Pratibha Jain of Nishith Desai Associates terms rejection of Tata Sons' application to buy Tata Teleservices stake from Docomo at a price higher than current fair value as unfortunate. She says the timing of the move may be negative for India since it is seeking foreign investments.
The Reserve Bank of India (RBI) on Tuesday rejected Tata Sons' application to buy Tata Teleservices stake from Docomo at a price higher than current fair value of the stake. Tata Sons had applied to buy back shares of Tata Teleservices at a price above fair value. The RBI is learnt to have told Tata Sons that the conveyed price was not in conformity with extant FEMA regulations and that TTSL shares should be bought back at fair value.
Speaking about the verdict, Pratibha Jain, partner and head of Infra practices at Nishith Desai Associates terms it unfortunate at a time when the government is seeking foreign investments. She hopes the government comes up with a guideline based on the February 3 policy of the RBI.
The central bank had written to the Finance Minister, saying that it is willing to re-look at FDI regulations, thereby being open to allowing downside protection for FDI. Even Governor Raghuram Rajan had said the central bank was open to re-looking at assured returns and willing to allow put options where the price is below the invested price.
Stay tunes for transcript of the interview
TataTeleservice stock price
On March 25, 2015, at 11:09 hrs Tata Teleservices (Maharashtra) was quoting at Rs 7.93, up Rs 0.22, or 2.85 percent. The 52-week high of the share was Rs 14.05 and the 52-week low was Rs 7.00.
The latest book value of the company is Rs -12.04 per share. At current value, the price-to-book value of the company was -0.66.
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