Even as questions are being raised on the alleged favours shown by the Tata group to C Sivasankaran for his stake in Tata Teleservices, Ratan Tata had sought to distance himself from the claims made by the Chennai-based businessman.
While Sivasankaran (Siva) had claimed that he had invested in Tata Teleservices (TTSL) because the company was in dire need of funds, Ratan Tata has disputed this. In an email written to Cyrus Mistry on October 8, 2013, Tata said: “He (Siva) wanted to invest in TTSL because he believed the telecom sector was fast-growing and he could sell his stake at a sizeable profit.”
Contrary to Siva’s stand that he had great relationship with the Tatas, Ratan said he was not directly involved with him and “some of the events as I recall them are somewhat different to what he has stated.”
The Tata chief also said that he was unaware of “any desire on our side to fund his acquisition. The only thing I can remember is that the transaction needed to be completed before Temasek paid their money and presumably, if he asked for accommodation, this may have been temporarily given.”
According to Tata, the entire transaction between Siva and TTSL was dealt with directly by Ishaat Hussain and Arun Gandhi. He, however, did acknowledge Siva’s help in bringing down the acquisition cost of network-related equipment purchased by TTSL.
Tata’s email was in response to a letter from Siva to Mistry, where Siva had invoked the good relationship with the Tata group. The documents seen by BusinessLine show that the initial corpus of ₹782 crore invested by Siva to buy TTSL shares was supported by the Tata Group, under Ratan Tata; ₹650 crore was provided to Siva by Standard Chartered Bank, as a loan against a buyback guarantee by Tata Sons, if Siva defaulted on the loan repayment.
Siva’s company Sterling Infotech Ltd (now known as Siva Industries & Holdings Ltd) had been given shares in Tata Teleservices (TTSL) at ₹17 a share through an agreement on February 24, 2006. On March 8, 2006, less than a fortnight later, Temasek Holdings, an investment company owned by the Singapore Government, was sold TTSL shares at ₹26 per share. This was again flagged by Tata Sons’ legal team in a communication to Siva’s lawyers on October 20, 2016, just four days before Mistry’s ouster.
Stakeholders Empowerment Services (SES), a corporate governance advisory firm, said that the narrative has left analysts and investors confused. “Mistry has raised several issues relating to transactions of the Tata Group with Mr Sivasankaran. One such transaction mentioned is a transaction with
Tata Capital for a loan against security of TTSL shares, as indicated in Mr. Mistry’s letter about a loan to Siva. The allegation has been denied by Tata Capital, as reported in the media. This leaves all analysts and investors confused as to what is the truth and who is telling the truth,” SES said in a note.