Core Education denies sale of pledged share as a reason for sharp fall in the stock, says business is as usual.
Core Education & Technologies shares today nose dived around 60 percent along with many other mid-cap stocks. While in the market brokers believe that this distress sales could have been caused by sale of promoter's pledged shares by financial institutions, the company is denying the allegation completely.
"We have confirmed that none of the institutions have sold any of the pledged shares and therefore that leads us to believe that whatever has happened in the market has got nothing to do with the promoter shares," Nikhil Morsawala, Chief Financial Officer, Core Education told CNBC TV18.
Core Education's promoter hold 47 percent stake in the company, out of which 46 percent is pledged with institutions against company loans. Morsawala stressed that the company's business is running as usual and its has enough funds for the repayment of loans.
Also in a separate statement the company said that it has a strong order book of Rs 1,398 crore of which 90 crore is from India spanning across next five years.
Below is a verbatim transcript of the interview:
Q: Any colour you can throw on why the stock should have fallen so much, are any of the promoter pledged shares a cause at all?
A: We have pledged some shares with institutions against project loans in the company. We have spoken to all the institutions since this morning’s events and we have confirmed that none of the institutions have sold any of the pledged shares and therefore that leads us to believe that whatever has happened in the market has got nothing to do with the promoter shares. Obviously some market players or some private investors whose investments in the company could have led to this drop in the share price.
Q: Can you clarify how much of the promoter shares are pledged and with institutions as well these private guys whom you are guessing have sold, how much of your shares would they be holding?
A: The promoter holding is 47 percent in the company and out of that 47 percent roughly 46 percent has been pledged.
Q: So half of the promoter holding is pledged?
A: Absolutely, little less than half and this is with institutions against loans in the company. So, the free float or the shareholding outside of the promoter holding is 53 percent and within that 53 percent, there are constant churns, so we do not track it.
Q: You do not have to but in an event like this, you may have got in touch with people even operators who hold the shares?
A: It is a bit fresh, since morning we are trying to find out what has happened but it is obviously not the promoter shares.
Q: That is true but it will have an impact because you would have pledged it at a particular price, when 60 percent falls, all calculation go awry, so they may also be asking you for money or shares?
A: We have cleared the loans that have been taken in the company against projects and therefore there are adequate cash flows to back the repayment of the loans. The share has been given as collateral and they are not the prime security for the loan. The prime security is the projects that the company has undertaken in India with various state governments. In fact our business is as usual and so I just wanted to put this across to you and to the viewers that the company’s business is as usual, of course we have to worry about the share price and we have to find out what is happening but definitely it has nothing to do with the promoters.
Q6: The institutions have not asked you to pay back the money or called the promoters to give top-up the collateral?
A: If we need to top-up a bit and if we have to do it, we are talking to them but right now there is no need for that because there are adequate project cash flows to back the repayment of the loans.
CORE Education stock price
On August 28, 2015, CORE Education & Technologies closed at Rs 5.26, up Rs 0.09, or 1.74 percent. The 52-week high of the share was Rs 14.40 and the 52-week low was Rs 4.50.
The latest book value of the company is Rs -6.19 per share. At current value, the price-to-book value of the company was -0.85.
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