Share prices of Tata group firms plunged on sustained selling pressure today as the controversy over auditor A F Ferguson's report on Tata Finance Ltd (TFL) accounts took a turn for the worse. The fall of Tata scrips was in a range of 7.37 per cent to 2.10 per cent, while the Nifty closed down 15.55 points, or 1.60 per cent at 953.55, today. BSE Sensex lost 1.97 per cent.
Market operators today dumped Tata group stocks on the simple assumption the controversy was snowballing into a situation where the group would find it difficult to keep its reputation intact.
As much as 10 scrips of the group-Tisco, Telco, TFL, Tata Power, Titan Industries, Tata Metaliks, Tata Infortech, Tata Tea, Tata Telecom and Tata Chemicals, slipped today on NSE.
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The biggest loser was Tata Infotech which lost 7.37 per cent to Rs 155.30. Next on the list was TFL (down 7.36 per cent to Rs 22.65). The lowest loss was suffered by Tata Metaliks (down by 2.10 per cent to Rs 28.)
In addition Crisil yesterday downgraded Tata Power's debentures due to its huge exposure in a group firm's telecom venture. The news hit the stock market today and added insult to Tata Power's injury. The stock lost 6.64 per cent on NSE and closed at Rs 99.80.
Tisco plunged by 6.10 per cent to Rs 115.20 and Telco was down by 6.10 per cent to Rs 126.20. Both the stocks were among the biggest losers in the BSE Sensex constituents. Tisco and Telco account for 3.65 per cent weightage in the Sensex.
Analysts said despite the audit firm having withdrawn its report on TFL, it blamed the management of the company for certain business actions leading to irregularities in its accounts. The sentiment for Tata group's stocks was likely to remain bearish for the next few trading sessions.
Other losers included Titan Industries (down 5.64 per cent to Rs 62.70) and Tata Metaliks (down 2.10 per cent to Rs 28). The stocks of Tata Tea slipped by 2.67 per cent to Rs 163.50, Tata Telecom by 2.77 per cent to Rs 124.70 and Tata Chemicals by 2.39 per cent to Rs 55.25.
The group companies which are audited by A F Ferguson include Telco, Tisco, Tata Power and Titan Industries.
Ferguson has already announced that it would set up a new and independent team to examine and review the data collected so far and come up with a fresh report on TFL.
The apex auditing body, the Institute of Chartered Accountants of India, said it would examine if Ferguson's withdrawal of its report on dubious management practices at TFL could be viewed as professional misconduct. Market regulator Sebi also said that it would look into the report.
ICAI said the institute could investigate individual members of a firm. If a member is found guilty of professional misdemeanor, the ICAI can even recommend permanent cancellation of his or her auditing licence to the High Court. The author of the controversial report, Y M Kale, who resigned from Ferguson on Wednesday, used to head ICAI earlier.