The NBFC crisis has come back to haunt the market, putting the financial services companies, which saw a sell-off in September 2018, back in the bear grip.
Shares of Piramal Enterprises also felt the hit after market participants raised concerns about the liquidity situation of the company. The primary source of the concerns was Piramal Enterprises' sale of a 10 percent stake in
Shriram Transport Finance via block trades on June 17 to raise Rs 2,300 crore. CNBC-TV18 has exclusively dug out information on the portfolio and the liquidity status of Primal Enterprises. Top 10 Accounts
The top 10 companies, which account for around 30 percent of Piramal Enterprises' total financial services portfolio of Rs 56,600 crore, include Lodha, Omkar, Wadhwa, Century, Vatika, Sheth, Embassy, Renew, Acme and ATS Home.
CNBC-TV18 that Piramal Enterprises has commercial papers (CP) worth Rs 4,000 crore due for redemption in the next two months. The company is taking steps to provide for it, and, for the last six months, the company's strategy to deal with the situation involved an overhaul of the asset-liability management by boosting the long-term fund component, they added. Asset Quality
Sources also suggested that there is no default on account of Lodha Group and Ajay Piramal, chairman of Piramal Group, has articulated that exposure to Lodha will be reduced to Rs 2,000 crore by March 2020. Piramal does not have any exposure towards Radius, Bombay Dyeing ICC.
The exposure and status along with the future projection of the chunky accounts are given below:
Strengthening Asset Quality
Piramal Enterprises has been taking steps to reduce the concentration of any account to 15 percent of net worth within the next six months. There could be more sell down of part exposure to Goldman Sachs, said sources, adding that the company is exploring a tie-up with another global partner to diversify its risk to any account. This will also generate fee income for the company.
Measures to Enhance Liquidity
Piramal’s finance arm has cash and bank lines worth Rs 5000 crore as on May 31, 2019. The company is in talks to raise term loan of Rs 5,000 crore from state-run banks, CNBC-TV18 has learned. It has already raised Rs 17,000 crore long term fund in the last six months and has reduced CP exposure to Rs 8,000 crore from Rs 18,000 crore in the last six months.
Sources suggested that, out of the $375 million external commercial borrowings, $275 million will come in 60 days. The company is also looking to raise $500 million long-term fund in 4 months.
Shriram Group Strategy
Sources further told CNBC-TV18 that the company is in no hurry to sell its stake in Shriram City Union Finance. The company is in the process of selling its 20% stake in Shriram Capital, they added.
Piramal Enterprises' spokesperson said the company will not comment on any market speculations."Over the last 6 months, we have been focused on raising long term funds to replace short term borrowings, to further strengthen our borrowing profile," said the spokesperson, adding that the company has reduced its CP borrowings by nearly 50 percent from Rs 18,000 in September 2018, and are on track to do more in that direction.