Promoters of 31 per cent of the 1,214 listed companies having market capitalisation above

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Rs 100 crore collectively have shares worth Rs 1,10,000 crore pledged as on November 18, 2011, according to Crisil Research.

Gujarat Pipavav Port (100 per cent of promoter shares pledged), Tata Coffee (100 per cent), Vikas WSP (100 per cent), ICSA India (98.5 per cent), Edserv Softsystems (97.9 per cent), Ansal Properties and Infrastructure (97.7 per cent), Blue Coast Hotels (97.7 per cent), Western India Shipyard (97.3 per cent), GTL (96.4 per cent) and Birla Power (95.8 per cent) top the list of companies with highest promoter share pledges.

Those with over 90 per cent promoter pledging also include AGC Networks, Andhra Cements, Gayatri Projects and Kingfisher Airlines. Of the listed companies that have reported pledges, as many as 183 companies have over 25 per cent of promoter holdings pledged. They include 107 companies with above 50 per cent holdings pledged.

In 14 companies, promoters have pledged over 90 per cent of their holdings, thereby risking loss of management control and also higher share price volatility if the prices were to fall from present levels.

Sector-wise, power generation, IT and ITeS, infrastructure, pharma and healthcare companies have higher levels of share pledges.

The report titled Crisil EquityInsight pointed out inadequate disclosure levels on share pledges, thereby exposing investors of such companies to severe price volatility in case a promoter is not able to meet payment requirements or provide additional collaterals in a falling market.

Mukesh Agarwal, senior director of Crisil Research, said: “In 2011, the capital markets have been highly volatile due to looming concerns of high domestic inflation, rising interest rates and tepid global economic environment. These concerns have triggered a fall in stock prices creating pressure on promoters who have pledged shares to make good the loss in the value of collaterals. Investors, especially retail investors, are generally oblivious of such details, and eventually incur losses because of sharp fall in prices.”

The report said besides Sebi guidelines that require companies to disclose percentage of promoter holdings pledged, there is no regulation which makes it mandatory for promoters to disclose other crucial details such as the purpose of funds raised through pledging of shares, price at which the initial pledging was made and conditions under which a margin call may be triggered.

Tarun Bhatia, director of capital markets at Crisil Research, said, “Critical information on promoter share pledges other than the percentage holding should be made available on a quarterly basis to ensure greater transparency and more information to investors.”