Saturday, February 25 2006 18:20 Hrs (IST) - World Time -

New Delhi: Intensifying their attack on Tata's on the issue of stakeholding in joint venture Idea, Birlas shot off yet another letter to the government alleging that the former had not disclosed acquisition of AWS of Mauritius in the venture.

But Tatas are holding their ground - that they are not under any such obligation and would sell their equity at an appropriate time for a fair value - and will respond to Birla's second missive in a day or two, sources in the know said.

Following up its communication earlier this month, A V Birla group wrote to Department of Telecommunication that Tatas were not complying with the licence conditions and they should be asked to expeditiously bring their stake in Idea to below 10 per cent from over 48 per cent now.

Tatas had acquired the equity of Mauritius-based AWS in Idea through their wholly owned subsidiary AT&T cellular in September last year, sources said, wondering as to why acquisition of foreign equity belonging to Cingular by Birlas had not become an issue earlier.

Industry sources feel that the two oldest corporate groups in India are clashing possibly over the valuation of Tata's holding in Idea, where Birlas have the first right of refusal at a mutually agreed price.

However, Tatas are scouting for buyers and are believed to be in talks with a number of players including Maxis, but no confirmation could be ascertained. While Birlas have amplified their earlier point of view and sought further clarification on the issues raised by Tatas in their rejoinder sent to Department of Telecom (DoT) urging that no regulatory compulsion could be applied on them to sell equity.

Distress Sale for Tatas

Sources said any ruling in favour of Birlas could mean a distress sale for Tatas of their equity and they may not get the proper value for their holding.

The point has also been highlighted by Tatas themselves, when they told DoT that there was no time bar for such a process and they would sell their equity at an appropriate time when they get a fair value for their stake.

Tata Chief Ratan Tata had earlier said that holding in Idea was purely an investment decision, sources pointed out and said that Tatas were not participating in any major decision of the company including appointment of CEO despite the fact that the group has pumped in about Rs 800 crore to acquire stake in the joint venture.

In its second letter, Birlas wanted to know as to why no prior permission was taken by Tatas for acquiring AWS equity and absence of discloure was having 'all round impact' on the company's business.

On the other hand, sources say that Tatas are not interfering with the business nor are they imposing any decision despite the regulatory clause that consent of any serious Indian partner (having over 10 per cent equity) was a must for taking any decision by a telecom player.

When contacted, Birla group officials declined to comment on the issues raised in their letter as also if they would be interested to buy out Tatas from Idea using the agreement clause of first right of refusal.