MUMBAI : Piramal Enterprises will stay away from alternate investment funds (AIFs) after the non-bank lender took a provision hit, resulting in a consolidated loss of 2,377.59 crore during the December quarter. In the corresponding quarter last year, the NBFC had posted a net profit of 3,545.4 crore.

In a post earnings call on Monday, the management said that the company has written down its total investment in the AIFs and made provisions worth 3,540 crore against this. Both Piramal Enterprises and Piramal Capital & Housing Finance Ltd (PCHFL) have AIF exposure in two schemes.

“Our intent is to follow what the regulator has said. Whatever you have done in the past, bring baseline to zero and take the pain through P&L. We will try and recover to the best of our ability. If regulator is saying investing in AIF, which has linkage to underlying client, is a bad idea, we will stay away from it,” said Jairam Sridharan, managing director, PCHFL. The management is however confident of getting cash flows from its AIF investments over the next few quarters, adding to future profitability. It has already received repayment worth 1,137 crore of interest and principal so far.

Excluding the impact of provision, the NBFC reported a net profit of 290 crore at the end of the third quarter and capital adequacy of 28.4%.

The total assets under management (AUM) is up 6% quarter-on-quarter and 9% year-on-year, excluding the impact of AIF provisions.

On Saturday, Piramal Enterprises announced its intention to sell the entire direct investment of 20% of the fully paid-up equity share capital held in Shriram Investment Holdings Pvt Ltd to Shriram Ownership Trust (SOT), for a consideration of 1,440 crore.

The company is also looking to slow down on disbursements in consumer unsecured loans after the Reserve Bank of India (RBI) raised risk weights on these exposures by 25 percentage points.

“We like the consumer unsecured loan segment. The risk level is decent given the yields we make there. It is clear that there is some overheating in that space. We will moderate it out. Our consumer unsecured loan portfolio is 6,000 crore on a total loan book of 70,000 crore. That book will grow but modestly in mid-single digit,” added Sridharan.

The management also added that it has seen repricing of these consumer loans to the extent of 25-100 basis points post the increase in risk weights.

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Published: 29 Jan 2024, 11:59 PM IST


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