We aim to raise ₹15,000 crore-₹20,000 crore in H2FY25: Piramal Capital MD

 We are a large NBFC and have been constantly present in the market for debt capital. We continue to raise capital both from domestic and foreign sources. In H1FY25, we sourced little under ₹10,000 crore of debt, of which about little over ₹2,000 crore is from foreign sources. Our stated intention is to have 10-12 per cent of total borrowing from foreign sources. In H2FY25, we will look at raising anywhere between ₹15,000 crore-₹20,000 crore, depending on the credit growth.

 We consider them to be financial investment and will monetise them in the times to come. Over the next year or two years period, you should see us monetise the stakes, just as you have seen with rest of Shriram companies’ stake, we have divested most of it.

 Our legacy wholesale book has come down sharply from around ₹50,000 crore three years ago to about ₹12,000 crore. Correspondingly, retail book has grown from around ₹20,000 crore to ₹50,000 crore in the same period. So it is a total swap, where we have grown retail book substantially while running down legacy wholesale book. The overall book size has grown from ₹65,000 crore to ₹70,000 crore, with composition of book changing in significant manner. The legacy book will reduce to ₹6,000 crore-₹7,000 crore by March 2025. In one more year, by FY26 end, we will fully run down the legacy wholesale loans.

 In the last three years, in the process of reducing the legacy book, we have taken a haircut of 25 per cent. 50 per cent of the legacy book is in SMA-1 (special mention account) and SMA-2 bucket, and the remaining is SMA-3 loans or collateral which we have enforced on original loans.

 We have submitted application to the regulator to merge the top company (Piramal Enterprises) into the bottom company (PCHF), so the merged company becomes automatically listed. That is the approach we have followed, and that hopefully will get done in 3 quarters. We are awaiting regulatory comments and approval for the same.

We have not identified any acquisition targets yet. Conceptually, we continue to remain open (for acquisition). We like these segments which are structurally positive for the country in the long run. In general, its a fact that Indian consumers have got large gold deposits as part of household savings which they have not monetised so far, and they could monetise to create new capital sources.

Similarly, MFI has bottom of the pyramid customer base who does not have collateral to offer, but there needs to be some way for them to setup a shop or other productive businesses. So structurally, these are important segments for the country.

With regard to industry issues, lenders must always ensure strong governance and risk management practises. Occasionally industry gets carried away and develop some practises which are not good for long term health of industry. The regulator is right in calling out foul practises, and any player who wants to be a long term player must follow right guardrails.

 I think the kind of growth the sector has seen in past few years is probably not sustainable and accordingly the sector would see slowdown. Even at Piramal, the kind of growth we had in retail business in last two years cannot be sustained and things will slow down, which is fairly acceptable. The longer term growth trajectory continues to be robust. You will have to see growth in cycles.

 There has been some overheating and over-lending in unsecured space over the last 1-1.5 years. Some customers are going around with extremely high number of open unsecured credit and it is obviously problematic. To be fair, that problem is starting to slow down a little bit as industry is taking steps to reduce leverage level of customers in unsecured space. Reduced leverage part of the story has just started and we are still at a very high level compared to historical averages. Industry needs to continue working together to reduce customer leverage in unsecured space.

We are trying to build a brand that resonates well with small wallet customers, or budget customers of Bharat. These customers are looking for financial service providers who take them seriously. For many customers earning between ₹25,000-₹60,000 of income per month, who are living in lower tier city, if they have to buy a re-sale property for ₹17 lakh to ₹20 lakh, they feel big banks are just not interested in them.

Especially if they don’t have right paper work wherein they can’t fully establish their salary, or full ownership trail of property they are buying, they struggle more to find funds. These customers segment have lost hope for getting funding. We want to encourage them to consider us. We are happy to look beyond the paper work, of course some aspect of paper work is important but its not everything. We care more about intention to repay. We have been campaigning with this message and our retail book has grown sharply too.

Now we are in a place where we are taking a new step forward, where we encourage customers to come and have a conversation with us. Others may hesitate to talk to you, despite of knowing your profile, we are very happy to invite you for a conversation.