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Piramal pays consideration for acquisition and merger of DHFL

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 Piramal Enterprises Limited on Wednesday announced that it has completed payment for the acquisition of Dewan Housing Finance Corporation Ltd (DHFL), marking the first successful resolution under the IBC route in the financial services sector.

The National Company Law Tribunal, Mumbai Bench (NCLT), had earlier accorded its approval to the resolution plan of Piramal Group in relation to the CIRP (Corporate Insolvency Resolution Process) of DHFL.

In value terms, the transaction is among the largest resolutions till date, setting the precedent for future resolutions in the sector.

Speaking on the occasion, Ajay Piramal, Chairman, Piramal Group said, “We are very pleased to announce the consideration payment made towards the completion of this exciting acquisition. This accelerates our plans to become a leading digitally oriented, diversified financial services conglomerate that focuses on serving the financial needs of the unserved and underserved customers of our country.”

“An important characteristic of any advanced economy is a robust insolvency code. The landmark bankruptcy reforms have made it possible to solve complex resolutions like this in a more complete and timely way.”

Anand Piramal, Executive Director, Piramal Group said, “The combined entity will have 301 branches, 2,338 employees and over 1 million lifetime customers. We will be a dominant player in the fast-growing affordable housing segment. Over the last two years we have successfully built our next-gen technology platform, advanced analytics engine and AI/ML capabilities. This acquisition allows us to implement these technologies across a much larger base of customers. The new merged entity is poised to be at the forefront of the digital-first retail lending market in India.”

In January 2021, 94 per cent of the Creditors of DHFL voted in favour of Piramal’s resolution plan. Approvals were also obtained from the RBI, CCI and NCLT for the completion of this transaction. As a part of the process, Piramal Capital and Housing Finance Ltd (PCHFL) will merge with DHFL. The merged entity will be 100 per cent owned by Piramal Enterprises Limited.

The creditors of DHFL (including FD holders) would recover an aggregate amount of Rs 38,000 crore from the resolution process of DHFL. This amount comprises of Rs 34,250 crore to be paid by PCHFL as a combination of cash and Non-Convertible Debentures and an amount of Rs 3,800 crore, which is the entitlement of creditors (as per the resolution plan), from the cash balance available with DHFL.

There were 70,000 creditors of DHFL and most of them are recovering nearly 46 per cent of their pending dues through the successful completion of resolution process.

The total consideration paid by the Piramal Group of Rs 34,250 crore at the completion of the acquisition, includes an upfront cash component of Rs 14,700 crore and issuance of debt instruments of Rs 19,550 crore (10-year NCDs at 6.75 per cent per annum on a half-yearly basis).

The merged entity combines Piramal’s financial strength with DHFL’s geographic footprint and distribution network of 301 branches and 2,338 employees catering to 1 million lifetime customers across 24 states – making it one of the leading housing finance companies in the country.

It creates an India-wide platform focused on the affordable segment (with average loan ticket size of nearly Rs 17 lakh) to address the diverse financing needs of the under-served and unserved ‘Bharat’ market – that represents Indian budget conscious customers at the periphery of metros and in Tier I, II and III cities.

Over the last two years, Piramal Enterprises strengthened its balance sheet to take advantage of such large opportunities by raising Rs 18,000 crore of equity. It reduced net debt-to-equity and shifted towards long-term borrowings, thereby creating a headroom for significant growth in the merged entity. The acquisition is a major step under the execution of a strategic roadmap to transform our financial services business.

This transaction will not only grow the retail loan book to 5 times, but also lead to a significant diversification of the overall loan book. This paves the way for achieving nearly 50:50 retail wholesale mix in the near-term. The company will leverage the “phygital” lending platform driven by Machine Learning (ML) and Artificial Intelligence (AI), including the new mobile app.

In addition, the transaction will lead to a reduction in weighted average borrowing cost by nearly 130 basis points and should further improves the Asset Liability Management (ALM) profile of our Financial Services business.

India’s household credit to GDP at 12 per cent is lowest among sizable economies of the world, indicating a huge untapped market potential for the housing finance business in India. With major push from the Government of India towards affordable housing, the share of credit active customers in Tier 2 and Tier 3 cities/towns is significantly increasing over the last few years.

The acquisition will now provide an India-wide infrastructure with a large branch network as well as a sizable customer base that will leverage the technology-driven multi-product retail lending digital platform. It enables the company to significantly grow and diversify the retail loan book through product innovation, customised offering and superior customer experience. The share of retail financing is likely to improve to 50 per cent in near-term and 67 per cent in mid-to-long term. The growth in the retail loan book will facilitate capital efficiency in the financial services business.

The company will offer services such as used cars and two-wheeler loans; education loans for vocational and online courses; small builder finance to meet construction finance requirement; unsecured business loans; personal loans and loan against securities.

Business

‘Innocent Unless And Until Proven Guilty’: Adani Group Issues Statement In The US Bribery Indictment; Denies Charges, Calls Them Baseless

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The Adani Group, which has been at the eye of the storm since the beginning of the new day, has issued a statement in the US Indictment matter.

Adani Denies Charges

The company, in a statement procured by the conglomerate-owned IANS, said, “The allegations made by the US Department of Justice and the US Securities and Exchange Commission against directors of Adani Green are baseless and denied.”

Furthermore, the statement asserted its stance and added, “As stated by the US Department of Justice itself, “the charges in the indictment are allegations and the defendants are presumed innocent unless and until proven guilty.” All possible legal recourse will be sought.”

Committed to Highest Standards

The Adani Group further added that it has always upheld and is steadfastly committed to maintaining the highest standards of governance, transparency and regulatory compliance across all jurisdictions of its operations.

US Court Indicts Adani and Co.

The company, in an attempt to assuage stakeholders, partners and employees, said that the company is a law-abiding organisation, fully compliant with all laws.

The storm was kicked off by a post from short-seller group Hindenburg, which shared the news of the US Federal Court’s indictment of Gautam Adani and seven others associated with the company.

Billionaire Gautam Adani has been charged by US prosecutors for allegedly being part of a scheme to pay over USD 250 million (about Rs 2,100 crore) bribe to Indian officials in exchange of favourable terms for solar power contracts.

The press release from the US court elaborated on the allegations and claimed that the company and its leadership had indulged in mass bribery activity, in which the company bribed Indian officials to bag a contract for its Adani Green Energy company.

This in turn led to misleading American investors and global financial investors.

The court reportedly also issued an arrest warrant against Gautam Adani and seven others.

Adani Shares Tank

In the aftermath of the report, Adani Group company shares tanked at Dalal Street. With Adani Enterprises shares hitting the lower circuit, losing 20 per cent of their value. The situation was the same with the other Adani stocks, including Adani Green Energy, which is in the middle of the new storm.

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Business

Bharat NCAP Awards 5-Star Crash Test Rating to Mahindra Thar Roxx

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The Mahindra Thar Roxx has earned a prestigious 5-star rating in Bharat NCAP’s latest crash tests, reflecting its commitment to safety. Recently evaluated under stringent testing, the SUV excelled with a 31.09 out of 32 score for adult occupant protection and 45 out of 49 for child safety.

Tested in its AX5L and MX3 variants, the Mahindra Thar Roxx delivered notable results, scoring 15.09 out of 16 in the Frontal Offset test and a perfect 16 out of 16 in the Side Impact test. The assessment revealed strong protection for most areas, with adequate ratings for the driver’s chest and lower legs.

The Mahindra Thar Roxx has received high marks for child occupant safety, scoring 24 points in Bharat NCAP tests, along with 12 points for CRS (Child Restraint System) installation and a Vehicle Assessment Score of 9. This top-tier safety rating applies to all Thar Roxx units produced from November 2024 onward, underscoring Mahindra’s dedication to enhancing safety features across its SUV range. Additionally, Mahindra’s XUV400 and 3XO models have also achieved 5-star safety ratings, further emphasizing the automaker’s commitment to robust safety standards.

The Mahindra Thar Roxx offers two interior themes – Classic Ivory and a new Dark Mocha Brown. Comfort and convenience are prioritizing with ventilated seats, leatherette upholstery, a digital driver display, a larger 10.25-inch touchscreen, a high-quality Harmon Kardon sound system, a panoramic sunroof, rear AC vents, wireless connectivity for Apple CarPlay and Android Auto, and a six-way adjustable driver’s seat, combining practicality with luxury.

Mahindra Thar 5-door comes packed with safety and interior upgrades to enhance its appeal. On the safety side, it includes essentials like six airbags, three-point seatbelts for all occupants, hill control features, electronic stability control, and a seatbelt reminder. Advanced driver-assist features, such as autonomous emergency braking, adaptive cruise control, lane-keeping support, lane departure alerts, and a 360-degree camera system with blind spot monitoring, add an extra layer of protection.

Mahindra Thar Roxx offers two engine choices: a 2.0-litre turbo-petrol and a 2.2-litre diesel. The petrol engine comes in two setups—150 bhp and 330 Nm of torque for the manual, and 174 bhp with 380 Nm for the automatic. The diesel option is available only with four-wheel drive.

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Business

Why The Indian Stock Market Struggled: Inflation, FPI Outflows, And Currency Pressure; Everything You Need To Know

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The Indian stock market on Wednesday (November 13) wrapped the another challenging day, marking the fifth consecutive session of losses.

The Sensex and Nifty, the two benchmark indices, both ended lower amid concerns over inflation and a broad selloff in metal stocks.

Market Snapshot

By the close of the trading session, Sensex was down by 984.23 points, or 1.25 per cent, ending at 77,690.95. Nifty 50 followed suit, shedding 324.40 points, or 1.36 per cent, to settle at 23,559.05.

The day saw a sea of red on both the Sensex and Nifty, with the majority of stocks ending lower. Among the few gainers were NTPC, Tata Motors, and Infosys, which saw minor upticks on BSE.

However, the broader market was dominated by heavy losses, especially in stocks such as JSW Steel, State Bank of India (SBI), Adani Ports, Mahindra & Mahindra (M&M), and Tata Steel, all of which posted declines.

Reasons behind the sharp decline

One of the major factor contributing to the market’s downward trajectory is the growing concern related to inflation.

As per the data which released by the Ministry of statistics and Programme Implementation regarding the India’ retail inflation, it showed that for the month of October, it surged to 6.21 per cent, breaching the Reserve Bank of India’s (RBI) upper tolerance limit of 6 per cent for the first time in over a year. The primary factors that contributed to surge include rise food prices, driven by the extended monsoon season and crop damage.

Adding to the pressure is the continued outflow of foreign portfolio investments (FPIs). On November 12, FPIs sold shares worth Rs 364.35 crore, bringing the total outflows for November to Rs 23,911 crore

The Indian rupee also struggled on November 13, weakening by 1 paisa to close at 84.38 against the US dollar.

The rise of the US dollar, which surged 1.8 per cent in November, has been exacerbated by the US presidential election result and higher bond yields. The US 10-year bond yield spiked to 4.42 per cent, further diverting capital away from emerging markets like India.

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