If the Satyam and Orchid Chemicals and Pharma episodes are any indication, promoters pledging shares can be an extremely sordid affair and can leave ordinary investors in the lurch. But promoters, unperturbed, continue to pledge a large chunk of their stake with banks and financial institutions.
The pledged shares in some cases touch 20% to 30% of the total paid-up capital of the company. If a margin call (done when share prices quote substantially lower than the price at which shares are pledged) is triggered these companies could well become prime takeover targets.
Radikaa Sarathkumar, promoter and chairperson of Radaan Mediaworks, has pledged 1.25 crore shares as collateral with Indian Overseas Bank for availing cash credit. This represents 23% of the paid-up capital of the company and 44.8% of Radikaa’s total stake. Radaan makes serials for Sun TV.
Promoters of Ganesh Housing Corporation, an Ahmedabad-based realty firm, have pledged shares equivalent to 29.9% of the total paid-up capital of the company. They have pledged 97.96 lakh shares or 52.1% of their holding to ICICI Bank for availing a term loan for a SEZ project.
The promoters could well have to look for ways to ring-fence the company from a possible acquisition if a call is triggered. Aban Investments and Reji Abraham, who are the largest shareholders besides being promoters of Aban Offshore, have pledged 30.76 lakh shares. The company has neither disclosed the institution with which the shares are pledged nor the reason for the exercise. The pledged shares represent 8.14% of the total paid-up capital and 13.3% of promoters’ holding.
SIL Investments, the largest promoter entity in K K Birla Group company Zuari Industries, has pledged 20.3 lakh shares with three institutions.
