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Niskalp chairman Talaulicar quits

BS Bureaus

The Tata Finance fiasco has claimed another victim. J E Talaulicar, director of Tata Finance and chairman of Niskalp Investments & Trading Company Ltd, the erstwhile Tata Finance Ltd subsidiary, on Friday resigned from the board of Tata Finance. He has also stepped down from Niskalp.

A Tata release said Friday: "Talaulicar has written on August 17 to the chairman of Tata Finance Ltd, Fredie Mehta, stating that recent reports in sections of the media relating to his sale of Tata Finance are totally 'inaccurate and distorted' and has requested that an impartial enquiry be instructed to clear his image."

In order to ensure an impartial probe, Talaulicar resigned from the Tata Finance board. In a separate letter to the Niskalp board, Talaulicar tendered his resignation as the chairman and director of the company.

Talaulicar's decision to step down marks a significant development in the chain of events in Tata Finance, which started with the Tatas filing an FIR with the economic offence wing of the Bombay police against former Tata Finance managing director Dilip Pendse and five other executives alleging criminal conspiracy, forgery and falsification of accounts.

Talaulicar got embroiled in the mess after it was alleged that he, along with his family members sold 100,000 shares of the company on March 30, 2001, at Rs 69 while the share price in the market was around Rs 35. The Securities and Exchange Board of India has asked Talaulicar to furnish details of the alleged deal. The capital market watchdog also wants to know whether he had informed the company board and stock exchange about this deal.

"We are yet to receive any reply from either Talaulicar or Tata Finance in this regard. It is too early to derive any conclusion on the gravity of the matter," a senior Sebi offical told Business Standard.

Sebi is also probing the transfer of funds from Tata Finance to Niskalp, then its subsidiary company.

The Reserve Bank of India is also conducting a thorough probe in the alleged financial irregularties, which suffered major financial losses due to the mismanagement of fund in its erstwhile subsidiary Niskalp. This follows the letter written by the TFL to the RBI on July 25, seeking condonation as the company has submitted fudged accounts and balance sheet last year which has been discovered recently.

The regulators are also probing the activities of at least two group investment companies -- Insallah and India Emerging. Former Tata Finance MD Pendse claimed in a ltter to Tata Finance chairman Fredie Mehta that "Insallah and India Emerging were used to bail out/book hefty profits by other Tata companies and for the purchase of TFL shares from these Tata companies".

A Tata spokesperson said: "Inshallah and India Emerging are indeed investment companies and are associates of TFL/Niskalp. Operations of both these companies were under the control of and managed by the erstwhile managing director Dilip S Pendse. Operations of both these companies are under scrutiny."

In a realated development, an RBI release Friday said that consequent upon the change in the ownership pattern, the name of Tata Finance Securities ( a primary dealer) has been changed to Tata TD Waterhouse Securities Ltd.

Technically, RBI could book the company on this issue as it did in case of Madhavpura Mercantile Co-operative Bank, which had indulged in criminal activities. However, the central bank is unlikely to do so as TFL volunteered the information to the apex bank. RBI inspection will take about a month to get the correct picture.

TFL in its letter to the central bank on July 25 asked for reliefs for achieving required prudential norms including capital adequacy ratio of nine per cent, lending limits to the subsidiary companies and high debt-equity ratio.

Tata group sources said: "As on June 30, 2001, TFL had maintained the required capital adequacy ratio. The Tatas are in constant dialogue with the RBI seeking the central bank's support and cooperation in brining the matter back to normalcy as quickly as possible. The group has reiterated that it will be standing behind Tata Finance Limited and it will take the full responsibility to meet all its obligations."

The RBI warned the company to bring down its debt-equity ratio, which is quite high six months back. According to sources TFL is addressing this issue. The huge public deposits of the company was also a major worry for the regulator.

TFL on the back of this concern of the RBI cut down its public deposits by around Rs 5 billion over the last one year. Tata Fin's ICD exposure to Niskalp is over Rs 4 billion.

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