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Tata group probing unit's losses

The Tata group is investigating a case of mismanagement of funds by senior officials at its financial services company, a source close to the group told Reuters on Wednesday.

"The group is going to look into mismanagement of funds at Tata Finance," said the source, who declined to be identified.

The Economic Times, India's leading financial daily, reported on Wednesday that Tata Finance had sacked five senior officials for mismanagement of funds.

It said the officials were dismissed because of an Rs 800-million ($16.98 million) loss in the year to June 2001 at Tata Finance's stock market investment arm, Niskalp Investments and Trading.

The Tata group spokesman declined to comment on the report when contacted by Reuters.

The paper said Niskalp had invested heavily in tech companies during the boom of 2000 only to see its investments diminish in value this year with a stock market slump that began in March.

Niskalp's investments included shares in telecom equipment makers Global Tele-Systems and Himachal Futuristic, Vakrangee Software, Pentamedia Graphics and Satyam Computers, the daily reported.

Another financial paper, said Tata Sons, the holding company of the Tata group, had decided to acquire a majority stake of over 50 per cent in Niskalp from Tata Finance to ensure better control and compliance with norms.

It said Tata Finance would retain a 49-per cent stake.

The report quoted Tata finance managing director Subodh Shah confirming Tata Sons' move, saying it was part of a restucturing exercise.

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