Piramal’s Progress
Aggression is the last thing which comes to mind when you meet the soft-spoken, gentle Ajay Piramal. But behind the warm smile and the amiable demeanour lies a razor-sharp business brain which spots opportunities and is ready to take on the competition with steely determination and a will to win. Indeed, this readiness for battle was in ample evidence when Piramal bid for the troubled finance company Dewan Housing Finance Ltd (DHFL) in a bruising battle which had Oaktree Capital and the mighty Adani Group vying for the debt-laden firm. After multiple rounds of bidding, Piramal emerged the winner and bagged DHFL, which will now be an important part of the Piramal Group’s financial services ambitions.
Acquisitions are part of the Piramal Group’s DNA, and Ajay Piramal is known for being one of the smartest investors around, someone who knows when to get in and, more importantly, when to get out of a business. Take, for instance, his exit from Vodafone India in 2014, where he made a hefty 52 per cent return in just two years as a financial investor or, even earlier, his mega pharma deal in 2010 with Abbott, where he sold the Piramal Healthcare branded generics business to the US pharma major for $3.72 billion, surprising the markets with the massive valuation of 9x sales and 30x profits. Piramal explains his philosophy simply, saying that the right acquisition must give good value. “You sell when perfect and buy when imperfect,” he tells Krishna Gopalan, who gets you the cover story on Piramal’s strategy following the DHFL deal and the announcement of a demerger of his businesses into two distinct parts—financial services and pharma. Post-demerger, Piramal Enterprises will house financial services (retail and wholesale lending, alternatives and investments), while Piramal Pharma will have CDMO (contract development and manufacturing organisation), complex hospital generics, India consumer healthcare, and ophthalmology. With son Anand and daughter Nandini now firmly entrenched, Piramal is gearing up to scale up both these businesses further. He says, going forward, the two pillars of the group will be financial services and pharma, and both sectors are serious growth engines for India. It is time for Ajay Piramal, then, to unveil Piramal 2.0.
In this issue, we also bring you a special report on India’s small and medium enterprises (SME) sector, one of the most important growth drivers for the economy and a major employment generator. Our reporters bring you stories of SME clusters from across the country. Vidya S. tells you the story of the travails of the enterprises in the southern textile cluster of Tiruppur, Rajat Mishra travels to Kanpur to examine what the future holds for the tanneries and leather makers there, while Prerna Lidhoo gets you the ground report from the Pune-Chakan auto cluster, which is bracing for the EV explosion. The good news: there’s also a digitisation wave quietly sweeping through India’s SMEs, and, as Binu Paul reports, several start-ups are helping SMEs digitise and transform their businesses.