Shares pledged by promoters of Future Consumer Ltd. and Wockhardt Ltd. rose the most even as the overall promoter pledges or percentage of stake offered as collateral by controlling shareholders of Indian companies fell to its lowest in at least nine quarters.
Future Consumer and Wockhardt saw the stakes pledged by promoters jump 29.8 percent and 20.7 percent, respectively, in the quarter ended December, according to a report by Kotak Institutional Equities. Crompton Greaves Consumer Electricals Ltd., Dhanuka Agritech Ltd., and SpiceJet Ltd. follow.
Risks related to equity pledged by promoters came into the spotlight after the troubles of debt-ridden Essel Group and Anil Ambani's Reliance Group last year. Kotak's report, however, clarified that pledging of shares doesn't necessarily imply that a company or a promoter is under financial stress. Lenders could have sought additional security in the form of promoter shares, it said.
MK Dhanuka, managing director of Dhanuka Agritech, said the company bid for Orchid Pharma Ltd., facing insolvency proceedings at the National Company Law Tribunal, for which a bank guarantee of Rs 50 crore was created. “The promoters have pledged their shares to meet this requirement,” he told BloombergQuint.
Future Group declined to comment on BloombergQuint's emailed queries regarding reasons for an increase in pledged shares, while SpiceJet, Wockhardt, Crompton Greaves, and Motherson Sumi Systems Ltd. are yet to respond.
Meanwhile, pledged shares as a percentage of total promoter holding in BSE 500 companies declined to 2.28 percent—the lowest at least since the quarter ended December 2017—from 2.52 percent in the three months ended September, the report said. Promoters of 108 companies in the BSE 500 Index, it said, had pledged all or part of their holdings.
Companies whose promoters have so far pledged more than 90 percent of their holdings: Gayatri Projects Ltd., Future Lifestyle Fashions Ltd., Dish TV India Ltd., and Future Consumer.
Also Read: Promoter Share Sales Here To Stay In 2020
Zee Entertainment Enterprises Ltd. saw the biggest decline in pledged promoter holding, followed by Bajaj Consumer Care Ltd., Yes Bank Ltd., Centrum Capital Ltd., and Adani Green Energy Ltd, among others.
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