Post Mistry's allegations, Tata Motors & Tata Steel come under Sebi, exchanges' lens

Market regulator Securities and Exchange Board of India (Sebi) has directed stock exchanges to look into the disclosures made by listed Tata group companies, particularly Tata Motors and Tata Steel to ensure compliance with the listing regulations.

The move comes following Cyrus Mistry's allegations about losses incurred by the Tata group due to various projects like Nano car, European steel business and Mundra power project.

Confirming the development, a senior official of exchange said that they are in the process of checking 'accuracy' of the information filed by company in its financial statements, quarterly and annually earnings under Listing Obligations and Disclosure Requirements, (LODR) 2015.

Regulator has also asked exchanges to compile trading data (price movements, volumes) of Tata group companies just ahead of Mistry's ouster, said a person with direct know.

Sources said regulator has a view that allegations made by Mistry are material in nature and most of them would have warranted a disclosure under rules laid down in the listing regulations.

Mistry in the letter had alleged lapses in corporate governance processes, disclosures and violation of insider trading norms at various group companies in the letter to Tata Sons board.

Specifically, Sebi is probing the flow of unpublished price sensitive information (UPSI) at various Tata group firms.

Under the new insider trading norms, an UPSI can be shared with only those executives who are part of the decision making process-need-to-know basis.

"The market regulator wants to establish if any entities, other than those who are authorized, were privy to UPSI and whether they used the information in any way to make any gains," said a source.

Exchanges have already been querying various Tata group companies on allegations made by Mistry in his letter.

Earlier this month, exchanges had asked Tata Motors to provide clarification on the issue of extension of credit which resulted in non-performing assets (NPA) of around Rs 4,000 crore. Besides, exchanges also asked to furnish details of loss made by Tata Nano peaking at Rs 1,000 crore.

Responding on the exchange queries, Tata Motors said that their financial statement present a true and a fair value of their respective companies. In a clarification dated November 4, Tata Motors had made an extensive response, said " Our accounting policies are in due compliance of the relevant accounting standard including IND-AS and appropriate to present true and fair view of financial statements. Additionally, these are regularly reviewed by our audit committee and appropriately disclosed."

Exchanges now would be corroborating the replies submitted by Tata group to check for any possible violations.