Ajay Piramal-controlled Piramal Enterprises Ltd has raised ₹1,500 crore from Standard Chartered Bank through non-convertible debentures (NCD), said two people aware of the development.
The money will be used to meet working capital requirements of the group, including for the lending business Piramal Capital and Housing Finance and for upcoming debt-related payment obligations, said the first person cited above, requesting anonymity as he is not authorized to speak with the media.
“The financing from Standard Chartered will go towards meeting near-term needs and has a repayment date in January 2020," he said.
According to Piramal Enterprises’ regulatory filings, in the past week, the company has made principal and coupon payments on outstanding debt worth around ₹1,700 crore. These comprised large loans from HDFC Bank and Deutsche Bank, which had subscribed to NCDs worth ₹1,000 crore and ₹590 crore respectively in 2016, the filings showed.
An email sent to Piramal Group on 19 June did not elicit any response. A spokesperson for Standard Chartered declined to comment.
The financing from Standard Chartered is part of the group’s plans to raise more debt financing from long-term sources of funds, said the second person cited above.
“They (Piramal Enterprises) have significantly improved their borrowing mix towards long-term sources of funds. The company has raised nearly ₹16,500 crore of bank loans and NCDs during the second half of fiscal 2019 and has reduced its exposure of commercial paper to ₹8,900 crore from ₹18,000 crore, in the same period," he said.
The company’s latest investor presentation says banks contributed 71% of its total borrowing mix as of 31 March, up from 49% at September end.
The group is also planning to tap foreign currency borrowings and further increase borrowing from banks, the presentation said.
On 9 July, rating agency Crisil reaffirmed a rating of A1+ on the commercial paper programme of Piramal Enterprises, followed by a reaffirmation of Piramal Capital and Housing Finance Ltd’s A1+ rating for its commercial paper programme worth ₹10,500 crore.