They are headed out, to be replaced by brighter people, sources close to communications and information technology minister Pramod Mahajan told eFE.
Government nominee on the VSNL board Rakesh Kumar drew flak on Wednesday for ostensibly playing along to push the decision to draw on the companys reserves to dole out Rs 1,200 crore for a stake in another Tata firm, Tata Teleservices.
While the Tatas claim that the decision of the board to invest Rs 1,200 crore to pick up a 20-26 per cent stake in Tata Teleservices over the next 4 years was unanimous, Mr Kumar has written to the VSNL board putting on record his opposition to the proposal.
On the issue of replacing the directors, the ministry sources said: We need bright people there to fight the Tata management. As little as 48 hours ago, the government was inclined to suspend Mr Kumar.
The other government director on the VSNL Board who may have to pay for his sins of omission (he was not present at the board meeting since he was out of the country) is Yashwant Bhave.
The communications ministry feels that even if there was a case for investing in a basic telephony services company, there were much better alternatives for investment.
Why did the VSNL management not consider Bharat Sanchar Nigam Ltd (BSNL) or even Mahanagar Telephone Nigam Ltd (MTNL). Both companies have a well-entrenched position in the market. Why opt for a fledgling Tata Teleservices, they said.
BSNL and MTNL together account for a subscriber base of over 35 million.
Against this, they scoffed, Tata Teleservices has just 150,000 subscribers in Andhra Pradesh and licences to offer services in states like Gujarat, Tamil Nadu, Karnataka and Delhi.
Licences have no value today. We issue them dime a dozen, they said.
Official sources also questioned the urgency of taking out money from VSNL.
If the same announcement had been made a couple of years from now, it would have been acceptable.
To invest Rs 1439 crore to pick up a 25 per cent stake in VSNL in February and take out Rs 1,200 crore in a little over 100 days smacked of impropriety, they maintained.