Piramal Capital and Housing Finance Ltd, the financial services arm of the Piramal Enterprises, has a debt close to Rs 2,500 crore that is coming up for redemption in next 18 months.
This debt includes non convertible debentures (NCDs) issued to various institutional investors and also inter corporate deposits (ICDs). It does not include short-term commercial papers (CPs), which were close to Rs 5,000 crore outstanding by March 2019. The subsidiary may have paid a part of CPs as these are quite short-term in nature. But replacing CPs with longer term resources, that too at the same rate is a big challenge.
There are bank loans that will also come up for redemption in the near future. The amount of bank loan outstanding is not known.
The current liquidity crisis in non-banking financial companies (NBFCs) has been creating a problem as the short-term money is not available in the market to pay back the loans, while the money deployed in the business is locked in various assets such as home loan and developer loans. IL&FS and DHFL are two examples where the entire business model has turned upside down.
Ajay Piramal-owned Piramal Enterprises has strong credentials to raise money from the market. As Business Today reported earlier, the financial services subsidiary has managed to get the life insurance giant Life Insurance Corporation on board with a credit line of Rs 1,500 crore. In addition, International Finance Corporation has also put in some money. Sources earlier informed that the subsidiary had paid back Rs 1000 crore to Birla Sun Life and Rs 500 crore to private sector IndusInd Bank on maturity.
Piramal Group has a large financial services business, with exposure to real estate. In fact, the group has been cutting down its wholesale real estate exposure and increasing the retail home loan book. In the last four years , the wholesale real estate exposure is down from 80 per cent to around 60 per cent. The retail housing finance, which is a new business, is around 10 per cent of its total exposure.
Piramal Capital and Housing Finance Ltd, formerly Piramal Housing Finance Ltd, has revenues from operations at Rs 5571 crore with profits of Rs 1442 crore. The housing finance business has a loan book of Rs 5,188 crore. This business, which was launched two years ago, has presence in close to two dozen cities. Major areas are retail home loans, loan against property, construction finance and affordable housing.
Currently, Piramal Enterprises, the holding company, quotes at a market valuation of Rs 40,000 crore, consolidated revenues of Rs 13,528 crore and profits of Rs 1,470 crore in 2018-19. Almost half of the revenue contribution comes from financial services that include wholesale lending, housing finance and alternative asset management. In terms of the capital, a major portion -almost 60 per cent - is employed in financial services.
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