Finmeccanica denied any wrongdoing over a 560 million euros helicopter deal after Indian authorities launched a corruption probe into the contract which sent shares in the Italian defence and aerospace group reeling.
Shares in Finmeccanica slumped as much as 8.5% to a six-day low. By 1327 GMT, the stock was down 5.6% at 3.92 euros, featuring among the top losers.
Defence Minister AK Antony has ordered a probe into the purchase of 12 helicopters from Finmeccanica unit AgustaWestland because of alleged irregularities, two Defence Ministry sources said, declining to be identified.
The sources said government officials could be involved in taking kickbacks for changing the terms and conditions of the deal in favour of the company.
"AgustaWestland is not involved in any irregularity concerning the supply of helicopters in India. No notice related to the investigations has been served," Finmeccanica said.
The probe is a fresh challenge for chairman and chief executive Giuseppe Orsi who has been tasked with rebuilding the group's reputation after a corruption probe forced out former boss Pier Francesco Guarguaglini.
The state-controlled group is involved in a long-running probe centering on accusations of false invoices and slush funds to pay bribes.
Guarguaglini and his wife Marina Grossi, who was chief executive of Finmeccanica subsidiary Selex Sistemi Integrati, are both under investigation as part of the probe. Both deny wrongdoing.
Orsi was at the helm of AgustaWestland when the Indian helicopters contract was signed two years ago.
Italian daily Il Messaggero said Italian magistrates investigating Finmeccanica's international operations allege that price increases in contracts may have allowed the group to set aside funds used to pay bribes.
Separately, AgustaWestland said the helicopter contract had undergone no price increases and instead it was awarded after the company lowered the value of its initial bid.
The contract refers to 12 AW101 helicopters and was awarded to AgustaWestland after a comprehensive evaluation, it said. Negotiations lasted 17 months to February 2010.
