DB Realty shares fall after MD arrest

Shares of Mumbai-based real estate developer DB Realty lost nearly six per cent of their value today, a day after the Central Bureau of Investigation (CBI) arrested its managing director, Shahid Balwa, in connection with the 2G telecom spectrum scam.

Balwa, also a vice-chairman of Swan Telecom (now Etisalat DB), was arrested by CBI late last night. A court today granted two days of transit remand. Balwa has been charged with criminal misconduct and criminal conspiracy in the scam. A police case was registered by CBI. He has been charged under the penal code.

DB Realty shares slumped nearly 20 per cent to Rs 109.70 in early trades on the Bombay Stock Exchange today. The company issued a statement in the afternoon to calm jittery investors, following which its shares recouped most of the losses. The stock finally ended at Rs 129.05, down 5.9 per cent, or Rs 8.05. “Shahid Balwa, managing director of DB Realty, has been wrongly implicated in the investigations pertaining to the grant of 2G licenses… We reiterate that neither Balwa nor any person/entity forming part of the DB Group has done anything inappropriate or illegal. Balwa will be strongly contesting the proceedings,” the company said.

Adding: “We would also like to state that these developments will not affect the functioning of DB Realty in any manner whatsoever. DB Realty will continue its business in the normal course under MD Vinod Goenka, along with the top tier team under the guidance of its board.”

DB Realty and Etisalat had taken over Swan Telecom, one of the companies that got the 2G licence by allegedly presenting pre-dated drafts when former telecom minister A Raja suddenly changed the criteria for allotment. Licences were issued to Swan for 13 circles at nominal rates, for which the company paid Rs 1,537 crore. Swan sold 45 per cent stake before roll out to Etisalat for Rs 4,200 crore.

Some officials of the Department of Telecom allegedly leaked information to certain private parties and granted licences to select companies at nominal rates.

Sources say Balwa is suspected of investing in various front companies on behalf of Raja and some of his aides. The money trail linking various DB Realty subsidiaries with several entities linked to Tamil Nadu’s ruling party, the DMK, is also being looked into.

Balwa had been summoned twice by the CBI and was arrested after he allegedly refused to make himself available for questioning.

Raja allegedly helped Swan bag 2G licences for 13 circles, including Mumbai and Delhi, for Rs 1,537 crore but Swan sold 45 per cent of the shares to UAE telecom giant Etisalat for approximately Rs 4,500 crore within months of bagging these.

Balwa is the fourth person to be arrested in the 2G spectrum case after Raja, his former personal secretary, R K Chandoliam and former Union telecom secretary Siddharth Behuria.

With inputs from  Katya Naidu