Wipro shares tumble on World Bank ban
Mumbai, January 12, 2009
Shares in India's No 3 software company, Wipro Ltd fell more than 12 percent on Monday after the outsourcer said the World Bank had barred the company from its direct contracts, citing a conflict of interest.
The decision, taken by the World Bank in June 2007 and effective until 2011, was being announced now under revised disclosure policies, Wipro said.
The World Bank said in a separate statement from Washington that the ban was for "improper benefits to bank staff". It had also earlier barred Satyam Computer Services for eight years.
Wipro said it had offered American Depositary Shares in 2000 to employees and clients at the initial public offer price. Wipro later extended participation to World Bank employees and their friends and families, under which they purchased 1,750 ADS.
It said all participants signed a statement that the purchase did not violate the company's ethics or conflict of interest policies.
By 0523 GMT, Wipro shares were down 10.2 percent at 225.10 rupees after falling as low as 220, in a Mumbai market that was down 2.6 percent.
"We have not yet come out of the Satyam fiasco, so any news like this hits sentiment," said Tejas Doshi, head of research at Sushil Finance.
"There is a blip, but people are likely to put this aside because the business impact of this is not great for Wipro."
Shares of Satyam were battered last week, with its market value plunging to $330 million at Friday's close from more than $7 billion just six months ago, after chairman and founder Ramalinga Raju resigned last Wednesday saying the firm had falsely inflated profits for many years.
Wipro said its revenues from the World Bank were insignificant and the decision would not affect its business and results.
"Our business from the World Bank had been less than $1 million over the last eight years," chief financial officer Suresh Senapaty told television channel CNBC-TV18. - Reuters