The board of Tata Capital
Financial Services and its auditor have given a clean chit to C Sivasankaran, a close friend of Tata Group patriarch Ratan Tata, on allegations made by former group chairman Cyrus Mistry
that the company had incurred huge losses, as the loans given to the Siva group had turned bad.
In its annual report for the financial year ended March 2017, the company’s board said, during the year, certain allegations were made in relation to the loans availed by Siva Ventures
and Siva Industries
and Holdings, firms promoted by C Sivasankaran
from Tata Capital
and its subsidiary, Tata Financial Services, which turned out to be untrue. The auditor, Deloitte also gave a clean chit to the firm without raising any qualifications on loans given to the Siva group.
The audit committee of the board reviewed the internal policies, processes and the statutory requirements and also the correspondence between the regulators and the firm. “After due review and deliberations, the audit committee expressed its confidence in the company’s processes and due compliance with the applicable RBI
(Reserve Bank of India) and Sebi
(Securities and Exchange Board of India) Regulations,” the firm wrote to its shareholders. The audit committee is chaired by independent director Janki Ballabh, former chairman of State Bank of India.
“The audit committee found no violation or non-compliance of applicable provisions of the Sebi
Act/rules and Sebi
listing regulations or other applicable regulations by the company. It follows, therefore, that the aforesaid allegations in the various proceedings, representations and public statements against the company were incorrect and without exercising proper care,” it said about the allegations made by Mistry soon after he was removed as the chairman of the Tata group.
Mistry had alleged that the loan to the Siva group was given under the strong advice of Tata Trusts executive trustee R Venkataramanan, which has since turned into a non-performing asset. “All of this resulted in Tata Capital
having to recognise an abnormal size of non-performing assets,” Mistry said in his letter to Tata Sons board members and Tata Trusts trustees soon after his ouster in October last year.
However, in an interview to this newspaper, Sivasankaran (Siva) had denied defaulting on Tata Capital
loans, saying the loans were covered by shares of Tata Teleservices as collateral. Siva also said the firm had defaulted on loans after it filed for bankruptcy
and Tata Capital
wrote off the debt
and kept the collateral.
In the annexures to his petition filed with the National Company Law Tribunal early this year, Mistry had included his communication to N A Soonawala, a trustee of Tata Trusts, in early 2016 giving details of Tata group businesses which were facing headwinds. On Tata Capital, Mistry had said there would be a diminution in the value of investments and loans which Tata Capital
pursued at the behest of the group. Mistry had also written that the lack of appropriate culture and risk management systems led to high non-performing assets, particularly in infrastructure.
For fiscal 2017, Tata Capital
made a net profit of Rs 216 crore as compared to previous year’s Rs 266 crore on revenues of Rs 4,192 crore vs Rs 3,471 crore in FY16.