Mumbai: The board of directors of Tata Sons, the holding firm of the Tata group, will meet on Monday to take a decision on whether it wants to buy out the Union government’s 26.12% stake in Videsh Sanchar Nigam Ltd (VSNL), India’s largest long-distance telecom firm.
“We will decide on Monday regarding the call option to buy the government stake in VSNL,” Kishor A. Chaukar, a senior Tata executive and a director on the board of VSNL, said. The conglomerate controls 50.11% stake in the company, listed on the Bombay Stock Exchange and National Stock Exchange.
The Tatas received a call option or a right to buy the remaining VSNL shares when they acquired a 25% stake in the then state-owned unit on 13 February 2002.
Together with an additional 20% stake it mopped up in a public offer, the Tata group spent Rs2,591 crore on the acquisition.
The value of the government’s 26.12% equity in VSNL is Rs3,648 crore. The shareholder agreement between New Delhi and Bombay House, the headquarters of the Tatas in Mumbai, mandates that the actual price will be decided by an independent evaluator.
Also complicating matters is a large tract of land—773 acres—that VSNL currently owns. The value of this land alone runs into hundreds of crores of rupees.
Meanwhile, the government is yet to make a decision on whether to sell its stakes in partly-privatized public-sector units such as VSNL.
On 11 January, it tasked a group of ministers to make recommendations on the residual stakes New Delhi controls in VSNL, Paradip Phosphates and Jessop & Company.
In an earlier case involving another privatized unit, attorney-general Milon Banerjee had ruled that the government could not be forced to sell its remaining stake in Bharat Aluminium Company though its new controlling shareholder, Sterlite Industries, had an option on the stake.