Indian promoters, especially first generation entrepreneurs, run the risk of losing control over their best assets after pledging shares to raise money.
In 1967, Messrs Ramgopal Indraprasad, which ran two cotton ginning factories besides polishing pulses, went bankrupt. The business had suffered losses and the owner family owed Rs 6 lakh to friends and relatives. The family’s eldest son, then 17 years old, was asked to discontinue studies due to financial difficulties and help with the business. A chance meeting with an official of Food Corporation of India (FCI) helped the teenager strike a deal with the government’s grain-handling arm – to supply polished dal and clean barley to the Indian Army, one of the biggest buyers of grains and pulses. Two years later, the company was renamed Subhash Chandra Laxmi Narain and continued to scale new heights with new businesses.
Over half a century later, the enterprising boy, now 69-year-old Subhash Chandra, finds himself in another fiscal turmoil. At risk this time is the jewel in his empire’s crown, Zee Entertainment Enterprises, owned by the Essel Group. Its promoters, including Chandra, have pledged nearly 60 per cent stake in Zee Enterprises to raise money for some risky businesses, including infrastructure.
Chandra is not alone in the pledged share saga of listed Indian companies. In fact, Zee ranks a lowly 22nd among the BSE 500 companies whose promoters have pledged their shareholding. On top is the Avantha Group, where promoters have given 100 per cent of their equity in CG Power and Industrial Solutions as collateral. For Zee, the figure is 58.3 per cent (end of December 2018).
The percentage of pledged shares for many others is also rising. Promoters of Coffee Day Enterprises have increased the percentage of their pledged shares from 57.6 per cent in December 2017 to 79.4 per cent in December 2018. For Anil Ambani’s Reliance Infrastructure,this has gone up from 66.1 per cent to 83.6 per cent, while Reliance Capital is up from 70 per cent to 83 per cent.
This story is from the {{IssueName}} edition of {{MagazineName}}.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber ? Sign In
This story is from the {{IssueName}} edition of {{MagazineName}}.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber? Sign In
"Moving to cloud helped us grow❞
What was the problem you were grappling with?
She's Got Time
MORE WOMEN ARE BECOMING WATCH CONNOISSEURS, SEEKING OUT BOTH JEWELLED AND TECHNICAL WATCHES FOR THEIR STYLE AND CRAFTSMANSHIP
RISING STAR
PARUL GULATI IS a name that's been steadily gaining prominence in the Indian entertainment industry after she appeared on season 2 of Shark Tank in 2023. She has become a multifaceted personality who effortlessly transitions between acting and entrepreneurship.
Building on a Legacy
WHEN ZAHABIYA KHORAKIWALA stepped into her role as Managing Director of Wockhardt Hospitals over a decade ago, she confronted formidable challenges that have since turned into achievements.
LEADER IN INNOVATION
AS FEDEX'S PRESIDENT (Middle East, Indian subcontinent and Africa), Kami Viswanathan has a lot on her plate.
WAITING IN THE WINGS
Here are those who missed out as they have not yet completed a year in office; they'll be strong contenders in 2025
A DECENT PROPOSAL
IN TODAY'S WORLD OF TRYING TO CREATE AN EQUITABLE SPACE, BOTH MEN AND WOMEN CONTRIBUTE TO THEIR HOUSEHOLDS. WOMEN ARE ENCOURAGED TO HAVE THEIR OWN SAVINGS POOL AND INVESTMENT ROUTINE. GIVEN THIS, HOW SHOULD FUTURE BRIDES APPROACH FINANCIAL PLANNING?
Women and the STEM Bias
EMPOWERING WOMEN IN STEM WILL NOT ONLY BENEFIT INDIVIDUALS, BUT ALSO STRENGTHEN THE ENTIRE INDUSTRY, DRIVING INNOVATION AND PROGRESS.
ROCKET WOMEN
WOMEN IN INDIA ARE NOT ONLY VENTURING INTO SPACE BUT ARE ALSO STARTING TO SPEARHEAD THE COUNTRY'S EFFORTS IN THE GLOBAL SPACE RACE.
ONE STEP FORWARD
THE NUMBER OF WOMEN INDEPENDENT DIRECTORS IS GROWING STEADILY, BUT IT'S A LONG WAY FROM GENDER PARITY. MUCH MORE NEEDS TO BE DONE TO BREAK THE GLASS CEILING IN BOARDROOMS.