Tata Finance Arm Raised Huge Icds

Till November last year, Inshaallah Investments Pvt Ltd, a Tata Finance associate company, had a paid-up capital of just Rs 200. And with this small equity base (its authorised capital was to the tune of Rs 1 lakh), the investment company took huge loans and invested huge sums of money in the shares of Tata Finance and Global Telesystems.

The company was floated by Dinesh Bahl, an internal auditor of Tata Finance and other Tata companies in 1994-95. According to Tata sources, Dilip S Pendse, the former managing director of Tata Finance, was instrumental in buying Inshaallah in 1999.

The Tatas seem foxed as to why the company was bought in the first place, but surmise two things: First, they think that Pendse wanted to use this company for buying Tata Finance shares from the Tata group companies, the idea being to protect the prices of Tata Finance.

The price of Tata Finance shares would have dipped if the shares were unloaded by the Tata companies in the open market. Secondly, the Tatas suspect that the company was acquired as a vehicle for the former management team to play the markets.

By March 31, 2001, the Tata group