DoCoMo can't say Tata just yet, arbitration begins
Wednesday, 25 March 2015 09:06
The RBI has turned down Tata Sons’ request to honour a put option given to DoCoMo in 2009 to agree to buy back the latter’s 26.5% investment in Tata Teleservices at half the price, reports fe Bureau in New Delhi. DoCoMo had invested R14,500 crore. When the deal was signed, there was some ambiguity as to whether this was allowed — indeed, in 2001, even the NDA government had signed a similar option with Sterlite for the latter’s purchase of Balco and Hindustan Zinc.
When the RBI finally announced a policy on options last year, it laid down strict rules on fair-market valuations, as a result of which the buyback price would be just R23.34 per share against the R58.05 agreed to — at that time, Tata Teleservices’ net worth was -R1,863 crore while it is -R8,985 crore today. Since the Japanese are big investors, the RBI asked the finance ministry if a one-time exception could be given. Following protests from top industrialists against a relaxation for one firm, there was a discussion between the PMO and the finance ministry, and the RBI was advised to stick to the current guidelines. A Tata spokesperson confirmed the RBI decision and said steps towards initiating an arbitration have been taken.