Pidilite to Venture into NBFC Business

Fevicol maker Pidilite Industries is set to venture into the non-banking financial company (NBFC) business with the acquisition of Pargro Investments Pvt. Ltd., owned by its promoter group. The company aims to strengthen its relationships with vendors and contractors through the NBFC.

The acquisition of Pargro Investments is being facilitated through a wholly owned subsidiary, which will enter into a share purchase agreement with the NBFC at a fair value of up to Rs. 10 crore. Pidilite plans to invest Rs. 100 crore in Pargro in tranches to strengthen its network of vendors and carpenters.

Pargro is a debt-free company that has not yet started its lending business.

“One of our reasons for success is our deep connect with the user and dealer universe, carpenter contractors, plumbing contractors, masons, etc. We have a lot of demand from this ecosystem, pushing back and saying that they need short-term capital. There is nobody who knows them better than we do. We have information on their buying record, creditworthiness, and KYC with credit record,” said Pidilite Managing Director Bharat Puri, clarifying that the company has no plans to go big initially.

The acquisition is subject to the approval of the Reserve Bank of India. Pidilite has already started financing its vendors and carpenters in smaller cities in South India.

Pidilite Industries reported a consolidated net profit of Rs. 450 crore in the second quarter of 2024, a 35% increase from the same quarter in the previous year. The profit was primarily generated through cost-cutting, which reduced expenses by 4%. Revenue increased by only 2.2%.

According to Puri, the company also plans to venture into new areas in the home décor space. It started its paint business in May.