VSNL to take up surplus land issue at April 11 board meet

Mumbai, March 29 | Updated: Mar 30 2005, 05:30am hrs
The board of Tata-owned Videsh Sanchar Nigam Limited (VSNL) will meet on April 11 with the intention of hiving off/demerging the surplus land into a separate company. In a communique to The Stock Exchange, Mumbai (BSE), VSNL has said that this is pursuant to the share purchase agreement and the shareholders agreement signed at the time of the disinvestment of the governments holding in VSNL in 2002.

The surplus land issue refers to about 770 acre of land that is in possession of VSNL. The Tatas acquired a 25% stake in VSNL in 2002 through a Special Purpose Vehicle (SPV) Panatone Finvest Ltd which was created for this particular disinvestment. VSNLs recent communique to BSE says that it has received a draft scheme of demerger from Panatone and this will be included in the agenda for the board meeting to be held on April 11. Out of the 770 acre of land, about 524 acre is in Pune while the balance is spread across New Delhi, Kolkata and Chennai.

In the open offer document that was mailed out to VSNLs shareholders at the time of selling a 25% stake to the Tatas, it was stated that they would gain on two fronts - the open offer price of Rs 202 per share apart from a share in the revenue proceeds generated from the 770 acre surplus land. At that point, it was maintained that the major beneficiary would be the government and that the Tatas would merely facilitate the sale.

According to the open offer document, Panatone Finvest will demerge the 770 acre surplus land acquired by the government through the establishment of a realty undertaking in VSNL. The shares of the resulting company allotted to Panatone will be transferred to the Government of India to the extent of 25% and to the shareholders of VSNL, said the open offer letter. Interestingly, the letter stated that if the demerger did not go through, Panatone will pay the government and the shareholders within a week of the sale or transfer of the land.