Piramal to focus on brownfield expansion, cut debt before acquisitions

livemint.com:

₹700 crore ($85 million) in brownfield expansion through FY25. This capital expenditure (capex), she revealed, will mostly be assigned towards the contract development and manufacturing organisation (CDMO) segment of the company. “The plan for the next year will be to uphold our continued focus on revenue growth, brownfield organic expansion, Ebitda and net debt to Ebitda ratio improvement.

And so, for this, the capex will remain the same as last year at around $85 million," Piramal told Mint in an interview. “We plan to finance this through internal accruals only and the bulk of this capex will be attributed towards the CDMO business of the company, which will be a mix of maintenance capex as well as some debottlenecking things." Although the core focus remains on organic growth, the company will consider any accretive acquisition opportunities if they come along. But the priority before any acquisition remains on reducing the net debt ratios of the company, and so it remains cautious.

The company's net debt to Ebitda ratio as of 31 March 2024 was 2.9 times, lower from 5.6 times at the start of the financial year, as the company cut its debt to ₹3,932 crore from ₹4,781 crore at the end of FY23. “The company has plans to refinance its debt, but the process remains only in the planning stages, and it would be too early to comment on its current details," she added. The company earlier had raised ₹1,050 crore through a rights issue, primarily used for debt repayment.

It has managed to cut its net debt by ₹958 crore since March 2023. The Mumbai-based pharma company reported a 102% y-o-y increase in its net profit to ₹101 crore in January-March on the back of strong revenue growth in the CDMO business. The company posted a