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Niskalp's market operations cost Tata Finance Rs 2 billion

Tamal Bandyopadhyay

The hole created in the balance sheet of Niskalp Investment & Trading Ltd, the former Tata Finance subsidiary, by its stock market operations is getting bigger.

Niskalp and therefore, Tata Finance has lost over Rs 2 billion in its stock market exposure. This is four times more than the figure reported in the first information report the Tatas had filed with the economic offences wing of the Maharashtra government early this month.

The loss is due to a massive exposure in five stocks whose market value has been eroded substantially over the last few months. The list of stocks in the Niskalp portfolio includes DSQ Software, Global Telesystems, Vakrangee Softare, Pentamedia Graphics and Cyberspace Infosys.

In the FIR, the Tatas accused former Tata Finance managing director Dilip S Pendse of embarking upon carryforward transactions in DSQ, Zee Telefilms, Global Telesystems and Pentamedia Graphics, leading to a loss of Rs 460 million for Niskalp.

DSQ is currently trading at around Rs 34 (its 52-week high being Rs 847.65 and low Rs 23.50), Global Tele Rs 105 (Rs 1,673.90 and Rs 93.40), Vakrangee Rs 19 (Rs 126.50 and Rs 15.65), Pentamedia Rs 54 (Rs 527.90 and Rs 50.65) and Cyberspace Rs 1.15 (Rs 190 and Rs 1.05).

Tata sources said Y Kale, senior partner of AF Ferguson & Co, which was appointed to conduct a probe into the affair, has submitted its preliminary report and the quantum of loss has been ascertained. The next stage involves the restructuring of Niskalp.

Niskalp, which had Rs 5 billion worth of inter-corporate deposits (ICDs), boasts of an equity portfolio of around Rs 3 billion, primarily consisting of these five scrips. The market value of the portfolio has got eroded by at least Rs 2 billion.

Niskalp's asset portfolio also includes Rs 2 billion worth of material assets and investment in windmills and another Rs 2.30 billion worth of receivables from Telco dealers (Niskalp's chief business was securitising Telco dealers' receivables).

The non-performing assets in the Telco dealers' receivables could be around Rs 400 million, senior Tata executives said.

The offer document of Tata Finance's rights issue, which opened on March 30 this year, concealed the company's huge ICD exposure to its former subsidiary Niskalp.

The former Tata Finance managing director is also accused of having 'proposed a backdated sale and buyback transaction of securities between Niskalp and Tata Finance to eliminate Niskalp's losses' as on September 30, 2000.

Tata Finance spun off Niskalp in the wake of the controversy that engulfed the non-banking finance company.

Ewart Investments, a Tata Sons outfit, picked up a shade under 50 per cent in Niskalp for Rs 398 million, reducing Tata Finance's stake from 99.4 per cent to little below 50 per cent.

A set of Telco dealers hold less than 1 per cent in Niskalp.

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