Piramal Healthcare, sitting on a cash pile of Rs 10,000 crore, plans to invest across sectors apart from its core business of pharmaceuticals. “We have strongly positioned to capitalise opportunities in this economic crisis. We expect superior returns from surplus funds than what we are getting on Thursday," said Ajay Piramal, chairman, Piramal Group.
On Wednesday, Piramal Healthcare had announced acquisition of a 5.5 per cent stake in Indian joint venture Vodafone-Essar for $640 million (Rs 2,900 crore).
Speaking at a press conference held in Mumbai, Piramal said the company will look at picking up minority stakes in companies without operational management roles. “We will look at global companies in high growth sectors.” Shares of Piramal Healthcare went up by 1.46 per cent to close at Rs 374.8 on BSE on Thursday.
On the rationale behind investments in other sectors, Piramal said the pharmaceuticals sector alone would not be able to absorb the company’s cash surplus and it needs to invest in other sectors as well. The company, he said, will invest Rs 7,000 crore in the pharma business by 2016.
“In the next five years, we will invest about Rs 7,000 crore in drug discovery research, CRAMS (contract research and manufacturing services), critical care and the OTC business,” he said. The investment will include both organic and inorganic route. “We are assuming an IPO of Vodafone-Essar in 1-2 years and can participate in that or sell it back to Vodafone for a return of 17-20 per cent.”
Last year, Piramal Healthcare had sold its domestic formulations business to US drug firm Abbott Laboratories for $3.72 billion (around Rs 17,500 crore). Also, Piramal Diagnostics Services Limited (PDSL) was sold for Rs 600 crore to Super Religare Labs. From both deals, Piramal Health has a cash balance of Rs 10,000 crore after distributing Rs 2,700 crore to shareholders in the past six months.