Amit Khurana, head of equities at brokerage firm Dolat Capital Markets suggested that there has been little evidence of promoters looking to increase their stake except for some distressed firms. He believes that promoters in general may be willing to put in more money in companies after there is more evidence of a turnaround in the economy.
“If the economy bottoms out in the next few quarters...lot of promoters may say, ‘okay, let me raise my stake’,” he said.
Gross domestic product grew at 4.5 per cent in the September quarter showed data released on Friday. This was the slowest since 2013. Analyst commentary suggested that a return to higher growth may take some more time. Lack of demand, and a reluctance to make fresh investments amid idling existing capacity are said to be some reasons hindering a quick recovery.
Exceptions aside, the regulations can call for stringent action in case of non-compliance with minimum public shareholding. The regulator has proposed various strictures including fines and other restrictions over time.
“The recognized stock exchange shall intimate the depositories to freeze the entire shareholding of the promoter and promoter group in such listed entity till the date of compliance by such entity…. The promoters, promoter group and directors of the listed entity shall not hold any new position as director in any other listed entity till the date of compliance by such entity,” an October 2017 circular had said.
It increases the fine and actions against promoters if non-compliance is for a period of a year or more.
“The actions specified in this Circular are without prejudice to the power of Sebi
to take action under the securities laws for violation of the MPS requirements,” it said.
Listed firms require minimum public shareholding
Promoters can't own more than 75%
Sebi rules allow for some exceptions, including for PSUs
Recently, promoters have pumped in capital into loss-making entities
Some companies have over 90% promoter stake
Of the 78 firms, 48 profit-making companies made over Rs 20K crore
Thirty of these 78 companies werein the red with a total loss of over Rs 73,000 crore