Mumabi: Shares of GTL Ltd and its unit GTL Infrastructure Ltd crashed on Monday, with the former losing more than half its value as panicky investors rushed to get rid of the telecom infrastructure companies’ shares on multiple concerns.
Also See | Steep Sell-Off (PDF)
While there were rumours that the shares pledged by GTL promoters were sold, uncertainty over taxation of Mauritius-based investors also weighed on the stock.
Though the firm clarified in a letter to the Bombay Stock Exchange (BSE) that neither its promoters nor entities related to promoters had sold any shares, including the pledged ones, the shares did not recover by the end of day.
GTL shares dropped 62.4% on the BSE, making its shareholders poorer by Rs 2,063.10 crore, to end the day at a four-and-a-half-year low of Rs 127.80. “In GTL, promoters hold 52.71% of the equity capital of the company. The promoters have pledged only 12.85%,” the company said in its letter to the exchange.
“We would like to confirm that the company continues to conduct its business in normal course and is focusing on growing the business,” the letter said.
Shares of GTL Infra, which as at March end had 2,283 outstanding foreign currency convertible bonds (FCCBs) worth $228.30 million with a conversion price of Rs 52 maturing in November 2011, dropped 43.4% to close at Rs 16.85. In the process, Rs 1,232.51 crore worth of investor wealth got wiped out.
Around 45.6 million GTL Infra shares changed hands on the BSE, and around 22.2 million GTL shares were traded—around 10 times their two-week average trade.
Since both are traded in futures and options segment, GTL Infra and GTL do not have any circuit filters, or a trading band to restrict wild movements in a single day.
“It is (a) little premature to talk about redemptions as of now,” GTL’s investor relation and capital markets vice-president Pinakin Gandhi said in an emailed response.
However, a question on whether the creditor is still holding the pledged shares was not answered.
On Friday, GTL was down 16% on rumours that it may default on FCCBs due next year. “As the stock fell a further 20% in early trade on Monday on talks that its pledged shares were sold, margin calls got triggered, and then there was panic selling,” said Dev Kapadia, chief strategist, institutional desk, Lalkar Securities.“Further, this whole confusion over taxation of Mauritius based entities also weighed on the stock.”
According to BSE shareholding data, foreign institutional investors (FIIs) hold 14.69% in GTL with Rhodes Diversified holding 5.05% and Mavi Investment Fund Ltd 1.78%. Besides, Citigroup Global Markets Mauritius Pvt. Ltd and Barclays Capital Mauritius Ltd hold 1.49% and 1.03%, respectively in the firm.
In mid-2010, GTL had acquired 17,500 towers of telecom operator Aircel for Rs 8,400 crore.
In late 2010, a proposal by Reliance Communications Ltd (RCom) and GTL to form a joint venture with an independent transmission network with around 80,000 towers, valued at Rs 50,000 crore, fell through as the non-binding term sheet signed by both firms overshot the deadline.
Graphics by Ahmed Raza khan/Mint