Amid Tata-Mistry row, Tata Power today said it has discharged all legal and fiduciary obligations in connection with its Mundra Ultra Mega Power Project (UMPP).
“This (Mundra UMPP) project was bid for in 2006 when the concept of a formal Risk Management Committee was not introduced and all proposals were deliberated and approved by the board,” Tata Power said in a BSE filing.
“All required information has been periodically given to the stakeholders and the company has complied with its obligations under the SEBI (regulations),” it said.
Amid high profile feud between Ratan Tata and Cyrus Mistry, who was unceremoniously removed as Chairman of Tata Group last month, stock exchanges have sought clarifications from various group companies, including Tata Power, after purported disclosure of around USD 18-billion possible writedown at the firms.
In response to clarification sought by BSE, Tata Power had said it has always made all relevant disclosures.
With regard to comments purported to have been made by Mistry about the company’s Mundra UMPP, Tata Power had said, “the company has always made all relevant disclosures, as required, and has no further comments to offer”.
In a letter, Mistry had said that Tata Power aggressively bid for the Mundra project based on low-priced Indonesian coal but as regulations changed, “the losses in 2013-14 alone amounted to Rs 1,500 crore”.
“Given that Mundra constitutes Rs 18,000 crore of the capital employed (40 per cent of the overall company’s capital employed) this substantially depresses the return on capital for Tata Power as well as carries the risk of considerable future impairments,” he had said.
Tata Power responded by saying that its annual reports and financial statements published from time to time have presented a “true and fair view of the state of affairs of the company and its business and the company has disclosed all material facts as required under applicable laws”.
The company further said that the Mundra project was approved by the board after considering all business aspects including associated risk.
The board had also approved a long term contract for supply of coal on terms mirroring the bid along the acquisition of Indonesian coal mines and ships to hedge the risk of changes in coal prices, the company said.
It added that in 2010 there was sudden change in Indonesian regulations which mandated that coal be sold by mines at prices to be decided by Government of Indonesia on monthly basis.
“This adversely impacted Mundra as well as other bid-out imported coal based projects. This matter has been in the public domain since last four years…the matter has been covered in our annual report…a provision was built up for a impairment eventually aggregating to Rs 2,650 crore,” it added.