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IVRCL denies links to road expert's suspicious death, stock plunges to year's low

Reacting sharply to the media reports, the IVRCL stock on BSE plunged to year's lowest price of Rs 31.80 before closing at Rs 33.

, ET Bureau|
Updated: Jan 24, 2013, 07.18 PM IST
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HYDERABAD: Infrastructure firm IVRCL categorically denied any connection with the suspicious death of a road quality expert working on its road project, even as the media reports linking the company to the episode dragged its stock by 20%. Analysts termed the market response to media reports a 'case of overreaction to bad news.'

Media reports surfaced on Thursday of suspicious death of Paulose Thomas, an expert consultant with the National Highways Authority of India (NHAI), who died some 40 days ago during the third week of December 2012. He was overseeing the quality of IVRCL's build, operate and transfer (BOT) road project Chengapally-Wallayar Tollways in Tamil Nadu-Kerala border.

The media reports said Thomas was found dead in his apartment in Coimbatore, where his family was first told he died of cardiac arrest or suicide and the autopsy report confirmed it a murder recently. The family members of Thomas, including his London-based son Dr Suraj Thomas, a surgeon, alleged that the death could be connected to the road project he was associated with.

Reacting sharply to the media reports, the IVRCL stock on BSE plunged to year's lowest price of Rs 31.80 before closing at Rs 33, translating into a loss of 19.81%, by close of trading hours.

Categorically denying any connection with the unfortunate death of Thomas, IVRCL in a statement said, "Linking the unfortunate incident to us by some section of the media (even though it was only a passing reference) appears to have resulted in our shares in the stock market being affected adversely and damage to our image."

Analysts view the hammering of IVRCL stock and panic selling nothing but a case of overreaction. " The bears (shorts) appear to be the usual suspects. Shorting stocks on even a whiff of smoke has become the trend these days," said Nitin A Khandkar, founder of the Mumbai-based Nitin Khandkar Institutional Research.

Khandkar said the IVRCL stock seems to be the victim of speculative activity since only 25% of the shares traded on the NSE on Thursday were actually delivered. "Investors ought to be more concerned about the company's poor financial performance during year ended June 30, 2012, which was a 15-month period, and also in the September quarter."

Chengapally-Wallayar Tollways is among the three road projects IVRCL is on the verge of selling to retire Rs 818 crore of debt and get back Rs 250 crore of equity investments. The other two projects on block include Salem Tollways Limited and Kumarpalayam Tollways. The company has an equity requirement of Rs 520 crore for its other road projects including the new projects it bagged.

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