While the troubles for the real estate sector seem to be easing with a gradual pick-up in demand, there are still concerns over the huge chunk of promoter shares pledged.

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Though pledging of shares is considered the last fund-raising avenue, several developers are taking the route, indicating their difficulty in raising finances.

Ravi Kiran Aggarwal and Pujit Aggarwal, promoters of Mumbai-based niche realtor Orbit Corp, have pledged 96.43% and 35.26% of their shares, respectively, as collateral to raise debt of Rs 100 crore. The value of the collateral works out to Rs 327 crore, thrice the amount raised as debt. The collateral (of 1.16 crore shares) has been pledged in three tranches.

Rama Shriya Yadav, chief financial officer, Orbit Corp, said, “We have raised some debt as we are actively looking for project acquisition in south Mumbai.”

Pradeep Jain and family, the promoters of New Delhi-based Parsvnath Developers, have also pledged 84.88% of their holdings.

An email sent to the company about the reasons for the pledging of shares went unanswered. The company had failed to raise money through its qualified institutional placement (QIP) last year. It is looking at raising Rs242 crore by the end of this month through private equity.

But pledging more shares makes availing funds from banks more difficult.

Analysts tracking the sector said banks are keeping at least thrice the amount lent as collateral. And, given the change in corporate lending terms from next month (with interest rates on loans linked to the base rate) and the poor performance of realty stocks, they are not going easy on developers where the promoters have pledged shares.    

Ramesh Chandra and his son Sanjay Chandra, promoters of Unitech, the second-largest realtor by market capitalisation, had pledged as much as 80.42% of their 43.84% stake in the company. This has come down to 64.54% after the company halved its debt following two QIP issues.

A Unitech spokesperson said, “The proportion of pledged shares has not come down much despite debt reduction owing to cross collateralisation of debt by lenders.”

An analyst with a domestic brokerage said the only way forward for Unitech is to execute all its projects and generate cash flows to repay loans. “That is one of the reasons why Unitech is launching projects at less-than-market prices…otherwise investors are not keen to enter the stock unless the pledged shares come down.”

Sanjay Chandra, managing director, Unitech, had said earlier, “we are securing our unsecured lenders.”

Omaxe promoter Rohtas Goel has pledged 37.22% of his 89.14% stake in the company. Omaxe is looking to raise Rs 800 crore by the end of this month through a QIP to repay loans. Analysts, however, say it is difficult for Omaxe to raise this huge amount as investors are chary about investing in top realty companies, let alone smaller players.

Mumbai-based Peninsula Land, promoted by Rajeev Piramal, has 26.77% of its 53.65% promoter holding pledged.