EXCLUSIVE: Piramal Group is ready for acquisitions in both pharma and financial services

• Speaking at the Business Insider Global Trends Festival 2020, Indian billionaire industrialist and Piramal Group chairman Ajay Piramal said that post the pandemic, more consolidation will take place in pharmaceuticals and the financial services space. And, the company is positioning itself to be ready.
• Piramal revealed that in the midterm, the company has plans of having two independently listed companies of pharmaceuticals, as well as financial services.
• The Piramal Group has cut down on its debt significantly from ₹55,122crore in March 2019 to ₹38,153 crore in June 2020.
• He further highlighted that the 2018 IL&FS crisis and other business incidents that took place after that were alarming for the company, and that’s when it decided to cut down on debt.
• The company’s current net debt to equity ratio is 1.2 times, as per its first-quarter financial report.

The post-lockdown boom in the Indian pharma and financial sector has caught the eyes of Indian billionaire industrialist and Piramal Group chairman Ajay Piramal, who is now looking to expand the business across these segments.

Speaking at the Business Insider Global Trends Festival 2020, the chairman of the diversified global business conglomerate revealed its plans to grow the pharmaceutical and the financial services business organically as well as by acquisitions. “I believe that post the pandemic, more consolidation will take place whether it’s in pharmaceuticals and also in the financial services space. And we are positioning ourselves to be ready,” he said


Piramal added that the company has capital worth ₹35,000 crore ($4.75 billion) on its side and is now looking for a global partner to accelerate its growth. “We have been growing at about 15-16% year on year for the last nine years, and we feel that partner will be able to do that more. A global partner to be with us— they can be on our side, and we can accelerate this growth rate—the real opportunities for organic growth as well as through acquisitions. We want to take advantage of that.”

“Today if I look at it on our overall consolidated basis that capital we have is around ₹35000 crores and our debt is going to be less than that even today,” Piramal said.

The company’s current net debt to equity ratio is 1.2 times, as per its first-quarter financial report.

Piramal did not reveal the expected size of the business as he said the discussion is still at a nascent stage, but he did tell Business Insider that “in the midterm what we are saying is we will have two independent companies both pharmaceuticals, as well as financial services, will be independently listed, so that’s why we’re going to go towards it. We at least can say that in both the sectors pharmaceuticals as well as financial services, there are several opportunities for growth.”

Karnataka Chief Minister B.S. Yediyurappa also revealed earlier that the Piramal Group expressed its keen interest to invest in the pharma sector in the state during a virtual meeting with Yediyurappa, last week.

Significant reduction in debt over the past two years

The conglomerate has cut down on its debt seriously over the past 2 years. Emphasising on the need to cut down on debt, Piramal said that there are various reasons that drove the company’s decision of cutting down on debt. One of them being the “clear slowdown” in the funding for Non-Banking Financial Companies (NBFC).

He further highlighted that the 2018 IL&FS crisis and other business incidents that took place after that were alarming for the company, and that’s when it decided to cut down on debt.

“We saw many different companies falling on the wayside. These were the very very well reputed companies— the ZEE Empire, the Jet Airways, ADAG Group and so many the YES Bank and we could see that one after the other there were challenges. So we said that the best way to tackle this crisis is to bring in your own equity and actually to reduce the debt. ”

The company share price also reveals similar investors optimism. The shares have gained over 41% since the beginning of the financial year in March.

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