Piramal Enterprises logs Rs 1,536 crore net loss as DHFL merger takes toll

Piramal Enterprises, the financial services arm of the Piramal group, on Wednesday reported a net loss of Rs 1,536 crore in the second quarter of the current financial year.

The quarterly report includes the numbers of Dewan Housing Finance Corporation (DHFL) which it had acquired in September 2021 through the insolvency process.

Piramal Enterprises said the numbers are not comparable as this is the first time that the company, whose credit business was 90 per cent dominated by wholesale lending earlier, is reporting the earnings as a Reserve Bank-regulated non-banking lender, and also after the merger of DHFL.

Net interest income rose 34 per cent to Rs 934 crore and other income rose over 130 per cent to Rs 63 crore, taking total income 37 per cent higher to Rs 997 crore.

Jairam Sridharan, managing director of Piramal Capital & Housing Finance, said net loss shot up to Rs 1,536 crore for the quarter -- nearly five-times more than what it had reported in the year-ago quarter at Rs 395 crore -- primarily due to re-computing after the merger of DHFL and the demerger of Piramal Pharma.

He said the combined entity has seen improved performance across most parameters, led by a massive spike in the retail book that now constitutes 43 per cent of the Asset Under Management (AUM), as retail disbursements rose 8 times to Rs 3,973 crore.

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Sridharan told PTI that net loss widened as the company had taken a hit of Rs 3,311 crore due to the merger of DHFL and moved Rs 5,888 crore of wholesale assets from stage 1 to stage 2. Of the Rs 3,311 crore hit, Rs 1,000 crore are for doubtful investments and the rest are for loan provisions for the stage 2 accounts, he said.

Another reason for the massive jump in losses is the steep 158 per cent jump in expenses to Rs 541 crore from Rs 209 crore. The management did not offer any reason for this.

The losses would have been much higher had it not held back Rs 694 crore in deferred taxes as against Rs 98 crore payments in the year-ago period.

Yesh Nadkarni, chief executive, wholesale lending, at Piramal Capital, said the total AUM rose 35 per cent to Rs 63,780 crore, led by 12 per cent jump in retail loans to Rs 24,872 crore, while wholesale book declined by 13 per cent during the quarter to Rs 38,908 crore, helping the firm close the quarter with a revenue growth of 37 per cent at Rs 997 crore and increasing the share of the retail book to 43 per cent of the total book.

Higher revenue growth has been primarily on account of DHFL acquisition as well as healthy growth in retail lending business, Sridharan said, adding the target is to take the retail book to 60 per cent over the next few years.

Sridharan said the company shuttered 22 DHFL branches but opened 64 new ones taking the total to 345 branches, and reiterated the commitment to have around 600-700 branches over the next few years.

He said the company has made a pilot entry into the micro finance space and also branch-led personal loans.

While personal loan business is nascent, in the micro finance space the company has opened 70 branches across Karnataka, Rajasthan, UP and Bihar.

He said the company is piloting gold loans, which will be commercially launched next fiscal.

On the asset quality side, the company said gross NPA stood flat at 3.7 per cent, while net NPA improved marginally to 1.3 per cent. Provisions as percentage of wholesale AUM increased to 13.1 per cent from 8.8 per cent and the capital adequacy ratio to 23 per cent in the second quarter.

Total disbursals stood at Rs 3,973 crore outperforming the guidance of Rs 2,500-3,500 crore and the yield from lending touched 12.3 per cent for the quarter.

Piramal Enterprises has presence across retail and wholesale lending as well as fund-based lending. It has a network of over 330 branches across 25 states and serves 22 lakh customers including 4.5 lakh acquired during the reporting quarter.