Ajay Piramal-led Piramal Enterprises Ltd. (PEL) has demerged its pharmaceuticals business for listing on the stock exchanges as a separate entity. The group will have two separate listed companies in financial services and pharmaceuticals as part of a corporate restructuring exercise. The Board of Directors on Thursday approved a composite scheme of arrangement.

PEL, which last week acquired the country's second-largest housing finance company Dewan Housing Finance (DHFL), will transform into a large listed diversified NBFC, focused on retail and wholesale financing, with a consolidated loan book of ₹65,000 crore.

The pharmaceuticals business will get demerged from PEL and will be consolidated in Piramal Pharma Ltd. (PPL). Hemmo Pharma Pvt. Ltd. (focused on peptide APIs development and manufacturing capabilities), and Convergence Chemical Pvt. Ltd. (set up for development, manufacturing and selling of speciality fluorochemicals), will get amalgamated with PPL to create a consolidated listed pharma entity.

“Over the years, Piramal Enterprises has grown multi-fold with diverse businesses under one listed holding company structure. In line with our stated strategy, the Board has approved the demerger and simplification of our corporate structure, to create two independent listed entities in financial services and pharmaceuticals, with a leadership position across business segments they operate in,” said Ajay Piramal, chairman, Piramal Group.

Investors will get four equity shares of paid-up value of ₹10 each in PPL for every one share held in PEL.

PPL will be one of India’s largest listed pharma companies present in Contract Development and Manufacturing Organisation (CDMO) and Complex Hospital Generics (CHG) spaces, among others.

Piramal Enterprises said revenue from the pharma business has grown 3.8 times in the last 11 years, at a CAGR of 14% to ₹5,776 crore in FY21, while EBITDA has gone up 13 times at a CAGR of 28%. The company did nearly 15 M&A transactions worth over ₹4,000 crore since it sold its formulation division to Abbot Laboratories in 2010.

PPL has manufacturing capabilities across 15 global facilities and a distribution network in over 100 countries. PPL’s CDMO business is among the top three in India and the 13th largest globally. Its CHG business caters to hospitals, surgical centres and veterinary centres with a portfolio of inhalation anaesthetics, and ranks among the top four globally. It also has a consumer healthcare business with 21 brands across multiple categories and include products such as Saridon, Littles, I-pill, Lacto, etc.

PEL will amalgamate PHL Fininvest Pvt. Ltd. with PEL to create a listed non-banking financial services (NBFC) entity. The merged housing finance company (HFC) post DHFL acquisition will remain a 100% subsidiary of PEL. Through this demerger and simplification of the corporate structure, the shareholders of PEL will directly own shares in both the listed entities, without cross-holdings and minority stakes. PEL will continue to own 100% stake in the HFC (merged with DHFL), and focus on affordable housing finance.

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