The company made provisions in the financial services business to the tune of Rs 2,963 crore in Q4FY20.
Piramal Enterprises has reported a consolidated pre-tax loss of Rs 1,296 crore in the March qurter, as opposed to a pre-tax profit of Rs 678 crore in the same period last financial year (Q4FY19) because of incremental provisioning in its financial services business on account of Covid-19. The company reported a net loss of Rs 1,703 crore in Q4FY20 compared to a net profit of Rs 455 crore in Q4FY19.
Its revenues were down 2 per cent to Rs 3,341 crore in Q4FY20 from Rs 3,409 crore in Q4FY19 whereas for the whole year (FY20), the company’s revenue was up 10 per cent at Rs 13,068 crore. Financial services arm saw 8 per cent growth in revenue while the pharma arm registered a 13 per cent growth. The net interest margin, a measure of profitability in the financial services business, stood at 5.2 per cent. The company made provisions in the financial services business to the tune of Rs 2,963 crore in Q4FY20, up more than 200 per cent, which includes incremental provision of Rs 1,903 crore for Covid-19.
The gross non-performing assets of the firm has moved up to 2.4 per cent in Q4FY20, compared to 1.8 per cent in Q4FY19. “In the financial services business, we are not targeting growth but deleveraging and preserving liquidity,” said Ajay Piramal, chairman Piramal Group.
The loan book of the company at the end of the March quarter stood at Rs 50,963 crore, of which its wholesale real estate is 70 per cent of the book and retail financing is just 11 per cent.
However, the wholesale loan book has shrunk 12 per cent in FY20 to Rs 45,429 crore and the exposure to top 10 borrowers has also shrunk by 23 per cent.
At the end of March quarter, the financial services arm had Rs 8,900 crore in the form of cash and undrawn bank lines but it has drawn down Rs 4,000 crore of long term bank lines since the beginning of the lockdown.
It has maintained a capital adequacy ratio of 31 per cent at the end of March quarter, and has also reduced the gross debt to equity ratio to 2.6x as of March 2020, from 3.9x at the end of March, 2019.
As far as the pharma business is concerned, the revenue for Q4FY20 was up 10 per cent at Rs 1,623 crore compared to Rs 1,476 crore in Q4FY19. The management said, operations continued at all the sites globally and for the whole year revenue was up 13 per cent to Rs 5,419 crore while EBIDTA reached Rs 1,400 crore. Moreover, the process of fundraising is on track in the pharma business by issuing a minority stake to potential financial investors and at the appropriate time, stake in the Shriram Group will be monetized, the management said.
“The economic recovery is going to take some time but it will atleast take 2-3 quarters to even reach the December 2019 gross domestic product (GDP) levels and perhaps not before FY22, the government expects that our GDP can go up to 6.5-7.5 per cent”, said Ajay Piramal.
“We had at the onset said we will strengthen our balance sheet by bringing in equity and in the year, we have brought in Rs 14,500 crore capital in the company. The equity base has increased to Rs 30,500 crore”, he added.