PIRAMAL ENTERPRISES LIMITED VOTE RECOMMENDATIONS FOR COURT CONVENED MEETING

Transcription

1 Corporate Governance Services Proxy Voting Solutions Vote Recommendations PIRAMAL ENTERPRISES LIMITED VOTE RECOMMENDATIONS FOR COURT CONVENED MEETING ISIN: Industry: Meeting date Meeting venue: INE140A01024 Diversified/Healthcare March 13, 2013, Wednesday, AM IST Y. B. Chavan Auditorium, General Jagannath Bhosale Marg, Nariman Point, Mumbai Stock codes NSE BSE Exchange PEL Reuters PIRA.NS PIRA.BO Bloomberg PIEL:IN March 2013 Market Details Index S&P CNX 500 Market Price/share Rs Market Cap. Rs. 9,612 cr Total Issued Shares cr Free Float 47.01% 52 week high price Rs week low price Rs (Source: Market Details and Shareholding Data from NSE) Shareholding (As at Dec 31, 2012) 2.22% 12.68% 28.30% 3.81% Promoters 52.99% Public Institutions Private Corp. Bodies Individuals Others Mohan Kumar K mohan@ingovern.com Soumya Dash soumya@ingovern.com Shareholder with >1% Stake Sl. Name of Shareholders (as on December ) % Holding 1 Aberdeen Global Fund Life Insurance Corporation of India Indiahold Ltd Morgan Stanley Asia (Singapore) Pte 1.58 Total (Source: Shareholding Data from NSE) List of Resolutions InGovern Mumbai * Bangalore Res # Resolution Title Management InGovern 1. Merger of PHL Holdings Private Limited with Piramal Enterprises Limited. FOR AGAINST All rights reserved

2 Executive Summary: A summary of the transaction details along with key highlights of our analysis is given below: Key Highlights on the Transaction: The scheme of amalgamation proposes to merge PHL Holdings Private Ltd. ( PHPL ) with Piramal Enterprises Ltd. ( PEL ). PHPL is a company forming part of the Promoter Group of PEL and holds 48.73% stake in PEL as of December 31, The Promoters of PEL desire to streamline and realign their current shareholding in the Company and eliminate multi-layered shareholding structure. The Sri Krishna Trust (a Promoters Family Trust holding the entire share capital of PHPL) will be issued shares directly in PEL post the scheme of amalgamation. There would be no change in the promoter shareholding of PEL. The promoters would continue to hold the same percentage of shares in PEL, pre and post the amalgamation. There would be no impact on the financials of PEL and the asset and liability position of PEL will remain unchanged. The difference between the value of net assets of PHPL transferred to PEL and the consideration issued by PEL shall be adjusted in general reserve. Reduction of share capital of PEL shall be effected as an integral part of the Scheme under Section 102 of the Companies Act. Key Governance Concerns: Inadequate disclosures on the promoter group entities and related party transactions between these promoter group entities made prior to this Scheme to effect this merger. The scheme of amalgamation proposes to merge PHL Holdings Private Ltd. ( PHPL ) with Piramal Enterprises Ltd. ( PEL ). PHPL is a company forming part of the Promoter Group of PEL and holds 84,092,879 equity shares in PEL, constituting 48.73% of PEL s share capital. However, the company in its notice to its shareholders has not made sufficient public disclosures on PHPL or its step down subsidiaries. On the face of it, the transaction seems to be a straight forward merger of a holding company with its listed subsidiary, where shareholders of PHPL will directly get shares in the listed entity PEL. However, a deeper scrutiny of PHPL reveals that PHPL had entered into related party transactions with its step down subsidiaries in the past three years (which have now been merged with PHPL in October 2012) which raises concerns with regards to the current scheme of amalgamation between PHPL and PEL. InGovern looked at filings made by PHPL and its step down subsidiaries for the past three years in addition to the public filings and stock exchange filings made by PEL during this period. InGovern also approached the company for further details of the transaction but were told to visit the company for inspection of the documents and the same were not made available to us electronically. The company has clarified that PHL Holdings will not have any debt in the books of PHPL as on the appointed date and that there will be no adverse impact on the financials of PEL due to the merger. However, the company should also clarify to its shareholders the rationale for these past transactions and their potential effect due to these related party transactions on PEL shareholders if the current merger goes through. The company should also publicly disclose the financial documents for PHPL ending September 30, 2012 and December 31, 2012 as well as all scheme related documents, for greater public scrutiny. InGovern P a g e 2

3 In absence of full disclosures, InGovern does not wish to make any specific comments on the exact nature of impact on PEL due to these transactions but urges the company to provide a public clarification on the concerns raised in the analysis section (See Page 8 of the report for detailed analysis). Rationale given for this amalgamation can also be achieved through an inter-se transfer or a scheme of amalgamation at the promoter group level and does not suggest any specific business logic for PEL shareholders. The rationale for the current scheme as mentioned in the notice to shareholders states that the promoters of PEL desire to streamline and realign their current shareholding in PEL and eliminate multi-layered shareholding structure. However this rationale does not seem to suggest any specific business logic since the same objective could have been achieved through an inter-se transfer or a scheme of amalgamation at the promoter group level. In another listed group company, Piramal Life Sciences Ltd., PHPL has recently transferred their shareholding to Sri Krishna Trust (holding company of PHPL) through an inter-se transfer and hence we cannot see why the same couldn t be achieved in PEL through this route. If not, the promoters could have merged their group entities and streamlined their multi-layered shareholding structure in PEL. Given the backdrop of the related party transactions that have happened in the past between PHPL and its step down subsidiaries, it seems as if the current merger might have been affected to cover up some of these past corporate actions. We urge the company to provide more clarification on the business rationale for such a transaction. In light of the abovementioned concerns, we recommend shareholders of PEL to vote AGAINST the resolution. InGovern also believes that the Company should stand up for greater scrutiny and institutional investors should seek more details and clarification for this transaction. InGovern P a g e 3

4 Resolution No.1: Merger of PHL Holdings Private Limited with Piramal Enterprises Limited Type of Resolution: Special Management Recommendation InGovern Recommendation : FOR : AGAINST Text of Resolution(s) (Item no.1) RESOLVED THAT pursuant to the provisions of Sections 391 to 394 read with Sections 78, 100 to 103 and other applicable provisions, if any, of the Companies Act, 1956 ( the Act ) and subject to the approval of the Hon ble High Court of Judicature at Bombay, and subject to such other approvals, permissions and sanctions of regulatory and other authorities, as may be necessary and subject to such conditions and modifications as may be prescribed or imposed by the Hon ble High Court of Judicature at Bombay or by any of the regulatory or other authorities, while granting such consents, approvals and permissions, which may be agreed to by the Board of Directors (hereinafter referred to as the Board, which term shall be deemed to mean and include one or more Committee(s) constituted/to be constituted by the Board to exercise its powers including the powers conferred by this Resolution), the proposed arrangements embodied in the Scheme of Amalgamation and Arrangement between PHL Holdings Private Limited and Piramal Enterprises Limited and their respective shareholders and creditors ( the Scheme ) placed before this meeting and initialed by the Chairman of the meeting for the purpose of identification, be and is hereby approved; RESOLVED FURTHER THAT the Board be and is hereby authorized to do all such acts, deeds, matters and things, as may be considered requisite, desirable, appropriate or necessary to effectively implement the arrangements embodied in the Scheme and to accept such modifications, amendments, limitations and/or conditions, if any, which may be required and/or imposed by the Hon ble High Court of Judicature at Bombay while sanctioning the arrangements embodied in the Scheme or by any authorities under law, or as may be required for the purpose of resolving any doubts or difficulties that may arise in giving effect to the Scheme, as the Board may deem fit and proper. InGovern P a g e 4

5 Company Profile: Piramal Enterprises Limited (PEL) PEL is the flagship company of the Piramal Group and was incorporated on April 26, 1947 as Indian Schering Limited. It has presence in pharmaceutical, financial services and information management sectors. In the pharmaceutical space, PEL has presence in the global critical care segment with a portfolio of inhalation and injectible anesthetics and OTC business. It is also engaged in drug discovery & research and has strong pipeline of development products. In the financial services space, PEL has a real estate focused PE fund Indiareit and a NBFC that is focused on lending to real estate and education sector. Recently, PEL has also entered the global information management industry through acquisition of a US based company - Decision Resources Group. PEL - Shareholding Pattern (As of December 31, 2012) Category No. of Shares % Promoters 91,438, Individuals 330, PHL Holdings Pvt. Ltd. 84,092, Other Corporate Bodies 4,572, ESOP Trusts 2,442, Public Shareholders 81,124, Total 172,563, Source: NSE Website PEL has an equity capital of Rs cr. divided into cr. shares of Rs. 2 each with promoter holding of 52.99% and public holding of 47.01% (as of December 31 st 2012). Institutional investors hold 28.30% of which Aberdeen Global Fund and LIC are the largest institutional shareholders holding 9.31% and 3.23% respectively. PHL Holdings Private Limited (PHPL) PHPL is a promoter group entity holding 84,092,879 shares (48.73% stake) in Piramal Enterprises Ltd. It was incorporated on November 15, 1999 as Piramal International Pvt. Ltd. It has an equity capital of Rs. 6,760,010 divided into 676,001 shares of Rs. 10 each, held by Sri Krishna Trust, a trust belonging to promoter family of Piramal Enterprises Ltd. PHPL - Shareholding Pattern (Pre-Scheme) Category No. of Shares % Piramal Management Services Pvt. Ltd Corporate Trustee of The Sri Krishna Trust 675,999 Piramal Management Services Pvt. Ltd Corporate Trustee of The Sri Krishna Trust jointly with Mr. Khushru B. Jijina % Piramal Management Services Pvt. Ltd Corporate Trustee of The Sri Krishna Trust jointly with Mr. Sunil Adukia % Total 676,001 Source: Company Filings InGovern P a g e 5

6 Scheme of Amalgamation and Arrangement: The scheme of amalgamation proposes to merge PHPL with PEL. PHPL is a company forming part of the Promoter Group of PEL and holds 84,092,879 equity shares in PEL, constituting 48.73% of PEL s share capital. Pursuant to the Scheme, there would be no change in the promoter shareholding of PEL. The promoters would continue to hold the same percentage of shares in PEL, pre and post the amalgamation of PHPL into PEL. Pre-amalgamation structure: The Shri Krishna Trust PHL Holdings Private Limited Other Promoter Group Entities Public Shareholders 48.73% 4.26%% 47.01% Piramal Enterprises Limited (Listed Entity) Post-amalgamation structure: The Shri Krishna Trust Other Promoter Group Entities Public Shareholders 48.73% 4.26%% 47.01% Piramal Enterprises Limited (Listed Entity) Consequent to the amalgamation of PHPL into PEL and the dissolution without winding up of PHPL, 84,092,879 fully paid-up equity shares of the face value of Rs. 2 each held by PHPL in PEL will be cancelled and equivalent number of equity shares in PEL will be issued by PEL to the equity shareholders of PHPL as consideration for the merger. Reduction of share capital of PEL shall be effected as an integral part of the Scheme under Section 102 of the Companies Act. All assets and liabilities of PHPL shall be recorded at their book values by PEL using the pooling of interest method and all reserves and surplus of PHPL will be transferred to PEL at their existing carrying amounts. InGovern P a g e 6

7 Pre- and Post- Merger Shareholding Pattern of PEL Category Promoters Pre-Merger Post-Merger No. of shares % No. of shares % Individuals/HUF 3,30, ,30, PHL Holdings 84,092, The Sri Krishna Trust ,92, Other Corporate Bodies 4,572, ,572, ESOP Trusts 24,42, ,42, Total Promoters 9,14,38, ,14,38, Public Shareholders 8,11,24, ,11,24, Total 17,25,63, ,25,63, Source: Company Filings Rationale of the Scheme of Amalgamation and Arrangement (as per Management): The Promoters of PEL desire to streamline and realign their current shareholding in the Company and eliminate multi-layered shareholding structure. As a step towards this end and for rationalization, it is proposed to merge PHPL into PEL. Shareholders of PHPL shall indemnify PEL for liability, claim, demand, if any, discharged by PEL and not recorded in the books of account of PHPL or any other liability, claim, demand, suit or proceedings made, lodged or filed by any third party(ies) including Governmental authorities and which may devolve on PEL on account of this amalgamation. InGovern P a g e 7

8 InGovern Analysis and Recommendation: The transaction seems to be a straight-forward merger of a holding company with its listed subsidiary, where shareholders of PHPL will directly get shares in the listed entity PEL. However, we notice certain key governance concerns primarily arising from inadequate disclosures relating to the holding company PHPL and its step down subsidiaries (which have now been merged with PHPL in October 2012) as well as related party transactions between these group entities made prior to this Scheme to effect this merger. Key Governance Concerns: Inadequate disclosures on the promoter group entities and related party transactions between these promoter group entities made prior to this Scheme to effect this merger. In June 2010, PHL Holdings Private Ltd. (PHL Holdings) held 37.45% stake in Piramal Enterprises Ltd. (erstwhile Piramal Healthcare Ltd.). Subsequently PHL Holdings filed for a scheme of arrangement wherein the Investment Division for Pharmaceuticals Business of PHL Holdings got merged with another promoter group entity, Piramal International Private Ltd. (Piramal International). The assets & liabilities of the said division were transferred to Piramal International at their fair value on the appointed date i.e. April 01, The difference between the excess of net assets transferred and face value of preference shares allotted to shareholders of PHL Holdings were recorded as general reserve in the books of Piramal International. The resulting entity PHL Holdings ended up with much larger asset base (Refer to FY2011 financials of PHL Holdings given in Appendix). The scheme was sanctioned by the court in October Court Approved Scheme of Amalgamation between PHL Holdings and Piramal International: The Shri Krishna Trust Pharma Investments of PHL Holdings merged Piramal International Private Limited PHL Holdings Private Limited Holding company for PEL and PLSL Assets and Liabilities transferred at Fair Value Prior to the court sanction of the scheme in October 2010, PHL Holdings transferred its shareholding in Piramal Enterprises Ltd. to its step down subsidiaries (BMK Laboratories Private Ltd., Paramount Pharma Private Ltd. and Cavaal Finvest Private Ltd.) through inter-se transfers. Date Price Acquirer Transferor # of Shares % Shares 25-Aug-10 Market Price Paramount Pharma PHL Holdings 40,000, % 26-Aug-10 Market Price BMK Laboratories PHL Holdings 38,284, % 07-Sep-10 Market Price Cavaal Finvest Other Promoters 15,212, % (Source: NSE Website) Refer Appendix: Change in Shareholding Pattern of PEL from June 2010 to September InGovern P a g e 8

9 Shareholders should note that the during this time, Piramal Enterprises Ltd. (erstwhile Piramal Healthcare Ltd.) had announced the sale of its domestic formulation business to Abbott for a total cash consideration of US $ 3.8 billion including US $ 1.6 billion in four annual installments of US $400 million every year starting from These inter-se transfers were primarily affected through book entries in the books of PHL Holdings and its three step-down subsidiaries without any substantial cash inflow or outflows. Since the investments in PEL were already at fair value in the books of PHL (which was closer to the then market prices) the interse transfers (which were also made at the then market prices of PEL) did not have much effect on the balance sheet position of these promoter group entities. Any small differences (gain or loss) through transfer of shares were adjusted in the reserves. (See FY11 financials of BMK Laboratories, Paramount Pharma and Cavaal Finvest in the Appendix). The mechanics involved PHL Holdings giving loans and advances to its step-down subsidiaries BMK Laboratories and Paramount Pharma and they in turn will purchase the PEL shares held by PHL Holdings funded by those loans and advances. BMK Laboratories will in turn provide loans and advances to its step-own subsidiary Cavaal Finvest and Cavaal will use that loans and advances to purchase PEL shares from other promoter group entities. PHL Holdings also raised loans from financial institutions to finance these loans and advances given to its subsidiaries for purchase of their shares held in PEL. The Shri Krishna Trust Holding company for PEL Loans and Advances PHL Holdings Private Limited Buy PEL shares using the loans and advances by PHL Adelwise Investments Private Limited BMK Laboratories Private Limited Paramount Pharma Private Limited Loans and Advances Cavaal Fininvest Private Limited (See FY11 financials of BMK Laboratories, Paramount Pharma and Cavaal Finvest given in the Appendix). InGovern P a g e 9

10 In October 2010, Piramal Enterprises Ltd (erstwhile Piramal Healthcare Ltd.), announced the buyback of upto 20% of its outstanding share capital at Rs 600 per share through a tender offer route in which the three step-down subsidiaries of PHL Holdings (BMK Laboratories, Paramount Pharma and Cavaal Finvest) also sold some of their shares in PEL. The general reserves of these three subsidiaries increased as a result of the gain from sale of shares through the buyback and subsequent dividend payouts of PEL thereof. Company Name Shares Sold in Buyback % of Shares Outstanding BMK Laboratories Private Limited 86,81, % Paramount Pharma Private Limited 78,41, % Cavaal Finvest Private Limited 34,83, % (Source: Company Filings) See the change in Shareholding Pattern of PEL in the Appendix In March 2012, a resolution was passed by the board of PHL Holdings for a composite scheme of arrangement to merge the three step-down subsidiaries into PHL Holdings. The Scheme was sanctioned by the court in October On scheme becoming effective, all assets and liabilities of these subsidiary companies were transferred to PHL Holdings at higher of their respective book value or fair value. Intercompany balances and investments were cancelled. Since BMK Laboratories and Cavaal Invest were wholly owned subsidiaries, no consideration was given for their transfer, but shareholders of Paramount Pharma were allotted shares in PHL Holdings in the ratio of 1:10 (1 PHL Holdings share for 10 shares held in Paramount Pharma). The difference between excess of net asset value of subsidiary companies and face value of shares allotted by PHL Holdings post adjustments stood credited to General Reserves of PHL Holdings and any shortfall debited to goodwill account of PHL Holdings. Pre Amalgamation Structure of PHL Holdings Post Amalgamation Structure The Shri Krishna Trust Holding company for PEL PHL Holdings Private Limited Adelwise Investments Private Limited The Shri Krishna Trust BMK Laboratories Private Limited Paramount Pharma Private Limited Holding company for PEL PHL Holdings Private Limited Cavaal Fininvest Private Limited InGovern P a g e 10

11 Hence, post the scheme, all shareholding in PEL held by these three step-down subsidiaries effectively got transferred back to PHL Holdings through this scheme of amalgamation and as a result PHL Holdings ended up holding 48.73% in PEL as of December 31, The current scheme proposes to merge PHL Holdings with PEL through a court approved scheme of arrangement. Given the backdrop of the abovementioned related party transactions, the company should have ideally disclosed the financials of PHL Holdings and the nature of adjustments arising from these past transactions in the books of PEL. PHL Holdings also had liabilities to the tune of Rs 474 crores as of March 31, On approaching the company for further details of the transaction, InGovern was told to visit the company for inspection of the documents and the same were not made available to us electronically. The company has clarified that PHL Holdings will not have any debt in the books of PHPL as on the appointed date and that there will be no adverse impact on the financials of PEL due to the merger. However, the company should also clarify to its shareholders the rationale for these past transactions and their potential effect due to these transactions on PEL shareholders if the current merger goes through. The company should also publicly disclose the financial documents for PHPL ending September 30, 2012 and December 31, 2012 as well as all scheme related documents, for greater public scrutiny. Rationale given for this amalgamation can also be achieved through an inter-se transfer or a scheme of amalgamation at the promoter group level and does not suggest any specific business logic for PEL shareholders. The rationale for the current scheme as mentioned in the notice to shareholders states that the promoters of PEL desire to streamline and realign their current shareholding in PEL and eliminate multi-layered shareholding structure. However this rationale does not seem to suggest any specific business logic since the same objective could have been achieved through an inter-se transfer or a scheme of amalgamation at the promoter group level. In another listed group company, Piramal Life Sciences Ltd., PHPL has recently transferred their shareholding to Sri Krishna Trust (holding company of PHPL) through an inter-se transfer and hence we cannot see why the same couldn t be achieved in PEL through this route. If not, the promoters could have merged their group entities and streamlined their multi-layered shareholding structure in PEL. Given the backdrop of the related party transactions that have happened in the past between PHPL and its step down subsidiaries, it seems as if the current merger might have been affected to cover up some of these past corporate actions. We urge the company to provide more clarification on the business rationale for such a transaction. In light of the abovementioned concerns, we recommend shareholders of PEL to vote AGAINST the resolution. InGovern also believes that the Company should stand up for greater scrutiny and institutional investors should seek more details and clarification for this transaction. InGovern P a g e 11

12 Annexure Financials - Piramal Enterprises Ltd. (Consolidated) Balance Sheet as of (In Rs. Cr.) March 2012 Share capital Reserves & surplus 11, Total equity 11, Minority interest Long term borrowings Deferred tax liabilities Other long term liabilities Long term provisions Total non-current liabilities Short term borrowings 1, Trade payables Other current liabilities Short term provisions Total current liabilities 2, Total liabilities 14, Tangible assets 1, Intangible assets Capital WIP Intangible assets under development Non-current investments 6, Long term loans & advances Other non-current assets 4, Total non-current assets 13, Current investments Inventories Trade receivables Cash and bank balances Short term loans and advances Other current assets Total current assets 1, Total assets 14, Source: Company Filings InGovern P a g e 12

13 Financials - Piramal Enterprises Ltd. (Consolidated) Income Statement (In Rs. Cr.) Mar-12 LTM Net Revenues 2, , Other Income Total Income 2, , Expenses 2, , Finance Costs Depreciation & Amortization Total Expenses 2, , Exceptional Items (5.66) (6.93) Profit before Tax (29.84) Tax 5.63 (17.21) Profit after Tax (12.63) Minority Interest Share of Profit/(Loss) of Associates - (2.13) Net Profit (18.35) Source: Company Filings InGovern P a g e 13

14 Financials - PHL Holdings Pvt. Ltd. Balance Sheet as of (In Rs.) Mar-10 Mar-11 Mar-12 Share Capital 100, , ,000 Preference Shares (0.01% Redeemable) - 500, ,000 Reserves and Surplus 74,200 35,563,463,051 35,174,539,551 Total Equity 174,200 35,564,063,051 35,175,139,551 Loans from Financial Institution - 4,000,000,000 - Loan From Others - - 4,743,010,000 Loan From Company 73,771, Unsecured Loans 73,771,814 4,000,000,000 4,743,010,000 Current Liabilities 3,740,054 8,158,585 7,696,968 Total Liabilities 77,686,068 39,572,221,636 39,925,846, , , Piramal Life Sciences Ltd ,314, ,314,821 BMK Laboratories Ltd , ,277 Paramount Pharma Pvt. Ltd. - 9,988 9,988 Piramal Healthcare Limited - - 1,794,450,790 Piramal Enterprises Ltd. (Preference Shares) - 1,552,110 1,552,110 Mutual Funds 62,962,657 7,719,083,511 - Investments 62,962,657 8,520,562,707 2,595,929,986 BMK Laboratories Ltd. 21,710,700,000 21,492,723,000 Paramount Pharma Pvt. Ltd. 9,187,519,000 15,822,161,000 Others - 96,328,620 - Loans and Advances - 30,994,547,620 37,314,884,000 Cash in Bank 32, , ,160 Current Assets 4,037,109 33,960,822 14,772,373 Accumulated Losses 10,653,920 23,039,412 - Total Assets 77,686,068 39,572,221,636 39,925,846,519 Source: Company Filings InGovern P a g e 14

15 Financials - BMK Laboratories Pvt. Ltd. Balance Sheet as of (In Rs.) Mar-10 Mar-11 Mar-12 Share Capital 300, , ,000 Reserves and Surplus - 446,424, ,114,833 Total Equity 300, ,724, ,414,833 Loans from Financial Institutions - - 1,000,000,000 Loan From Others 107,374,271 21,728,506,941 21,496,457,933 Unsecured Loans 107,374,271 21,728,506,941 22,496,457,933 Current Liabilities 3,177, ,637, ,022 Total Liabilities 110,851,625 22,496,869,336 23,141,753, , , Fixed Assets 380, , ,739 Piramal Healthcare Limited - 14,879,251,327 15,000,299,749 Cavaal Finvest Pvt. Ltd. - 3,499,750,000 3,499,750,000 Investments - 18,379,001,327 18,500,049,749 Cavaal Finvest Pvt. Ltd. 41,624,871 3,813,684,947 3,637,410,000 Loans and Advances 41,624,871 3,813,684,947 3,637,410,000 Cash in Bank 209, ,431 1,000,175,216 Current Assets 3,606, ,645,442 3,799,084 Accumulated Losses 65,030,331 - Total Assets 110,851,625 22,496,869,336 23,141,753,788 Source: Company Filings InGovern P a g e 15

16 Financials - Paramount Pharma Pvt. Ltd. Balance Sheet as of (In Rs.) Mar-10 Mar-11 Mar-12 Share Capital 100,000 2,620, ,000 Reserves and Surplus - 6,867,458, ,494,878 Share Application Money - 753,850,000 - Total Equity 100,000 7,623,928, ,594,878 Loans from Financial Institution Loan From Others Loan From Companies 2,772,836 9,191,294,776 15,822,161,000 Unsecured Loans 2,772,836 9,191,294,776 15,822,161,000 Sundry Creditors 24,680 24,680 3,371 Audit Fees 3,309 3,309 - TDS Payable - 236,571 19,892 Provisions - 203,000, ,360 Other Liabilities ,024 Current Liabilities 27, ,264, ,647 Total Liabilities 2,900,825 17,018,487,638 16,781,117,525 Piramal Healthcare Ltd 16,296,792,044 16,296,792,044 Piramal Glass Ltd 104,668, ,668,240 Piramal Life Sciences Ltd 379,636, ,636,314 BMK Laboratories Pvt Ltd Investments - 16,781,096,808 16,781,096,808 Advance Tax - 197,795,543 - Loans and Advances 1,642,531 39,564,891 - Cash in Bank 22,147 30,396 20,717 Current Assets 1,664, ,390,830 20,717 Accumulated Losses 1,236, Total Assets 2,900,825 17,018,487,638 16,781,117,525 Source: Company Filings InGovern P a g e 16

17 Financials - Cavaal Finvest Pvt. Ltd. Balance Sheet as of (In Rs.) Mar-10 Mar-11 Mar-12 Share Capital 100,000 10,000,000 10,000,000 Reserves and Surplus - 3,669,071,118 3,845,915,000 Total Equity 100,000 3,679,071,118 3,855,915,000 Loans from Financial Institution Loan From Others Loan From Holding Company 41,624,871 3,813,684,947 3,637,410,000 Unsecured Loans 41,624,871 3,813,684,947 3,637,410,000 Tax Deductible at Source - 999,895 43,000 Liability for Expenses 4,412 8, ,000 Provisions - 102,150, ,154,000 Current Liabilities 4, ,158, ,588,000 Total Liabilities 41,729,283 7,595,914,784 7,595,913,000 Shares of Piramal Healthcare Ltd - 7,493,759,624 7,493,760,000 Investments - 7,493,759,624 7,493,760,000 Advance Tax - 102,150, ,150,000 Loans and Advances - - Cash in Bank 822 5,160 3,000 Current Assets ,155, ,153,000 Accumulated Losses 41,728, Total Assets 41,729,283 7,595,914,784 7,595,913,000 Source: Company Filings InGovern P a g e 17

18 Change in Shareholding Pattern of Piramal Enterprises Limited: Promoters of Piramal Enterprises 30-Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec-2012 Ajay G Piramal 1,57,915 1,00,155 1,00, ,044 1,044 1,044 1,044 1,044 Piramal Swati A 4,46, ,167 1,167 1,167 1,167 1,167 Anand Ajay Piramal 27,36, ,653 95,653 95,653 95,653 95,653 Lalita G. Piramal , Nandini A Piramal 38,56, ,406 96,406 96,406 96,406 96,406 Ajay G Piramal (HUF) 2,08,875-1,00,155 1,00,155 1,00,155 5,221 5,221 5,221 5,221 5,221 Ajay G Piramal Karta of Gopikishan Piramal (HUF) ,02,658 1,02,658 1,02,658 1,02,658 1,02,658 Anya Piramal DeYoung ,000 28,000 28,000 28,000 The Ajay G Piramal Foundation 12,50,000 12,50,000 12,50,000 12,50,000 10,00,000 10,00,000 10,31,250 9,56,250 9,56,250 9,56,250 9,56,250 Nandini Piramal Investments Pvt Ltd 49, PHL Holdings Pvt Ltd 7,82,84, ,30,411 63,30,411 63,30,411 63,30,411 8,40,92,879 Savoy Finance & Investments Pvt Ltd 63,08, Swastik Safe Deposit And Investments Ltd 88,54, ,240 1,240 1,240 1,240 1,240 Paramount Pharma Private Limited - 4,00,00,000 4,00,00,000 3,21,58,739 3,21,58,739 3,21,58,739 3,30,58,878 3,30,58,878 3,30,58,878 3,30,58,878 - BMK Laboratories Private Limited - 3,82,84,677 3,82,84,677 2,96,02,906 2,98,52,906 2,98,52,906 2,98,52,906 2,99,27,906 2,99,27,906 2,99,27,906 - Cavaal Fininvest Private Limited - 1,52,12,677 1,82,59,474 1,47,75,684 1,47,75,684 1,47,75,684 1,47,75,684 1,47,75,684 1,47,75,684 1,47,75,684 - Piramal Management Services Pvt. Ltd. - 73,05,731 73,05,731 54,31,430 50,83, Piramal International Private Limited ,83, Various ESOP Schemes of PEL 67,51,574 65,28,662 62,40,837 61,96,752 61,91,452 61,91,152 62,20,100 61,99,875 61,72,500 61,55,150 60,57,175 Total Promoters 10,89,04,848 10,86,81,936 11,14,40,908 8,95,15,700 8,91,62,400 8,91,62,100 9,16,01,222 9,15,80,997 9,15,53,622 9,15,36,272 9,14,38,297 Total Public 10,01,08,296 10,03,31,208 9,75,72,236 7,84,00,344 7,80,48,115 7,80,48,415 8,09,61,878 8,09,82,103 8,10,09,478 8,10,26,828 8,11,24,803 Total Outstanding 20,90,13,144 20,90,13,144 20,90,13,144 16,79,16,044 16,72,10,515 16,72,10,515 17,25,63,100 17,25,63,100 17,25,63,100 17,25,63,100 17,25,63,100 Promoters of Piramal Enterprises 30-Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec-2012 Ajay G Piramal 0.08% 0.05% 0.05% 0.00% 0.00% 0.00% 0.01% 0.00% 0.00% 0.00% 0.00% Piramal Swati A 0.21% 0.00% 0.00% 0.00% 0.00% 0.00% 0.01% 0.00% 0.00% 0.00% 0.00% Anand Ajay Piramal 1.31% 0.00% 0.00% 0.00% 0.00% 0.00% 0.06% 0.06% 0.06% 0.06% 0.06% Lalita G. Piramal 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.01% 0.00% 0.00% 0.00% 0.00% Nandini A Piramal 1.84% 0.00% 0.00% 0.00% 0.00% 0.00% 0.06% 0.06% 0.06% 0.06% 0.06% Ajay G Piramal (HUF) 0.10% 0.00% 0.00% 0.06% 0.06% 0.06% 0.00% 0.00% 0.00% 0.00% 0.00% Ajay G Piramal Karta of Gopikishan Piramal (HUF) 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.06% 0.06% 0.06% 0.06% 0.06% Anya Piramal DeYoung 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.02% 0.02% 0.02% 0.02% The Ajay G Piramal Foundation 0.60% 0.60% 0.60% 0.74% 0.60% 0.60% 0.60% 0.55% 0.55% 0.55% 0.55% Nandini Piramal Investments Pvt Ltd 0.02% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% PHL Holdings Pvt Ltd 37.45% 0.00% 0.00% 0.00% 0.00% 0.00% 3.67% 3.67% 3.67% 3.67% 48.73% Savoy Finance & Investments Pvt Ltd 3.02% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Swastik Safe Deposit And Investments Ltd 4.24% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Paramount Pharma Private Limited 0.00% 19.14% 19.14% 19.15% 19.23% 19.23% 19.16% 19.16% 19.16% 19.16% 0.00% BMK Laboratories Private Limited 0.00% 18.32% 18.32% 17.63% 17.85% 17.85% 17.30% 17.34% 17.34% 17.34% 0.00% Cavaal Fininvest Private Limited 0.00% 7.28% 8.74% 8.80% 8.84% 8.84% 8.56% 8.56% 8.56% 8.56% 0.00% Piramal Management Services Pvt. Ltd. 0.00% 3.50% 3.50% 3.23% 3.04% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Piramal International Private Limited 0.00% 0.00% 0.00% 0.00% 0.00% 3.04% 0.00% 0.00% 0.00% 0.00% 0.00% Various ESOP Schemes of PEL 3.23% 3.12% 2.99% 3.69% 3.70% 3.70% 3.60% 3.59% 3.58% 3.57% 3.51% Total Promoters 52.10% 52.00% 53.32% 53.31% 53.32% 53.32% 53.08% 53.07% 53.06% 53.05% 52.99% Total Public 47.90% 48.00% 46.68% 46.69% 46.68% 46.68% 46.92% 46.93% 46.94% 46.95% 47.01% Total Outstanding Source: NSE Website InGovern P a g e 18

19 List of Documents Referred: 1. PEL Annual Reports for FY2010, FY2011, FY Stock Exchange filings made by PEL 3. PHL Holdings Pvt. Ltd. filings for FY 2010, FY 2011, FY 2012 from MCA. 4. BMK Laboratories Pvt. Ltd. filings for FY 2010, FY 2011, FY 2012 from MCA. 5. Paramount Pharma Pvt. Ltd. filings for FY 2010, FY 2011, FY 2012 from MCA. 6. Cavaal Finvest Pvt. Ltd. filings for FY2010, FY2011, FY2012 from MCA. 7. Scheme Document sanctioned by the High Court relating to Scheme of Amalgamation of BMK Labs Pvt. Ltd., Cadeau Labs Pvt. Ltd., Paramount Pharma Pvt. Ltd., Cavaal Finvest Pvt. Ltd. and PHL Holdings Pvt. Ltd., dated October Scheme Document sanctioned by the High Court relating to Scheme of Amalgamation of Piramal Enterprises Ltd. and Piramal International Pvt. Ltd., dated October InGovern P a g e 19

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