Fresh valuation of land ? valued at R6,156 crore in 2009 ? to determine current price could further delay transfer to new company
Even a year after the Union Cabinet cleared the de-merger of the surplus 740-acre VSNL land, the final deed of transferring the land to the new company ? Hemisphere Properties India (HPIL) ? may take another year.
Currently, the final proposal post-approval of the Cabinet is before communications and IT minister Kapil Sibal, and once he signs it, the actual process of the de-merger and formation of the new company would start.
There could be further delay if the government decides to conduct a fresh valuation of the land at different locations, as the current valuation, by which the land is valued at around R6,156 crore, was arrived at in 2009 and real estate agents say by now the value has increased manifold. Also, the de-merger deed needs the approval of the high courts of Mumbai and Delhi.
A senior official in the department of telecommunications (DoT) told FE that the minister?s approval is expected any time. ?Once the approval comes, it will take about a year for the land to be transferred to HPIL,? the official said.
VSNL was disinvested in 2002 when the NDA government was in power and Arun Shourie was the disinvestment minister. Stringent guidelines were put in the sale clause, wherein no benefit was to accrue to the bidder from the de-merged land and its sale or any form of revenue and shareholding in the resultant company.
The surplus land was to be transferred to another company and the bidder who acquired stake in VSNL (the Tata Group) was barred from purchasing shares in the new company owning the land. The new company was to have the exact shareholding that VSNL did before disinvestment.
Subsequently, a special purpose vehicle ? HPIL ? was formed in 2005 by the government to which the land was to be transferred.
Thereafter, for around 10 years, the matter remained stuck because the Tata Group refused to pay the stamp duty of R500 crore for transferring the land. The argument was that when it is neither the owner of the land and nor would it be its beneficiary in any form, why should it pay the stamp duty?
Finally, last year in July, the Cabinet cleared the de-merger of the surplus land.
The government holds 51.12% of HPIL, to which the land spread across five locations in Delhi, Kolkata, Chennai and Pune, is to be transferred. Around 70 acres of this is in the posh Greater Kailash area of south Delhi, and another 58 acres is said to be in Chattarpur area.
Circle rates in 2009 consulted by DoT put the value of the 740-odd acres at around R6,156 crore. However, DoT officials at this point of time are not clear whether a fresh valuation exercise would be undertaken.
?In 2009, based on the circle rate, the land was valued at around R6,156 crore, but that may not be the actual value today,? says an official.
Circle rate, like a ready reckoner rate, is set by the government and is used to calculate the minimum registration charges and stamp duty to be paid at the time of registering a property transaction. However, the market value differs from the circle rate, and is generally much higher.
Real estate consultants say at the prevailing circle rates in GK-I (based on if land falls in category B and is government land), the 70 acres in GK-I should be valued at around R5,779 crore, an appreciation of almost 50% from R3,863 crore in 2009.
The delay in the de-merger exercise has also been a cause of problem for Tata Communications, which is saddled with a high debt of over R8,500 crore as on December 31, 2012, but is unable to raise funds by issuing fresh equity because investors want full clarity on the land issue.
The company?s consolidated net loss widened to R201 crore in the quarter ended December 31, 2012, against R153 crore in the same period of 2011-2012.
Still stuck
* The final proposal post-approval of the Cabinet is before communications and IT minister Kapil Sibal
* The de-merger deed also needs the approvals of the high courts of Mumbai and Delhi
