MUMBAI: Shares in Indian billionaire Anil Ambani's flagship Reliance Communications fell nearly 10 percent on Monday after the group was removed from the benchmark index on the Bombay Stock Exchange (BSE).
RCom, India's second largest mobile phone firm, fell as much as 9.46 percent to a day's low of 86.1 rupees while Reliance Infrastructure, which was also removed from the index, slid 8.53 percent to a low of 531 rupees.
From August 8, both companies will be pulled out of the group of 30 leading shares that form the Sensitive index or Sensex, the BSE said without citing reasons.
They will be replaced by Sun Pharmaceuticals and the state-run giant Coal India respectively.
A BSE source told AFP on Monday that the stock exchange had no role in deciding the change.
"An independent committee of experts decides on changes in indices" based on parameters such as liquidity, market capitalisation, trading volumes, history and portion of shares held by investors for trade, the source added.
RCom's stock has more than halved from its year high price of 204.75 in June last year, while Reliance Infrastructure is down 55 percent from its 52-week high of 1,225 rupees.
The withdrawal of the firms comes at a time when Anil Ambani is attempting to revive the fortunes of his businesses, particularly in the key telecoms and financial services sectors.
Investors have been offloading shares in the group since it emerged that Ambani met federal police in April, who were investigating alleged irregularities in the awarding of second-generation (2G) mobile phone licences.
Three senior executives from group subsidiary Reliance Telecom are on remand in prison facing charges of cheating, forgery and criminal conspiracy in the 2G fraud case, which is thought to have cost the country billions of dollars.
RCom, which has recorded seven straight quarterly falls in profit, is trying to lower its ballooning debt and find a partner to buy a controlling stake in the telecom tower unit Reliance Infratel.
RCom's net debt was $7.12 billion for the fiscal year ended March.
Copyright AFP (Agence France-Presse), 2011
Comments
Comments are closed.