Tata Sons on Tuesday announced it has agreed to pay $1.18 billion in damages to NTT DoCoMo to settle long standing dispute over exit of the Japanese firm from their India joint venture.
The holding company of the $103 billion salt-to- software group firms, reached an out-of-court agreement with Japan’s largest mobile phone firm to enforce a June 2016 award of a london arbitral tribunal.
Following this, the two firms applied to the Delhi High Court to suspend legal proceedings and accept the settlement.
The settlement came within days of Tata Group getting a new Chairman in N Chandrasekaran following the ouster of Cyrus Mistry last year.
“The settlement terms clear the way for the USD 1.18 billion already deposited by Tata Sons with the court to be paid to DOCOMO, and would allow DOCOMO to transfer its shares in Tata Teleservices, Inc,” the Japanese firm said in a statement.
DoCoMo had in November 2009 acquired 26.5 per cent stake in Tata Teleservices for about Rs 12,740 crore (at Rs 117 per share). This was as per a 2008 understanding that in case it exits the venture within five years, it will be paid a minimum 50 per cent of the acquisition price.
DoCoMo in April 2014 decided to exit the joint venture that struggled to grow subscribers quickly. It sought Rs 58 per share or Rs 7,200 crore from Tatas.
But the Indian Group offered Rs 23.34 a share in line with the RBI guidelines which state that an international firm can only exit its investment at a valuation “not exceeding that arrived at on the basis of return on equity”.
The Japanese firm dragged Tatas to international arbitration where it won a $1.18 billion award. It also filed a plea in the Delhi High Court seeking enforcement of the arbitration ruling.