Markets regulator Sebi has begun looking into the high profile Tata-Mistry case for any possible breach of corporate governance norms and listing regulations at various listed companies of the over USD 100 billion conglomerate.
SEBI’s move comes on a day when ousted Tata sons chairman Cyrus Mistry wrote a letter to the Board members of Tata Sons giving his version.
“Board members and trustees are also aware that in the case of Air Asia, ethical concerns have been raised with respect to certain transactions as well as overall prevailing culture within the organisation.
“A recent forensic investigation revealed fraudulent transactions of Rs 22 crore involving non-existent parties in India and Singapore” Mistry said in his letter.
The Securities and Exchange Board of India (Sebi) is looking into the alleged disclosure made in the purported letter written by Mistry to Tata Sons’ board members including about financial and other irregularities as also lapses on the corporate governance front.
The Market regulator sought clarification from many of the group’s listed companies on the purported disclosure by ousted Chairman Cyrus Mistry about Rs 1.18 lakh crore possible write-down at the group firms.
“We (Sebi) are taking note of each and every development and will act immediately on any hint of possible violation of corporate governance and listing norms or any other regulation under our jurisdiction,” a senior official said.
The stock exchanges and the regulator are also keeping a close watch on the price movement and trading activities of over two dozen listed companies of Tata group, which have seen an erosion in value in last two trading sessions after the surprise ouster of Mistry in less than four years of being made chairman of Tata Sons, the main holding company of the group.
The price movement and trading volumes for few days prior to the surprise announcement will also be looked into.
The exchanges have asked these companies, including Tata Motors, Tata Steel, Indian Hotels, Tata Teleservices and Tata Power, to provide full details about these issues.
The notices from the stock exchanges followed reports about Cyrus Mistry, who was ousted as the chairman of the group’s main holding company Tata Sons, disclosing possible writedown to the tune of USD 18 billion faced by the conglomerate.
The exchanges have asked the companies to provide “clarification/confirmation on the news item in detail”.
The companies have also been asked to explain “whether such event/negotiations/article stated in published news were taking place?
“If so, you are advised to provide the said information along with the sequence of events in chronological order and the material impact of this article on the company,” the exchanges said.
The companies have also been asked about “any information that has not been announced to the exchanges” as required under the Listing Regulations.
The companies were yet to respond to the exchanges.
In an explosive confidential email to Tata Sons board members, Mistry warned that the salt-to-software giant may face Rs 1.18 lakh crore in writedowns because of five unprofitable businesses he inherited.
Mistry said he inherited a debt-laden enterprise saddled with losses and went on to single out Indian Hotels Co, passenger-vehicle operations of Tata Motors, European operations of Tata Steel and part of the group’s power unit and its telecommunications subsidiary as “legacy hotspots.”