Tata Teleservices says no undue favours to Sivasankaran

The board of Tata Teleservices has given a clean chit to Chennai-based entrepreneur, C Sivasankaran saying the allegations by former Tata group chairman Cyrus Mistry that undue favours worth Rs 600 crore were given to Sivasankaran because of his proximity to group patriarch Ratan Tata are untrue.

In its annual report for the year ended March 2017, Tata Teleservices director Ishaat Hussain and MD and CEO N Srinath said it has also been alleged by Mistry in the National Company Law Tribunal (NCLT) that the Siva Group has unduly benefited by Rs 600 crore through contracts granted by the company to the Siva Group in the period 2003 to 2008. “Tata Teleservices has benefited significantly from the services performed by the Siva Group and this has been duly considered by the board of directors,” the directors said without elaborating on what services were provided by Sivasankaran.

The Mistry-owned companies had also alleged in the NCLT that Tata Teleservices was influenced in 2006 to issue shares to entities controlled by C Sivasankaran at a “throwaway” price. 

"An attempt has been made to justify this allegation by stating that the company had subsequently (after issuance of shares to the Siva Group) issued shares to Temasek Holdings at a far higher price. We would like to place on record the fact that the issuance of shares to the Siva Group in February 2006 was approved without management rights. It would be fallacious to equate the investment made by the Siva Group with the subsequent investment made by Temasek Holdings in March 2006, in relation to which significant management rights were granted to Temasek,” the directors wrote. Further, it is also important to note that, before shares were allotted to the Siva Group in February 2006, Tata Teleservices had also allotted shares in August 2005 to one of Mistry’s holding firms, Sterling Investment Corporation Private Limited, at a price less than the rate at which shares were allotted to the Siva Group, the report said. 

The directors said it is incorrect to suggest that any undue benefits were granted to the Siva Group by Tata Teleservices. 

Soon after Mistry was removed as chairman of Tata group, he alleged that the Siva Group was unduly benefited by Rs 600 crore through contracts granted by Tata Teleservices to the Siva Group in the period 2003 to 2008. 

“Tata Teleservices has benefited significantly from the services performed by the Siva Group and this has been duly considered by the Board of Directors, Tata Tele directors said without elaborating on what services were provided by Sivasankaran.

As per Mistry,  even the Rs 782 crore invested by Siva group was financed by banks due to guarantees and loans given by the Tata group. Of Siva’s investment, Rs 650 crore were provided by a loan from Standard Chartered Bank against a guarantee by Tata Sons and another Rs 132 crore was provided by Kalimati Investments, a subsidiary of Tata Steel, a listed entity, as a temporary inter corporate loan. By November 2008, Docomo decided to buy 26 per cent stake in Tata Teleservices for Rs 118 a share. Along with other Tata group companies, Siva group sold part of his stake to Docomo and made an additional profit of Rs 209 crore within three years of investments. In 2014, when Docomo asked Tata Sons and Siva group to buy back shares as per the 2008 agreement, Siva group refused to pay its share of Rs 694 crore to Tata Sons and threatened to take Tata Tele court for mismanagement. Tata Sons board then decided to take Sivasankaran to courts for the default.

Sources close to Mistry said the statements in the Tata Teleservices annual report conveniently overlook the fact that Siva group owes nearly Rs 694 crore in relation to the put option that Docomo had exercised on TTSL. "This attempt to repeat half-truths loudly to create a convenient and alternate recreation of history, will be strongly refuted by written documentation and facts on record," said a source close to the development.