Tata Finance to take fresh look at auditors

Our Banking Bureau

Mumbai, Oct 31: Tata Finance may review its auditors, SD Billamoria & Co, now that a full-fledged reshuffle of the company’s board has been announced. The reshuffle has also raised questions on the outgoing chairman of the company, Fredie Mehta, continuing as a Tata Sons board member.

Tata Sons’ director, and the new chairman of Tata Finance, Ishaat Hussain, said that a review of the company’s auditors “may be taken up”, but declined specific comment on the issue.

The role of auditors has come into sharp relief as some of the transactions were in flagrant violation of current regulatory norms of Reserve Bank of India (RBI) regarding the operations of non-banking finance companies (NBFC). The role of NBFC auditors came into limelight for the first time after the CRB Capital fiasco in 1996.

Tata Finance-watchers also say that “it is reasonable to expect a change of auditors of Tata Finance” given that just about everything at the company has been the subject of a toothcomb enquiry.
Some of the deals, that were responsible for Tata Finance having been sucked into quagmire, have been its erstwhile subsidiary’ Niskalp’s investments in equities as well as what is called “circular” transactions.

Meanwhile, with the current board-level reshuffle, the outgoing chairman, Mr Mehta’s continuation as a Tata Sons’ board member has come into relief.

The board of Tata Finance is being reshuffled on grounds of “moral responsibility”. None of the outgoing members of Tata Finance’s board were directly involved in the questionable transactions being attributed to the company’s former managing director, Dilip S Pendse, in the lead.

Mr Hussain declined comment on Mr Mehta’s stay on Tata Sons board.

However, to a related query, Mr Hussain said that a board member need not step down just because affairs at one specific company turned bad.

Senior Tata group officials did not explicitly comment on whether Mr Mehta will continue to stay on a Tata Sons.

Mr Mehta is one of the old-timers with Bombay House, and is at present also the chairman of Forbes Gokak wherein controlling interest has passed onto Pallonji Mistry from the Tatas.