Mumbai: The pledging of shares by promoters of NSE-listed companies has hit a seven-year high during the quarter ended December 2015 indicating the high level of financial distress faced by India Inc.
According to data analysed by PRIME Database, share pledging by promoters saw an increase of 14 per cent in the last quarter of calendar year 2015, with the value of pledged shares going up to Rs 2.03 lakh crore as on December 31, 2015 compared to Rs 1.78 lakh crore reported at the end of September 30, 2015.
"High pledge levels are typically not considered a good sign by the investors as a downturn in the market price can lead to invocation and change in management," said Prithvi Haldea, managing director, PRIME.
Surprisingly, there were as many as 25 companies in which the complete holding (100 per cent) of the promoters was under- pledged as at the end of December 2015.
Mr Haldea pointed out that lenders have already invoked pledged shares in as many as 19 companies during the October-December period with Pipavav Defence & Offshore Engineering seeing Rs 300 crore worth of pledged shares being invoked by their lenders.
Some of the companies in which 100 per cent of the promoters holdings were pledged include AGC Networks, Ankit Metal & Power, Bajaj Hindusthan Sugar, DQ Entertainment, Eastern Silk Industries, Era Infra Engineering, Gokaldas Exports, IL&FS Investment Managers, Impex Ferro Tech, Ind-Swift Labs, IVRCL, Para-mount Communications, Parenteral Drugs (India), Pipavav Defence & Offshore Engineering, PSL, and Raj Rayon Industries.
In all, there were as many as 79 companies in which more than 90 per cent of the promoter’s shareholding was pledged. In another 208 companies, promoters had pledged more than 50 per cent of their ownership. As at the end of 2015, the shares of as many as 517 companies out of 1,506 NSE listed companies, were pledged, up from 370 companies six years ago.