The percentage of promoter-pledged shares touched an all-time high of 10% in 345 of BSE 500 companies that released their shareholding data.
At the end of FY09’s fourth quarter, the percentage of promoters’ pledged shares stood at 7.19%. Since then, the percentage of pledged shares in those companies has seen a fall. By the end of FY10’s third quarter, it dropped to 6%.
However, over the last 10 quarters, the number of pledged shares have been rising with the figure touching an 8% mark for the first time in the first quarter of FY13.
Experts believe that delay in projects has hit certain companies and forced their promoters to pledge their shares. “Promoters are pledging shares to service their debt as they await clearances for new projects,” said Dalton Capital Advisors managing director UR Bhat. “Some promoters are also pledging their shares to borrow money and trade in their own company stocks to generate volumes,” Bhat added.
Among individual companies, Gujarat NRE Coke’s entire promoter holding had been pledged by March quarter, which was 82.8% in the December quarter.
The company’s total debt in FY13 end stood at R4,723 crore. It reported a net loss of R277 crore in Q3 FY14, due to previous quarter losses of R90 crore. The company was shown a green light for corporate debt restructuring (CDR) last month.
Promoters of power producer Suzlon Energy have pledged 99.9% of their shares by the March quarter. In the previous quarter, the Suzlon promoters had pledged 81% of their shares. The company’s total debt by Q3 FY14 stood at R14,971 crore.
Realty firms Unitech and HDIL have seen their promoters’ pledged shares at 90% and 96%. “Developers typically pledge their shares to raise money to buy land,” Bhat said.
The market regulator Securities and Exchange Board of India (Sebi) had made it mandatory for the promoters of listed companies to disclose the details of the shares pledged by them, in January 2009, after the Satyam scam.