Be careful in dealing with material info disclosure to investors: Sebi warns TCS

The regulator has asked the IT major to provide adequate and timely information.

Mumbai:The Securities and Exchange Board of India(Sebi) has warned Tata Consultancy Services (TCS) to be careful in dealing with disclosure of material information to investors after it found the company did not disclose the extent of damages related to a lawsuit in the US.

The regulator has asked the IT major to make disclosures that provide adequate, accurate, explicit and timely information to the investors.

On April 16, 2016, TCS made a disclosure to the stock exchanges regarding a US court verdict related to an intellectual property rights case with Epic Systems but it did not mention the $940 million penalty imposed against it as part of the verdict.

However, in the financial results declared two days later on April 18, 2016, $940 million was shown as damages awarded by Jury verdict as part of contingent liabilities.

“The damages are substantial, more so when seen in comparison to Rs. 24,292 crore net profit of TCS (consolidated) for FY 16. The disclosures made by TCS to Stock Exchanges on April 16, 2016 should have prominently displayed the extent of damages to enable investors to assess the impact of the Jury's verdict on the financials of the listed entity,” Sebi said in a letter to the company.

The Sebi letter dated May 28 was submitted by TCS to the stock exchanges on Friday.

“This goes against the spirit of SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015 which requires that the listed entities shall ensure that the disseminations made by them are adequate, accurate, explicit, timely and presented in a simple language to the investors,” Sebi said.