Tatas deposit $1.17 billion in DoCoMo case1 min read . Updated: 30 Jul 2016, 01:24 AM IST
The deposit is towards the compensation sought by NTT DoCoMo Inc. for its stake in Tata Teleservices Ltd as it tries to exit one of its worst overseas investments
Mumbai: Tata Sons Ltd, the promoter of major operating Tata companies, said on Friday that it had deposited the $1.17 billion that a UK arbitration court had awarded NTT DoCoMo in a fixed deposit favouring the Delhi high court registrar.
This comes after Bloomberg on Thursday reported that the Indian government plans to block this payment.
The finance ministry would not grant an exemption to the foreign exchange act that Tata Sons would need to pay the money to its Japanese partner, the report had said.
The $1.17 billion deposit is towards the compensation sought by NTT DoCoMo Inc. for its stake in Tata Teleservices Ltd as it tries to exit one of its worst overseas investments.
The London Court of International Arbitration in June ordered Tata Sons to pay this amount to NTT DoCoMo for breaching an agreement over the wireless venture.
Under the Japanese firm’s agreement with Tata Sons, it had the right to request a buyer for its stake at a fair market price or 50% of its acquired price, amounting to ₹ 7,250 crore, whichever is higher. Current rules state that foreign companies can only exit investments at a valuation based on the return on equity.
Tata Sons said that the high court had given till 30 August for both parties to try and resolve the outstanding issues between them.
“Tata Sons wishes to clarify that it has in the past, as well as after the arbitral tribunal announced its award, invited DoCoMo to join it in representing this matter before the Reserve Bank of India (RBI) and the Ministry of Finance. In the meantime, we would caution against any stakeholders being misled by statements that are made in ignorance of India’s foreign exchange regulations," its statement said.
The Indian government is wary of setting a precedent, as at least 10 other companies have sought waivers for similar deals, the Bloomberg report added.