GTL tanks 60%, firm says fall 'attack on group'

Shares of the GTL group plunged on Monday, even as it is not yet clear what triggered the sell-off in them.

Flagship GTL was down nearly 60% to Rs 135, and market talk is that the slide could have been accentuated by margin calls getting triggered. Promoters hold around 52% in the company, of which a little over 24% has been pledged with lenders, according to the company's filing with the stock exchanges as on March 31.

In April this year, GTL had informed the exchanges that the company had invested Rs 1500 crore in Chennai Network Infrastructure Ltd (CNIL), a special purpose vehicle formed by GTL Infrastructure Ltd(GIL), to purchase a portfolio of 17,500 telecom tower assets from Aircel Ltd, Aircel Cellular Ltd and Dishnet Wireless Ltd (Aircel). The transaction is expected to be completed in July 2011. Brokers say there is speculation on whether the deal will be completed, and that could have been a trigger for the sell-off.

Shares of GTL Infrastructure were down 41% to Rs 17.50. GTL holds 36.22% in GTL Infrastructure.

There is also speculation that Mauritius-based Technology Infra, which holds 23% in GTL Infra, has sold a sizeable chunk. Technology Infra is classified as foreign direct investment in GTL Infra's prospectus.

Manoj Tirodkar, chairman and managing director of GTL described the fall as a “wild speculative attack on the stocks.” In an interview to CNBC-TV18, Tirodkar denied that the slide had anything to do with sale of pledged shares (in GTL) or Technology Infra dumping shares (in GTL Infrastructure).

Market sentiment in general was undermined by speculation that the Indian government was in talks with its Mauritian counterpart, to renegotiate the Dounle Taxation Avoidance Agreement (DTAA) between the two countries. The DTAA exempts Mauritius-based investors from paying capital gains tax in India.

Over the years, this has led to many foreign portfolio investors routing their investments through Mauritius to save on short term capitals gains tax they would otherwise have to pay in India. Institutional investors hold 16.5% in GTL and 3.3% in GTL Infra.

The latest book value of GTL is Rs 131.86 per share. At current value, the price-to-book value of the company was 1.17. The dividend yield of the company was 1.94%.

The latest book value of GTL Infrastructure is Rs 17.05 per share. At current value, the price-to-book value of the company was 1.09.

Source : Moneycontrol.com