Piramal Enterprises Announces Demerger and Simplification of Corporate Structure;To Create Two Separate Listed Entities in Financial Services andPharmaceuticals

Mumbai, India | October 11, 2021: The Board of Directors of Piramal Enterprises Limited (‘PEL’, NSE: PEL, BSE: 500302), in their meeting held today, approveda composite scheme of arrangement providing forthe demergerof the pharmaceuticals business from PEL and simplification of the corporate structure to create two industry-focused listed entities in Financial Services and Pharmaceuticals.

Mr. Ajay Piramal, Chairman, Piramal Group,said, “Over the years, Piramal Enterprises has grown multi-fold with diverse businesses under one listed holding company structure. In line with our stated strategy, the Board has today approved the demerger and simplification of our corporate structure, to create two independent listed entities in Financial Services and Pharmaceuticals, with a leadership position across the business segments they operate in. It will firmly empower both entities to be future-ready and enable them to independently pursue their growth strategies with sharper focus and identity.

Piramal Enterprises Limited will get transformed into a large listed diversified NBFC, focused on retail and wholesale financing, with a consolidated loan book of~INR 65,000 Crores. Our retail lending platform will be digitally-led, that will serve the financing needs of the under-served customers in the ‘Bharat’ market. With the recent acquisition of DHFL, the wholly-owned housing finance housing subsidiary has been significantly scaled to become one of the largest HFCs of our country, focused on affordable housing finance.

Piramal Pharma Limited will be a large India-listed pharma company with proven capabilities in Contract Development & Manufacturing, global distribution of complex hospital generics, and a large geographic footprint in the consumer products market in India. PPL’s Contract Development and Manufacturing (CDMO) business is one of the top three in India and the 13th largest globally. PPL’s Complex Hospital Generics and India Consumer Healthcare businesses are well positioned with differentiated products and business models.

Going forward, in line with our philosophy of ‘Doing Well and Doing Good’, both the listed entities will continue to work towards creating value for all our stakeholders.”

About the Demerger and Simplification of the Corporate Structure:

Pharma:

The pharmaceuticals business will get demerged from Piramal Enterprises Limited and consolidated in Piramal Pharma Limited (PPL). Hemmo Pharma Private Limited (focused on peptide APIs development and manufacturing capabilities) and Convergence Chemical Private Limited(setup for development, manufacturing and selling speciality fluorochemicals), will get amalgamated with PPL to create a consolidated listed Pharma entity.

In consideration of the demerger, PPL shall issue 4 (four) fully paid-up equity shares of PPL of Rs. 10 each to the shareholders of PEL for every 1 (one) fully paid-up equity share in PEL having a face value of Rs. 2 each held by them, in accordance with the Share Entitlement Ratio.

Financial Services:

The amalgamation of PHL Fininvest Private Limited with PEL will create a listed Non-banking Financial Services (NBFC) entity. The merged Housing Finance company, (HFC) post DHFL acquisition, will remain a 100% subsidiary of PEL.

Through this demerger and simplification of the corporate structure, the shareholders of PEL will directly own shares in both the listed entities, without any cross-holdings and minority stakes.

Thecomposite Scheme of Arrangement is subject to the approval of the shareholders and creditors of the companies, the Reserve Bank of India (RBI), Securities and Exchange Board of India (SEBI), National Stock Exchange of India Ltd. (NSE), Bombay Stock Exchange Ltd (BSE) Limited, Hon’ble National Company Law Tribunal (NCLT) and other regulatory authorities, as applicable.

Strategic Rationale:

The demerger and simplification of the corporate structure is expected to create synergiesfor both the companies and unlock significant value for both the companies and stakeholders.

• It will simplify the Piramal Enterprises’ corporate structure with two separate pure-play entities in Pharmaceuticals and Financial Services.

• It will further strengthen governance architecture for the businesses with separate dedicated Boards and Management teams.

• It will create an optimal capital structurefor eachbusiness.

• It will give both entities the ability to independently pursue growth plans organically and inorganically.

• It will enable a better understandingof each sector-focused listed entity by the investor and analyst community.

Outcome:

The demerger and simplification of the corporate structure will lead to the creation of separate sector-focused listed entities in Financial Services and Pharmaceuticals.

Piramal Enterprises Limited

• Pursuant to the amalgamation, PEL will become one of the leading diversified NBFCs^* in India. The company offers a wide range of financial products and solutions across both retail and wholesale financing. Through its digital-led multi-product retail lending platform, the company will provide home loans, small business loans, loans for working capital to customers, used cars/two-wheeler loans, education loans, personal loans and loan against securities.

• PEL will continue to own 100% stake in the Housing Finance company (merged with DHFL) focused on affordable housing finance. The HFC will address the diverse financing needs of the under-served ‘Bharat’ market through its India-wide platform across 24 states through 301 branches and a reach to ~1 million customers.

• The DHFL acquisition hasenabledthe transformation of thefinancial services business from a largely wholesale led model to a well-diversified financial services player. The retail loan book has increased nearly five-fold, paving the way to achieve a balanced retail-wholesale mix in the near term and 67:33 in the medium-to-long term. The DHFL transaction will enhance capital efficiency (net debt-to-equity to increase from 1.6x as in June 2021 to 3.5x in the near term).

• Within wholesale lending, the company continues to provide financing to real estate developers, as well as corporate clients.

• Over the last two years, the company has significantly strengthened the balance sheet and reduced its debt-to-equity, thereby creating a headroom for growth in coming years.

• PEL has also formed strategic partnerships with leading financial institutions such as CPPIB, APG and Ivanhoe Cambridge, and others, across various investment platforms. Piramal Alternatives, the fund management business, provides customised financing solutions to high-quality corporates through – ‘Piramal Credit Fund’ and ‘IndiaRF’ (a distressed asset investing platform with Bain Capital Credit).

• PEL also has equity investments in Shriram Group, a leading financial conglomerate in India.

Piramal Pharma Limited

• PPLwill be one of the largeIndia listed Pharma companies focused on customer and patient centricity, with presence in the Contract Development and Manufacturing Organization (CDMO), Complex Hospital Generics (CHG), and India Consumer Healthcare markets. PPL operates in large, fragmented and growing markets and industry segments with high entry barriers, whereit has a strong position.

• PPL offers a portfolio of unique services and products through development and end-to-end manufacturing capabilities across 15 global facilities and a distribution network in over 100 countries.

• PPL’s Contract Development and Manufacturing (CDMO) business, one of the top three in India and the 13^th largest globally, provides differentiated CDMO offerings across large, growing categories such as the development and manufacturing of highly potent active pharmaceutical ingredients, antibody drug conjugation, sterile fill/finish with and without containment, potent solid oral drug products, peptide API products and custom peptide synthesis.

• PPL’s Complex Hospital Generics business caters to hospitals, surgical centers, and veterinary centers with a portfolio of inhalation anaesthetics (amongst top 4 globally), intrathecal therapies for spasticity and pain management (US market leader), injectable pain and anaesthetics, injectable anti-infectives and a growing pipeline of more than 30 products.

• PPL’s Consumer Healthcare business has built a diverse and extensive portfolio of 21 brands across multiple categories and many of its brands such as Saridon, Littles, I-pill, Lacto, etc. feature in the top 100 OTC brands in India.

• The JV withAllergan is the market leader in the fast-growing ophthalmology category in India.

• Excellent US FDA compliance track record having successfully cleared all 36 USFDA inspections, 243 other regulatory inspections, and 1,261 customer audits, since the beginning of FY12.

• PPL has a track-record of building scalable and diversified pharma businesses with world-class talent in attractive markets.  Pharma revenue has grown 3.8 times since the Abbott deal at a CAGR of 14% to INR 5,776 Crores in FY 2021, and EBITDA has gone up 13 times at a CAGR of 28% to INR 1,283 Crores in FY 2021, improving the EBITDA margin from 7% in FY2011 to 22% in FY 2021. It successfully closed and integrated nearly 15 M&A transactions over INR 4,000 Crores, since the Abbot deal in 2010.

• PPL raised growth equity from the Carlyle Group in October2020, significantly strengthening the balance sheet that will accelerate its growth plans. Since FY21, PPL has completed three acquisitions.