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Piramal Enterprises has decided to adjust Rs 3,164 crore worth of exposure in Alternative Investment Funds (AIFs) in its financial statements through capital funds or provisions.

“Of the remaining Rs. 3,164 crores, Rs. 1,737 crores worth of downstream investments have been made by the AIF into 3 entities that are (or were in the last 12 months) debtor companies of PEL (consolidated),” the company said in an exchange filing on Thursday.

Notably, as of November 30, the value of investments by Piramal Enterprises and Piramal Capital and Housing Finance in AIF units was Rs 3,817 crore. Out of this, Rs 653 crore pertains to funds that have no exposure to any debtor companies of PEL.

The company said that it was confident of full recovery of the underlying downstream investments in the impacted AIF units.

“PEL (consolidated) has received Rs. 905 crores so far as repayment of interest and principal on these units,” it said.

PEL has a consolidated net worth of Rs 28,710 crore (September end 2023), and a capital adequacy of 31%, the company said in the statement.

For September quarter, Piramal Enterprises reported a net profit of Rs 48 crore, compared to a loss of Rs 1,536 crore in the same period last year.

Ajay Piramal, chairman, Piramal Enterprises, in a statement, said that performance in the second quarter was supported by growth in assets under management (AUM), led by retail business.

On Tuesday, the Reserve Bank of India (RBI) introduced regulations to prevent banks and non-banking financial companies (NBFCs) from utilising the alternative investment fund (AIF) route to ‘evergreen’ their loans.

The central bank highlighted Regulated Entities (REs) make investments in units of AIFs as part of their regular investment operations. These transactions entail substitution of direct loan exposure of REs to borrowers, with indirect exposure through investments in units of AIFs.

“If an AIF scheme, in which RE is already an investor, makes a downstream investment in any such debtor company, then the RE shall liquidate its investment in the scheme within 30 days from the date of such downstream investment by the AIF,” it said.

“….if REs have already invested into such schemes having downstream investment in their debtor companies as on date, the 30-day period for liquidation shall be counted from date of issuance of this circular. REs shall forthwith arrange to advise the AIFs suitably in the matter,” it added.

Also Read: RBI tightens norms for banks, NBFCs investing in alternative investment fund

  • Published On Dec 21, 2023 at 04:17 PM IST

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