The value of shares pledged by the promoters of listed companies in India reached Rs 1.4 lakh crore level at the end of last fiscal, with one in every five firms having some part of their promoter holdings encumbered.
Companies from industrial sectors accounted for the largest amount of pledged shares, followed by healthcare and consumer discretionary segments, according to a report by financial services major Edelweiss.
“At Q4 FY’13, from the universe of 3,861 companies that have declared their shareholding, promoters of 788 companies (over 20 per cent) have pledged part of their holdings.
“Value of pledged holding stands at Rs 1.4 lakh crore during the quarter,” said the report titled ‘Pledge: Risk ‘O’ Meter’.
Funds crisis
Pledging has been active in some of the capital-intensive industries owing to limited sources of funds.
Promoters of companies, at times, in order to raise capital for business purposes pledge their shares with lenders as collateral. If the company defaults on payments, the lenders can recover the cost by selling the pledged shares in the open market.
In early 2009, SEBI had made it mandatory to disclose the data of pledged shares, and since then this data has been under the scanner of the investor community.
Among the major companies were United Spirits (about 96.95 per cent), HDIL (96.11 per cent) and Unitech (75.72 per cent). Pledging of promoters’ holdings in United Spirits and HDIL has been above 90 per cent for three quarters now, it said.
Among the Nifty-50 companies, Asian Paints had the highest promoters’ pledge, although it declined from 17.67 per cent to nearly 15.48 per cent during the last quarter.
The other companies with significant promoters’ pledging included Essar Ports (99.74 per cent), Pipavav Defence (96.98 per cent), Wockhardt (87.06 per cent), Jaypee Infratech (67.3 per cent) and Fortis Healthcare (63.77 per cent).
The list also included Suzlon Energy, Pipavav Defence, Era Infra Engg, Unitech, India Cements, Future Retail, Lanco Infratech, Omaxe, Dish TV and JSW Steel.