 "Tata Capital's NPA woes due to Siva group exposure")
Tata Sons’ ousted chairman Cyrus Mistry has alleged Tata Capital required a major clean up on account of bad loans to the infrastructure sector, especially credit to the Sivasankaran group. The loan to the Sivasankaran group was under the strong advice of executive trustee of Tata Trusts R Venkataraman, which has since turned into a non-performing asset (NPAs).
All of this resulted in Tata Capital having to recognise an abnormal size of NPAs, Mistry said in a letter to the directors of Tata Sons. Mistry, however, did not divulge the loan amount and when the loans turned into NPAs.
According to the annual report for 2015-16, the gross NPAs of Tata Capital on a consolidated basis declined to 3.8 per cent in 2015-16 from 4.2 per cent in 2014-15. The asset quality of Tata Capital had suffered in 2014-15 due to an adverse business environment for the infrastructure sector, resulting in a rise in gross NPAs to 4.2 per cent from 3.5 per cent in 2013-14. Subsidiary Tata Capital Financial Service, which financed the infrastructure business, faced the brunt.
Companies operating in the infrastructure sector faced a difficult environment in 2014-15. The sector was also adversely affected by regulatory issues and delayed payments from government-owned companies. These challenges also had an impact on Tata Capital Financial Service, resulting in reduced disbursement compared to 2013-14 and increased stress on asset quality, according to the annual report for 2014-15. Tata Capital’s book size increased from Rs 34,362 crore on March 31, 2015, to Rs 43,881 crore on March 31, 2016, on a consolidated basis. This increase of about Rs 9,519 crore was mainly due to the growth in the loan book of two major subsidiaries, Tata Capital Financial Services with Rs 5,053 crore and Tata Capital Housing Finance with Rs 3,917 crore.
All of this resulted in Tata Capital having to recognise an abnormal size of NPAs, Mistry said in a letter to the directors of Tata Sons. Mistry, however, did not divulge the loan amount and when the loans turned into NPAs.
According to the annual report for 2015-16, the gross NPAs of Tata Capital on a consolidated basis declined to 3.8 per cent in 2015-16 from 4.2 per cent in 2014-15. The asset quality of Tata Capital had suffered in 2014-15 due to an adverse business environment for the infrastructure sector, resulting in a rise in gross NPAs to 4.2 per cent from 3.5 per cent in 2013-14. Subsidiary Tata Capital Financial Service, which financed the infrastructure business, faced the brunt.
Companies operating in the infrastructure sector faced a difficult environment in 2014-15. The sector was also adversely affected by regulatory issues and delayed payments from government-owned companies. These challenges also had an impact on Tata Capital Financial Service, resulting in reduced disbursement compared to 2013-14 and increased stress on asset quality, according to the annual report for 2014-15. Tata Capital’s book size increased from Rs 34,362 crore on March 31, 2015, to Rs 43,881 crore on March 31, 2016, on a consolidated basis. This increase of about Rs 9,519 crore was mainly due to the growth in the loan book of two major subsidiaries, Tata Capital Financial Services with Rs 5,053 crore and Tata Capital Housing Finance with Rs 3,917 crore.