GTL Tanks 55%, 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 55% to Rs 135, and market talk is that the slide could have been accentuated by margin calls getting triggered. Promoters hold around 48% 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 Infra. Ltd a special purpose vehicle formed by GTL Infra.Ltd to purchase a portfolio of 17,500 telecom tower assets from Aircel Ltd, Aircel Cellular Ltd and Dishnet Wireless Ltd. 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.

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 between the two countries.

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.