Asian Paints promoters reveal 14 per cent pledged shares

30 January 2009

Promoters of Asian Paints have pledged 1.43 crore equity shares 14.98 per cent of the paid up equity capital held by them as securities through their associate companies. Its promoters have utilised the proceeds of shares pledged with lenders to raise stake in the company through secondary market purchases.

Company vice-chairman and MD Ashwin Dani said in a regulatory filing to the BSE, "The money borrowed have been invested in the purchase of Asian Paints' shares through the secondary market and by my family through creeping acquisition." 

The company said the pledges have been made over the last few years and the promoters' holding in the company has now gone up from around 40 per cent to 50 per cent.

The reporting seems to match the figures in the balance sheets of the company. As per the Asian Paints website, the aggregate percentage of non-promoter shares were over 57 per cent in the quarter ending 30 September 2004. It further reduced to around 52 per cent in June 2006. As on 31 December 2008, the non-promoter share holding was down to around 50 per cent.

Asian Paints is India's largest and Asia's third-largest paint company with a turnover of Rs4,400 crore (around $1.1 billion). Its stock fell by about 10 per cent when the disclosure was announced.

Capital markets regulator Securities and Exchange Board of India (SEBI) has made it mandatory for promoters to disclose details of shares pledged by them in their listed entities.