Piramal Enterprises chairman Ajay Piramal said the fund it has raised till date, most of them will be used for debt reduction, and supplementing the equity.
There is a lot of demand for credit, and the supply is limited. India, even at the slower growth rates, does need more credit, he told CNBC-TV18 on the sidelines of World Economic Forum at Davos.
He said: “In some ways the money that we have raised now as far as the rights issue is concerned, and the sale of Decision Resources Group (DRG), it is about Rs 10,000 crore. So, most of it will be used for debt reduction, supplementing the equity because the way I look at it, I think there is a lot of demand for credit, there is not enough supply."
"India, even at the slower growth rates that we have today , does need more credit. So, this is an opportunity for us to take advantage and I think that is the reason why we felt that this is the time to just strengthen our balance sheet so that the opportunities that are there, we could take advantage of that.”
Speaking about the realty fund, he said, “The fund has been announced but still more needs to be done. To get Rs 10,000 crore or Rs 15,000 crore, this fund is not enough for the whole country and the disbursals need to be faster."
"That will be some relief, but it is not going to be significant. Also, they have said they are limiting it to each developer, I think it is like Rs 200 crore or something which is not enough; we should do more. The larger developers need more funding.”
Speaking about the rights issue and whether the promoters subscribed more than the entitlement, Piramal said, “It is oversubscribed by 115 percent, so we did not need to, but we had said that we would. All the existing shareholders, most of the large institutional shareholders and retail shareholders have subscribed and I know that there were many others who wanted more. So, let us see what the allocation is.”
On the outlook going forward, he said, “In the economy, I hear some green shoots coming. As far as the NBFC sector is concerned, and as far as we are concerned, I think with this rights issue, plus we have also sold healthcare insights and analytics business in the US."
"So, with this and the rights issue, plus the preferential issue which CDPQ did, in this year we will have raised about Rs 14,000 crore of extra money in terms of equity and reduction of debt only by these three transactions and the stake which we had sold in Shriram Transport. So, we are on a pretty sound wicket.”