A total of 768 companies had pledged their shares—amounting to a total value of Rs1,536.60 billion—as on June 2011

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A total of 768 companies had pledged their shares—amounting to a total value of Rs1,536.60 billion—as on June 2011

This article was posted on Aug 29, 2011 and is filed under Market News

Pledging shares against debt is a sure recipe for disaster, especially in a falling market. Around 30 companies have actually pledged shares of more than 50% of their paid-up capital. Among the top companies with the highest value of pledged shares were TCS, Adani Power and JP Power—with a pledged value of $4.20 billion, $2.10 billion and $1.20 billion respectively

On 19th August, Moneylife had reported on how KS Oils saw its share price plummeting by 32% on the Bombay Stock Exchange (BSE), after months of steady decline (Private equity funds slip as KS Oils slides).

KS Oils had pledged around 80% of its shares against loans. On 16th August, KS Oils crashed by a whopping 32% after Edelweiss Finance and Investment Limited sold around 44.50 lakh shares on the BSE at Rs9.13 a share. Earlier, on 12th August, Sicom had sold 25.78 lakh shares of KS Oils at Rs12.96 on the National Stock Exchange. KS Oils has seen its scrip plunge by 90% since January 2010. For more visit: Moneylife.in

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