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Sebi likely to reply to Tata Finance

Janaki Krishnan

The Securities and Exchange Board of India is expected to give its reply to Tata Finance Ltd on Tuesday, in response to the disclosures and clarifications which the company made to the securities watchdog today afternoon.

Tata Finance officials confirmed that they had provided Sebi with the necessary information with regard to the company's secondary market transactions, which has resulted in a loss of around Rs 700 million for the company in the form of notional losses due to depreciation in the value of the scrips.

The investments were made through one of its subsidiaries, Nishkalp Investment & Trading Company.

Sebi officials said that along with the losses suffered by the company, they had also sought from the company for the current status of its investments, profit of the company for all the quarters of the last fiscal including the estimated profit for the year 2000-01.

Sebi is expected to give its verdict as to whether Tata Finance will have to make post-documentation disclosures if any of the figures are found to be material enough to impact the profits of the company.

The disclosures are necessary for the subscribers to the ongoing Rs 900-million rights issue of the company.

"Investors have a right to be informed about the developments subsequent to the prospectus date so that they can take an informed decision about whether to invest in the company or withdraw," sources said.

The issue, which opened on March 30, closes at the end of this month. As on June 30, last year (the balance sheet date according to which the prospectus was filed with Sebi) the company had posted a profit (before tax) of Rs 600 million.

However since the investment losses are notional, since they are not yet accounted for in the books of accounts, Sebi is also in a quandary as to whether the disclosures would be pertinent. With the rise in the prices of the scrips held by the company, the losses will also reduce.

Tata Finance had made two investments in Global Tele-Systems and Vakrangee Software. The purchases of Vakrangee's shares were made at a time in 1999 when the price of the scrip was more than 14 times its current price. According to information as on March 31, 2001, the Nishkalp held around Rs 810 million worth shares of Global Tele.

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