Nusli Wadia accuses Tata of insider trading

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Nusli Wadia, independent director of the board of directors of three companies in the Tata group, accused Ratan Tata, acting chairman of Tata Sons, and the Tata trustee NA Soonawala on Monday of seeking price sensitive information from the companies. of the Tata group, thus violating the Securities and Exchange Council. of Insider Trading Standards in India (Sebi). Defending his role as an independent director on Tata Steel’s board, Wadia said Tata is seeking to remove him from the boards because he refuses to be Tata’s “yes man”.

In a letter to shareholders of Tata Steel, Wadia said that Tata Sons and the trustees of the Tata Trusts requested and received information regarding Tata Steel, which is important and price sensitive. “It was, I believe, before the introduction on January 15, 2015 of the insider trading regulations. I believe that Tata, Soonawala and the Tata Sons Board of Directors, even after the settlement notification on January 15, 2015, sought access to information and documents from Tata Steel, Tata Motors and other Tata companies, ” Wadia asserted.

Tata Steel shareholders meet on December 21, following a special notice from Tata Sons to remove Wadia and Cyrus Mistry as a director of the company’s board.

The financial and strategic presentations and the data sought could be considered a violation of insider trading regulations because unpublished and price-sensitive information and knowledge was sought, Wadia alleged.

Furthermore, in 2015-16, Tata and Soonawala demanded that certain important and strategic issues be shared with them as trustees, in relation to the affairs of Tata Motors and Tata Steel. “As a result, I believe that presentations regarding Tata Steel Europe, strategy, financial data, proposed merger with ThyssenKrupp and other important and unpublished pricing information and questions have been made to Tata and Soonawala – a violation of the Sebi Insider Trading Regulations, ”Wadia said.

Wadia said there were serious concerns, regarding statements made by Lord Kumar Bhattacharyya (professor at the University of Warwick, UK) that could attract the insider trading provisions of the regulation. Wadia said that Bhattacharyya, in a speech to the House of Lords on July 7, 2016, claimed that he influenced and advised Ratan Tata to buy Corus. “The question is, in what capacity Lord Bhattacharyya made these statements and with what authority he engaged your company, made announcements to the British Parliament, to the British public and to the Indian public. He has no role or responsibility in your business, ”he added.

Wadia vs. Tata

Wadia said he is seeking to be removed from Tata Steel’s board because he, as an independent director, disagreed with several Tata proposals. “I was firmly convinced that Tata Steel should focus on the growing Indian market and develop its new steel plant where margins and yields would be much higher. My strategic view was that Tata Steel would become India’s No.1 steel company. This is unfortunately not the case today. The Kalinganagar project was seriously delayed with a substantial cost overrun and entered service with only three million tonnes compared to the six million tonnes initially proposed. As a result, its financial returns have been significantly affected, ”noted Wadia.

“I also differed strongly in providing continued financial resources to Tata Steel Europe from the year 2012 prior to Tata’s resignation. From that date to now, the capital employed in the company has increased by approximately Rs 25,000 crore with zero return, ”Wadia said.

Furthermore, any return on investment for Tata Steel shareholders from its investment in Tata Steel Europe seems almost impossible. “The shareholders of Tata Steel have already suffered severe depreciation of nearly Rs 35,000 crore and are likely to have further significant depreciations in the future. The total capital currently used thanks to Tata Steel Europe is in the order of Rs 75,000 crore, ”said Wadia.

The very purpose and founding of Tata Steel by founder Jamshedji Tata in 1907 was to fulfill the dream of Make in India when all steel consumed in India was imported from the UK. “It is his pride and belief in India that are today supported by Prime Minister Narendra Modi through his Make in India vision. Tragically, by contrast, we now read in the British and Indian press “Ratan Tata hailed as the savior of the British steel industry”, “Wadia said.

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