Mumbai:The Ajay Piramal-led Piramal Enterprises Ltd (PEL) is considering a re-entry into the domestic formulations business, eight years after selling its portfolio to US-based Abbott Laboratories.

The firm is also looking to set up an asset management business as part of its overall strategy to focus on fee income, a top official of the company said on Monday.

“The valuation we got (for domestic formulations business), has not been breached locally. There has not been a single issue with the acquisition. But our non-compete agreement with Abbott ends in September, which means we can explore re-entering the market. The proposal is still in the exploratory stages," said Ajay Piramal, chairman, Piramal Enterprises, on the sidelines of a press conference to release the company’s quarterly earnings.

Piramal sold its domestic formulations business, which manufactured, marketed and sold branded pharmaceutical products in India, Nepal and Sri Lanka in finished form, to Abbott for $3.72 billion in 2010.

Critical care, over-the-counter consumer products, custom manufacturing for third parties, manufacture and supply of active pharmaceutical ingredients (API), diagnostic medical devices and equipment and diagnostic services, including pathology laboratories and radiology centres and clinical research services, were some of the business that were retained.

For the January-March quarter of fiscal year 2018, the firm posted a net profit of Rs375 crore as against a net profit of Rs311 crore during the corresponding period a year ago. The firm has also merged its financial services units—Piramal Finance and Piramal Capital—under Piramal Housing Finance. The reverse merger scheme came into effect from 31 March 2018. The financial services book accounts for close to 50% of PEL’s overall business. Apart from re-entry into the domestic formulations business, the firm is also looking to build its asset management business.

“We are expanding our presence into financial services. The interest rates are hardening. Our endeavour is to keep our net interest margin protected and we will also look at other avenues like fee income, which we were not so focused on earlier. Due to the recognition we have among the customers, we will be exploring opportunities in the asset management and loan syndication businesses," Piramal said.

Piramal will keep adding more products to diversify the book, he said. The firm’s financial services offerings include housing finance and construction finance, structures loans and loans to large and emerging corporates. Piramal said that with the banking sector under stress, there is ample opportunity for the firm to grow its book.

“It is not only public sector banks but also some of the private sector banks that are under pressure. The decision making has been slowed down. Also, not many banks are looking at large corporate loans. There are, however, some very good corporates that need funds. So there is an opportunity for us," Piramal said.

“The US generic market is seeing a significant price decline and pharmaceutical firms there are facing pricing pressures. India and some of the emerging markets however are better placed. Ajay Piramal has a history of successful M&As, so he could be sensing opportunities in the space right now—both organic and inorganic. There could be decent acquisition opportunities for the firm considering there are some good quality assets available in the space," said Abhimanyu Sofat, head of research at IIFL

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