Management Discussion Analysis

Business-wise Revenue Performance

PEL's consolidated revenues grew by 29% to ₹6,609.9 Crores in FY2016, compared with ₹5,122.6 Crores in FY2015, driven by growth across all business segments. 61% of PEL's FY2016 revenues were generated in foreign currencies.

The Healthcare business grew 14% in FY2016. Within this, Piramal Pharma Solutions business grew by 14.1% to ₹2,290 Crores, compared with ₹2,007.7 Crores in FY2015. This was owing to good traction in both the Active Pharmaceutical Ingredients (API) and Formulations businesses, besides contribution from the Coldstream facility acquired in FY2015. Revenue from the Critical Care business grew 15.7% to ₹875.8 Crores as against ₹756.8 Crores in FY2015 on account of access to new geographies, growth of market share in existing geographies and positive impact of Indian Rupee depreciation. Sales from Ophthalmologythe Consumer Products business was at ₹392.6 Crores as compared with ₹356.7 Crores in FY2015, registering a 10.1% growth, driven by various organic and inorganic initiatives undertaken during the year.

Income from the Financial Services business grew by 98.9% to ₹1,863.8 Crores in FY2016 as compared with ₹937.1 Crores in the previous year. This growth was primarily on account of increase in the size of the loan book from ₹4,766 Crores in FY2015 to ₹13,048 Crores in FY2016.

Revenue from the Information Management business grew 13.4% to ₹1,156.2 Crores in FY2016 as compared with ₹1,019.6 Crores in FY2015, driven by growth across entire range of products and services.

% Change in Consolidated Revenues FY2016 vs. FY2015

TOTAL OPERATING INCOME BREAKUP

(₹Crores or as stated)

Revenue break-up % Sales  FY2016  FY2015 % Change
Healthcare 53.8% 3,558.3 3,121.2 14.0%
     Pharma Solutions 2290 2,007.7 14.1%
     Critical Care 875.8 756.8 15.7%
     Consumer Products* 392.6 356.7 10.1%
Financial Services 28.2% 1,863.8 937.1 98.9%
Information Management 17.5% 1,156.2 1,019.6 13.4%
Others 0.5% 31.5 44.8 -
TOTAL 100.0% 6,609.9 5,122.6 29.0%

*Including Ophthalmology

In FY2016, PEL delivered a robust revenue performance across all three business segments. This is remarkable when seen in the context of an environment of muted earnings growth across sectors. At PEL, all our three business segments have been consistently improving their performance across the last five years. This reflects the strength of our business model and the successful execution of our proven growth strategy.

Vijay Shah
Executive Director, PEL

Consolidated Financial Performance

P&L STATEMENT

(₹Crores or as stated)

Particulars
FY2016
FY2015
% Change
Total Revenues
66,09.9
5122.6
29.0%
R&D Expenses
136.7
266.7
(48.8%)
Other Operating Expenses
4,601.0
3,970.4
15.9%
OPBITDA
1,872.3
885.5
111.4%
OPBITDA Margin %
28.3%
17.3%
-
Non-operating Other Income
242.5
254.2
(4.6%)
Interest Expenses
938.8
510.6
83.9%
Depreciation
327.4
289.9
13.0%
Profit Before Tax & Exceptional Items
848.5
339.2
150.2%
Exceptional items — (Expenses)/ Income
45.7
2,696.2
-
Income Tax
103.2
345.0
(70.1%)
Profit After Tax (before minority interest & prior period items)
791.0
2,690.4
(70.6%)
Minority Interest
(0.3)
(0.3)
-
Share of Profit/(Loss) of Associates
159.3
159.3
-
Net Profit After Tax
950.6
2,850.0
(66.6%)
EPS (₹/share)
55.1
165.2
(66.6%)

Operating profit and margin

FY2016 operating profit grew by 111.4% to ₹1,872.3 Crores as compared with ₹885.5 Crores in FY2015. This growth was on account of strong revenue performance across all three segments and fall in R&D expenses. R&D expenses were lower during the year due to scaling back of the Company's investments in NCE research in FY2015. OPBITDA margin was higher at 28.3% in FY2016 as compared with 17.3% in FY2015.

Finance costs

Finance costs for the year were higher by 83.9% at ₹938.8 Crores as compared with ₹510.6 Crores in FY2015. This was primarily on account of increase in borrowings for making investments in the Financial Services segment

Depreciation

Depreciation for FY2016 was higher at ₹327.4 Crores as compared with ₹289.9 Crores in FY2015. This was primarily on account of capitalisation of amount invested in capacity expansion and acquisitions within the Healthcare and Information Management businesses

Taxation

Tax expenses were lower at ₹103.2 Crores in FY2016 as compared with ₹345 Crores in FY2015. In FY2015, ₹267 Crores of taxes were paid on the profit made on the sale of the Company's stake in Vodafone India.

Exceptional items

Exceptional gain for FY2016 included profit on sale of certain properties. Exceptional gain for FY2015 included profit on sale of 11% stake in Vodafone India for ₹8,900.5 Crores (an investment of ₹5,864.4 Crores made in FY2012), partly offset by the amount written down on account of scaling back of investments in NCE research.

Net profit after tax

Net profit after tax for FY2016 was ₹950.6 Crores vis-à-vis ₹2,850.0 Crores in the previous year. In FY2015, there was an exceptional gain on sale of 11% stake in Vodafone India, partly offset by the amount written down on account of scaling back of investments in NCE research. Excluding these items, the net profit for FY2015 was ₹420.8 Crores. EPS for FY2016 was at ₹55.1 per share as against an EPS of ₹24.4 for FY2015 (excluding major exceptional items mentioned above).

BALANCE SHEET

(₹Crores or as stated)

Particulars  As at Mar 31, 2016  As at Mar 31, 2015
Shareholders' Funds
(A)Share Capital 34.5 34.5
(B)Reserves & Surplus 12,387.6 11,701.4
Minority Interest 33.7 29.1
Loan Funds 16,254.5 7,306.1
Deferred Tax Liability 2.6
TOTAL 28,710.2 19,073.8
Fixed Assets 8,367.2 7,342.4
Investments 14,800.2 7,767.9
Deferred Tax Asset 14.1 29.5
Current Assets, Loans and Advances
Inventories 735.4 674.9
Sundry Debtors 924.6 831.7
Cash and Bank Balances 443.4 460.1
Other Current Assets 675 354.5
Loans and Advances 4,875.7 3,474.8
Less: Current Liabilities and Provisions
Current Liabilities 1,731.9 1,228.8
Provisions 393.5 633.2
TOTAL 28,710.2 19,073.8

Dividend

The Company paid an interim Equity Dividend of ₹17.5 per share. The total cash outflow on account of dividend payment including dividend distribution tax thereon was ₹363.5 Crores.

Loan Funds

Total borrowings as on March 31, 2016 were ₹16,254.5 Crores as compared with ₹7,306.1 Crores as on March 31, 2015. Increase in borrowings during the year was primarily on account of higher investments in the Financial Services segment.

Fixed Assets

During FY2016, total fixed assets increased by ₹1,024.9 Crores, primarily on account of acquisitions and increase in fixed assets in the Healthcare and Information Management segments.

Investments

Book Value of investments as on March 31, 2016 was higher at ₹14,800.2 Crores, compared to ₹7,767.9 Crores as on March 31, 2015. This increase was largely on account of higher investments in the Financial Services business.

PEL had another year of excellent profitability performance. Our persistent focus on efficient capital allocation and unrelenting efforts for growth across our businesses are yielding results. This is enabling us to improve our underlying bottom-line performance every year.

Rajesh Laddha
CFO, PEL

Healthcare Business

PEL forayed into the healthcare space in 1988. Over the years, the Company has successfully established itself as one of the most recognised and respected names in the healthcare industry. Its manufacturing units are located across India, Europe, the US and Canada. PEL's culturally diverse team of over 5,000 people from over 20 nationalities, is its primary strength. The Company has reported a strong trend of revenue growth over years across all Healthcare businesses. In the last five years, the Healthcare revenues have grown at a CAGR of 17%, touching ₹3,558.3 Crores during FY2016.







3,558.3 Crores
Healthcare revenues in FY2015-16

The Healthcare segment broadly operates in four businesses:

1. Pharma Solutions

The Pharma Solutions business is amongst the few large integrated Contract Development and Manufacturing Organisations (CDMOs) in the world, offering both APIs and Formulations.

2. Critical Care

PEL's Critical Care business is the third largest player in the global Inhalation Anaesthesia market, with products sold across 118 countries. It is the world's only company with a complete product portfolio of all generations of inhalation anaesthetics.

3. Consumer Products

The Company's Consumer Products business is primarily an India-centric consumer healthcare business with a strong brand portfolio. Most of its brands feature among the top two in their respective markets and product categories.ext

4. Imaging

The Company's lead commercial stage product, NeuraCeq (INN: Florbetaben) received approvals from US FDA in March 2014, European Commission in February 2014 and MFDS (South Korea) in December 2014. The business is selling its commercial doses in the US, Germany, France, Austria, Spain, the Netherlands and Italy.

Focused capital allocation strategy

The Company remains focused on its strategy of efficiently allocating capital, while undertaking controlled risk, to consistently achieve higher profitability and deliver superior shareholder returns. During the year, the Healthcare segment efficiently deployed the capital for future growth through various organic as well as inorganic initiatives. Key initiatives taken during the year include:

  • Implemented debottlenecking and capacity expansion at different locations of Pharma Solutions business
  • Expanded global presence and increased market share in Critical Care business
  • Acquired three brand portfolios and organically launched three new brands in Consumer Products business

In line with PEL's strategy to rationalise the overall business structure, it decided to exit the businesses which were either non-strategic/non-core in nature or required investments for a longer time horizon, involving higher risk. In January 2016, the Company sold its Canada-based cartilage repair product, BST-CarGel® to Smith & Nephew.


Piramal Pharma Solutions (PPS)

In FY2016, Pharma Solutions reinforced its standing in the industry through a relentless focus on its core pillars of Quality, Reliability and Customer Centricity. We have been recognised at various global forums for our excellence in these areas. We are on track towards expanding capacities and capabilities at our most recent acquisition, Coldstream Laboratories and we expect it to be a cornerstone in accomplishing our long-term strategic goals. We believe that our initiatives towards Operational Excellence, Productivity enhancement and continued addition of niche capabilities will hold us in good stead towards being the partner of choice for our valued customers.

Vivek Sharma
CEO, Pharma Solutions

Market scenario and business positioning

The global pharmaceutical industry continues to face headwinds on both topline growth and profitability. Factors like patent expiry of blockbuster drugs, a leaner development pipeline, and reducing exclusivity period due to aggressive generic penetration have resulted in revenue deceleration. On the other hand, increasing drug development expenses and higher regulatory scrutiny has resulted in additional compliance and quality assurance costs, thereby impacting the bottom line, while increasing the time it takes to bring a New Chemical Entity into the market. The industry continues to embrace strategies that optimise costs and increase efficiency to mitigate the impact of these factors. These strategies include increased outsourcing (in functions such as research, manufacturing, and clinical trial management), adopting novel R&D models, and migrating of non-core business functions to low-cost countries (like China and India).

The global pharmaceutical outsourcing market is expected to grow at a CAGR of 8.7% to reach US$ 215 billion by 2022 (Source: Research and Markets). With high quality development and manufacturing assets (located both in eastern and western parts of the world), strong scientific talent, solid client relationships, immense trust from innovators and an excellent regulatory track record, PEL is well-placed to gain from this growing outsourcing trend.

Excellent global reputation

PEL's Pharma Solutions (PPS) business is among the leading Contract Development & Manufacturing Organisations (CDMO) with an excellent reputation in the global market. It has also received numerous global recognitions.

In FY2016, PPS was recognised at CPhI, one of the largest global trade shows for the contract manufacturing business. The Company won two prestigious awards– (a) the business CEO was awarded the 'CEO of the Year-2015' and (b) the Company was recognised for 'Excellence in Global Supply Chain-2015'. Besides, the Company's efforts to maintain quality have been well recognised in the pharma space. The Global Head of Quality was recognised as one of '50 most Influential People in Quality' by the World Quality Congress, 2015.

The Company won 'API Supplier of the Year' award at the Global Generics and Biosimilar Awards during FY2016.

The consistent focus of PPS on customer centricity, quality, and innovation has established the business as the partner of choice for both large pharma and biotech firms. It was voted among the top global contract manufacturing organisations (CMO) for both 2014 and 2015 in categories of quality, reliability and compliance. PEL's leadership in Anti-body Drug Conjugates (ADCs) has also been widely recognised in the industry.

These recognitions not only reflect the Company's constant desire to improve but also highlight the trust that clients have placed on the business.

Key differentiators

  • Strong customer relationships:
    PPS has continued to serve most of the top seven global pharma firms over the past two decades. Besides, the Company has strong partnerships with several leading mid-size, small, virtual pharma firms in the West and in Japan, from pre-clinical through clinical development and from commercialisation through life cycle management.
  • End-to-end service offering:
    The business has a global network of quality contract development, with manufacturing facilities in North America, Europe and Asia. It offers an impressive array of services covering the entire drug-lifecycle – from discovery to development and commercial manufacturing, to off-patent supplies of APIs and Formulations. The Company is uniquely positioned and is among the select few CDMOs offering services in both early development and late phase commercialisation. Its capability as an integrated service provider, along with its experience in various technologies has enabled it to serve several innovator and generic companies worldwide.
  • Getting well positioned in injectables space:
    The global market for generic sterile injectable is expected to reach US$ 70 billion in 2020 at 10% CAGR. Generic companies are looking at tapping into these high-value sterile injectable markets in the US, Europe, besides other markets like Brazil, Australia, South Korea and Taiwan. In FY2015, PEL acquired the US-based Coldstream Laboratories Inc., a specialty pharmaceutical CDMO focused
  • on the development and manufacturing of sterile injectable products. This acquisition has strengthened the position of PPS in the injectable market, complementing well with its sterile injectable development capability at Mumbai. It also offers fill and finish options to ADC customers at Grangemouth. Besides, the Company has expanded PPS's offerings to reach to new customers, and brought significant synergies with existing operations. There is a significant traction at Coldstream site with its order book running full. To cater to the commercial demand from existing and new projects, a US$ 12 million capacity expansion project is currently underway.
  • World leader in ADC Manufacturing, a promising field:
    The global ADC market is estimated to grow rapidly at a CAGR of 33% to reach to US$ 10.6 billion by 2024. The growth will be fuelled by the launch of new products even though investment in development activities continues to remain high. Despite the increase in development targets for ADCs, the global contract manufacturing sector remains significantly under-resourced, due to lack of requisite players with proper experience and regulatory accreditations. With 10 years of presence in ADC market, PPS has become the most experienced manufacturer of ADCs. It aims to meet the growing demand from development customers as well as support customers, as their products are being commercialised. PPS is in its fifth year of commercial production on the first ever commercial ADC. The Company expects the next five years will be an exciting time for the ADCs. PPS has expanded its capacity by investing £3.0 million at Grangemouth site to handle larger batch sizes for ADC manufacturing.

Strong operating performance during the year

  • After crossing the revenue milestone of ₹2,000 Crores during FY2015 for first time, PPS reported a revenue growth of 14% to ₹2,290 Crores in FY2016. This growth was primarily driven by good traction in both API and Formulations, besides contribution from the Coldstream acquisition. PPS has grown at a CAGR of 18% over the last five years, outpacing the global CDMO market which has grown at 9% CAGR over the same period.
  • The following debottlenecking and capacity expansion initiatives were undertaken by PPS during the year:
    • Doubled capacity at Discovery Services facility in Ahmedabad; it has already commenced operations
    • Expanded capacity at Grangemouth site to handle larger batch sizes for ADC manufacturing
    • Capacity expansion at Coldstream currently underway and the execution of capex is on track
    • Executed debottlenecking at API plants to handle higher volumes
  • The business successfully cleared the USFDA audits at its manufacturing locations with no observations during the year – a commendable performance in current stricter regulatory environment.

Way forward

  • The business will continue to operate across the life cycle, leveraging the Company's wide network of relationships across a broad spectrum of customers.
  • Also, the focus will be on growing organically as well as inorganically in areas that offer growth opportunities, and are synergistic with the existing offering.
  • It will further strive to expand the customer base, and target new segments/geographies.

Strong focus on Quality

PEL's quality management model is based on four key pillars:

Governance: Quality is part of the Key Result Areas (KRAs) of employees including the business CEO and the entire leadership team. The Company has a strong quality governance model, with the Quality function reporting to a Board member. This autonomy provides quality with the necessary authority to focus solely on compliance and product safety. The Global Head of Quality determines the resource and capital allocation for the Quality function, which are subsequently placed for approval to the Board.

People: The best strategies still need the best people. To achieve the vision of quality leadership, PEL has always focused on bringing the best global talent on board to build a Quality function that stands out both on its experience and execution. The quality leadership at the Company's various manufacturing and development sites have a team that is in line with the organisation's vision. The team is trained on a regular basis to keep them abreast of the latest regulatory developments.

Execution: Four well-defined work flows track PEL's quality practices: technology, process, systems, and people. Each of these is led by a subject matter expert from the Quality Leadership team. Over the years, the Company has improved upon these workflows, both by incorporating industry best practices, and developing novel internal solutions.

Review: The Company has a well-defined and regular review and escalation process. Each site is assigned to a designated corporate coordinator who keeps a close track of quality processes and identifies areas for improvement (if any). Any significant quality deviation that requires escalation is promptly shepherded through a defined protocol, and then acted upon with highest priority.

This focus has led to an excellent track record with the regulatory authorities. Over the last many quarters, the Company's sites have been inspected by global regulatory authorities including USFDA with no major observations. The Global Head of Quality was recognised as one of the '50 most Influential People in Quality' by the World Quality Congress, 2015.

PEL remains focused on continuous improvement and recognises that its primary obligation is to customers and patients. Quality Empowering Strategic Transformation (QUEST) – an organisation-wide initiative – enables the Company to further imbibe 'Quality as a Culture'.

Evolution of Pharma Solutions Business

The Company has aggressively grown its Pharma Solutions business since 2003. With a series of acquisitions and organic growth initiatives, PEL created one of the top integrated CDMOs offering services both in APIs and Formulations. Now, its services comprise the entire drug-lifecycle, right from discovery to development and commercial manufacturing, to off-patent supplies of APIs and Formulations. Over the years, it has also added niche products including antibody drug conjugates and sterile injectables, among others.

From 5 manufacturing facilities in India in 2003, PPS now has 10 manufacturing facilities spread across North America, Europe and India with a sourcing office in China. All key commercial sites are USFDA approved. Since 2010, the growth has been largely driven by organic initiatives including debottlenecking and capacity expansion at various facilities, addition of new clients and improving capacity utilisations, among others. PPS have grown at a robust CAGR of 24% over FY2003 - FY2016.


Piramal Critical Care (PCC)

Our team's strong effort towards adding new geographies and expanding presence in existing geographies has delivered results. Despite significant global volatility, we have reported good growth for the year. Simultaneously, we are working towards further optimising costs and continuing to improve customer service to gain additional market share. We look forward to launching Desflurane. Apart from this, we are also aiming to enhance our offerings in critical care to leverage our global distribution strengths.

Peter DeYoung
CEO, Critical Care

Market scenario and PEL's positioning

PCC is a leading player in the global anaesthesia market. With a varied range of inhalation anaesthetic products, PCC provides customers with an access to superior quality critical care drugs across the world.

The global inhalation anaesthesia market is estimated at US$ 1.1 billion. 2/3rd of this is concentrated in the US and Europe. Sevoflurane, Desflurane and Isoflurane make up for more than 99% of the global inhalation anaesthesia market. PCC is one of the top three global players in inhaled anaesthetics.

Key differentiators

  • End-to-end product coverage:
    PCC's product portfolio includes inhalation anaesthetics, such as Halothane, Isoflurane and Sevoflurane. It is the market leader in Isoflurane and Halothane globally. With the addition of Desflurane, PCC is projected to become the only company to offer a complete product portfolio of inhalation anaesthetics. PCC expects to launch Desflurane in 2017.
  • Global reach:
    The Company is globally renowned in the domain of anaesthesia and critical care and sells its products across 118 countries. It has a strong presence across major regulated markets including the US, Europe and Japan and over 50% market share in key emerging markets. A strong distribution network enables it to serve over 6,000 hospitals worldwide.
  • Trusted customer relationships:
    PCC maintains strong relationships with hospitals, doctors and end-customers which it serves and has high credibility among them. It serves over 6,000 hospitals through a combination of a direct sales force (the US and select European markets) and marketing partners. The Company works collaboratively with over 150 marketing partners in countries where it does not have direct sales force.
  • Strong team:
    The Company's leadership has rich industry experience in the critical care and generics business. Its nimble and focused team acts collaboratively to meet customer and partner expectations. PCC's strength also lies in its culturally diverse team of ~350 members from 20 nationalities, in 15 countries, with major operations in the US.

ONLY COMPANY WITH ENTIRE PORTFOLIO OF INHALATION ANAESTHESIA

PEL'S PERFORMANCE

*Only Inhalation Anaesthesia products of AbbVie and Baxter have been compared

  • Manufacturing and supply chain excellence:
    The Company's focus on manufacturing and supply chain excellence and its strategic decision to vertically integrate key inputs enable it to profitably gain share in a market with declining prices. It also ensures consistent high-quality product supply.
  • Established track record:
    In the past 10 years, PCC's revenue has grown at a robust CAGR of 29%, exceeding the market average. Until 2009, growth was driven primarily by successful M&As. PCC's recent growth was organic as it integrated and capitalised on the products and capabilities it had acquired.

PCC's commitment towards quality resonates through global regulatory approvals (including USFDA approval), accorded to its manufacturing facilities.

Increasing strong presence in Sevoflurane – capturing around 70% of the market

Sevoflurane, the current generation product, accounts for ~ 70% of the global inhalation anaesthesia market. The US and Europe are the largest markets for this business.

PCC already has a large share in the US Sevoflurane market and gaining traction in key European and emerging markets. At present, it ranks as the second largest seller of Sevoflurane by volume. Last year, after the Company's entry into the UK, its market share has grown to 42%. The Company's Sevoflurane market share, in terms of volume has grown significantly in the US, from 20% in 2011 to 30% currently. During the year, Sevoflurane's market share in Japan surged to 56%. New Sevoflurane contracts were won following the registrations and launches done in last few quarters in several new markets, including Saudi Arabia, Germany and Malaysia.

Strong operating performance during the year

Revenues from PCC business grew 16% Y-o-Y to ₹876 Crores in FY2016 from ₹757 Crores in FY2015. This development was on account of access to new geographies, growth of market share in existing geographies along with positive impact of Indian Rupee depreciation. PCC became the largest player in Isoflurane in the US and increased the sales volume of Sevoflurane. The Company is progressing well on the initiatives to reduce costs and improve EBITDA margins.

Investments made in the Bethlehem site are yielding results. The execution of capacity and yield improvement project is on track. The focus on manufacturing and operational excellence has enabled the Company to maintain its cost leadership through productivity improvements and volume growth.

During the year, PCC also entered into a co-promotion agreement with Cumberland Pharmaceuticals Inc., a specialty pharmaceutical company focused on hospital acute care and gastroenterology. As part of this agreement, PCC started promoting two branded hospital products, Caldolor® and Vaprisol® to top customers in US. PCC will help expand Cumberland's reach for these products by providing coverage to an additional group of hospitals where its sales force has relationships. The multi-year collaboration is expected to enhance sales promotion for these two brands with increased communication to medical professionals to support patient care across the US.

Way forward

PCC is in the process of registering and launching its next-generation product, Desflurane, by 2017. Desflurane has untapped market potential with only one competitor. PCC's strong customer relationships, global reach and cost competitiveness are likely to make Desflurane another success story for PEL's Critical Care business. Going forward, its core focus areas will continue to include:

  • Increasing market share in inhalation anaesthesia markets where it currently operates
  • Registering and launching existing products in new geographies and further penetration in European countries
  • Expanding portfolio beyond inhalation anaesthetics both organically and inorganically – injectable anaesthetics, pain management, other hospital and veterinary injectable products, which are used in the critical care setting will leverage the Company's strong global network
  • Continuing to improve cost leadership to increase profitability and gain market share

Note: All market data is based on internal estimates

Bethlehem: Sevoflurane turnaround

Piramal Critical Care (PCC) acquired the inhalation anaesthetics (Sevoflurane) facility from Minrad Inc. in 2009.At the time, there were several issues with manufacturing. The processing and packaging lines were manually operated and product chemistry was not well understood. This made production and quality variable. In addition, operations were inefficient due to frequent breakdowns and morale was low. The resulting unreliable product supply and high cost limited our ability to gain market share.

Under PCC, a transformation began. The initial focus was to build the knowledge base at the facility and establish a level of expertise. The fixed cost of the facility was so high that unless the productivity was raised significantly it would have been difficult to remain competitive. The transformation process can be viewed in three phases:

Phase 1: Addressing known issues with minimal capex

The first phase focused on increasing productivity and improving regulatory compliance largely with the existing team and equipment. The team focused on reducing quality failure rates by adjusting critical manufacturing process parameters. It also changed the configuration of the equipment to debottleneck key process steps. Finally they implemented a maintenance program to improve critical equipment reliability to reduce unplanned outages. These steps collectively resulted in a significant increase in production capacity and quality without any major investments.

Phase 2: Going to the next step of process innovation by involving shop floor people

The success achieved in Phase 1 was tremendous. It encouraged us to further tap the human element to look for innovative ideas to further improve productivity and reduce costs. It was clear that we would need to train the production crew to look for opportunities beyond the obvious. This would help us migrate to the next level in cost leadership. PEL's Operational Excellence team helped to rollout the 'Shop Floor Transformation Initiative' program at the site – training people on how to identify and analyse problems, and help find solutions. The site team then conducted an ideation and value stream mapping exercise to come up with improvement opportunities. Plant operators were motivated and encouraged to come up with creative and innovative ideas. For instance, a shift supervisor came up with a suggestion to run a bottleneck step semi-continuously instead of batch. This increased the output instantaneously without any major investment. These changes further increased capacity and also reduced the amount of raw material needed per ton of finished product.

Phase 3: Investing in a new line

Having earned the right to invest based on the success achieved in the initial phase; the team came up with innovative ideas for a new line incorporating all the learnings from the last five years. The objective is to ensure an enhanced plant capacity to service significantly higher share at globally competitive costs with consistently high quality. The team designed a process for continuous manufacturing two important bottleneck steps, which were previously in batch manufacturing mode. This was an important innovation in the new line. These changes required an investment in new custom equipment which is under implementation. Once operational, the line will provide a number of benefits including enhanced capacity, better yield, lower production costs, higher automation and lower cycle time.

The first two phases of the transformation have increased the annual production by a factor of more than seven times in five years without any increase in personnel in the production area. The third phase of transformation will boost this further.

Evolution of Critical Care Business

The acquisition of ICI Limited in 2002 enabled PEL to enter into the business of Inhalation Anaesthesia. Since then, the Company made a few more value-accretive acquisitions until 2009. These acquisitions were critical in shaping the Company's offerings, providing access to global markets and integrating state-of-the-art manufacturing capabilities.

Since 2009, PCC has grown largely organically at a robust CAGR of 31% over FY2009-FY2016, taking its revenues from ₹132 Crores in FY2009 to ₹876 Crores in FY2016. The organic growth has resulted from entering into newer geographies, expanding into existing geographies, constantly achieving cost efficiencies and thereby improving market share.

As a result, PCC's market share has grown from 3% in FY2009 to 12% in FY2016. Its market share in the US increased from 20% in FY2011 to 30% in FY2016.


Consumer Products (OTC)

Over the last few years, the business has invested significantly in creating a portfolio of Iconic brands which are either No. 1 or No. 2 in their categories. The combination of growing our existing core brands and strategically acquiring accretive brands has created a powerful portfolio which will put us on a path towards our aspirational goal of being one of the top three players by 2020. To achieve this goal, in last two years, we have created a large distribution network comparable with leading OTC players, which will further boost our future growth. I feel the strategy that we had laid out few years back for this business, is executing very well and the business is now clearly evolving as a leader in the Indian OTC market.

Nandini Piramal
Executive Director, PEL

 

In the last year we acquired three brand portfolio and also launched several new brands which are recognised and valued by our customers and consumers. These initiatives are backed by a strong plan and our future success will depend upon strong execution of these plans. A strong execution will enable effective utilisation of our distribution set-up and thereby will prove to be margin-accretive due to higher fixed cost absorption. With a strong and execution focused team that we have, I am confident that we will significantly improve top-line and bottom-line performance in the coming years and create significant value for our stakeholders.

Kedar Rajadnye
COO, Consumer Products

Market scenario

The size of the Indian self-care market is over ₹15,000 Crores with 12-13% annual growth. The market is witnessing exciting times with strong trends owing to rising incomes levels, increasing consumer confidence in self-care along with easy access to information, rural penetration and channel development. The market is competitive, with limited differentiation among the offerings on a product level. This, however, means that there are enough opportunities for players who go the extra mile to address consumer needs. PEL, through its range of products, targets specific consumer needs. This has made the Consumer Product business one of the fastest growing players in the domestic consumer healthcare market.

Key differentiators

  • Strong distribution network:
    The Indian drug distribution channel is large and quite fragmented with roughly seven lakh chemists across India. As the OTC market is largely a branded generic market, product availability is extremely important to prevent product substitution at the point of sale. PEL's OTC division is capable of ensuring availability of any new product in stores within 21 days of its launch. To become one of the top 3 players in the OTC market by 2020, the Company has expanded its distribution reach to 3.5 lakh retail outlets, of which 2.2 lakh are chemist outlets, through a field force of 2,000 people. This development will support the Company's robust growth going forward. Till 2015, OTC's organisational presence was limited to 481 towns comprising a population of over one lakh. However, with the rapid growth in the portfolio and growing demand from next-tier of towns, the business took the strategic step of increasing its presence to towns with a population of over 20,000. To meet the service levels, the Company has a pan-India network of carrying and forwarding agents. They use automated systems for reporting point of sales to maintain optimal inventories, which minimises both loss of sales and working capital.
  • Tie-ups with manufacturers:
    To maximise competitiveness in terms of lower manufacturing costs and wider range flexibility, PEL's OTC business has tied up with some of the industry's best third-party manufacturers. This strategic choice of using third-party vendors has helped the business to maximise its flexibility and increase responsiveness towards its consumers, while minimising the need for capital investment.
  • Stringent quality controls:
    PEL follows a stringent protocol to select its vendors for manufacturing. Each vendor is evaluated on a set of key parameters comprising manufacturing capability, regulatory compliance, quality standards and competitive pricing. Vendor has to score well on each of these parameters to qualify as business partner. Once qualified, quality is monitored at each stage, with detailed checks at all critical points in the chain – right from sourcing to finished products.
  • Strong brand positioning:
    The business has a strong brand portfolio with most of its brands among the top two in their respective markets. PEL's six brands are among India's top 100 OTC brands. Positioning of the major brands are as follows:
    1. Saridon – India's largest-selling headache analgesic brand with over 14% of the market share and rated the largest oral analgesic brand by value. It is recognised as a 'Super Brand' in the list of top 100 brands. Saridon is Piramal Consumer Product's first ₹100 Crore+ brand and is growing rapidly.
    2. Lacto Calamine – Recognised as a 'Super Brand', Lacto Calamine has strong footprints in the skincare market with its unique oil-control formulation. It is available in various formats, such as lotion, facewash, sunscreen and anti-aging cream. Being the oldest calamine brand in India, Lacto Calamine continues to be the largest brand among calamine skin lotions.
    3. i-pill/i-know – i-pill was acquired from Cipla. It is the second-largest brand in the emergency contraceptive market. i-know is India's first ovulation strip and extends i-pill equity to other adjacent markets.
    4. Polycrol – An antacid brand, which is a distinct leader in the Eastern region and among top three brands at an India level. Strong equity exists for the brand. It is going through a revamping exercise to target leadership beyond east.
    5. Tetmosol – India's number one doctor-prescribed soap for skin-related disorders. It has experienced a healthy double-digit growth over last few years.

  • Multiple growth engines:
    The Company has improved its market positioning through both organic and inorganic routes. During FY2016, PEL further expanded its portfolio by adding the following products:

    Organic initiatives
    1. Untox: A 100% natural detoxification product, which detoxifies the after effects of socialising, late night outs and binge eating. It helps wake up fresh to daily routine.
    2. Stop AllerG: An anti-allergy OTC brand. It is a non-drowsy formula, providing relief in minutes.
    3. Throatsil: Test-launched India's first ever Benzocaine-based throat spray – 'Throatsil', a sore throat pain relief product.
  •  
    Acquisitions
    1. Baby-Care brand – Little's: In November 2015, PEL acquired the baby-care brand 'Little's'. This portfolio includes the entire product range across six categories including feeding bottles, skin-care range, grooming accessories, apparels and toys for babies. The brand operates in the ₹1,000 Crores non-food baby-care category, currently growing at 13%. The brand is available at chemists, cosmetics and kids stores as well as modern trade and e-commerce formats. Little's is preferred by mothers of babies in the age group of 0-4 years. Earlier, the Company used to cater to children between the age group of 5-10 years through the Jungle Magic brand. With this acquisition, PEL now has an offering for babies between 0-10 years.
    2. Five brands in Gastro-Intestinal segment: In December 2015, PEL acquired five brands from Organon India Pvt. Ltd. and MSD BV. The acquisition primarily includes brands like Naturolax, Lactobacil and Farizym, which PEL intends to continue in the Gastro-Intestinal (GI) segment through the over-the-counter (OTC) route. These brands have a rich legacy in India and a high consumer pull. GI is a ~₹2,000 Crores market, addressing constipation, diarrhoea and appetite-stimulant categories. The market is growing at 15-16%. The Company already has an antacid brand Polycrol in GI segment, which is the number one brand in Eastern India. With these additions, PEL's basket of offerings in the GI market will become even larger.
    3. Four brands from Pfizer Ltd: In May 2016, PEL entered into an agreement to acquire four brands from Pfizer Limited namely, Ferradol, Neko, Sloan's and Waterbury's Compound. The agreement includes the trademark rights for Ferradol and Waterbury's Compound also for Bangladesh and Sri Lanka. Currently, these brands operate in a market estimated at ₹7,000 Crores. They hold a rich legacy of 30+ years and have a high consumer pull.
      • Ferradol, launched in 1982, a leading nutritional supplement for children and adults.
      • Neko, launched in 1967, a medicated soap indicated for body odour and minor skin infections.
      • Sloan's, launched in 1982, a muscular pain reliever that is available in balm and liniment forms.
      • Waterbury's Compound, launched in 1970, used for building cough and cold immunity.

The Salesforce automation programme was successfully rolled out during the year in India, across all channels.

Joint Venture with Allergan

Allergan India, a 51:49 Joint Venture between Allergan Inc. and PEL, for ophthalmic products, commenced commercial operations in 1996. It has emerged as the market leader in the fast-growing ophthalmic category, with the successful launches of a series of high-technology medication and devices for diseases like glaucoma, dry eye, infections and inflammations. Today, Allergan India is the partner of choice for majority of the country's ophthalmologists, and is poised to grow at a rapid pace. It is an undisputed leader in the eye-care pharma market with dominance in all major disease segments.

Strong operating performance during the year

Revenues from OTC and Ophthalmology business grew by 10% during the year to ₹393 Crores, compared with ₹357 Crores in FY2015. Allergan India continues to remain India's leader in ophthalmology with 21% market share. The Company undertook several organic and inorganic initiatives during the year to boost growth and ensure future profitability. It commenced exports of few brands to nearby countries that have reach to Indian media. Besides, the Company is increasing its digital presence with an exclusive launch of Untox ™ with Snapdeal. Products and brands launched earlier are now showing traction. The Salesforce automation programme was successfully rolled out during the year in India, across all channels. This has enabled improved productivity at each retailer level under direct coverage.

Saridon continues to maintain number one rank in headache category. Lacto Calamine and i-pill continue to sustain their demand in their respective categories by adapting a focused geographical approach strategy. 'Quikkool' became a respected brand for mouth ulcer in less than a year of launch. Caladryl doubled its distribution during the year.

Note: All market data and positioning are based on independent syndicated research providers.

How PEL plans to become a top 3 player in the OTC market by 2020?

PEL's Consumer Product business developed a strategy in 2012 and has grown substantially over the last few years as a result of successful execution of the same.

There are four levers to the Company's strategy including:

  1. Building strong distribution capability: From a small reach of 24,000 chemists in FY2008, PEL's Consumer Products division today reaches ~3.5 lakh outlets in towns with population of over 20,000. PEL made significant investments in infrastructure to make this possible. The Company has increased the field-force from 80 people in FY2008 to 2,000 people in FY2016 to provide best-in-class service levels to its customers. Today, the Company's distribution network and field-force stands among the top three OTC players in India. Distribution capability initially conceptualised for own use, today has become a key strength with many companies approaching PEL to partner in distributing their products across India.
  2. Invest in existing core brands and organically develop and launch new ones: Six of PEL's brands feature in the top 100 Indian OTC brands. The objective for each brand is to be either No. 1 or No. 2 in its respective category. The large portfolio increases the Company's importance to a large set of consumers, while reducing PEL's dependence on any single brand. The Company has made strategic investments over the years in marketing of these brands to enable them to reach their present position. Some of the new brands organically developed and launched during FY2016 have been discussed separately.
  1. Focused on acquiring new brands: Growing existing brands, while acquiring newer value-accretive brands has helped PEL to build a strong portfolio of 11 brands representing eight categories. The Company has set strict criteria for brand acquisition, key among which is PEL's ability to add value to the brand. The brands that the Company has purchased from large companies have strong legacy and brand recall. However, they were considered non-core by their previous owners at the time PEL acquired them. Some of the brands purchased by the Company from smaller private companies were constrained by limited financial resources. PEL's business model allows it to integrate acquisitions in an efficient manner, while also providing opportunities to realise significant cost savings. In line with this strategy, PEL has made three sets of acquisitions during FY2016 (discussed separately).
  2. Minimise capital expenditure and keep low overheads: The strategic choice of using third party vendors has helped the business to maximise competitiveness through lower manufacturing cost and wider range flexibility, while increasing responsiveness towards its consumers. The business also has a high variable compensation structure for its sales staff to keep overheads low, and incentivise higher performance.

Over the last 15 months, the business has invested significantly in growth levers. The strategy has worked well and the Consumer Products business is evolving into a strong player in the Indian OTC market. PEL's ambition is to become one of the top three OTC player by 2020 and create strong value for all stakeholders in the business.

Evolution of Consumer Products Business

Post dissolution of JV with Boots, PEL independently started its Consumer Product Division in 2007. At that time, the business had only three brands in its portfolio, catering to just 24,000 outlets through a team of 80 people. It was ranked 40th among OTC companies in India. Since then, the business has grown significantly, both organically and inorganically. Growth of existing brands, launch of new products and acquisition of some of the top brands have boosted the Company's revenue and business positioning in the industry. The business has grown at a CAGR of 21% over FY2008-2016 as against 12% CAGR reported by the addressable market.

The ranking of the business jumped from 40th position in 2007 to 7th position currently. The Company now has 11 brands in its portfolio with most of them being No. 1 or No.2 in their respective categories, and six of them being among the top 100 OTC brands in India. It services 3,50,000 outlets on a weekly basis through a strong field force of 2,000 people.

To leverage its India-wide distribution network, PEL is in a mode of rapidly adding more products – organically and inorganically. Apart from launching new brands, the Company has recently acquired 3 brand portfolios to scale up the business to achieve the target to be among the top 3 players by 2020.

* Ferradol, Neko, Sloan's and Waterbury's Compound are the four brands that we agreed to acquire from Pfizer Ltd. in May, 2016.

Financial Services Business

PEL's Financial Services segment offers a complete suite of financial products to meet diverse needs of its customers.
















1,863.8 Crores
Revenues in FY2015-16

FY2016 was a significant year for us. It enabled us to uniquely position ourselves among the top players within Real Estate funding through our suite of financial products and relationships. We have focused relentlessly on building effective controls to maintain our robust asset quality. With 60% of our team involved primarily in monitoring existing assets, the platform clearly stands out from the industry in ensuring the quality of each individual asset account. I feel we will continue down the path of delivering strong growth as well as superior risk adjusted returns in the future by adding more products to our portfolio.

Khushru Jijina
MD, Piramal Fund Management

The Company has created its unique positioning in financial services space through its strong presence in the following sub-segments:

Wholesale Lending

₹13,048 Crores of lending to real estate developers and under special situation opportunities in sectors, including infrastructure, renewables, cement, transportation, among others.

Alternative Asset Management

₹8,717 Crores of alternative Assets Under Management through private equity funds that invest in real estate sector, and special situation investments under the Company's strategic alliance with APG Asset Management. The Company currently manages 7 funds, 3 third party mandates and 2 managed accounts. It is one of the first institutions (earlier named as INDIAREIT) in India to enter in real estate fund management business.

Investments in Shriram Group

₹4,583 Crores has been invested in Shriram Group of Companies. This has enabled the Company to enter into a long-term association with Shriram Group and strengthen its presence in the financial services space, by diversifying into various areas. These include retail and Small and Medium Enterprises (SME) lending, life and general insurance, broking and retail asset management. Following were the key milestone transactions of the Company's investments in the Shriram Group :

  • In May 2013, PEL acquired ~10% equity stake in Shriram Transport Finance Company Limited (STFC) for a consideration of ₹1,636 Crores.
  • In April 2014, PEL acquired 20% equity stake in Shriram Capital Limited (SCL), the holding company for Financial Services and Insurance entities of Shriram Group. The total amount invested in SCL is ₹2,146 Crores.
  • In June 2014, PEL acquired ~10% equity stake in Shriram City Union Finance (SCUF). The total amount invested in SCUF is ₹801 Crores.
  • In November 2014, Mr. Ajay Piramal, the Chairman of Piramal Enterprises, was appointed as Chairman of Shriram Capital.

PEL'S FINANCIAL SERVICES BUSINESS

Complete suite of products to meet diverse customers' needs

Strong portfolio with a total investments, loans and assets under management of ₹26,348 Crores

Key differentiators

  • Strong positioning:
    PEL is one of the largest deployers of capital across all stages of the life-cycle of residential real estate projects. During FY2016, it announced its intention to initiate funding towards commercial spaces as well. PEL is also among the top providers of structured mezzanine funding in India. Its exposure is well diversified across geographies as well as product types in India.
  • Established track record:
    PEL has a well-established track record in wholesale lending. In last five years, the Company has significantly grown the size of its loan book. The Company currently has a loan book of ₹13,048 Crores under real estate and special situations. In real estate lending, it has entered into 145 transactions till date, with 81 development partners located in Tier 1 cities – Mumbai, Pune, Bengaluru, NCR and Chennai, to reach this scale. Under the Special Situations arm, the Company entered into series of transactions. Further, its real estate private equity fund has an AUM of ₹8,717 Crores, created through investments in 57 projects across seven cities, with 25 leading developers. A seasoned team of professionals with a local presence in all the markets of operation gives PEL an in-depth local expertise to maximise long-term investment returns for its investor partners. Given PEL's reputation, skill sets, network and track record of success, developers recognise the benefits of working with PEL. The Company is among the first and few Indian players to have demonstrated a full cycle of fund raising, deployment, exits and distributions from the residential real estate projects and continues to do so across the capital stack.

Note: 1. Excludes our investment in Vodafone India, which was exited during
FY2015 and includes special situation investments

  • Strong governance:
    The business has stringent oversight by a highly experienced Board and specific Investment Committees that includes external industry experts as well. All investment proposals are reviewed by the Investment Committee members, who provide strategic inputs and oversight governance to ensure that an opportunity meets the investment criteria. They also ensure that investment guidelines have been thoroughly and appropriately evaluated, downside risks have been mitigated and that the investment offers superior risk adjusted returns.
  • Management depth:
    PEL has highly talented and experienced teams of 140 professionals, with a healthy mix of investing and operating experience, operating in six cities. This reflects the depth and scale of its operations and the belief that real estate is a locally focused business that requires constant 'eyes and ears' on the ground. ~60% of the team is engaged in monitoring of assets.
  • Domain expertise:
    PEL has long-standing expertise in alternate financing across asset classes (private equity, mezzanine equity, mezzanine debt, senior lending, and construction finance, among others) and the ability to quickly identify and capitalise on new financing opportunities. The Group also has a strong track record of developing large real estate projects in India.
  • Strong relationships providing an access to patient and intelligent capital:
    Over the years, PEL has established strong relationships with large reputed partners (including APG Asset Management and CPPIB Credit Investments) as well as various domestic 'ultra-high net worth' individuals and family offices that gives it an edge to access long-term patient and intelligent capital. Alliances with these large, known partners reaffirm credibility and serve as an external measure of validation for the Company's business mechanism.

Areas of operation

The Company has its Financial Services businesses operating in following areas of national and economic significance:

Real Estate
Piramal Fund Management (PFM), an arm of PEL, is one of the largest deployers of capital across all stages of the life-cycle of residential real estate projects in India. During the year, it announced entry into financing of commercial space. It deploys both internal and third party capital in most attractive opportunities in real estate to provide attractive returns for all its stakeholders. With ₹21,765 Crores of loan book and assets under management, it is one of the India's largest real estate funding platforms. PEL is the only Indian company to have an integrated platform providing an exposure to the entire capital stack across real estate, including private equity, structured mezzanine equity, structured debt, senior secured debt and construction finance. The unique combination of a debt and equity practice within the same platform facilitates engagement with development partners across their entire capital requirement through the project life cycle, right from longer tenure/initial stage equity

REAL ESTATE: END-TO-END DEVELOPER FINANCING PLATFORM

funding to more mature/shorter tenure construction finance. PFM is uniquely positioned to deliver superior risk adjusted returns to investors, by leveraging its unparalleled skill sets, sector experience and industry relationships.

PEL is the only Indian company to have an integrated platform providing an exposure to the entire capital stack across real estate.

Unique features

  • Innovative Investment Opportunities
    Last year, the Company entered into construction finance for residential projects. During the year, it announced the expansion of its offerings to include financing for commercial projects, consciously completing its entire suite of products. Typically, structured equity or structured debt investments often get refinanced by banks or other NBFCs once the projects achieve certain milestones. Construction finance gives PFM the ability to extend the overall tenure of the relationship with a project, by not requiring the development partner to refinance once the project matures. The fund management business has, over the years, separately introduced several innovative products for its investors, harnessing the unique skill-set of its investment professionals.
  • Alliance with CPPIB
    PEL has a strategic alliance with CPPIB Credit Investments Inc., a wholly-owned subsidiary of Canada Pension Plan Investment Board (CPPIB) to provide rupee debt financing to residential projects across India's major urban centres and made investments under this alliance.

Special Situation Investments

PEL believes that mezzanine capital can play an important role in the capital structure of companies and it is well positioned to offer composite financing solutions to cover multiple situations. It believes structured solutions work well in situations such as last mile refinancing, promoter financing, acquisition financing etc. In FY2016, the Company expanded the coverage of its Special Situation arm to include sectors other than infrastructure.

Indian Infrastructure space is now seeing a recovery after a long slump. There is a definitive pick up seen in government capex with increased allocation of ₹2.2 trillion to infrastructure in the FY2017 Budget. Moreover, to meet its infrastructure targets India will need to spend US$ 450 billion over the next five years. Additionally, with increasing focus on renewable energy, there is significant requirement of equity, mezzanine capital and debt. PEL will continue to focus on this segment through the APG platform.

The Company's evaluation of sectors other than infrastructure tends to be situation specific. As the economy turns around, companies would need financing to increase their capacities and hence would need providers of long-term capital, who are able to work with them as partners. The Special Situation arm of the Company will look to provide financing solutions to such companies.

PEL stands among the top providers of structured mezzanine funding in India. A series of transactions have been entered under Special Situation in FY2016. The total amount deployed from the Company's balance sheet under this segment is ₹1,515 Crores as on March 31, 2016.

Strategic Investment Alliance with APG Asset Management

PEL and APG Asset Management, (a Dutch pension fund asset manager in the Netherlands with an AUM of €417 billion as on March 2016), has a strategic alliance for investing in rupee denominated mezzanine instruments issued by India's infrastructure companies. PEL and APG, both have initially committed US$ 375 million for investments under this strategic alliance. This is one of the largest private sector commitments to the infrastructure sector in India. This alliance accentuates the confidence reposed by institutional investors in Piramal Group's capabilities. This strategic pool of capital is focusing on operational and near-completion projects with limited execution risks and high visibility of cash flows coming from a portfolio of projects. Under this 50:50 strategic alliance, PEL and APG have jointly invested ₹1,050 Crores till March 31, 2016. Of this amount, ₹525 Crores have been disbursed by APG under the alliance.

Launch of Piramal India Resurgent Fund

The Piramal Group has a long standing history of spotting early trends and acting decisively on them. The Company believes that this is a perfect time to explore the thematic opportunity of investing in turn around assets – especially as banks are actively working on resolving the issue of high level of restructured / non-performing assets in their portfolio. Further, the recently introduced bankruptcy code will bring in efficiency, both, in terms of associated timelines and costs in default / insolvency resolution framework thereby significantly assisting lenders in decision-making.

Given PEL's strong operating and financing credentials, the Company believes it can effectively tailor a strategy centered around the turn around potential in good quality assets and sound businesses that require both financial and operational restructuring. To explore, evaluate and invest in such opportunities, the Company is considering to look at investing in specific assets through multiple tiers of capital and vehicles. This is done in a manner such that the fungible capital and structure helps meets the requirements of various stakeholders in each of these potential transactions. The investment will be done through a dedicated fund or co-invest structure in partnership with institutions/investors of global repute.

Investments in Shriram Group

To strengthen its presence in the financial services industry, PEL aimed at being in a well-diversified play. Wholesale lending is done in-house and exposure to retail is through its investments in the Shriram Group of Companies. PEL's long-term partnership with Shriram diversifies its exposure into the retail and SME customer segments through its lending business, life and general insurance, distribution, broking and retail asset management.

  • Investment in Shriram Capital (SCL): In April 2014, PEL acquired 20% equity stake in SCL. The total amount invested in SCL is ₹2,146 Crores. SCL is the holding company for the Financial Services and Insurance entities of the Shriram Group.
  • Investment in Shriram Transport Finance (STFC): In May 2013, PEL acquired ~10% equity stake in STFC for a consideration of ₹1,636 Crores. STFC, with a consolidated AUM of ₹72,761 Crores, is one of India's leading players in commercial vehicle finance with a niche presence in financing pre-owned trucks and lending to small truck owners. It has pan-India presence with a network of 853 branch offices, 803 rural centres, 19,170 employees, partnership with ~500 private financiers and a large customer base of over 1.3 million.

  • Investment in Shriram City Union Finance (SCUF): In June 2014, PEL acquired ~10% equity stake in SCUF. The total amount invested in SCUF is ₹801 Crores. Shriram City Union is among the more established players in the retail financing space with an AUM of around ₹20,851 Crores. SCUF is the largest small enterprise finance company in India in the small loans segment. It is also a prominent provider of loans against gold, financing for two wheelers, pre-owned and new vehicle loans, personal loans and housing loans. Currently, SCUF has its presence in over 976 branches across the country.

PEL's long-term partnership with Shriram diversifies its exposure into the retail and SME customer segments.

Strong operating performance during the year

Income from Financial Services was 99% higher at ₹1,864 Crores for FY2016, from ₹937 Crores in FY2015. The growth was primarily driven by increase in the size of loan book. Loan book grew by 174% to ₹13,048 Crores from ₹4,766 Crores in FY2015, aided by entry into Construction Finance. Construction financing now constitutes 42% of the Real Estate loan book. Asset quality continued to remain robust with a GNPA ratio of just 0.91%. Gross Assets under Management grew to ₹8,717 Crores during the year. The Company exited almost 100% of corpus in all 3 vintage funds.

Way forward

Going forward, the Company plans to continue its strong growth momentum in financial services. The future growth will come through expanding product portfolio, effectively leveraging the balance sheet by targeting a diversified liability mix and exploring down-selling opportunities, and thereby enhancing returns to shareholders. Construction Finance would continue to remain the main growth driver in real estate financing. The Company announced Construction Financing in commercial space as well. It will continue to look for more long-term partnerships like CPPIB and APG that will enable the Company to get access to patient capital and generate more fee income. It will continue to strengthen its system and processes to handle the potential scale and keep the asset quality under check. The Company will continue to remain nimble to new and attractive opportunities in identified business segments that arise as an outcome of the prevailing market environment.

Construction Finance will continue to remain the main growth driver in real estate financing.

EXPANDING PRODUCT PORTFOLIO TO BOOST GROWTH

How PEL ensures a healthy asset quality?

Diligence before transaction

  • The Company provides funding to very selective developers based on their track record, market reputation, status of current projects, etc. More than 70% of the portfolio comprises of grade 'A' developers.
  • The Company selects project located mostly in Tier-1 cities having intrinsic end-user demand.
  • Given PEL's long experience in real estate, it has the ability to mine primary data from existing portfolio that enables it to make better informed decisions about product, pricing, cost and sales mix, while analysing new transactions.
  • The Company is targeting quality developers through its innovative approach such as 'Preferred Partner Program'.

Due Care whilst Underwriting

  • It structures each transaction uniquely to address any specific risks associated with the project. This enables the Company to enforce security in event of default and ensure that its risk adjusted returns are achieved.
  • The Company ensures strong independence to prevent bias from any person or team. For example:
    • The Risk and Legal teams are separate from Investment Function and have the ability to veto investment decision, if required;
    • The Company has Independent Directors & External Experts in the investment committees apart from the business team;
    • It has developed a proprietary risk scoring system so that no personal bias creeps in whilst pricing transactions.
  • Strategic alliances with large funds like CPPIB and APG, who independently assess each investment, serves as external validation of underwriting and re-assures the Company's investment thesis.
  • The Company is highly conservative in its assumptions while modelling a base case so as to ensure that the target returns are achieved without reliance on market re-rating. For example, it does scenario analysis based on velocity and not just sales and cost.

Unrelenting focus on Monitoring and Asset Management

  • The Company has set up dedicated local teams in all cities where it has invested to constantly assess the performance of each project right from investment to exit stage.
  • The Company has separate and dedicated Asset Management team of financial and techno-commercial people across these cities that act as check and balance and further enhances its focus on asset quality.
  • Significant time is spent for post-disbursement monitoring by both these investment and asset management teams to detect and react to early warning signals.
    • Monthly site visits are conducted to ascertain the physical progress of project, the quality of the project and also to estimate cost overruns and delays if any.
    • Monthly performance is monitored with regard to sales units, sales value, sales price, collections, physical progress, construction cost and other cost.
    • Computes monthly cash covers to ascertain if it is above the minimum stipulated cash cover and highlight if additional security is required at any stage.

Healthy security and balanced portfolio

  • The Company maintains healthy security and cash cover of 1.5x-2x at all times based on its conservative underwriting assumptions and have the ability to enforce security.
  • Piramal Group has a history of strong project development capabilities and can take over, complete and sell project, if required.
  • The Company is constantly de-risking its portfolio by changing overall mix towards construction finance and senior debt vis-a-vis structured equity / mezzanine transactions.
  • The Risk team maps and monitors 'portfolio level' risk and adjust exposure to city, project or region accordingly.

Evolution of Financial Services Business

Over the years, PEL has created a robust Financial Services portfolio. The total amount invested under financial services (includes on-balance sheet & off-balance sheet) has grown from ₹4,207 Crores in FY2012 to ₹26,348 Crores. The Company has correspondingly delivered a strong trend of income growth over last few years. The Company has also demonstrated a solid exit track record, with cumulative exits and repayments of ₹8,532 Crores. Every year, it has been consistently expanding its product portfolio to boost its growth and optimise the overall risk-return profile of its loan book.

The total investments made by PEL under its Financial Services segment also include ₹4,583 Crores invested in various companies of Shriram Group.

Information Management Business

PEL's Information Management business, Decision Resources Group (DRG), is a market-leading decision-support platform in the healthcare information services space. DRG provides indispensable insights to life sciences companies as well as healthcare providers and payers through a variety of high value-added data and analytics, research reports, and knowledge-based services. These offerings enable customers to make informed investment, cost containment and strategic business decisions in their chosen markets. DRG's products and services are built around proprietary data, algorithms, primary research and domain expertise. Most of its branded product lines have a leading market share in their respective niches.





1,156.2 Crores
Revenues in FY2015-16

DRG sits at the intersection of two of the 'great waves' of our time, health value on the one hand and data & analytics on the other. What's more, our recent acquisitions, which pave our entry into the payer and provider markets, have meaningfully expanded our total addressable market. Furthermore, our strategic initiative of employing almost a fifth of our workforce in India will significantly boost margins. The implementation of these initiatives is on track and I feel very confident that the business will deliver strong performance in the years to come.

Jon Sandler
CEO, DRG

Robust Industry Outlook

In the US, national health expenditures surged to US$ 2.6 trillion in 2010 from US$ 1.4 trillion in 2000. It is further expected to grow at a rate of 6% to touch US$ 4.6 trillion in 2020 (Source: Centers for Medicare & Medicaid Services). Regulations like 'The Patient Protection and Affordable Care Act' (PPACA) of 2010 are expected to expand coverage to 32 million uninsured individuals (Source: Congressional Budget Office). In the wake of the PPACA and the increasing healthcare spending trends, the primary constituents in healthcare are changing the way healthcare costs are reimbursed. The focus is shifting from volume of services to the value and efficacy of the services offered.

The preceding factors, the increasing cost to bring drugs and devices to market, and greater regulatory scrutiny have resulted in an increased demand for high-quality information and analytical decision support tools. Besides, third-party insight from experts has gained importance to navigate the healthcare industry's increasing market and regulatory complexity. DRG, through its proprietary data, strong analytical capabilities and industry insight, enables stakeholders across the healthcare value chain to solve critical business questions and challenges. This, in turn, will enhance the value of their products and services.

PEL acquired the DRG core business in 2012, which served a US$ 2 billion market, providing syndicated content to life sciences customers. Since the acquisition, the business has expanded its addressable market to US$ 16 billion life sciences, payers and providers market, as per Company management estimates. With escalating global healthcare expenditures (driven by, among other factors, ageing populations in G7 countries), new regulations and the expansion of improved treatments, DRG expects that demand and market for its products and services will witness a steady increase.

SIGNIFICANT FOCUS TO BOOST GROWTH

Expanding Into New End Markets, Products and Geographies

Key differentiators

  • Comprehensive product suite:
    DRG's product and services portfolio comprises three categories – Data and Analytics, Research Products and Global Consulting Services. These offerings have tremendous synergy, enabling DRG to provide end-to-end expertise, including bespoke solutions to address the most challenging customer problems. Moreover, the diversity and depth of DRG's offerings are long-term competitive differentiators.
  • Strong presence:
    Headquartered in Burlington, Massachusetts (USA), DRG operates across North America, Europe and Asia. Its product and service offerings cover G7 countries, along with all major emerging markets. DRG's greatest strength is its talented and diversified workforce, located in 17 offices across six countries.
  • Long-term revenue visibility:
    DRG's comprehensive product suite and the breadth of coverage have enabled it to establish strong relationships with its customers, embedding its services within their products and workflows. DRG's differentiated, high value offerings have contributed to 10+ year relationships with its top ten customers. Data & Analytics and Research Products which are highly recurring in nature comprise over 75% of total revenue. The Company has a stable revenue base with 100% retention among top 50 customers, contributing to around 80% of revenues. Total revenue retention by value is ~97% across the entire customer base.

  • Single, integrated global platform:
    DRG has shifted to integrated healthcare information services and analytics business, from a portfolio of brands accumulated through a roll-up acquisition strategy. The business has been restructured as an integrated organisation, with significant opportunity to scale. This is a result of various factors including investments in global sales and marketing, distributed production technologies and global capacity, cross-functional data and analytic talent, and a new product delivery platform. The shift towards consolidation has resulted in revenue and cost synergies. Previously, this opportunity was unrealised, because until PEL acquired DRG, the individual companies acquired previously were kept separate. By bringing together all DRG products, data, analytics, and services under one roof, the Company's prospects and customers now have access to holistic solution sets that can address multiple questions and complex business problems.
  • Single, integrated global platform:
    DRG has shifted to integrated healthcare information services and analytics business, from a portfolio of brands accumulated through a roll-up acquisition strategy. The business has been restructured as an integrated organisation, with significant opportunity to scale. This is a result of various factors including investments in global sales and marketing, distributed production technologies and global capacity, cross-functional data and analytic talent, and a new product delivery platform. The shift towards consolidation has resulted in revenue and cost synergies. Previously, this opportunity was unrealised, because until PEL acquired DRG, the individual companies acquired previously were kept separate. By bringing together all DRG products, data, analytics, and services under one roof, the Company's prospects and customers now have access to holistic solution sets that can address multiple questions and complex business problems.
  • M&A – crucial for growth:
    rowth through acquisitions is fundamental to every business information services company, and has also been an essential component of DRG's development. Markets place a premium value on business information companies that demonstrate the ability to scale successfully through acquisitions. As a high-growth business information company, DRG also relies on acquisitive growth. This strategy fortifies existing offerings, fosters product innovation, adds capabilities and expands reach to new markets. In CY2015 and early 2016, DRG made various acquisitions, which helped bolster its analytics capabilities and created an entry into the healthcare provider and payer customer market.
  • The acquisitions include:
    1. Activate Networks (Activate):
      In February 2015, DRG acquired Activate, a leading provider of network analytics that maps, analyses, and activates networks for healthcare/life sciences companies. Activate helps identify the key connections that drive commercial success, and will enable DRG to augment its Data and Analytics practice.
    2. Healthcare Business Insights (HBI): In May 2015, DRG acquired HBI, a trusted provider of best-practice research, trainings and services to over 1,400 hospitals across the US. This acquisition marked DRG's entry into the provider space.
    3. Adaptive Software (Adaptive): In February 2016, DRG acquired Adaptive, developers of market-leading pharmacy benefit and formulary management software platforms. Through this acquisition, DRG made its entry into the payer space to enhance its ability to provide data, insight and software solutions required to answer critical questions. Primarily, such questions are relating to drug efficacy, pricing, market access, contracting strategies and benefit design. Adaptive's customers manage pharmacy benefits for over 95 million US lives.

Growth through acquisition is fundamental to every business information services company, and has been an essential component of DRG's development.

Strong operating performance during the year

Revenue from Information Management business grew to ₹1,156 Crores in FY2016 from ₹1,020 Crores in FY2015, registering 13% Y-o-Y growth. The acquisitions of Activate, HBI and Adaptive increased the Company's addressable market size to US$ 16 billion, enhanced the depth of offerings and created new market opportunities.

During the year, the Company continued with its initiative to transform its global talent pool by expanding to India. It opened offices in Bengaluru (January 2015) and Gurugram (February 2016) and hired over 160 employees. This initiative will enable the Company to accelerate growth through accessing talent, increasing capabilities beyond existing products and services, improving customer delivery & response time and realising cost efficiencies.

Way forward

  • Growing organically
    DRG has a successful history of launching new products, delivery formats and accretive cross-brand portfolio solutions to drive substantial organic growth. It continuously leverages the insights that it gains from its customer engagements and interactions. This helps it to design and implement novel and compelling offerings according to the demands of market segments. Through this continued ideation and emphasis on technology-enabled innovation, the Company expects to continue its legacy of business transformation, both for itself and its customers.
  • Growing inorganically
    DRG's combined sales, products, data, and content platforms provide a unique foundation which also grows through accretive acquisitions. Acquisitions are fundamental to DRG's growth strategy. Accordingly, DRG expects to continue making value accretive acquisitions that complement and supplement its existing offerings, while promoting the long-term strategy of the business.
  • DRG India
    DRG will continue to capitalise on India operations to drive innovation, enhance revenue, expand margin, and promote cost efficiencies.
  • Insight Platform
    DRG's new, dynamic and web-based insight platform for DRG research reports is expected to launch in July 2016. The DRG Insights Platform combines Google-like search capabilities with a highly-intuitive user interface. This will help customers identify and explore highly-relevant content. The platform will transform the way customer's access and consume DRG content.

Note: All market data are based on proprietary market research and internal estimates.

DRG India – A new transformational initiative

In July 2014, DRG launched a new initiative to transform its global talent pool by investing and expanding operations in India. In January 2015, the business opened its first office in Whitefield, Bengaluru. Subsequently, in February 2016, it expanded to Northern India with a new office at Cyber City, Gurugram. By mid of FY2017, DRG is expected to have nearly 20% of its staff in the new Bengaluru and Gurugram offices.

DRG has set a goal to substantially its revenue in the coming years. This would require operational and strategic investments, scaling its India operations quickly with clear goals to:

  • Improve customer delight, delivery and response times through building and staffing 24/7 capabilities with the industry's most knowledgeable workers
  • Access a large pool of educated professionals with substantial expertise to invigorate growth within DRG's Data Sciences and Research & Operations domains and develop and apply new technologies to embolden data and insight products and services of the business
  • Establish new international offices in a key growth market, further cementing the Company's reputation as a provider of best-in-class global insights and analysis  
  • Accelerate DRG's profit growth through the cost-effective expansion of teams and centres of excellence 

Over the years, DRG has grown rapidly with multiple acquisitions as well as organic growth. DRG India follows a strategic 'build from scratch' initiative, enabling the Company to expand and develop capabilities that fuel and fortify all business segments of DRG. The India team's work is an extension of DRG's operating model across various product lines. With cross-team synergies and 24/7 capabilities, DRG India enhances the DRG's global delivery excellence and ability to create future products and services in a shorter time.

DRG is a knowledge business, built on a foundation of the best knowledge workers in the business, spread across the globe in 17 offices and six countries. The latest additions to this knowledge workforce along with the Company's new teams in India have transformed DRG into a global player from a talent prospective. India has a young, dynamic, growing, educated and knowledgeable workforce. Approximately 30 million college students graduate every year and enter the workforce. Besides, around 3.2 million people work in the off-shoring industry, a sector that contributes to 8% of India's national GDP. For the past decade, the healthcare information sector of India's knowledge industry has boomed with significant talent being developed at leading multinationals as well as innovative start-ups. Therefore, DRG's strategic imperative has been entering into India and recruiting the country's best talent.

DRG has created vibrant new offices in Whitefield, Bengaluru and Cyber City, Gurugram to attract the industry's best talent. These offices provide a dynamic, high-energy culture and compelling career opportunities at all levels of the organisation. DRG India is fortunate to employ exemplary college graduates and top quality professionals for nearly every product and service line. The employees include PhDs, doctors, and masters in pharmaceuticals and other disciplines with relevant industry experience with leading healthcare players.

Through this talent pool, DRG has augmented its existing product and service capabilities, thereby driving both revenue and profit growth for PEL. DRG India will be the source for many new ideas and product prototypes in coming years, and will play an invaluable role in fuelling long-term profitable growth. India has become an integral part of DRG's present and future.

Evolution of Information Management Business

In June 2012, PEL entered into Information Management business through the acquisition of DRG. In 2008, DRG had 10 offices across 5 countries. The business has expanded significantly over years and now has 17 offices across 6 countries. Post the acquisition of DRG, the business was further strengthened through various organic and inorganic initiatives. Growth through acquisition is fundamental to such businesses and has been an essential component of DRG's evolution. The Company has made few acquisitions over last few years that enabled it to expand its offerings and addressable market size. From providing services to the Lifesciences industry earlier, the Company now also caters to the provider and payer markets.

*Retention rate not tracked for this time period.

A well-defined risk management framework is integral to any business. PEL has an independent and dedicated Enterprise Risk Management (ERM) system to identify, manage and mitigate business risks. Risk management, internal controls and assurance processes are embedded into all activities of the Company.

PEL's ERM framework makes the Company aware of potential risks and helps the Board as well as the senior management to align their strategies accordingly. A clear distinction is maintained between Risk Management Group and business units. While the Risk Management Group establishes the risk policy and the processes for risk evaluation and measurement, business units focus on developing and implementing mitigation measures, while taking controlled risk. Specific risk approaches are in place for financial and non-financial businesses.

Over the period, the Risk Management Group has managed to streamline risk processes and present a holistic view of risks to the management.

Business-specific Risk Management Approaches

Financial Services Business

The Risk Management Group independently assesses all investments of PEL's Financial Services business. The Group used customised risk assessment models to evaluate credit, market and concentration risks embedded in any deal. All executed deals are re-valued by the Group at regular frequency to provide the Management with an updated view on the portfolio performance.

The next focus area is to improve portfolio analytics and use the insights for better credit underwriting. The Risk Management team and the Treasury team have initiated the ALM process for the Financial Services business. The Board has approved the Asset Liability Management Policy and the formation of Asset Liability Management Committee (ALCO). The ALCO includes the Company's senior management and an external industry expert. It defines the strategy for managing liquidity and interest rate risks in the business.

  • Liquidity risk: ALCO deliberates on the static liquidity gap statement, future asset growth plans, tenor of assets, market liquidity and pricing of various sources of funds. It decides on the optimal funding mix taking into consideration the asset strategy and a focus on diversifying sources of funds.
  • Interest rate risk: ALCO reviews the interest rate gap statement and the mix of floating and fixed rate assets and liabilities. The Risk Management Group has also initiated a scenario analysis to assess the short-term impact of interest rates on net interest income (NII).
  • Transfer pricing: The Treasury Group has started publishing a transfer pricing curve based on the cost of borrowing and negative carry on liquid assets.

Non-financial Services Businesses

Risk assessment at Non-financial Services business units is carried out using risk registers. Risks across different business units; their probability, impact and mitigation plans are properly documented at regular frequency. These risks are then aggregated and top three risks across each business units along with the proposed mitigants are presented and reviewed by the Board on periodic basis.

 

 

MEASURES TAKEN BY THE RISK MANAGEMENT GROUP

The major risks perceived by PEL along with the measures taken to mitigate the same are highlighted below:

RISK IMPACT MITIGATING MEASURES
CLIENT AND PRODUCT CONCENTRATION RISK PEL's primary businesses are based on contracts with customers. In few businesses, a large portion is transacted with a few major customers. Therefore, any setback at customers' end may adversely affect the Company's financials.

While some particular products generate a significant portion of the Company's overall revenue, any drop in demand for these products may adversely affect profit margins.
PEL's business development teams continue to actively seek to diversify the client base and products to mitigate concentration risk.
PRODUCT AND QUALITY RISK PEL is expected to maintain global quality standards in manufacturing. Some of PEL's products are directly consumed / applied by the consumers. Therefore, any deviation with regards to quality compliance of products would impact the consumers worldwide and hence, adversely affect the Company's performance. A dedicated corporate quality assurance group actively monitors the adherence to prescribed quality standards.
DEFAULT AND CONCENTRATION RISK IN FINANCIAL SERVICES BUSINESS In the Financial Services businesses, the risk of default and non-payment by borrowers may adversely affect profitability and asset quality.

The Group may also be exposed to concentration risks across sectors, counterparties and geographies.
At PEL, each investment is assessed by the investment team as well as independent risk team on the risk-return framework. The combined analysis of these teams is presented to the Investment Committee for investment decision.

The risk is being partly mitigated by setting up a concentration risk framework, which incentivises business units to diversify portfolio across counterparties, sectors and geographies.
ADVERSE FLUCTUATIONS IN FOREIGN EXCHANGE RISK PEL has significant revenues in foreign currencies through exports and foreign operations. Therefore, the Company is exposed to risks arising out of changes in foreign exchange rates. The centralised treasury function aggregates the foreign exchange exposure and takes prudent measures to hedge the exposure based on prevalent macro-economic conditions.
INTEREST RATE RISK Volatility in interest rates in PEL's investment and treasury operations could cause the net interest income to decline. As a result, this would adversely affect profitability of the Financial Services business. ALCO actively reviews the interest rate risk and ensures that interest rate gaps are maintained as per ALCO's interest rate view.
TENOR MISMATCH Early redemption or delay in coupons and principal payments from Financial Services businesses can cause mismatch in the tenor of assets and liabilities. ALCO reviews the gap statements and formulates appropriate strategy to manage the risk.
REGULATORY RISK PEL requires certain statutory and regulatory approvals for conducting businesses. Any failure to obtain, retain or renew them in a timely manner, may adversely affect operations. A change in laws or regulations made by the government or a regulatory body can increase the costs of operating a business, reduce the attractiveness of investment and / or change the competitive landscape. Also, PEL is structured through various subsidiaries across various countries in a tax-efficient manner. Changes in regulations in terms of repatriation and funding may lead to adverse financial impacts. The applicable regulatory framework is continuously tracked by various teams within PEL. Appropriate action as necessary is being undertaken to ensure compliance with all regulatory requirements.
INVESTMENT RISK PEL has equity investments in various companies in India. Like any other equity investment, these are subject to market conditions. The Company continue to effectively evaluate various risks involved in underlying assets, before and after making any such strategic investments.

PEL, derives its strength from its Values – Knowledge Action and Care. These values drive Pel's overall organisation's purpose of Doing Well and Doing Good, which forms a core of its people practices across the Group.

To live the purpose of 'Doing Well and Doing Good' and to be able to deliver on the organisation's growth blueprint, PEL has been focusing on strengthening its talent pipeline. Besides, it emphasises on culture and capacity building. PEL's HR function has evolved rapidly over the last few years. In line with the ambitious business mandates, PEL's journey has been around five people imperatives:

  1. Creating a high performance culture
  2. Building people capability across levels
  3. Building a 'One Piramal' culture
  4. Increased efficiency in HR systems
  5. Attracting and retaining high quality talent

Significant efforts have been undertaken in last few years on all these areas, resulting in positive movements on employee engagement, HR satisfaction survey scores and business metrics, including customer satisfaction indices.

Evolution of People Processes and Capability

In last few years, PEL's HR focus remained on building the fundamentals, deliver quick wins and create a strong base to transform the Company into a truly global conglomerate. A year back, PEL embarked on a comprehensive HR Transformation Journey called SEEDS (Strategy for Employee Engagement and Development Support), along with its business stakeholders and the senior leadership team. This structured journey covers five people imperatives. The focus was on diagnosing the existing situation, identifying the gaps and implementing improvements to address the same. Now, the focus will be on reviewing sustainability of these improvements, measuring impact and making necessary adjustments to drive accelerated growth.

The SEEDS Governance Structure

The SEEDS Governance structure consists of the following elements:

  • Steering Committee comprising Chairman and Executive Directors
  • Advisory Committee comprising CEOs and Business Heads
  • SEEDS Project Management Office (PMO) including an HR subject matter expert and two operational excellence experts
  • Five work streams aligned with the key people imperatives – each consisting of 2-3 HR representatives and 2-3 business representatives

An overview of five people imperatives

  1. Creating a High Performance Culture
    Performance management has been an area that consistently reported low satisfaction scores across businesses and geographies. Therefore, a six sigma black belt project was done to deep dive into the Performance Management System (PMS) and identifies the pain points. Changes brought in included streamlining processes and standardisation, better alignment to business, socialising and communicating elements of the performance management process and tightening consequence management. These changes have resulted in better performance differentiation, greater focus on performance dialogue, and improved perception of fairness and process reliability. It has significantly helped in increasing the PMS satisfaction score (on a scale of 10) from 6.3 (November 2012) to 8.5 (September 2015) as well as employee-engagement score (on a scale of 10) from 7.4 (November 2012) to 9.2 (September 2015). Going forward, the Company's focus areas will include e-enablement of the PMS process, moving transactional elements of the process to the internal shared services team, strengthening the quality of talent dialogues on potential and succession planning and aligning the job roles internally through job levelling and career pathing techniques.
  2. Building People Capability across Levels
    To build people capability, the focus areas revolves around:
    • Identifying and developing high potential across levels
    • Building a leadership pipeline of 'ready now' leaders for critical roles
    • Strengthening employee capability across levels in line with business needs, to enable the Company to 'do more with less'



A GROUP-LEVEL HIGH-POTENTIAL
IDENTIFICATION AND DEVELOPMENT
PROGRAMME WAS LAUNCHED DURING THE YEAR
FOR 114 CONSISTENT HIGH-PERFORMERS AT
MIDDLE-MANAGEMENT LEVEL.

  • The key elements of this plan include:
  • Learning University
    The Learning University focuses on the learning needs of employees across levels. There has been a significant transition from basic skill building to business-aligned programmes with a sharp focus on learning outcomes. Another key change has been around spreading out learning over the long-term, bringing in on-the-job elements rather than focusing on classroom training alone. It started as a small-scale initiative offering four unique programmes covering ~600 employees in 2012. Now, it offers over 43 unique learning solutions over 300+ batches reaching out to over 6,000+ employees across businesses and geographies. Starting from the learning needs identification process, the design and development of learning solutions, to the impact measurement approach, all aspects of learning are now much more closely dovetailed to business outcomes.
  • ASCEND
    A group-level high-potential identification and development programme was launched during the year for 114 consistent high-performers at middle-management level. The ASCENDers were put on two development tracks – the ASCEND Entrepreneur track that focuses on grooming a Chairman's cadre to take on larger general management roles, and the ASCEND Explorer track that builds functional specialists. The programme includes various elements such as Development Centre, cross-business projects sponsored by PEL's CEOs, Social Impact Projects with the Piramal Foundation, Learning Labs and external / internal leader connects, among others.
  • SUMMIT
    The Company's key priority is to strengthen the capability of its senior leadership. PEL has partnered with McKinsey through SUMMIT to work on business mandates and development mandates of each of the selected leaders through a one-year development journey. Through SUMMIT, the Company will formulate a clearly-defined succession heat map for critical positions at senior levels.
  1. Building a 'One Piramal' culture
    PEL's core values comprising Knowledge, Action and Care continue to be the Company's driving force and promotes the Group's immense diversity. The Company's focus has been on 'values in action' by involving its employees across businesses and geographies through 'signature activities' like House of Values and Pecha Kucha, among others. The values have been translated into a set of everyday high-performance behaviours called 'Piramal Success Factors'. It is enhancing the competency framework in line with the Company's 2020 business goals.

    Each people process across the employee life cycle is aligned to the values and the Piramal Success Factors to bring in harmonisation into recruitment, learning & development, performance management and succession planning, among others.
  2. Increased efficiency in people systems
    For HR to deliver on the people imperatives, PEL recognised a need to free up time to understand and add value to business. Therefore, an enabling structure and greater efficiency in HR processes was identified by the Company as a focus area.
  • The key thrust areas include:
  • HR structure: An HR function service delivery strategy has been articulated along with a corresponding HR structure comprising:
    • A Shared Services Unit that brings in efficiencies of scale to administrative / transactional activities such as sourcing, increment letter processing, Learning & Development (L&D) admin, among others. This has improved the operational efficiency within HR and has also resulted in much shorter turnaround times.
    • A Community of Excellence (CmoE) comprising experts in areas such as learning & development, performance management and compensation & benefits.
    • HR business partners working in close partnership with business stakeholders.
  • HR efficiency: The Company is also in the process of automating key HR systems like performance management, recruitment, learning and development through an integrated HRMS module.
  1. Attracting and retaining high quality talent
    PEL needs a steady pipeline of high-quality talent across businesses and geographies to spearhead its long-term growth plans. The primary focus is on building the employer brand equity to attract high-quality talent. Communicating a distinctive and differentiating employer value proposition is equally important.

    PEL conducted extensive research with over 300+ employees across businesses and geographies to identify the attributes that were not only distinctive about the Piramal employment experience but also offered a differentiator with respect to the Company's talent competitors. The core attribute that emerged was 'Entrepreneurship and Empowerment', resulting in the Company's Employer Value Proposition (EVP) statement of 'Entrepreneur @ Piramal'. It describes the working culture and the kind of employee profile who is most likely to thrive at Piramal. The next steps include:
    • Consistent communication around the EVP to the internal and external audience to strengthen the Piramal employer brand equity. This includes revamping the Company's careers microsite and strengthening its presence on social media, among others.
    • Aligning the employee experience to the EVP through the introduction of 'brand signatures' across processes such as recruitment, performance management, learning & development and working environment, among others.

Additionally, PEL is also in the process of building a structured entry level management trainee programme through a group-level 'future leaders programme' and a 'business level management trainee programme'.

HEADCOUNT UPDATE

PEL has aligned its Information Technology Strategy to its long-term vision. Information Technology is an important part of the business transformation journey, where innovative technology solutions (including digital transformation) are enabling the Company to achieve its business goals.

PEL increased its capital investments in various technology-driven transformation initiatives across businesses. The Company is preparing itself for non-linear business growth and making it future ready.

Healthcare

In today's digital era, technology is playing an important role in the healthcare sector. The healthcare industry relies on technology for process management, content management and data analytics. Besides, it focuses on identifying cost-effective ways to connect with the customers. The emphasis is on innovation and building new products, providing better technology foundation.

PEL is focused on providing innovative technology solutions considering the dynamic and ever improving regulatory requirements as well as scalability, considering the inorganic as well as organic business growth. Its technology solutions have yielded higher stakeholder value by creating better operational efficiency, improved margins and higher customer satisfaction.

PEL has implemented comprehensive and cutting-edge technology solutions that have enabled it to strengthen offerings and meet customised requirements of global clients across the value chain.

For plant staff members, PEL has taken up multiple productivity and efficiency improvement initiatives on its core ERP system as well as other enabling systems. This ensures that the business process automation level increases year-on-year and the Company is able to improve its productivity per employee.

PEL has also initiated many technology initiatives to transform its supply chain processes, which will not only help improve internal performance but also support its suppliers.

With technology solutions and processes, PEL has been able to manage current regulatory and compliance requirements. It has been continuously upgrading technology solutions to meet future needs of computer system validation and data integrity.

Few of the key technology initiatives implemented this year are expected to bring following benefits to business:

  • Enhanced customer experience: Superior Customer Relationship Management (CRM) system for internal and external customer servicing
  • Operational efficiency: Reduction in process turnaround and increase in productivity across business system through various business process automation initiatives
  • Process standardisation and best practices: End-to-end workflow integration and use of standardised best practices across locations
  • Regulatory requirements compliance: Compliance to regulatory requirements across all the plants
  • Complaint Management: Customer grievances are addressed, resulting in improved customer satisfaction

Financial Services

PEL has been managing the Financial Services business with high productivity per person. PEL has challenged itself to achieve significant non-linear growth, where the aim is to increase the Company's revenue considerably, without significant increase in its manpower. To achieve this, PEL embarked upon a business transformation initiative to ensure end-to-end business process automation.

PEL adopted a thorough approach that involved understanding long-term growth plans, assessing current state architecture for operations and technology, and then designing the target state operations and technology architectures. Detailed cross-functional business requirements were codified from the optimised business processes, and a best-in-class technology solution was selected following a rigorous evaluation of global market-leading technology solutions.

A detailed roadmap has been created for implementing changes required to move to the end-state architecture for operations and technology.

The target technology platform is envisioned to cover the entire business system of the real estate financing business, including fund administration, CRM for investors, distributors and investee companies, workflows, document management, asset monitoring operations, compliance, collections, accounting, portfolio management, data analytics and risk management, adopting global best practices of the world's leading financial institutions.

Currently, in the midst of the solution implementation, the business is targeting to go live during FY2017. Once implemented, the key benefits expected from this technology-enablement include:

  • Enhanced customer experience: Superior CRM and service for investors, investee companies and channel partners
  • Operational efficiency: Reduction in process turnaround, increase in productivity across business system, elimination of data duplication and reduction in physical paperwork
  • Process standardisation and best practices: End-to-end workflow integration and accountability and the use of standardised best practices across locations
  • Superior risk management and internal controls: Stronger portfolio risk management and control and dashboards and data analytics to detect early stresses
  • Data-driven insights for underwriting: Micro-market data, project sales and developer insights, learning's from past assumptions for more robust underwriting decisions, as well as proprietary insights to identify future lending opportunities
  • Robust financial management and compliance: Reduced operational risk in collections, reconciliation and accounting, system-driven tracking of compliances and regulatory limits on exposure

PEL increased its capital investments in various technology-driven transformation initiatives across businesses. The Company is preparing itself for non-linear business growth and making it future ready.

Information Management

In the DRG business, PEL maintains a large number of existing products and launches new products each year. To continuously evolve and enhance these products, and bring new products to market, the technology that underpins them must similarly evolve with them. As such, the DRG technology team focuses on both streamlining existing investments and building new infrastructure.

Below are the key technology initiatives implemented during the year:

  • An entire new publishing platform that leverages technology used by the largest content publishers, combined with website publishing, data visualisation and multiple export capabilities
  • Several market access tools of the pharmaceutical company that are part of the core of its market access offering have been rebuilt on a common and modern technology platform
  • The initial development of a large real-world data platform that consolidates electronic medical record and claims data from many sources. These data assets and the platform, itself, will form the backbone of several future products

PEL evaluates and justifies technology investments in different ways.

  • For new technology investments, which present a ground-breaking opportunity for the Company, the Return on Investments (ROI) and benefits of the technology investment are directly correlated with the revenue that the new technology will generate
  • For each investment made to upgrade existing technology, PEL assesses its criticality in terms of maintaining core technology on which the Company relies to conduct its business, the cost savings associated with reducing or eliminating vendor costs that the Company otherwise would incur without the technology upgrade, and the 'human capital' time-savings associated with upgrades that enable automation and eliminate tasks that were previously manually performed. To conclude, technology investments are assessed and valued much like any other business investments, i.e., the extent to which they can increase revenue and reduce the actual or indirect costs.

Sustainability is at core of what PEL does, and is integral to its strategy. 'Care' is one of the values of PEL, and as a responsible company, it is committed towards protecting the environment where it operates, besides focusing on promoting health, safety and well-being of all employees, stakeholders and society at large.

At PEL, Environment, Health and Safety (EHS) are three crucial pillars for sustainable growth of businesses. The Corporate EHS team develops policies and guidelines, providing technical support and assistance to all sites to maintain compliance with EHS. The EHS function ensures that products are manufactured in a safe environment and in compliance with national and international regulations and customer expectations. Regular audits at sites not only ensure compliance but also provide a strong and robust system for continuous improvement. Besides, continuous audits of various locations by PEL's global customers help raise standards even further.

The EHS management system's overall performance is regularly evaluated and reviewed throughout the year. The system's effectiveness can be reaffirmed by the fact that PEL is in compliance with all Indian and global standards.

Environment

Recognising the importance of preserving the environment, PEL remains committed towards conserving resources. Quality environmental performance is a key component of PEL's facility operations. During the year, PEL's manufacturing sites maintained their applicable environmental regulations. 'Reuse and recycle' of natural resources is one of the primary objectives for which adequate infrastructure to treat wastewater and reuse it has been developed.

Various initiatives were undertaken to upgrade the infrastructure for environment management at the manufacturing sites. PEL is focused on the upgradation of Waste Treatment Plant to reach beyond compliance. Besides, installation of online monitoring system for process emissions and ambient air quality and switchover from fossil fuel to carbon neutral fuel are some other initiatives to ensure environment management.

In 2016, PEL started feeding condensed and hot water generated during the heat operations to the boiler, in order to increase boiler efficiency and cut fossil fuel consumption. Site construction activities are carried out with utmost safety, while recycling and reusing old facility waste material. Leftover usable redundant chemicals of R&D were reused by donating to colleges for study and analysis.

Most of PEL's facilities are sustaining various certifications such as ISO-14001 Environment Management System and OHSAS-18001.

Occupational Health and Safety

PEL actively promotes a policy and culture of workplace risk elimination and prevention to guarantee a safe and healthy work environment. As a company, it has undertaken numerous initiatives to enhance safety standards at manufacturing sites/office premises to ensure that all stakeholders, including employees feel safe at PEL.

As an acknowledgment of these efforts, the Ennore Plant received 'Safe organisation of the year award 2015' from the OSHAI association and the Mumbai R&D facility received 'Lowest Average Accident Frequency Rate' and 'Longest Accident Free Period' Award from National Safety Council - Maharashtra Chapter. PEL also received four National EHS Awards in the following areas:

  • Outstanding contribution for Energy Conservation
  • Outstanding contribution for Carbon Emission Reduction
  • Best Pharmaceutical Industry
  • Best Innovation & Environment Management Practices

Organisational EHS Initiatives

Following are some of the organisational EHS initiatives undertaken by PEL to ensure the safety of all its employees and stakeholders:

  • EHS Governance Model: Corporate senior operations leaders started EHS governance model, which monitors the EHS performance. It guides and motivates the Piramal site leaders towards sustainable improvements.
  • DuPont Engagement: Engaged DuPont for safe behaviour transformation, continuing training to senior leaders and shop-floor employees. 'Behaviour Base Safety' observations are taken by observers; and risk behaviours are corrected by personal counselling.
  • Structured Safety Tool Box Talk: It is an everyday programme in which all employees stand at shop floor and safety topics are discussed with the group. Operators get the opportunity to talk openly on EHS points.
  • Transporter's Safety Meet: Focused on providing safety awareness for transporters who are engaged with Piramal and transporting hazardous goods.

EHS Training Statistics

At PEL, EHS training is an important aspect to follow the Piramal values of Knowledge, Action, and Care. The total EHS training hours grew to 35,513 man-hours in FY2016 from 29,480 man-hours in FY2015.

PEL promotes a culture of risk elimination and prevention to guarantee a safe and healthy work environment.

Piramal Foundation is the philanthropic arm of the Piramal Group. It develops innovative solutions to resolve issues that are critical roadblocks towards unlocking India's economic potential.

The Group's core values of Knowledge, Action and Care guide the organisation in carrying out its responsibilities towards society. It believes that considerable positive change can occur, when we collaborate with like-minded partners and nurture projects that are scalable, ensuring a long-term impact.

Vision

Piramal Foundation transforming Health, Education, Water and social sector ecosystems through high impact solutions, thought leadership and partnerships.

Healthcare Initiatives

Piramal Swasthya

Piramal Swasthya is Piramal Foundation's health initiative working towards making healthcare services 'accessible, affordable and available to all'. Piramal Swasthya's services are spread across 11 states in the country. Piramal Swasthya's technological and management strengths, along with medical expertise have benefited over 54 million beneficiaries. It offers three distinct services including:

  • Health Information Helpline (HIHL)
    It is a health contact centre that aims to reduce minor ailment load on the public health system. It provides medical information and advice as well as counselling services. Besides, people can request directory information, or lodge a service complaint against any public health facility. HIHL has received over 36 million calls across seven states.
  • Telemedicine Services
    This service brings specialist healthcare services to remote areas. It ensures comfort to both the beneficiary and the doctor by providing them with high-quality specialists with proper medical data. Piramal Swasthya's latest technology, Dox-in-Box®, supports this telemedicine offering by virtually connecting doctor and patient, thereby reducing the need for highly skilled workers where they are scarce.

    Asara was launched in 2010, Piramal Swasthya and it works towards decreasing maternal mortality among tribal people in Araku Valley, Andhra Pradesh.
  • It trains traditional birth attendants, raises health awareness, conducts village outreach using Dox-in-Box® and connects pregnant tribal women with an obstetrician/gynaecologist in Hyderabad through telemedicine services. Currently, there are 69 telemedicine centres across six states.
  • Mobile Health Services (MHS)
    MHS creates and fortifies linkages within the public health system. It tackles barriers in accessing primary healthcare in rural areas. Piramal Swasthya deploys mobile health vans equipped with technology, medical devices, medicines and health workers to villages where public health system is not easily accessible. MHS primarily focuses on chronic diseases, maternal, child health and minor ailments by providing:
  • Screening and referrals
  • Patient education
  • Medication
  • Monitoring and follow up
  • Electronic health records

Educational Initiatives

Piramal Foundation for Education Leadership (PFEL)
PFEL acknowledges the importance of imparting knowledge to school principals to inculcate the 'right' mindset and leadership skills. This positively impacts the education quality in public schools. To improve student performance, it's necessary to create a vision for schools, manage stakeholders, resolve problems and conduct reviews and assessments. Currently, PFEL is working in 15 blocks across four districts in Rajasthan, benefiting ~90,000 students.

PFEL runs the following programmes:

  • Principal Leadership Development Program (PLDP)
    PLDP is a three-year programme, providing holistic training and development to school principals to improve the learning quality in their schools. The programme aims to develop leadership skills of primary government school principals through forum training, onsite coaching and peer learning networks to effectively manage and lead their schools. As a new initiative in PLDP, a set of block education department officials have also been included in the programme for developing and honing the leadership abilities in Udaipur and Dungarpur districts, Rajasthan. It is also in the process of getting the same replicated in Jhunjhunu and Churu districts.

  • Piramal Fellowship
    This two-year fellowship programme is for fresh college graduates who work with the rural school principals enrolled in PLDP. They impart knowledge to school principals and help them turnaround failing schools and in turn recognise and develop their leadership skills. The fellows work as 'Sahyogis' and each fellow assists five school principals. These fellows bring in positivity, creativity, problem solving skills and address issues like teacher motivation, community-school relationships and maintain the school leaders' own sense of identity and purpose.
  • District Leadership Development Program (DLDP)
    It leverages the experience of PLDP to the entire hierarchy of educational system. DLDP aims to impact an entire education cadre and foster comprehensive growth in the learning outcome of children. Along with improved learning level, the programme engages children to write and solve complex math problems. Daily field-support and expert coaching will assure quality and sustainability across the public education system by building capacity of the engaged government education officials.
  • The Piramal School of Leadership (PSL)
    PSL is established with the intent of taking the PFEL initiative a step further. PSL collaborates with all sectors of society around the world including government, academics and corporates to sensitise educational leadership across India. So far, 1,000+ schools, 1,000+ headmasters, 300,000+ children and 250+ Piramal Fellows have been impacted.

Water

Piramal Sarvajal
Piramal Sarvajal's mission is to provide affordable, accessible, and safe drinking water to populations in India, where water quality is poor and availability is limited. It is committed to providing pure and safe drinking water for the under-served at an ultra-affordable price. Sarvajal provides affordable clean drinking water to around 290,000 people on a daily basis. It primarily conducts business through a franchise format, wherein it identifies, appoints, and trains village level entrepreneurs to operate state-of-the-art water treatment systems. Franchisees sell water to customers in one of three ways – through sales outlets, door-step delivery, or through electronic point-of-sale technology (using its latest innovation, the Water ATM).

Sarvajal employs patent-pending proprietary technology in monitoring and controlling machine operations. A PLC-based device called the 'Soochak' is installed on each of Sarvajal's Water Treatment Plants to monitor the source water quality, product water quality, litres produced (both rate and total), the overall health of the machine, and the amount of effluent created in the process. Using this technology, Sarvajal is able to assure a great amount of machine usage uptime and ensure durability of machines.

Currently, Sarvajal operates in 13 states including Gujarat, Rajasthan, Madhya Pradesh, Uttar Pradesh, Delhi, Haryana, Himachal Pradesh, Jammu & Kashmir, Chhattisgarh, Bihar, Jharkhand, Karnataka and Maharashtra. It has dispensed over 9.19 billion litres of clean drinking water.

Women Empowerment

Piramal Udgam
Located at Bagar in Rajasthan, Piramal Udgam is a full-fledged state-of-the-art BPO that provides top-quality BPO services to global clients at competitive prices. It empowers rural women with employment opportunities. Despite being an educational centre hosting about 35 schools, Bagar has very limited job opportunities. Udgam aims to break this anomaly by creating opportunities for these women to learn, grow, achieve financial and social freedom, and earn renewed respect of the community. It provides comprehensive and rigorous training programme wherein all associates undergo two modules of training – core training in computer skills, and soft skills training. Over 450 associates have been trained and have earned a livelihood in Piramal Udgam.

Piramal Uttarakhand Rehabilitation Project (PURP)
PURP works towards providing relief to disaster-affected communities in the villages across Kalimath Valley. This project's primary objective is to promote income generation activities for women in flood-affected areas. These women are between the age group of 18-35 years. PURP enables them to develop skills in four key areas comprising agriculture, food processing, enterprise development and animal husbandry. PURP works through Self Help Groups (SHGs). Currently, PURP is present in eight villages, engaging 152 members in food processing and agriculture.

Partnerships

Successful partnerships have been the driving force behind Piramal Group's success.

Piramal Foundation's objective to address large social problems through innovative solutions makes it indispensable to partner with governments and like-minded organisations. Piramal believes that partnerships can create meaningful impact through synergistic efforts, and optimise limited resources.

For example, public-private partnerships in the social space have also resulted in improving efficiency, while utilising an existing network and infrastructure that has been set up by successive governments over decades.

Over the last many years, the Foundation has been engaged in implementing solutions to address specific focus areas. The experience and expertise built up by the team is now combined with a deep understanding of factors that help drive change in the community. A combination of innovative solutions, smart deployment of technology, driving change of behaviour among stakeholders and a committed passionate team is making this happen.

In the course of its implementation, the Piramal Foundation has endeavoured to build a learning organisation. Lessons learnt from both successes and failures are analysed to evolve new solutions or replicable models.

Engaging with government policymakers, based on practical experiences brings a level of trust and integrity to the relationship, which is reflective of the core value of the Piramal Group.

Current Partner List

(₹in Crores)

Details FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016
Profit and Loss Account  
Total Income 2,472 2,879 3,288 3,777 2,009 2,352 3,544 4,503 5,123 6,610
EBITDA 384 548 589 833 379 471 611 860 1,140 2,115
Interest 31 46 84 184 89 215 575 1050 511 939
Profit Before Tax 267 373 341 500 16,415 121 -193 -435 3035 894
Profit after Tax 228 334 316 482 12,736 115 -227 -501 2850 951
Earnings per Share 10.3 15.9 15.1 21.4 572.2* 6.6 -13.2 -29.1 165.2** 55.1

** Includes gain on account of sale of the healthcare solutions business and sale of subsidiary - Piramal Diagnostics Services Private Limited
** Majorly includes gain on sale of 11% equity stake in Vodafone India and amount written down on account of scaling back of investments in NCE research

(₹in Crores)

Details FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016
Balance Sheet                    
Share Capital 801 422 42 42 343 354 35 35 35 35
Reserves and Surplus 1,006 1,051 1,275 1,643 11,803 11,208 10,689 9,287 11,701 12,388
Minority Interest 1 5 7   6 10 15 0 29 34
Debt 639 716 1,339 1,295 757 2,047 7,688 9,552 7,306 16,254
Net Deferred Tax 89 90 73 57 48 50 -46 -41 -27 -14
Total Liabilities 1,815 1,903 2,736 3,037 12,647 13,349 18,381 18,832 19,044 28,696
Net Fixed Assets 1,224 1,259 2,039 2,113 1,582 2,089 6,081 6,682 7,342 8,367
Investments 29 65 28 33 1,482 6,964 7,877 9,446 7,768 14,800
Net Current Assets 563 580 669 891 9,584 4,297 4,419 2,704 3,934 5,529
Total Assets 1,815 1,903 2,736 3,037 12,647 13,349 18,381 18,832 19,044 28,696

1. Redemption of 15,00,000 Preference Shares of ₹100 each.
2. Redemption of 15,00,000 Preference Shares of ₹100 each and 2,33,72,280 Preference Shares of ₹10 each along with proportionate dividend.
3. Buyback of 4,10,97,100 Equity Shares of ₹2 each at ₹600 per Equity Share.
4. Net increase in Equity Share Capital on account of :
- Allotment of 53,52,585 Equity Shares of ₹2 each to the shareholders of Piramal Life Sciences Limited (now known as Piramal Phytocare Limited) on demerger of its R&D NCE division into PEL.
- Buyback of remaining 7,05,529 Equity Shares of ₹2 each. With this, total number of shares bought back aggregate to 4,18,02,629.