Thread by @proxy_investor

#Piramal Conference Call Q2 H1FY19

- On if a developer defaults- Piramal has the ability to take over, develop, sell and retrieve loans
- 50bps increase in cost of funds, rate increase can be passed on
- Getting adequate liquidity even in these tough time, Asset quality is good

Will issue ECB's of $250m out of the $750m that can be done, going to raise $1bn , waiting for S&P rating
Lots of new banks have approached for new lending and lines, 7000cr line in this Qtr itself
Repayments of 1350cr in last week itself, 38700cr developer loan book
(2/n)

LRE and Hospitality has crossed 2000cr
CFG growth of 76% to over 10K cr
Housing Finance book in just a yr is 2300cr, 811 cr disbursed this qtr, not disbursed yet 1700cr
Very good EWS (early warning system) , to control NPA , using this system the NPA is nill
(3/n)

- Irrespective of DeMon RERA - good loan book becos of good developers not just Tier 1 in terms of size based on loan, project completion etc
- Our developer sales have grown 26% this year - shows quality, underwriting
- Loans based on certain assets and do cross collateral
(4/n)

- Biggest account - Lodha - 4300cr loan across 6 project, all principal and interest has been payed, 90% loans have been pre-payed 12 months in advance
- What if Lodha IPO gets delayed - plan B worked on with Lodha, sold 4.K cr assets sold non strategic assets
(5/n)

Omkar - 1700cr loan book , already permission , land clearance already done, repayment will come from Sales
1973 project loan - prepayed the loan - no outstanding

Vatika - 1390cr,45% is against cash flow from Westin Gurgaon, balance is against 3 projects all approvals done
(6/n)

Cross Collateral of all projects is the keys to the way Piramal Enterprises Financial Services work
Early warning system for NPA is the best in the country and the report will come out soon

(7/n)

NBFC talk taken over the call, no talk about Pharma , Consumer Products, CDMO which is 45% of their business 😀

There is not a issue of liquidity , the issue of that loans are being given to high quality NBFC -> Piramal

No asset quality deterioration based on the rates

(8/n)

Sales of Pharma Business <<< Ajay Piramal - we dont comment of speculation >>>
- NBFC is a critical part of economic ecosystem , so RBI Govt has to be aware of this
- SME sector 1% of GDP , 26% employment, Banks dont fund this sector, NBFC funds this, Govt recognizes this

(9/n)

- This crisis will separate the Men from the Boys, there will be a consolidation in both the Real Estate and NBFC space. Only the strong will become stronger
- Opportunities have double in the last month but managing quality of book , NPA etc is main consideration for us

(10/n)

- Risk of asset price reduction is not possible as prices have not gone up significantly in the last 3 years
- There is enough juice left on base of asset price v/s loan given basis
- EMS is done of a monthly basis to judge sales v/s loan
(11/n)

- We have earlier even forced developers to sell - Piramal understand the nuances of real estate better than just giving loans , so very good in this regarding asset quality , sales and collateral pricing
- Helping a distressed entity in a round robin is not the right way

(12/n)

- Discount days are gone in developer sales, now only quality and projects that complete on time sell so quality of developers, assets and consolidation of good developers is happening
- MFs to bring down their exposure to NBFC - we mostly bank on banks than MFs for funds
(13/n)

YoY - ROE improvement is visible

Finally a question on other biz 😁
Consumer Products - this yr onwards growth , distribution will be seen in this space as we have good brands and everything seems setup for growth.
We are very committed to this business
(14/n)

- If a builder is taken to NCLT ? 99% of deals are done with bankruptcy proof, all equity land etc is held
- Piramal - cost of funds increased by 50bps this was passed on to developers, borrowers have been appreciative of our relation with borrowers

(15/n)

- No borrowing from any group companies
- Bain JV on India Resurgence fund $100m each looking to raise $1bn funds
- Down selling is not limited to NBFC and Banks, lot of Pension funds, family group funds want to participate and are approaching us

(16/n)

-Cost of funds 8.6%, Last month raised 1600cr
-Construction v/s real estate sales, construction activity is great with great developers even in markets like Noida/Ggn
-This Qtr has been the best for "good developers" even NCR growth was 2.3%, prices have increased by 5-7%
(17/n)

- Proactively look for other assets eg) Logistics went to the best offered solutions and then capital

"Liquidity is not the issue, Confidence issue is there with Banks/MFs w.r.t to NBF, MARKETS ARE OVERREACTING, Good NBFCs are doing better than before"
-Ajay Piramal

(18/18)