TataFin board okays offloading in TFA

Our Banking Bureau

Mumbai, Jan 2: The board of directors of Tata Finance Ltd (TFL) at its meeting held on Wednesday, approved the sale of its entire shareholding in Tata Finance Amex Ltd.

While the company’s notice to the Bombay Stock Exchange did not specify as to whom the stake will be sold to, well placed sources said it will be most likely to its current partners, Amex. Both parties have been in talks on the matter. TFL and its affiliates have a 74 per cent stake with AmEx holding the balance 26 per cent.

TFL sources had earlier told The Financial Express that a decision to exit from TFL-AmEx had been taken in-principle and the matter would go to the board once something concrete emerges. They, however, had added that no progress has been made as to whom TFL’s stake would be sold to and other details like the price.

TFL-AmEx had started out with a paid up capital of Rs 15 crore. The company is in the money changing and foreign exchange services business in India and operates in both the retail and the wholesale segments. Its travellers cheques and payments business is done through AmEx Travel Related Services.

After the financial troubles at TFL, the Tatas have been looking for a strategic partner in TFL. Moreover, they have decided to exit from what they see as ‘non-strategic businesses’. The company has been in talks with several players for offering a stake in it, and names doing the rounds include GE and Citigroup. TFL has now gone in for a complete makeover. The restructuring exercise encompasses revamping the company’s board, undertaking a thorough business review and infusion of fresh capital of Rs 250 crore. It has been speculated that the present round of capital restructuring at TFL is a clean-up act — warranted by the past goings on at the company — and a precursor to a strategic, if not outright sale, to a potential acquirer. Tata Finance’s new chairman, Ishaat Hussain, had earlier confirmed that a strategic partner will be looked at, did not reveal any names.

TFL reported a whopping Rs 395.56 crore net loss for the fiscal ended June 30, 2001 compared to a net-profit of Rs 56.77 crore in the preceding fiscal, owing to a one-time extra-ordinary provision of Rs 315 crore on transactions relating to loans to and investments in its problem affiliates.