Pledging of shares by promoters in companies listed on the NSE hit a seven-year high in the quarter ending December 2015 in terms of number of companies, percentage of promoter holding pledged and value of shares pledged, according to Prime Database.
Dramatic rise Percentage of total promoter holding pledged has gone up dramatically to 46 per cent from about 27 per cent in the last seven years, while value of pledged shares has gone up to ₹2.03 lakh crore from ₹1.28 lakh crore. There were 370 companies in December 2009 that went up to 517 companies in December 2015.
There were as many as 25 companies in which the complete holding (100 per cent) of the promoters was under pledge . Some of the well-known names among them are Bajaj Hindusthan Sugar, DQ Entertainment (International), IL&FS Investment Managers, IVRCL, Pipavav Defence & Offshore Engineering, Spentex Industries, Subex and Surana Industries.
Financial distress According to Pranav Haldea, MD, PRIME database, fall in equity markets points to a high level of financial distress.
There were as many as 79 companies in which more than 90 per cent of the promoter’s shareholding was pledged and 208 companies in which more than 50 per cent of the promoter’s shareholding was pledged.
Top 10 firms by value of pledged shares are: Adani Ports and Special Economic Zone, Cairn India, TCS, JSW Steel, Essar Oil, Zee Entertainment, Reliance Power, Asian Paints, JSW Energy and GMR Infrastructure.
Exceptions There were nine companies in which pledged shares were brought down to zero. These companies are Mangalam Cement, Mangalam Timber Products, Century Enka, Astec Lifesciences, Sanghvi Movers, Jay Shree Tea & Industries, Essel Propack, Blue Star and Vaibhav Global.
Overall, there were 82 and 78 companies in which the percentage of promoter holding pledged increased and decreased respectively in December quarter compared to previous quarter.
Promoters have invoked their pledging in as many as 19 companies during September-December 2015 quarter. The company in which the maximum value of shares were invoked during the quarter was Pipavav Defence & Offshore Engineering Co (₹300 crore).