 "Cyrus Mistry")
Tata Group chairman Cyrus Mistry met several Cabinet ministers in the Capital on Monday, a day ahead of the DoCoMo case hearing scheduled in the Delhi High Court. An international arbitration court ordered Tata Sons to pay $1.17 billion to its telecom venture’s erstwhile partner, NTT DoCoMo, for “breach of contract”. Subsequently, Japanese telco DoCoMo dragged the Tatas to the Delhi High Court, seeking enforcement of the arbitration ruling.
Government officials and Tata executives called the meetings with ministers a “courtesy call”.
Mistry’s first halt was at Sanchar Bhavan, office of telecom minister Manoj Sinha, who also met Paul E Jacobs, executive chairman, Qualcomm, the top American chipmaker, soon after. By evening, Mistry had also met Finance Minister Arun Jaitley and Commerce Minister Nirmala Sitharaman.
Qualcomm’s Jacobs called on Prime Minister Narendra Modi later in the day. Officials in the Prime Minister’s Office (PMO) said there was no meeting with Mistry so far. However, Modi is likely to meet the Tata chairman on Tuesday or Wednesday.
Mistry will be in the Capital for the next two days for an Indo-US business event, including chief executive officers’ (CEOs) roundtable, luncheons and dinner meetings. He’s heading the CEOs’ forum from the Indian side. The event is part of the Strategic and Commercial Dialogue (S&CD) between the US and India. External Affairs Minister Sushma Swaraj, Commerce Minister Nirmala Sitharaman, US Secretary of State John Kerry and Secretary of Commerce Penny Pritzker will lead the two sides.
DoCoMo is being seen as an important matter of discussion in economic ministries ahead of the G20 meeting on September 4 and 5 in China’s tourist hub of Hangzhou. While several business issues are slated to come up at the G20, the DoCoMo case could well be among those. Besides Chinese President Xi Jinping, heads of states attending G-20 will include US President Barack Obama, Japanese Prime Minister Shinzo Abe and Prime Minister Modi.
NTT DoCoMo, in November 2008, had acquired 26.5 per cent stake in Tata Teleservices for about ~12,740 crore (at Rs 117 per share). This was according to an understanding that, in case the Japanese firm exits the venture within five years, it would be paid a minimum 50 per cent of the acquisition price.
In April 2014, DoCoMo decided to exit the joint venture that struggled to grow subscribers quickly. It sought Rs 58 per share or Rs 7,200 crore from the Tatas. But the Indian group offered Rs 23.34 a share in line with the Reserve Bank of India (RBI) guidelines, which state that an international firm can only exit its investment at a valuation “not exceeding that arrived at on the basis of return on equity”.
The Japanese firm dragged Tata Group to international arbitration and won a $1.17 billion award. To honour that, an application was made to RBI, seeking exemption from the Foreign Exchange Act. RBI, in turn, wrote to the finance ministry for exemption from rules, a step that would boost investor confidence.
The finance ministry, however, turned down the RBI plea. According to the ministry, if exemption is given in the matter of Tata-DoCoMo, a precedent would be set for other legacy issues.
