Piramal Enterprises suffers ₹2,378-crore Q3 loss due to AIF provisioning
Provisions of ₹3,540 crore, taken according to RBI circular on AIF investments, led to a reduction in the company's total assets under management. The AUM is up 6% quarter-on-quarter and 9% year-on-year, excluding the impact of AIF provisions. Shares of Piramal Enterprises Ltd ended at ₹883.55, up by ₹10, or 1.14%, on the BSE.
Piramal Enterprises Ltd, the financial services arm of the Piramal Group, on Monday (January 29) reported a consolidated net loss of ₹2,377.6 crore for the third quarter that ended December 31, 2023. The exceptional loss of ₹3,339.8 crore has to do with its investments in alternative investment funds (AIFs).
In the corresponding quarter last year, Piramal Enterprises posted a net profit of ₹3,545.4 crore, the company said in a regulatory filing. The company's revenue from operations declined 11.9% to ₹2,475.7 crore against ₹2,811.2 crore in the corresponding period of the preceding fiscal.
The total assets under management (AUM) is up 6% quarter-on-quarter and 9% year-on-year, excluding the impact of AIF provisions. Provisions of ₹3,540 crore, taken according to RBI circular on AIF investments, led to a reduction in AUM. The company remains confident of the full recovery of the AIF investments.
In an interview with CNBC-TV18, Jairam Sridharan, MD of Piramal Finance stated, “The underlying AIF investments are doing well, the underlying clients are doing well, we have about 13 underlying exposures, they are all completed projects and cash flows are coming in. We have mentioned in our material that over the last couple of years, Piramal has received about Rs 1,100 crore of cash flow from these clients that are underlying these AIFs. So in the coming quarters as well, one should expect to see these cash flows coming in and as they come in, we will be able to write back some of the capital that we have written down during the course of this quarter. We have written down about 400 basis points of capital with this Rs 3,500 crore. So that 400 basis points should in large part all come back over the course of the next six to eight quarters.”
The consolidated gross non-performing asset (NPA) ratio is down 33 bps QoQ to 2.4% and the net NPA ratio is down 37 bps to 1.1%. Net worth stood at ₹26,376 crore with a capital adequacy ratio of 24.3% on the consolidated balance sheet.
Interest income also fell to ₹1,931 crore from ₹2,006 crore in the year-ago period. However, the total expenses of the company stood at ₹2,414 crore against ₹2,807 crore in the same period a year ago, Piramal Enterprises said.
Ajay Piramal, Chairman of Piramal Enterprises Ltd, stated, "In response to the RBI circular issued in December, we made complete provisions for our investments in AIFs, subsequently removing them from our AUM. Our confidence in the full recovery of these investments remains strong, which is evident in the positive payment record thus far. We have made substantial enhancements to our net interest margins, achieved robust fee income growth, and optimized opex (operating expense) ratios to deliver a strong core operating profit. Our commitment is to further enhance profitability by optimising operating leverage in our growth business and reducing the contribution of the legacy business."
On January 27, Piramal Enterprises announced its intention to sell the entire direct investment of 20% of the fully paid-up equity share capital held in Shriram Investment Holdings Pvt Ltd (formerly known as Shriram Investment Holdings Ltd) to Shriram Ownership Trust (SOT), for a consideration of ₹1,440 crore.
The transaction is subject to receipt of requisite regulatory approvals by SOT and is expected to be completed before March 31, 2024, PEL had said in a separate regulatory filing. The contribution of SIHPL in the revenue of the company for the year ended March 31, 2023, was nil, it had said.
"This transaction is aligned with our focus on monetising non-core assets. The proceeds from the transaction will further strengthen our balance sheet," it had said. SOT is the promoter of Shriram Capital Private Ltd, which is the overarching holding company of Shriram Group.
Shriram Group offers a wide range of financial products in commercial vehicle financing, retail financing, chit funds, housing finance, life insurance, general insurance, stockbroking, distribution of financial products, and wealth advisory through its entities.
The results came after the close of the market hours. Shares of Piramal Enterprises Ltd ended at ₹883.55, up by ₹10, or 1.14% on the BSE.
(Edited by : Shoma Bhattacharjee)
First Published: Jan 29, 2024 7:18 PM IST
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