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Piramal hints at demerging healthcare, financial services units

17 May, 2016

Billionaire Ajay Piramal, chairman of Piramal Enterprises Ltd, has hinted at a move to split the company’s healthcare and financial services businesses.

This restructuring will likely happen in the medium term, Piramal said, according to media reports. He didn’t specify a timeline for the restructuring.

“Piramal Enterprises is a conglomerate today and, hence, may seem to be complex and difficult to understand. It is our intent to simplify the structure going forward and create focused businesses, in the process also unlocking value for our shareholders,” Piramal said after the company announced its quarterly results.

The Piramal Group, which was founded in 1984 and has operations in 30 countries, has diversified into areas such as finance, private equity and real estate funding from its core pharmaceuticals business over the past few years. 

An email sent to Piramal Enterprises seeking more details on the restructuring and the timeline did not elicit any response.

While Piramal reduced exposure to its core pharmaceuticals business after selling its key domestic formulations business to Abbott in a multi-billion dollar deal in 2010, the healthcare division remains a significant part of its business.

In the fourth quarter ended March 31, 2016, revenue of the healthcare business, comprising pharmaceutical solutions, critical care and consumer products, grew 14.3% from a year earlier to Rs 955 crore, contributing 53.8% to total sales.

Piramal Enterprises has made three acquisitions in the consumer healthcare segment in the past six months, including the recent purchase of four brands from drugmaker Pfizer Ltd for Rs 110 crore ($16.5 million), to expand its presence in the over-the-counter business. 

While its focus on healthcare remains, its push to expand into the financial services businesses has been noteworthy. Its income from financial services grew 112% from a year earlier to Rs 559 crore in the quarter ended March 31, 2016, contributing 28.2% to total sales. 

Piramal also has a Real Estate Fund Management business with investments of about Rs 9,000 crore. The firm had invested in 57 projects across six cities with 23 leading developers last year.

The company’s revenue from its third vertical, the information management business, grew 6.5% year on year to Rs 207 crore during the January-March quarter, accounting for 6.5% of total sales.

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Piramal hints at demerging healthcare, financial services units

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