Markets

Pledging by promoters increases marginally year-on-year despite market fall

Our Bureau Mumbai | Updated on January 20, 2018 Published on April 07, 2016

The percentage of promoter holding pledged (in companies which have at least some pledging) went up from 44.99 per cent a year back to 45.98 per cent on March 31, 2016, according to PRIME Database.

As on March 31, 2016, shares were pledged in as many as 505 of the 1,514 NSE-listed companies (around 33 per cent), up from 492 companies of the 1,445 NSE-listed companies (about 34 per cent) a year back.

High pledge levels are typically not considered a good sign by investors as a downturn in the market price can lead to invocation and change in management. Shares of promoters of as many as 40 companies were invoked in the last one year — the largest being Unitech (Rs 350 crore) compared to 44 in the previous year.

However, promoter share pledging saw a slight decrease of 1.66 per cent on a year-on-year basis to Rs 1.78 lakh crore as on March 31, 2016, in value terms.

The top 10 companies by value of pledged shares are Tata Consultancy Services, Cairn India, Adani Ports and Special Economic Zone, JSW Steel, Asian Paints, Reliance Power, Fortis Healthcare, Emami, JSW Energy and Apollo Hospitals Enterprise.

There were as many as 25 companies in which the complete holding (100 per cent) of the promoters was under pledge as on March 31, 2016. Some important names include Bajaj Hindusthan Sugar, Eastern Silk Industries, Gokaldas Exports, IL&FS Investment Managers, IVRCL, JMT Auto and Venus Remedies.

On the other hand, there were 39 companies in which pledged shares were brought down to zero during this period. The top five being Suryajyoti Spinning Mills, Shri Aster Silicates, GSS Infotech, Jaypee Infratech and Entegra.

Overall, there were 217 companies in which the percentage of promoter holding pledged increased while the percentage of promoter holding decreased in 180 companies.

The largest pledge creation transaction as well as release of the year was that of Vinod Shantilal Adani, promoter of Adani Ports & Special Economic Zone. Of 12.82 crore shares pledged on June 13, 2015, to IDBI Trusteeship Services worth Rs 3,999 crore, 7.30 crore shares worth approximately Rs 2,359 crore were released on September 11, 2015.

In all, creation of pledges took place in shares of promoters of 244 companies during the year, while release of pledges took place in shares of promoters of 191 companies.

The top five pledgees in the last one year were Kotak Mahindra Group, Axis Group, Yes Bank, Life Insurance Corporation of India and STCI Finance.

Published on April 07, 2016
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