Selling of pledged shares, along with resignation of 4 directors within a month has prompted fears that something is deeply amiss with the company

Varun Industries recently hit a 52-week low Rs42.65 on the National Stock Exchange (25 April 2012) amidst share pledging by the promoters and invocation by institutions triggering fears of a possible margin call. Additionally, several directors have resigned from the board. According to the filings, SK Srivastav, KL Gopalakrishna, MS Sundara Rajan and S Rajagopal have resigned from the directorship in the last one month alone. The reasons are unknown. The stock has tanked by a whopping 85% within a spate of over two months since it touched a high of Rs290 on 23February 2012. The stock is currently quoting at Rs42.95 (26 April 2012).

According to recent filings with NSE, three institutions—IFCI Venture Capital Fund, Kotak Mahindra Investments and Tata Capital—have invoked a combined total of 13,53,018 shares of the shares pledged by the promoters, representing 4.65% of the company’s total shares outstanding. According to NSE filings the promoters, particularly its chairman and managing director, Kiran Mehta, has been pledging shares since 5 December 2011, the same month the company decided to sell 51% of its stake in its onshore oil block at Madagascar to China’s Da Qing Oilfield Company for a hefty $150 million. Currently, the promoters have pledged 62,29,349 shares of the company, which amounts to 21.40% of the shares outstanding. For more visit: Moneylife.in

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