Pidilite to manufacture Litokol and Tenax products from Italy in India
~The state-of- the art manufacturing facilities are located in Amod, Gujarat~
~Development to strengthen Pidilite’s presence in the tile and stone care range ~
Source - Press Release
Pidilite Industries Ltd, has plans to start a new business which involves lending money. This new business will provide small loans to people or companies within its network to help them grow.
To make this new business happen, the company has found another company called Pargro Investments Private Limited, which is part of the same group as Pidilite Industries. Currently, Pargro doesn’t lend money to anyone, and it doesn’t owe any debts as of October 31, 2023.
Pidilite Industries plans to acquire Pargro by creating a new company, fully owned by itself, through a Share Purchase Agreement (SPA). This agreement should be in place by March 31, 2024. They will buy Pargro at a price of up to 10 crores Rupees, which is the same as the value of the investments Pargro holds on its books as of October 31, 2023. This value has been determined by an independent expert. The acquisition will be finalized after the SPA is signed and they get the necessary approvals from the Reserve Bank of India (RBI).
Over the next two years, to make this new lending business work, Pidilite Industries plans to invest up to 100 crores Rupees, using a combination of their own money (equity) and borrowed money (debt).
seems like a John Deere model. I came to know that they also have internal lending business and it helps them keep PAT at good levels by keep good margins.
my understanding so this should bode well for pidilite as well.
Is it not indirect admission that pidilite cannot grow on its own core business?
When I first saw this nbfc diversification news I was surprised and little disappointed. when i read more about it, the reason and purpose behind it to make their own ecosystem better and self sufficient. The real moat of pidilite is the trust their partners and consumer have over their products and this nbfc seems to cater to the benefit of their partners which seem to strengthen that moat further…provided this channel is used judiciously and sensibly…now that seems to be a big if for me as and when this nbfc grows…considering i had decided long back not to invest single penny in any lending nbfc…
For now, i am just evaluating the situation and it seems they will go very slow and conservatively with this nbfc which is a positive factor for me…also giving benefit of doubt to a good management so far…
I would not call it a typical diversification because they have not entered this business as they want to derisk from main business and neither they intend to increase revenue and profits out of this…instead they eneterd thos for their main business.
others views welcome on this new business
Disc: Invested & biased with pidilite among top 3 holdings. Not a buy/sell recommendation. Post only for academic purposes and i can be wrong in all my assessments. Not eligible for any advice.
As you said, you have not invested a single penny in NBFC, i was wondering what must be the reason and also, you must have lost on the great journey of Bajaj Finance and Chola Finance and to some degree muthoot finance. Do you feel that this decision is more emotional than fact based, performance based?
i think its experienced based and knowing myself as investor. we should not look at what we lost in say nbfc as success stories will be everywhere and we cannot be everywhere…its more personal decision and i am perfectly fine in not having ridden a bajaj finance…not so fine in having lost the page industry story though…
Below is the concall notes for Pidilite Q2FY24 - looks company is determined and deriving operating leverage sooner or later.