Loans to real estate developers which constituted about 78 percent in Q2FY19, has come down to 70 percent in Q3.
Piramal Enterprises on January 28 said it is looking to reduce its exposure in real estate by diversifying into segments such as housing finance, loans to small and medium enterprises (SMEs), and funding stressed assets.
The company's loan book grew 45 percent to Rs 55,255 crore as of December 31, 2018. Loans to real estate developers which constituted about 78 percent in Q2FY19, came down to 70 percent in Q3.
"We are diversifying our risk. We already got into housing finance and therefore going more and more for consumer and retail lending. Our housing finance book has already reached Rs 4,000 crore, we have said that by March 2019 this book will become 10 percent of our total book," Ajay Piramal, Chairman of Piramal Enterprises said.
"The second diversification, other than real estate developers, we are lending to corporates for project finance, smaller and medium scale industries. In our financial services, we have also created fund in joint venture with Bain for funding stressed assets, overtime, our exposure to real estate will come down," Piramal added.
He pointed out that the company hasn't taken any haircut from any of the top three real estate borrowers including Lodha , Vatika and Omkar, where it has maximum exposure.
On Lodha, Piramal stated that the real estate developer is prepaying loans, changed terms of debentures to bring payments forward and is monetising a few big assets including one in London.
Piramal continued to state that it is in a better position, as it lends only to those developers who have a strong brand name, track record of delivering projects within time and with right products.
He believes that the real estate sector will go through a consolidation phase, in which only 20 percent of large developers will survive."The biggest factor affecting the real estate sector is RERA. Those people who are not in a position to complete the projects there is an issue. The consumers lost confidence in the way the non-reputed real estate people launching products, because of huge delay," Piramal noted.The Great Diwali Discount!
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