Tatas serve notice to Birla; to buy out Idea

Serving a 'termination' notice to their partner for "breach of shareholders agreement", Tatas have said that they would proceed to purchase the shareholding of the AV Birla group in joint venture Idea.

In a new twist to the ongoing battle between India's two oldest corporate houses, Tata Industries said in a notice on February 27: "The AV Birla are a defaulting founder and we shall proceed to purchase the shareholding of AV Birla group within 90 days of this notice (termination notice) at the default price."

Birla officials declined to comment.

In the notice served on AV Birla group's flagship company Grasim Industries Limited, Tata Industries Ltd said: "We hereby put you to notice that by disclosing the financial data of Idea Cellular to Aditya Birla Nuvo Ltd's investors, ABNL has caused a material breach of the ICL share holder's agreement."

Stating that this material breach was not capable of being cured, Tatas said they were forwarding a copy of the notice to ICL to "immediately take steps to facilitate access to an international firm of auditors appointed by us for computing the fair market value."

Tatas have also sent a copy of the notice to the Department of Telecom, which was earlier approached by the Birlas for directions to their partner for expeditiously exiting Idea.

Tatas have contended that since the confidential information has been posted on the website and is already in the public domain and leaked to third parties, the material breach is far from being cured.

"Publication of such confidential information is an act, which has clearly been approved and authorised by the management of ABNL, and is a clear violation of the ICL SHA," Tata Industries said in the notice.

In a letter to DoT secretary J S Sarma, Tatas said: "We firmly believe that an attempt is being made to interfere with the contractual and shareholder rights and inappropriately convert DoT to a shareholders' grievance forum.

"We are sure that the DoT will not permit such an abuse of process by ABNL," Tata Industries Limited said.

According to the notice, ABNL has disclosed the information pertaining to ICL in terms of its revenue, net profit/loss, capital employed, annualised return on capital employed and projects.

Being one of the founders under the ICL SHA, the Aditya Birla Group was bound by the terms of the agreement and was not permitted to use or disclose confidential information pertaining to Idea Cellular other than as permitted by the SHA.

Idea Cellular is a closely held company and does not disclose its quarterly financial data to the public and it does not make any public disclosures or statutory filings in respect of such quarterly financial data, the Tatas said.

In the notice, the Tatas said information has been shared at the investors/analysts meet presentation on September 12, 2005 by the Birla Group and thus was a breach of the SHA.

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