In a bid to simplify the corporate structure, Piramal Enterprises has announced the demerger of its financial services and pharmaceutical businesses to create two separate listed entities. While the financial services, including the recently acquired DHFL, will remain under Piramal Enterprise Ltd (PEL), the pharmaceutical operations will be carved out into a separate entity called Piramal Pharma Limited (PPL). Existing shareholders of PEL will get four shares of PPL for one share of PEL.

Potential for growth

Ajay Piramal, Chairman, Piramal Group, told BusinessLine , “Now with the demerger — both the businesses — financial services and pharma — are now independent, they have a runway for growth. They have a good performance, there is adequate equity for us to grow in both businesses, organically as well as through acquisitions. It simplifies the structure.”

Piramal Enterprises will get transformed into a listed diversified NBFC, focussing on retail and wholesale financing, with a consolidated loan book of ₹65,000 crore. Piramal Pharma will comprise contract development and manufacturing, global distribution of complex hospital generics and consumer products market in India. The pharma business accounted for about 45 per cent of PEL’s revenues in FY 21. Private equity major Carlyle already owns 20 per cent stake in the pharma unit.

Piramal said the pharma unit could get listed over the next 8-9 months.

“The demerger and simplification of the corporate structure is expected to create synergies for both the companies and unlock significant value for both the companies and stakeholders. It will simplify the Piramal Enterprises’ corporate structure with two separate pure-play entities in pharmaceuticals and financial services,” said a press statement.

“There is adequate equity for us to grow in both businesses, organically as well as through acquisitions.”