Promoter stake slips in Essel group, Anil Ambani firms in March quarter

The promoter holdings in the troubled Essel group and Anil Ambani group have dropped in the March quarter.
 
According to exchange disclosures, the promoter group entities sold Rs 1,796 crore worth of shares in the listed Essel entities during the March quarter. Disclosures also show that the Essel promoters released Rs 2,497 crore of shares that were pledged with lenders. Despite this, promoter holding slipped between 284 basis points (bps) and 882 bps in the March quarter as against the previous quarter. 
 
Meanwhile, the Anil Ambani group companies have witnessed 1.4 billion pledged shares getting invoked in the March quarter. As a result, the promoter entities shareholding in the group companies has slipped 470-3,108 bps in the quarter. In the same quarter, 250 million pledged shares of the group companies have been released from pledge.
 
Among the Anil Ambani group companies, Reliance Capital has seen the least drop in promoter stake (476 bps), while Reliance Communications (RCom) has seen the largest drop (3,108 bps). The promoter entities’ stake in RCom has slipped to 22 per cent as of March 31, 2019 from 53 per cent as of December 31, 2018.
 
Anil Ambani-owned Reliance group did not comment to an e-mailed query.
 

To avoid invocation of pledged shares by lenders, Essel group promoters had entered into a 'standstill' agreement with lenders earlier in the year. As part of the deal, lenders have given the promoters time till September to settle the dues.
 
Among the Essel group entities, Zee Media has seen the promoter stake decline by 928 bps to 57.74 per cent by the end of March 2019. Among other entities, promoters' stake in Shirpur Gold Refinery has slipped by 882 bps to 63.89 per cent. Promoters' stake in Siti Networks has slipped by 655 bps to 65.68 per cent.
 
"Essel Group has always maintained extremely high levels of corporate governance, right since its inception. All disclosures to the exchanges, pertaining to the promoter holding, have been conducted as per regulatory guidelines," a company spokesperson, said.
 
While the two groups are grappling with their debt issues, mutual fund (MF) exposures to these group’s entities under loan against share (LAS) structures have come under scrutiny.
 
According to industry estimates, MFs have about Rs 7,500 crore worth of LAS exposures to Essel group. Recently, fixed maturity plans (FMPs) with these exposures had come under the spotlight as they were unable to give investors the full amount on maturity due to their Essel group exposures.
 
Meanwhile, MFs exposure to Anil Ambani group’s LAS exposures is estimated to be around Rs 1,000 crore.
 
Recently, CARE Ratings and Brickwork Ratings have revised the long-term rating for various debt instruments of Reliance Capital. CARE has placed the firm on ‘credit watch with developing implications’ and Brickwork has placed instruments on ‘credit watch with negative implications’.
 
Reliance Capital has said it considers these rating actions “unjustified and inappropriate”. “There has not been any adverse change in the company’s operational parameters from the time of the last rating action,” it has stated.