Piramal Enterprises (PEL) on Thursday announced a demerger of its pharmaceutical business. “The board of directors of PEL, in their meeting held today, approved a composite scheme of arrangement, providing for the de-merger of the pharmaceuticals business from PEL and simplification of the corporate structure,” the company said in a statement. 

The move will create two industry-focused, listed entities in financial services and pharmaceutical. 

The pharmaceutical business will get vertically demerged from PEL and consolidated under Piramal Pharma (PPL). Shareholders of PEL will get four shares of PPL for every one share in PEL in addition to their existing holding in PEL. “After the demerger, PPL will become one of the large pharma companies listed on NSE and BSE,” PEL said, adding that two operating subsidiaries, which are wholly-owned by PPL, will also be amalgamated with PPL to further simplify the pharma corporate structure. 

Meanwhile, PHL Fininvest, the non-banking financial company (NBFC) will be amalgamated with PEL to create a large listed NBFC. After the DHFL acquisition, the merged housing finance company will remain a wholly-owned subsidiary of PEL. 

Piramal Group Chairman Ajay Piramal said: “Over the years, Piramal Enterprises has grown multi-fold with diverse businesses under one listed, holding-company structure. In line with our stated strategy, the board has today approved the demerger and simplification of our corporate structure to create two independent listed entities in financial services and pharmaceuticals, with a leadership position across the business segments they operate in.” 

The demerger would also enable them to pursue their growth strategies independently with sharper focus and identity, he further added. 

Following the demerger, PEL will get transformed into a large listed diversified NBFC, focused on retail and wholesale financing, with a consolidated loan book of about Rs 65,000 crore. 

PPL will be a large, India-listed pharmaceutical company with proven capabilities in contract development and manufacturing, global distribution of complex hospital generics and a large geographic footprint in the consumer products market in India.