Tata, Docomo to bury the hatchet

Tata Sons on Tuesday announced that it has reached an agreement with NTT Docomo to settle its long-pending dispute to buy back the Japanese company’s shares in their joint venture – Tata Teleservices. The statement, however, is silent on how the Indian company will circumvent the Reserve Bank of India (RBI) guideline that bans any pre-determined valuation of shares.
In a statement, Tata Sons said in the larger “national interest” of preserving a fair investment environment in India, it has reached an agreement with NTT DOCOMO on a joint approach to enable enforcement of the 22nd June, 2016, London Court of International Arbitration (LCIA) award. “As a gesture of good faith and in accordance with the Tata group’s long-standing record of adherence to contractual commitments that it has always enjoyed both in India and abroad, the Board of Tata Sons has decided to withdraw its objections to the enforcement of the Award in India,” it said.
The RBI had earlier made asked the Finance Ministry to clear the transaction stating the  “national interest” and “better business relations with Japan” reason, but it was rejected by the finance ministry as the current laws do not allow any pre-determined valuation of shares. If the Finance ministry changes its rules allowing pre-determined valuation of shares then it would benefit many other MNCs who are waiting in the queue to cash in on their India investments.
Both parties have jointly applied to the Delhi High Court, requesting that it accept their agreed terms of settlement, subject to such further orders as the Court sees fit. The settlement terms, if approved by the Delhi High Court, clear the way for the $1.18 billion already deposited by Tata Sons with the Delhi High Court to be paid to DOCOMO, and would allow DOCOMO to transfer its 26.5% stake in Tata Teleservices. The RBI told the court that it would get back to the Delhi HC on March 8th after seeking the guidance from the central bank.
As part of this joint application, and in anticipation of the matter being finally resolved in India, DOCOMO has agreed to suspend its related enforcement proceedings in the United Kingdom and the United States for a period of time, Tata Sons said.
This agreement between the parties is a significant step towards resolution of this dispute, and both Tata Sons and DOCOMO are hopeful that they will continue to work together constructively to achieve a resolution of this case as well as will look to further collaboration in the future, it added.
Tata, Docomo to bury the hatchet

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s