Piramal announces demerger of pharmaceuticals business, to create two separate listed entities

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Piramal Enterprises Ltd (PEL) on October 7 announced the demerger of its pharmaceuticals business from the financial services business. The move, aimed at simplification of the corporate structure, would lead to the creation of two separate listed entities, it said.

The Board of Directors, in their meeting held earlier in the day, approved a "composite scheme of arrangement providing for the demerger of the pharmaceuticals business from PEL and simplification of the corporate structure to create two industry-focused listed entities in financial services and pharmaceuticals", an official release noted.

The pharmaceuticals business will get vertically demerged from PEL and consolidated under Piramal Pharma Limited (PPL), it said.

The company said that each shareholder of PEL will get four shares of PPL for every one share in PEL, "in addition to their existing holding in PEL".

"In consideration of the demerger, PPL shall issue four fully paid-up equity shares of PPL of Rs 10 each to the shareholders of PEL for every one fully paid-up equity share in PEL having a face value of Rs 2 each held by them, in accordance with the Share Entitlement Ratio," it said.

Post the demerger, PPL will become "one of the large pharma companies listed on NSE and BSE", the company claimed.

Two operating subsidiaries - Hemmo Pharma Private Limited (focused on peptide APIs development and manufacturing capabilities) and Convergence Chemical Private Limited (setup for development, manufacturing and selling speciality fluorochemicals) - will get amalgamated with PPL to create a consolidated listed pharma entity, it added.

On the other hand, the company plans to simplify the structure of its financial services business by amalgamating PHL Fininvest Private Limited, the non-banking financial company (NBFC) with PEL to create a "large listed NBFC", with a consolidated loan book of around Rs 65,000 crore, the company stated.

The merged Housing Finance company, post the DHFL acquisition, will remain a wholly-owned subsidiary of PEL, it said.

Commenting on the composite scheme of arrangement cleared by the company's board, Piramal Group Chairman Ajay Piramal said the decision is "in line with our stated strategy".

"It will firmly empower both entities to be future-ready and enable them to independently pursue their growth strategies with sharper focus and identity," he added.

Notably, the scheme of arrangement for the demerger will come into effect following the approval from shareholders and creditors of the companies, along with the RBI, SEBI, NSE, BSE, NCLT and other regulatory authorities, as applicable.