore as on March 31, 2019, and unutilised bank lines of Rs 4,518 crore as on March 31, 2020.
PEL stock closed 8.5 per cent down at Rs 904 a share.
KKR, on the other hand, is looking for opportunities in the fast-growing renewables, transportation, energy, telecom, water, and waste sectors. On April 27, it announced the acquisition of Shapoorji Pallonji Infrastructure Capital’s operational solar energy assets for Rs 1,554 crore.