How Aircel’s Sivasankaran Came To Owe Tata Group Companies Rs 9 billion

Chennai-based C Sivasankaran group, facing a Central Bureau of India investigation probe for defaulting on a Rs 7-billion bank loan, also owes close to Rs 9 billion to various Tata group companies. Over the past few years, the Tata group, including its holding company Tata Sons, has written off these loans calling them “doubtful recovery.”

According to a source, the Siva group defaulted on a payment of Rs 6.94 billion to Tata Sons in 2016 for its share in the acquisition of a stake from Japanese telecom major, NTT Docomo. This led to Tata Sons paying the money to Docomo from its own pocket and making a claim against the Siva group. This amount was written off by Tata Sons as the Siva group did not honour its commitment.

Similarly, the Siva group took a loan from Tata Capital worth Rs 2 billion which was later written off by the Tata group financial services company.

Sivasankaran is currently under investigation for defaulting on loans from IDBI Bank. In October 2010, the bank had sanctioned Rs 3.2 billion in loans to Win Wind Oy. The firm later applied for bankruptcy in Finland, due to which the loan was declared an NPA. Despite the default, IDBI Bank in 2014 sanctioned another loan of Rs 5.23 billion to Axcel Sunshine. Allegedly, the loans were used to repay loans of Win Wind Oy in violation of RBI norms. For the loans from IDBI Bank, the Siva group had used the shares of Tata Teleservices as collateral.

The business dealings between Sivasankaran, a close friend of group patriarch Ratan Tata, and the Tata group dates back to 2006 when the Siva group invested Rs 8.84 billion in Tata Teleservices equity via a preferential allotment of shares. Of this, Siva had paid Rs 1.02 billion by December 2006 and was allotted convertible warrants within a month. By February 2006, the Siva group invested in the remaining Rs 7.82 billion and converted the warrants to get a total of 520 million shares of a face value of Rs 10 each for a price of Rs 17 a share.

On 8 March 2006, the Tatas sold Tata Teleservices shares to Temasek Holdings, a Government of Singapore company, for Rs 26 per share. The difference in shares sold to Temasek and Siva group within a month led to a benefit of Rs 4.68 billion to the Siva group. In an interview to this paper in November 2016, Sivasankaran had said he was to get the share at par or Rs 10 a share, and not Rs 17 a share. As per documents now submitted to the National Corporate Law Tribunal, as Tata Teleservices was in dire need of funds, and did not want any awkward situation with Temasek, Siva’s share purchase price was raised to Rs 17 a share.

Interestingly, even the Rs 7.82 billion invested by the Siva group was financed by banks due to guarantees and loans given by the Tata group. Of Siva’s investment, Rs 6.50 billion was provided by a loan from Standard Chartered Bank against a guarantee by Tata Sons and another Rs 1.32 billion was provided to Sivasankaran by Kalimati Investments, a subsidiary of Tata Steel, a listed entity, as a temporary inter-corporate loan. The Kalimati loan was not disclosed to the then Tata Steel board, a former Tata Steel director claimed. – Business Standard