Piramal Enterprises Ltd (PEL) has embarked on a plan to demerge its healthcare and financial services business to create separate companies for better clarity in business, focused growth and creation of shareholder value. The company has not set any time frame for the demerger.
“PEL is a conglomerate today and hence, may seem to be complex and difficult to understand. We are fully aware of this fact. It is our intent to simplify the structure and create focused businesses, in the process, unlocking value for our shareholders,” Ajay Piramal, Chairman, Piramal Enterprises Ltd said, without elaborating on the roadmap.
The company has entered into several new businesses in the past five years after it sold its domestic formulations business to Abbott Laboratories for $3.7 billion (then estimated at Rs. 17,300 crore) in 2010, thus needing reorganisation.
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With plenty of cash at its disposal, the company picked up 11 per cent stake in Vodafone India in two tranches in 2011 and 2012 for a total consideration of Rs. 5,864 crore to exit in 2014 for around Rs. 9,800 crore, thus making a profit of over Rs 3,000 crore.
Since then, the company has invested in the south-based Shriram Group, got into construction finance and wholesale lending. It has also entered into the information management business.
The healthcare vertical comprises pharmaceutical solutions, critical care and consumer products. Financial services include wholesale lending, Alternative Asset management and Investments in Shriram Group (Shriram Capital, Shriram Transport Finance and Shriram City Union Finance). “Since the sale of the domestic formulations business in 2010, we have been constantly striving towards re-inventing the company. We have gone a long way in achieving the same over these last few years. Throughout this period, we have generated year-on-year improved performance and made substantial progress in delivering long-term sustainable value,” Mr. Piramal said.
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The company on Monday announced its annual and quarterly financial results. The revenues for the year ended March 31, 2016 were at Rs. 6,610 crore, up 29 per cent as compared to the previous year. Net profit was at Rs. 951 crore for the year. For the fourth quarter, it reported a net profit of Rs. 180 crore, a growth of 89 per cent over Q4 in 2015, on sales revenue of Rs. 1,734 crore, a 24 per cent growth over the comparable quarter last year.
Mr. Piramal said, “Our performance is a clear reflection of the strength of our business model and the determined execution of our proven growth strategy.”
The company has entered into several new businesses
in the past
five years