NBFC foray will help the Pidilite ecosystem, would keep it at arm's length distance: Bharat Puri
New Delhi, Nov 9 (PTI) Adhesive and construction chemicals manufacturer Pidilite Industries, which is entering into the NBFC sector by acquiring a promoter group firm, will be limited to providing small-value retail loans to the people related to its ecosystem, Managing Director Bharat Puri said on Thursday.
This would help 'deepen loyalty' and connect in the workman ecosystem and also enable premiumisation, and financial return, said Puri in a virtual media round table.
However, he also said, 'We are going to do this at arm's length,' having no connect with the main business of the company.
Pidilite, the makers of Fevicol, Dr Fixit, Fevikwik and M-Seal, is entering the lending business by acquiring an existing NBFC, Pargro Investments, belonging to its promoter group.
'We are entering the NBFC sector for the Pidilite ecosystem. The Pidilite ecosystem consists of a set of large number of users and a large number of dealers. These users could be furniture contractors, plumbing contractors, masons, Kothi contractors, tile layers,' he said.
This will also help dealers for plywood, hardware, sanitary, paint etc which have been known to the company for years.
When asked about its foray into lending business, Puri in a virtual media round said: 'Our assumption is that this ecosystem needs small bursts of capital at certain periods of time which we are best equipped to service.' This will not be a 'big bang initiative' where Pidilite wants to be a large-scale NBFC. It will remain restricted to the Pidilite ecosystem and service, where it believes to have a competitive advantage, he said.
'We will start with piloting this in one geography, understanding whether our assumptions hold, how it works for us, and then come back and see how to scale it up if we want to scale it up,' Puri said adding: 'Right now, we are clear that our maximum exposure over a two year period is 100 crores is what we are looking at and that is what we will stick to.' Over the next two years, to build the new business, the company has plans to invest up to Rs 100 crore in tranches, through an optimum mix of equity and debt.
'These are never going to be large loans' said Puri adding that it would be limited to the dealer contractor universe, therefore, not looking at large ticket items.
'These are going to be fellows who need a bump up in their working capital, and so on and so forth. These are not large capital investment loans,' Puri clarified.
Earlier, Pidilite Industries had made a foray into the paints segment with the launch of Haisha Paints in select geographies.
On Wednesday, Pidilite Industries reported a 35.76 per cent increase in consolidated net profit to Rs 458.53 crore for the second quarter ended on September 2023. Its revenue from operations was up 2.15 per cent at Rs 3,076.04 crore. PTI KRH MR
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