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The <keyword id="6354977" type="General" weightage="50" keywordseo="supreme-court" source="Orion">Supreme Court</keyword> on Thursday sentenced former Ranbaxy promoters Malvinder Singh and Shivinder Singh to 6 months imprisonment in a case connected with the sale of shares of <keyword id="89365" type="General" weightage="100" keywordseo="fortis" source="Orion">Fortis</keyword> to Malaysia-based IHH Healthcare. A bench, headed by Chief Justice U.U. Lalit, declined to lift its stay on the open offer by IHH Healthcare Berhad for a 26 percent stake in <keyword id="46994" type="General" weightage="80" keywordseo="fortis-healthcare" source="Orion">Fortis Healthcare</keyword>. It asked the Delhi High Court to issue remand in the case and also ordered a forensic audit of the Fortis-IIH deal. "Everything goes back to the executing court," it said. The former promoters of Fortis Healthcare Ltd were embroiled in a court battle after <keyword id="85190" type="General" weightage="80" keywordseo="daiichi-sankyo" source="Orion">Daiichi Sankyo</keyword>, a Japanese firm, had challenged the Fortis-IHH share deal to recover the Rs 3,600 crore arbitration award that it had won before a Singapore tribunal against the Singh brothers. Due to a legal fight between Daiichi Sankyo and the former promoters of Fortis Healthcare, the IHH-Fortis deal is stuck. The top court also slapped the Singh brothers with a fine in the contempt case filed against them by the Japanese firm. Daiichi Sankyo moved the court to enforce the arbitral award passed by a Singapore tribunal in 2016. The Delhi High Court, in January 2018, ruled that the arbitration award won by Daiichi Sankyo against the Singh brothers for concealing information about the erstwhile Ranbaxy Laboratories, was enforceable in India. In 2018, IHH Healthcare had acquired a 31 percent controlling stake in Fortis, which triggered a mandatory open offer to acquire another 26 percent of Fortis shares from the market. However, the open offer could not move forward due to ongoing legal proceedings with respect to the transaction based on a plea filed by Daiichi Sankyo. SEE ALSO : <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/news/rbi-cancels-licence-of-laxmi-co-operative-bank-solapur/articleshow/94387667.cms">RBI cancels licence of Laxmi Co-operative Bank, Solapur</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/stock-market/news/four-billionaires-debut-on-rich-list-after-ipos/articleshow/94384190.cms">Four billionaires debut on rich list after IPOs</a>

SC sends former promoters of Fortis Healthcare to six months jail

The Supreme Court on Friday held former Ranbaxy promoters Malvinder Singh and Shivinder Singh guilty of contempt of court for violating its order asking them not to divest their shares in Fortis Healthcare . The apex court earlier asked the Singh brothers to give it a plan as to how they would honour the arbitral award of Rs 3,500 crore granted by a Singapore tribunal against them and in favour of Japanese drug manufacturer <keyword id="85190" type="COMPANY" weightage="20" keywordseo="Daiichi-Sankyo">Daiichi Sankyo</keyword>. A bench comprising Chief Justice Ranjan Gogoi and Justice Deepak Gupta held the former Ranbaxy promoters guilty of contempt of court and said that they had violated its earlier order by which the sale of their controlling stakes in Fortis Group to Malayasian firm IHH Healthcare was put on hold. The apex court said that they would hear the Singhs on the quantum of sentence later. The Japanese firm had filed contempt petition against the former Ranbaxy promoters alleging that execution of their arbitral award had been in jeopardy as the Singh brothers disposed of their controlling stakes in Fortis Group to the Malaysian firm.

Malvinder and Shivinder Singh held guilty of violating Supreme Court order

<ul><li>India’s <keyword id="6354977" type="ORGANIZATION" weightage="20" keywordseo="Supreme-Court">Supreme Court</keyword> has ordered the former promoters of pharma major Ranbaxy, Malvinder Mohan Singh and his brother Shivinder Mohan Singh, to pay their outstanding dues to Japan’s <keyword id="85190" type="COMPANY" weightage="20" keywordseo="Daiichi-Sankyo">Daiichi Sankyo</keyword> or risk facing jail time. </li><li>The apex court has been hearing a petition filed by Daiichi Sankyo alleging the non-payment of ₹35 billion. The amount had been awarded to the Japanese firm in a previous arbitration in mid-2016 by the Singapore High Court. </li><li>The brothers sold their stake in Ranbaxy to Daiichi Sankyo in 2008. However, following the sale, a number of quality control issues and irregularities at Ranbaxy’s plants came to light. </li></ul>India’s Supreme Court has ordered the former promoters of pharma major Ranbaxy, Malvinder Mohan Singh and his brother Shivinder Mohan Singh, to pay their outstanding dues to Japan’s Daiichi Sankyo or risk facing jail time. The apex court has been hearing a petition filed by Daiichi Sankyo alleging the non-payment of ₹35 billion. The amount had been awarded to the Japanese firm <a href="https://www.thehindubusinessline.com/companies/singapore-hc-orders-singh-brothers-to-pay-3500-crore-to-daiichi/article25801645.ece">in a previous arbitration</a> in <a href="https://www.livemint.com/Companies/EqvCviWG72lCNAMBOm61OJ/Former-Ranbaxy-owners-will-have-to-pay-Rs1000-crore-more-s.html">mid-2016 </a>by the Singapore High Court. The brothers sold their stake in Ranbaxy to Daiichi Sankyo in 2008. However, following the sale, a number of quality control issues and irregularities at Ranbaxy’s plants came to light, after which Daiichi Sankyo took the brothers to court. In March 2019, the brothers had been ordered by the Supreme court to come up with <a href="https://www.livemint.com/companies/news/daiichi-ranbaxy-arbitration-case-find-a-way-to-pay-up-sc-tells-singh-brothers-1552593283137.html">a plan to pay the ₹35 billion amount</a> but until now have failed to do so. The two brothers have been mired in a conflict with each other in the last few years. This came to a head <a href="https://www.businessinsider.in/the-feuding-ex-billionaire-brothers-shivinder-singh-sues-malvinder-over-alleged-mismanagement-of-fortis-empire/articleshow/65682866.cms">in September 2018,</a> when <keyword id="136456" type="PERSON" weightage="20" keywordseo="Shivinder-Singh">Shivinder Singh</keyword> filed a case against his older brother Malvinder another associate Sunil Godhwani in the <keyword id="6354457" type="ORGANIZATION" weightage="20" keywordseo="National-Company-Law-Tribunal">National Company Law Tribunal</keyword> for their role in the “oppression and mismanagement” of <keyword id="46994" type="COMPANY" weightage="20" keywordseo="Fortis-Healthcare">Fortis Healthcare</keyword>, Religare and related firms. He eventually <a href="https://www.bloombergquint.com/law-and-policy/nclt-allows-shivinder-to-withdraw-case-against-brother-malvinder-singh">withdrew the case</a> after pressure from his mother. The brothers are also being investigated by a number of Indian regulators, including the SEBI and SFIO,for the loss of ₹23 billion from their listed companies, which has resulted in their public shareholdings being frozen. Fortis, which has been posting losses since 2015, has been at the centre of a money-laundering scandal related to the approval of unsecured loans to the brothers. SEE ALSO: <a href="https://www.businessinsider.in/the-feuding-ex-billionaire-brothers-shivinder-singh-sues-malvinder-over-alleged-mismanagement-of-fortis-empire/articleshow/65682866.cms">The feuding ex-billionaire brothers: Shivinder Singh sues Malvinder over alleged mismanagement of Fortis empire</a>

The former promoters of Ranbaxy now face jail time unless they cough up ₹35 billion

<keyword id="138068" type="PERSON" weightage="100" keywordseo="Malvinder-Mohan-Singh">Malvinder Mohan Singh</keyword> and <keyword id="138069" type="PERSON" weightage="100" keywordseo="Shivinder-Mohan-Singh">Shivinder Mohan Singh</keyword>, the former promoters of Ranbaxy Laboratories, were fined about Rs 2,600 crore ($400) million by the Singapore Court of Arbitration. They have been fined for concealing and <a href="http://www.businessinsider.in/Ranbaxy-Loses-Its-Exclusivity-ForStomach-Treatment-Drug/articleshow/46029030.cms">misrepresenting facts</a> from Daiichi Sankyo while they were selling the promoters' stake for $2.4 billion in 2008. 
 
Also read: <a href="http://www.businessinsider.in/Ranbaxy-Denies-Being-Barred-From-Germany/articleshow/45371977.cms">Ranbaxy Denies Being Barred From Germany</a> 
 
The Japanese pharmaceutical company had filed the arbitration case in 2013 in Singapore, in which it had accused the Indian promoters of concealment and misrepresented facts. Further, it had asked to be compensated for losses it had to suffer. 
 
The arbitration order has come as a major setback for Malvinder Mohan Singh, whose Younger brother Shivinder Mohan Singh has already stepped down from the executive role of group companies. He has since joined the Radha Soami Satsang Beas, the <a href="http://www.businessinsider.in/Deficiencies-Found-AtRanbaxys-Toansa-Plant-In-Punjab/articleshow/36141706.cms">Punjab</a>-based philosophical and spiritual organization headquartered in Beas near Amritsar. 
 
It was in May 2013 that Ranbaxy, which was under the management control of Daiichi, was forced to reach a $500-million settlement with the US Department of Justice since it had faked test results to get <a href="http://www.businessinsider.in/Ranbaxy-Sues-US-FDA-For-Withdrawing-Approval-For-Its-Drugs/articleshow/45203502.cms">FDA approvals</a> for its medicines. 
 
The US subsidiary of Ranbaxy had pleaded guilty to seven felonies relating to the manufacture and distribution of certain adulterated drugs made at its Indian units, and had even agreed to pay the money to settle all the criminal and legal suits. 
 
In 2014, however, Daiichi, finally decided to exit from the company after spending over nearly $4 billion for Ranbaxy’s 58% stake, merging it with home grown multinational <a href="http://www.businessinsider.in/Sun-Pharma-is-axing-its-RD-crowd/articleshow/48279718.cms">Sun Pharma</a>. 
 
Also read: <a href="http://www.businessinsider.in/Sun-Pharma-hands-out-walking-papers-to-18-top-Ranbaxy-executives/articleshow/47718725.cms">Sun Pharma hands out walking papers to 18 top Ranbaxy executives</a> 
 
<a href="http://images.forbes.com/media/lists/77/2011/17-malvinder-shivinder-singh.jpg">Image source</a>

Malvinder and Shivinder Mohan Singh fined Rs 2600cr for withholding facts from Daiichi during $2.4 bn Ranbaxy sale

<ul class="summary-list"><li><keyword id="6355311" type="UNKNOWN" weightage="60" keywordseo="japan">Japan</keyword> received a cargo of <keyword id="6409874" type="COMPANY" weightage="60" keywordseo="astrazeneca">AstraZeneca</keyword> vaccine from the US, the company told local media Thursday.</li><li>Japan wanted to source doses from the EU, but couldn't since the bloc banned exports in January.</li><li>The US too has been criticized for stockpiling doses of the vaccine, which it has not approved.</li></ul>Japan's first AstraZeneca vaccines are coming from the US, not the EU, after the bloc restricted vaccine exports in January, Reuters reported on Thursday. The company had planned to import the vaccine from Europe, Tomoo Tanaka, AstraZeneca's head of vaccine development, said in an interview with Asahi Shimbun on Thursday, <a href="https://www.reuters.com/article/health-coronavirus-japan-astrazeneca-idINKBN2BO45M">Reuters reported</a>.But restriction on vaccine exports <a href="https://www.cnbc.com/2021/03/22/uk-and-eu-covid-vaccine-export-ban-spat-grows.html">imposed by the EU in January</a> led to a change in plans. Instead, Japan imported undiluted vaccines from the US, Tanaka. Reuters confirmed the news with an AstraZeneca spokesperson. The Japanese government has ordered enough doses of the two-shot AstraZeneca vaccine for its 60 million population, around half the population, the <a href="https://www.japantimes.co.jp/news/2021/03/12/national/astrazeneca-vaccine-japan/">Japan Times reported</a>.90 million doses of the vaccine will be produced domestically by local companies Daiichi Sankyo, JCR Pharmaceuticals Co, and others, Reuters reported.Daiichi Sankyo said on March 12 it had started manufacturing the vaccine "using undiluted solutions provided by AstraZeneca," the company <a href="https://www.daiichisankyo.com/files/news/pressrelease/pdf/202103/20210312_E1.pdf">said in a press release</a>. It is not clear whether they were waiting on undiluted vaccine doses from abroad.The EU announced on <a href="https://www.cnbc.com/2021/03/24/eu-announces-tougher-controls-on-coronavirus-vaccine-exports.html">March 24</a> that it would again restrict vaccine exports for <a href="https://www.nytimes.com/2021/03/23/world/europe/eu-curbs-vaccine-exports.html">six weeks</a>, in a bid to keep up with supply issues among the member states.The bloc had previously said it authorized requests for millions of doses of vaccines to be shipped to 29 countries, including Japan, <a href="https://www.reuters.com/article/us-health-coronavirus-australia-idUSKCN2AX07H">Reuters reported on March 5</a>.The US <a href="https://www.businessinsider.com/us-as-millions-unusued-astrazeneca-coronavirus-vaccine-shots-not-sharing-2021-3">came under scrutiny</a> when it was found that it had blocked the export of doses of the AstraZeneca shot.Millions of doses were stockpiled in vaccine plants on US soil, even though the country had not approved the shot. As of April 1, it still has not.Speaking on the issue of vaccine supply, President Joe Biden said at the time that Americans should be "taken care of first."Since then, the US has shipped doses of the AstraZeneca vaccine to <a href="https://www.reuters.com/article/idUSKBN2BA22S">Mexico and Canada</a>, as a loan. Details about the conditions under which Japan has received doses from the US were not immediately clear.Last week, AstraZeneca had to revise its US trial <a href="https://www.businessinsider.com/astrazeneca-vaccine-efficacy-us-trial-revised-down-fauci-76-2021-3">efficacy data downwards</a> from 79% to 76% after US health officials said the company used outdated data in their first submission.More <a href="https://www.businessinsider.com/astrazeneca-coronavirus-vaccine-has-murky-future-in-us-2021-3">experts are calling for the US to export</a> their AstraZeneca vaccine doses, because, although it is likely that the vaccine will be approved by the FDA, it might come too <a href="https://www.businessinsider.com/astrazeneca-coronavirus-vaccine-has-murky-future-in-us-2021-3">late for the US vaccine rollout, Insider's Andy Dunn reported</a>.

Blocked by the EU's export ban, Japan got its first AstraZeneca vaccines from the US instead

<ul><li>Two of India’s most-famous billionaires, <keyword id="6359351" type="PERSON" weightage="20" keywordseo="malvinder-singh">Malvinder Singh</keyword> and <keyword id="136456" type="PERSON" weightage="20" keywordseo="Shivinder-Singh">Shivinder Singh</keyword> -- the former promoters of the erstwhile drug maker Ranbaxy-- have been arrested by the Delhi police </li><li>They are accused of siphoning $300 million from their own financing firm, <keyword id="168310" type="DOMAIN" weightage="20" keywordseo="Religare-Enterprises-Ltd">Religare Enterprises Ltd</keyword>. </li><li>The billionaire duo had inherited Ranbaxy, a company that was nurtured into becoming India’s largest drugmaker, over decades. </li><li>Just over a decade after the historic sale of Ranbaxy to Japanese pharma major Daiichi Sankyo, <keyword id="6739123" type="UNKNOWN" weightage="20" keywordseo="The-Singh-Brothers">the Singh brothers</keyword> find themselves in prison for alleged financial impropriety. </li></ul>Two of India’s most-famous billionaires,Malvinder Singh and Shivinder Singh -- the former promoters of the erstwhile drug maker Ranbaxy-- have been arrested by the Delhi police for siphoning $300 million from their own financing firm, Religare Enterprises Ltd. The billionaire duo had inherited Ranbaxy, a company that was nurtured into becoming India’s largest drugmaker, over decades. The Singh brothers lacked the patience and the scruples of their previous generation. Under their leadership, Ranbaxy gained unmatched global prominence very quickly, other businesses like the hospital chain Fortis Healthcare and financial services firm Religare thrived. But the house of cards came crashing down just as fast. Just over a decade after the historic sale of Ranbaxy to Japanese pharma major Daiichi Sankyo, the Singh brothers find themselves in prison for alleged financial impropriety. 
	<div type="Slideshow" msid="71534985" hostid="261" title="An Indian billionaire duo's journey from glory to prison in just over a decade" firstImageMsid="71535246" slideCount="7"></div>

An Indian billionaire’s journey from glory to prison in just over a decade

<keyword id="80487" type="COMPANY" weightage="20" keywordseo="walmart">Walmart</keyword>’s acquisition of <keyword id="6354742" type="COMPANY" weightage="20" keywordseo="Flipkart">Flipkart</keyword> is the biggest ever in India, with the US-based retail giant spending <a href="https://economictimes.indiatimes.com/small-biz/startups/newsbuzz/walmart-acquires-flipkart-for-16-bn-worlds-largest-ecommerce-deal/articleshow/64095145.cms">$16 billion</a>. But this buyout isn’t the first big takeover we’ve seen in the country. Here’s a list of some of the biggest mergers and acquisitions India has seen. Following are the top 10 acquisitions that happened in India. <ol><li>FLIPKART- WALMART: Walmart acquired 77% Flipkart for $16 billion, making it the largest acquisition involving an Indian company, in 2018.</li><li>TATA STEEL-CORUS: In 2007, <keyword id="6357147" type="COMPANY" weightage="20" keywordseo="tata-steel">Tata Steel</keyword> took over European steel major Corus for the price of $12.02 billion, making the Indian company, the world’s fifth-largest steel producer. </li><li>VODAFONE-HUTCHISON ESSAR: In 2007, the world’s largest telecom company (at the time) in terms of revenue, <keyword id="15492" type="CITY" weightage="20" keywordseo="Vodafone">Vodafone</keyword>, made an entered the Indian telecom market by acquiring a 52% stake in Hutchison Essar Ltd. Vodafone purchased 52% stake in Hutchisson Essar for about $10 billion. </li><li>HINDALCO-NOVELIS: Hindalco Industries Ltd. is a subsidiary of the Aditya Birla Group and Novelis is a world leader in the production of flat-rolled aluminum products. The <keyword id="929276" type="ORGANIZATION" weightage="20" keywordseo="Hindalco-Company">Hindalco Company</keyword> acquired the Canadian company Novelis for $6 billion, making the combined entity the world’s largest producer in rolled-aluminum.</li><li>RANBAXY-DAIICHI SANKYO: In 2008, Daiichi Sankyo Co. Ltd., signed an agreement to acquire the entire shareholders of Ranbaxy Laboratories Ltd, India. Ranbaxy’s sale to Japan’s Daiichi was priced at $4.5 billion.</li><li>ONGC-IMPERIAL ENERGY: In early 2009, Oil and Natural Gas Corp. Ltd (ONGC) took control of Imperial Energy, a UK Based firm operating in Russia for the price of $1.9 billion. </li><li>MAHINDRA &amp; MAHINDRA-SCHONEWEISS: In 2007, Mahindra &amp; Mahindra acquired 90 percent of Schoneweiss, a leading company in the forging sector in Germany. This consolidated Mahindra’s position in the global market.</li><li>STERLITE-ASARCO: In the year 2009, Sterlite Industries, a part of the <keyword id="147780" type="ORGANIZATION" weightage="20" keywordseo="Vedanta-group">Vedanta Group</keyword>, signed an agreement to acquire the copper mining company Asarco for the price of $2.6 billion. </li><li>TATA MOTORS-JAGUAR LAND ROVER: Tata Motors’ acquisition of luxury car maker Jaguar Land Rover was for the price of $2.3 billion, in 2008.</li><li>SUZLON-REPOWER: Wind Energy premier <keyword id="46212" type="ORGANIZATION" weightage="20" keywordseo="Suzlon-Energy">Suzlon Energy</keyword> acquired RePower for $1.7 billion. Suzlon Energy Limited is a wind turbine supplier based in Pune, India and RePower systems SE (now Senvion SE) is a German wind turbine company founded in 2001, owned by Centerbridge Partners. </li></ol>

Here are the top 10 acquisitions to have happened in India

<ul><li>Shivinder and Malvinder, who are the founders of <keyword id="46994" type="DOMAIN" weightage="20" keywordseo="Fortis-Healthcare">Fortis Healthcare</keyword>, are being investigated for the siphoning of ₹23 billion worth of funds from their listed companies. </li><li>On September 4th, <keyword id="136456" type="PERSON" weightage="20" keywordseo="Shivinder-Singh">Shivinder Singh</keyword> announced that he had filed a case against Malvinder and Sunil Godhwani, the former chairman of Religare, for their role in the “oppression and mismanagement” of their businesses. </li><li>A number of Indian regulators, including the SEBI and SFIO, are looking into the financial irregularities and diversion of funds at the brothers’ companies. </li></ul>Update: On September 13th, following intervention from their mother, Shivinder Singh withdrew the case he had filed against his brother Malvinder and Sunil Gondhwani in the NCLT. The brothers will now settle the case themselves out of court as their family members mediate. However, if the mediation fails, Shivinder retains the option of seeking a redressal through the courts. The decline of the healthcare czars, Shivinder Singh and brother <keyword id="6359351" type="PERSON" weightage="20" keywordseo="malvinder-singh">Malvinder Singh</keyword>, has been well-documented in recent months. The pair, who are the founders of Fortis Healthcare, have seen the empire they inherited from their father Parvinder Singh unravel spectacularly over the past few years and a fortune worth billions of dollars squandered. The brothers are being investigated for the loss of ₹23 billion from their listed companies, which has resulted in their public shareholdings being frozen. Fortis, which has been posting losses since 2015, has been at the centre of a money-laundering scandal related to the approval of unsecured loans to the brothers. Another financial services subsidiary, Religare Enterprises, which owned by them and was run by a close confidante, Sunil Godhwani, has also been hauled up by authorities for the siphoning of funds to firms that were privately held by the brothers. It has been speculated that the funds have gone towards the real estate investments of a spiritual sect, the Radha Soami Satsang Beas- the leader of which is the brothers’ uncle. The brothers also owe $500 million to Daiichi-Sankyo, which bought <keyword id="82365" type="COMPANY" weightage="20" keywordseo="Ranbaxy-Laboratories">Ranbaxy Laboratories</keyword> in 2008. The Delhi High Court found that they misrepresented the seriousness of regulatory investigations in the US against the Indian pharma major over the alleged violation of manufacturing standards and falsification of data. To add to their woes, they are also reeling from the losses of Ligare Aviation, a private charter airline business, and Religare Capital Markets, a failed investment banking venture. And now, a lawsuit On September 4th, Shivinder Singh announced that he had filed a case against his older brother Malvinder and Godhwani in the <keyword id="6354457" type="ORGANIZATION" weightage="20" keywordseo="National-Company-Law-Tribunal">National Company Law Tribunal</keyword>, a bankruptcy court, for their role in the “oppression and mismanagement” of Fortis Healthcare, Religare and related firms. Shivinder claims he has no part to play in the downfall of the companies as he left the business in December 2015 to join his uncle’s spiritual sect. He also allocates most of the blame to his brother Malvinder, who was chairman of the Fortis Healthcare over the period when the financial irregularities took place. The statement is in stark contrast to one issued last month by both the brothers that placed <a href="https://www.businesstoday.in/current/corporate/singh-brothers-say-sunil-godhwani-orchestrated-transactions-left-them-with-debt-load/story/281563.html">the blame squarely on Godhwani’s shoulders</a>. As things stand, a number of Indian regulators, including the Securities and Exchange Board of India (SEBI) and <keyword id="107956" type="ORGANIZATION" weightage="20" keywordseo="Serious-Fraud-Investigation-Office">Serious Fraud Investigation Office</keyword> (SFIO), are looking into the financial irregularities and diversion of funds at the brothers’ companies. Heads are expected to roll once their findings are revealed. Meanwhile, Fortis Healthcare will get a short-term lifeline from IHH Bhd, a Malaysian healthcare group. IHH is set to invest around ₹40 billion in India’s second-largest hospital chain for a 57% stake. The investment will ensure that the cash-strapped Fortis continues its operations for the foreseeable future.

The feuding ex-billionaire brothers: Shivinder Singh sues Malvinder over alleged mismanagement of Fortis empire

MUMBAI: Japan’s <keyword id="18313" type="CITY" weightage="40" keywordseo="NTT-Docomo">NTT DoCoMo</keyword> has decided to exit <keyword id="6359475" type="CITY" weightage="40" keywordseo="Tata-Teleservices">Tata Teleservices</keyword> by selling its 26.5% stake in its telecom joint venture with the <keyword id="6355725" type="CITY" weightage="40" keywordseo="Tata-Group">Tata Group</keyword> through a pre-agreed put option, setting the stage for protracted negotiations over valuation as the Indian conglomerate is likely to renegotiate the sum it has to pay to buy back the shares. The agreement was signed between the two companies in 2008-09. 
 
Both Cos have Hired Legal Teams 
 
Under the terms of the agreement, the Tata Group needs to ensure that its partner in the lossmaking joint venture gets the higher of either half the investment it made — which amounts to Rs 7,250 crore — or the stake’s fair market price in case the company fails to perform at a certain level. NTT DoCoMo had issued a notice to the Tatas three days ago, exercising its option to get a refund of Rs 7,250 crore by returning its 26% in Tata Teleservices before the deadline on July 9, said a lawyer involved in the transaction. 
 
Confirming the development, Tata Sons spokesman Debasis Ray said in an email: “The formal communication has now been received from NTT DoCoMo to that effect.” However, the Tata Group, which has applied for RBI approval to pay NTT DoCoMo as per the put option, expects regulatory hurdles. A central bank rule says put options must be exercised based on prevailing return on equity at the time the option is exercised, which could play spoilsport for DoCoMo’s exit plan. 
 
Since Tata Tele has been making losses and its net worth is negative, this clause could mean DoCoMo might not get the price it is looking for. RBI, in its latest monetary policy in May, had indicated that it was examining a mechanism linking such options to a fair market value, but it is yet to implement that decision. 
 
DoCoMo had purchased its Tata Tele stake in instalments in 2009 and 2011 for $2.7 billion, at a time the telecom sector was the poster child of India’s fast-growing economy. 
 
Facing the prospect of lengthy negotiations to arrive at a middle ground on valuations, the Tatas have lined up legal eagle Harish Salve, law firm Amarchand Mangaldas, UK-based firm Freshfields, and Mumbai-based AZB Partners to act on its behalf. NTT DoCoMo is likely to be represented by Khaitan &amp; Co, law firm Skadden, Arps, Slate, Meagher &amp; Flom. 
 
NTT DoCoMo spokeswoman Hiroko Shimoyama said she cannot comment due to confidentiality obligations.The joint venture partners will soon enter into fresh talks to arrive at a final price, according to people familiar with the matter. “One hopes that it won’t come to a legal battle. Both groups are reasonable and prefer to avoid that,” said a person involved.“ 
 It is not possible to predict how events will unfold; however, Tata Sons is cognizant of its responsibilities, and will act keeping in mind the interests of all stakeholders and in accordance with law,” added Roy, reiterating an April 25 statement by Tata Sons.The RBI rule was also invoked by the <keyword id="6425677" type="CITY" weightage="40" keywordseo="Essar-Group">Essar Group</keyword> when Vodafone exercised its option to buy Essar’s 33% in Vodafone India in 2011. 
 
However, the two companies agreed to up the price a little for the Indian promoter by depositing additional funds in an escrow account in case tax is imposed on the transaction, else the deposited amount will be given to Essar. This time around, as money will go out of India, the deal might attract more scrutiny. 
 
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“In 2008, there was no regulation around put calls. People assumed that these contracts will be honoured and so incorporated them in JV agreements. But RBI has now become far stricter and concerned over outflow of dollars,” said a legal advisor involved. 
 
NTT DoCoMo is the second large Japanese investor to be faced with disappointment in its India investment after Daiichi Sankyo’s buy into generic drug-maker Ranbaxy. Daiichi exited its Ranbaxy investment in May this year, selling its stake to Sun Pharma at less than half the $4.6 billion it paid in 2008. 
 
LOSS-MAKING VENTURE 
 
The Japanese company is exiting the Indian telecom venture since it is known to prefer owning a majority in its ventures and because it feels it cannot control management actions adequately in India, said a person familiar with DoCo-Mo’s thinking. They are also disappointed by the company’s performance. For the year ending March 31, 2014, Tata Teleservices recorded a loss of nearly Rs 2,000 crore, according to data from the Registrar of Companies (RoC). Its user base has been shrinking over the past two years. 
 
In December last year, Tata Teleservices’ lenders had insisted on a Rs 4,000-crore equity investment from the parents to recapitalise the company. Tata Sons had agreed to put in that amount through two tranches. In an effort to reduce losses, Tata Teleservices shut base stations at around 8,000 locations and entered into agreements with rivals Aircel and Reliance Communications to provide coverage where its network has gaps. 
 
In the financial year that ended in March 2013, Tata Teleservices’ net worth was completely wiped out and equity value fell to a negative Rs 1,863 crore from around Rs 3,000 crore in the previous year, according to data with RoC. Tata Teleservices is also weighed down by its debt of Rs 28,000 crore. The sum is said to have deterred potential suitors including Vodafone, and the exit of NTT DoCoMo may put this company at risk of becoming a distress sale target, said an investment banker. 
 The Tata Sons spokesman said substantial value had been created. “On the valuation of TTSL, it is an unlisted company. Substantial value has been created in it, reflected not only in its large retail subscriber base of over 63 million and its successful enterprise offerings, but also in its market leading position in data carriage, reflected in the high <keyword id="34527" type="UNKNOWN" weightage="40" keywordseo="market-share">market share</keyword> of products like Photon,” said the spokesperson. 
 
Top executives at two potential acquirers of the company said they were interested but did not want to take on the debt. For a deal to take place, they said, lenders need to take a “haircut” by writing off part of their exposure to Tata Tele, or the Tata Group has to assume responsibility for some of the debt. The Tata Group had evinced interest in exiting the telecom business as far back as 2010, and has refrained from any major investments since Chairman Cyrus Mistry took over.

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