Troubled promoters pledge their stake

The shares pledged by promoters have seen an upt-ick over the last one-year with promoters in as many as 25 listed companies pledging their entire shareholding with lenders.

Investors generally turn cautious towards companies with high level of pledging as a downturn in the market price could lead to invocation of pledged shares and change in management.

According to Prime Database, the percentage of promoter holding pledged went up from 44.99 per cent a year back to 45.98 per cent by the end of March 31, 2016.

However, in value terms, promoter share pledging saw a slight decrease of 1.66 per cent on a year-on-year basis with the value of pledged shares going down to Rs 1.78 lakh crore as on March 31, 2016 compared to Rs 1.81 lakh crore as on March 31, 2015.

“This was largely due to the fall in the equity markets over the last one year,” said Pranav Haldea, managing director, Prime Database.

Some of the companies in which the entire shareholding of the promoters were pledged include AGC Networks, Arshiya, Bajaj Hindusthan Sugar, Bha-rati Defence and Infrastr-ucture, DQ Entertainment (International), Eastern Silk Industries, Flexituff International, Gokaldas Exports, IL&FS Invest-ment Managers, Ind-Swift Laboratories, IVRCL, JMT Auto and Paramount Com-munications.

There were as many as 73 companies in which more than 90 per cent of the promoter’s shareholding was pledged and 209 companies in which more than 50 per cent of the promoter’s shareholding was pledged.

The largest pledge creation in FY16 was undertaken by Vinod Shantilal Adani, the promoter of Adani Ports & Special Economic Zone, pledging 12.82 crore shares to IDBI Trusteeship Services. The value of the pledged shares stood at Rs 3,999 crores.

The largest release of pledged shares transaction was also again that of Mr Adani as about 7.30 crore shares worth around Rs 2,359 crore were released on September 11, 2015.

TCS topped the list of firms with the highest pledging in value terms. Promoters have pledged shares worth Rs 11,490 crore or 3.15 per cent of their total holding.

This is followed by Cairn India (Rs 9,931 crore; 57.49 per cent), Adani Ports & SEZ (Rs 9,865 crore; 34.18 per cent), JSW Steel (Rs 7,069 crore; 54.98 per centc) and Asian Paints (Rs 5,801 crore; 13.19 per cent).