The Pyramid Saimira Theatre Ltd (PSTL) plot is getting thicker with the company now informing stock market regulators that its key promoters?S Saminathan and N Narayanan?had pledged their entire holdings with financial institutions and banks.
Earlier, Nirmal Kotecha, another founder promoter of the southern entertainment chain, had sold his 24.5% stake in PSTL in the open market.
Both Saminathan and Narayanan had reportedly pledged their holdings in PSTL to raise funds to bail out the cash-strapped company from the current crisis.
Chips went down for PSTL ever since its big budget Rajani-starer Tamil movie ?Kuselan? bombed on the screens a few months back. PSTL stock closed on BSE at Rs 21.15, down by 3.42%, on Thursday.
In a regulatory filing, PSTL said its main promoters had pledged their entire holdings in the company. While Saminathan had pledged 50,64,672 shares or 17.91% stake, Narayanan had pledged his entire 10,78,000 shares or 3.81% stake. Saminathan was holding 50,86,614 or 17.99% stake.
Saminathan, on his personal capacity had pledged close to 7% holding in PSTL in December last and could not buyback the shares because of a cash crunch. Consequently, his holding had come down to 17.91%. Analysts contacted by FE expressed doubts about his ability to raise funds now to buyback the 17.91% stake. Both Saminathan and Narayanan were not available for comments.
Saminathan earlier told FE that PSTL was facing a severe liquidity crunch and the promoters were even ready to dilute their stakes to overcome the crisis. It was planning to sell its unviable subsidiaries, particularly those in the overseas markets, and to rope in some private equity players to raise resources.
Though PSTL had announced some operational restructuring, it is still under financial stress. PSTL had grown faster than expected till June 2008 by acquiring over 45 lakh seats or 800-odd screens across the globe. However, due to many reasons, the average footfall per screen has come down drastically and the company was forced to bring down the number of screens to 252 by December from 802 in June 2008.
According to the company, the average capacity utilisation of screens were falling across the industry, without a proportionate rise in the average spend per person. There is a huge failure of content to an extent that the average success rate of films has become less than 10% this fiscal, compared to 20% plus before, the company added.
PSTL had huge fixed cost for carrying capacity for developing content to feed exhibition units in a revenue sharing model. To add to its woes, the company was also caught in income tax net during the last two quarters.