India's leading bourses, the National Stock Exchange and Bombay Stock Exchange, on Wednesday issued notices to a number of the Tata Group's companies listed under the indices. They sought a clarification on ousted Tata Sons' chairman Cyrus Mistry's claims that the conglomerate faced a $18-billion (Rs 1.15-lakh crore) writedowns, or reduction in value of assets, PTI reported.
Both BSE and NSE have asked Tata Steel, Tata Motors, Tata Teleservices, Indian Hotels and Tata Power to submit all details about the issues Mistry mentioned in a letter to the group's board. "...You are advised to provide the said information [events mentioned in the news], along with the sequence of events in chronological order and the material impact of this article on the company," the exchanges said. They also inquired whether the companies had not disclosed any information as required under regulations for listed firms.
Earlier, the Securities and Exchange Board of India had also said that it was making note of every development in the matter and will seek a report from the $100-billion (Rs 6.6-lakh crore) conglomerate regarding the allegations Mistry made in his letter. A Sebi official had said, "We will act immediately if there is any hint of possible violation of corporate governance and listing norms or any other regulation under our jurisdiction."
Tata Steel issued a clarification on Thursday, saying it was a listed entity that prepares financial statements according to the provisions of the Companies Act 2012 as well as SEBI's regulations. "Financial statements are considered by our audit committee and the company's board of directors," it said. However, the steel major did not comment on Mistry's claims that the conglomerate was facing a massive writedown.
In his letter, Mistry had alleged that he had inherited "debt-laden" ventures during his tenure as chairperson, including Indian Hotels, Tata Motors' passenger vehicle operations, Tata Steel's European business, part of the group's power unit and its telecommunications subsidiary. The ousted chairman said he had proposed the scrapping of the "unprofitable" Nano project – a brainchild of Ratan Tata – and said it was being kept alive for "emotional reasons".
On October 24, the board decided to push Mistry out after a massive fallout, with shares of Tata companies falling and the group anticipating legal action by the former executive. Ratan Tata has taken over Mistry's post temporarily, the board had announced.
The Tatas had filed caveats seeking a notice from Mistry "fearing legal action" against their move to dismiss him from the post after four years. A caveat is a preventive measure that disallows courts from hearing matters without both parties being notified about them first.