Promoters of two JSW Group companies—JSW Steel Ltd and JSW Energy Ltd—got their pledged shares valued at ₹2,500 crore released. With this, the Sajjan-Jindal led group has repaid loans amounting to ₹1,200 crore, said JSW Group in a statement on Tuesday.
The pledged shares represent 2.9% of paid-up capital of JSW Steel and 7.2% of JSW Energy.
Four promoter entities of JSW Steel–JSW Holdings Ltd, JSW Techno Projects Management Ltd, Sahyog Holdings Pvt Ltd and Vividh Finvest Pvt Ltd—repaid the debt and got their pledged shares released. In case of JSW Energy, Indusglobe Multiventures Pvt Ltd and JSW Investments Pvt Ltd got their pledged shares released.
In September, promoter of JSW Steel had repaid ₹1,150 crore for release of 5.07 crore of its pledged shares, representing 2.01% of the company’s paid-up share capital.
Promoters pledging shares with banks as collateral for loans is a common practice in India. It mostly happens when managing existing debt becomes difficult for the promoters.
According to a Kotak Institutional Equities, analysis of pledged holdings of BSE-500 stocks, the percentage of pledged promoter (majority shareholder) holdings by value has come down in the June quarter in comparison to the preceding three months.
However, the brokerage said pledging shares does not necessarily imply that a company or a promoter is under financial stress. Lenders can seek additional security in the form of promoter shares too.
In another development, National Company Law Appellate Tribunal (NCLAT) on Monday halted the transfer of Bhushan Power and Steel Ltd (BPSL) to JSW Steel Ltd and stayed the Enforcement Directorate’s (ED) move to attach assets of the insolvent steel maker, delaying the resolution of BPSL.
ED on Saturday attached assets worth ₹4,025 crore of BPSL in an alleged bank loan fraud, vindicating JSW Steel stand of seeking immunity from criminal proceedings in the ongoing probe against erstwhile promoter of BPSL. In September, JSW Steel had acquired debt-ridden BPSL under the Insolvency and Bankruptcy Code (IBC) with an offer of ₹19,700 crore.
Source: Livemint, October 15, 2019