Apart from beefing up pharma and real estate, Ajay Piramal is looking at entering financial services or education.
The Lord’s influence is omnipresent at his 10th floor office at Nicholas Piramal Towers in Mumbai’s Peninsula Park. The walls have inscriptions from the Bhagavad Gita. And pride of place has been given to Zen-style sculptures of its 18 verses in pure black granite from near the ancient city of Hampi.
Quite predictably, the man at the corner office, Ajay Piramal, thinks the Bhagavad Gita is the greatest management book he has read, as it prescribes optimism and freedom from stress. Both are evident on the face of the Piramal Group chairman: the smile is permanent and he exudes the air of a man sure about the track his group will take —whether it’s acquiring a company or selling one.
Piramal, who had earned the sobriquet of takeover artist because of the series of pharma acquisitions in the 1980s, has been making headlines for selling the formulations business of his flagship Piramal Healthcare to US firm Abbott five months ago. “It was a good opportunity,” Piramal says.
That’s an understatement. For, it was the most expensive deal in the history of the Indian pharmaceutical industry. The Rs 17,000-crore deal valued Piramal Healthcare nine times its sales, which is 60 per cent more than what Ranbaxy promoters got for selling their stake to Japan’s Daiichi. He has already received Rs 10,000 crore from Abbott and the balance will be paid in four annual instalments of Rs 1,800 crore each.
So, what will he do with the money? “I am not planning to exit business and hang up my boots. If I wanted to earn for myself and my family, I could have done the deal on the stock exchanges,” he says.
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Broadly, the group wants leadership position in contract manufacturing, over-the-counter products and critical care; build substantial scale in real estate; and enter into one or two new areas to build a new platform for growth in the next decade. The new areas may not have anything to do with what the group has done in the past. “When we were into textiles earlier, we entered the pharmaceuticals space. There was no correlation,” Piramal says.
Piramal says he will invest only a small portion of the money in the group’s existing pharma businesses, which has annual sales of Rs 1,700 crore. However, he rules out acquisition of the Paras brands such as Moov and D’Cold, as the pricing expectations are not in sync with what he wants.
He is also planning to invest in Piramal Life Sciences Ltd, a separate listed entity, which is into discovery of novel drugs. The company is developing around 14 molecules, including some phytopharmaceutical, or drug targets of plant origin, that are in various stages of clinical development.
“If a couple of these targets reach the commercialisation stage, it is going to be big for India. It will take a few years to reap benefits from investments in research and we will continue to invest,” says Piramal.
Then there is the flourishing real estate empire. The group already has two ventures: Piramal Suntech and Piramal Realty. Besides, he has Indiareit Fund Advisors, a private equity focused on real estate opportunities. Piramal is planning huge townships in Hyderabad and Jaipur, where the company has a big land bank, say people close to the developments. “We are talking to many real estate developers to form joint ventures on the lines of Piramal Suntech,” says Piramal.
On the entry into new areas, which will consume the bulk of the money he received from Abbott, Piramal is unwilling to be drawn into specifics, but says he is not interested in retail, even though he had set up India’s first shopping mall, Crossroads. “It’s a low-margin, long-gestation business,” Piramal says.
Sources say Piramal could enter financial services or education, but the man at the centre of it all is in no hurry and says he is yet to zero in on something. “We are evaluating all options. In insurance, there are many suggestions on life, non-life and health. We are listening to everything. Since India’s GDP is growing at over 9 per cent, all sectors will grow. We will invest in areas where we get maximum value,” says Piramal.
Is an acquisition on the radar? “We have a track record of growing business through acquisitions,” is all he would say, adding that he is still in the process of evaluating numerous proposals that his team gets every day. Piramal says his acquisition strategy is simple: “When a river merges into an ocean, the water level in the ocean does not rise. But, a sangam (confluence) of two prominent rivers creates a big holy river.”