DB Realty slips after MD quits over telecom probe

MUMBAI, INDIA: Shares in Indian developer DB Realty hit a record low on Monday after its Managing Director Shahid Balwa, embroiled in a widening telecom corruption investigation, resigned from his position.

The Mumbai-based company's shares opened 15 per cent lower at 100 rupees, after DB said its board had accepted Balwa's resignation with effect from Feb. 9, in view of his preoccupations relating to certain investigations.

The stock recovered partially, but was still trading 3 per cent lower at 0510 GMT. Shares in the company, which went public in February 2010, are down 42 per cent so far this year, and are less than a fourth of their listing price of 468 rupees.

"The management is preoccupied with getting Balwa released. Day-to-day decision-making seems to have gone for a toss," said a sector analyst at a Mumbai brokerage, who declined to be named as he no longer had the company under active coverage.

"One can't say at what level the stock will settle, because there's no real buying interest," he added.

Balwa was the first company executive arrested in a multi-billion dollar telecoms corruption scandal that has rocked the Congress party-led government and undermined Prime Minister Manmohan Singh.

The investigation into telecoms licence awards that may have cost the government as much as $39 billion in lost revenue has led to other arrests, seen members of India's corporate elite questioned by authorities, and battered telecom stocks.

Balwa, also vice chairman of Etisalat's Indian joint venture, was arrested in February after his firm was accused of being among two firms that were given undue preference in licence grants in 2008.

DB Realty, which is focused on building high-end apartments in India's financial capital, had said earlier Balwa has been "wrongly implicated" and will be strongly contesting the proceedings.