Bharti shares dip after Kohli sells

Written by Corporate Bureau | New Delhi | Updated: Mar 14 2009, 05:29am hrs
Shares of the countrys largest telecom company, Bharti Airtel, fell 6.37% on Thursday to close at Rs 550 on the BSE after it was disclosed that CEO & joint MD Manoj Kohli had sold 1.23 lakh shares of the firm in two open market transactions on March 6 and 9. Bhartis market cap has eroded 15.18% since March 9, shaving Rs 15,861 crore off investors wealth.

While Kohli cited personal reasons for selling his shares, which fetched Rs 7.24 crore, a statement issued by Bharti Airtel after market hours announced major restructuring at the top. Sanjay Kapoor was elevated from the post of president (mobile services) to the newly created post of deputy CEO. He, however, will continue to report to Kohli. I am happy to confirm that I continue as CEO & joint MD, Kohli said.

Atul Bindal, who headed the telemedia business, will now take over as president (mobile services) and K Srinivas, hitherto ED-East (mobile services) and who oversaw the Sri Lanka operations, will take over as joint president, telemedia services. They will now report to Sanjay Kapoor instead of Kohli, which was the case earlier.

Bharti has been one of the best performers on the stock markets despite the crippling October-December quarter, wherein most companies posted massive losses. Bhartis net profit was up 25% at Rs 2,159 crore, while revenues were up 38% at Rs 9,633 crore. But on Thursday, it was the worst performer on the BSE, on a day when the Sensex rose 2.25%.

Later, speaking with FE, Kohli said he was amused by the market reaction to his share sale and rumours that he was exiting the company. He refused to be drawn into the speculation that has surrounded the timing of his sale. I am a middle class guy. (The sale)is for a personal reason and only my wife can interfere in such decisions, Kohli said.

While Kohli is understood to share an excellent rapport with group chairman & CEO Sunil Mittal, analysts were surprised by both the need for him to sell company shares to raise money, as well as the timing. While there are no restrictions on a CEO selling shares in his company, any such move invariably creates jitters among investors.

The market is worried, confirmed Taurus Asset Management MD RK Gupta.

But Kohli said any speculation that he was quitting the company was baseless. I still hold more stake in the company than I have sold. I still have 1.8 lakh options in the company, some of which are vested with me and the balance would be vested by 2010, he said, adding: I am totally committed to my job theres no question of exiting from the company, he asserted.

In 2005, Mittal sold 0.15% of his stake in the company to raise Rs 60 crore. Akhil Gupta, an old-timer in the group and also deputy CEO, is believed to have sold some of his shares a few years ago.

In a disclosure to the NSE, Bharti said Kohli sold 70,000 shares in the company on March 9. Estimated on the basis of the closing price of the company at Rs 587.75 on March 9, the value of the transaction is Rs 4.11 crore. On March 6, Kohli sold 53,000 shares valued at Rs 3.13 crore.