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Sale of 773 acres of prime real estate: DoT to land Rs 10k-15k crore windfall

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New Delhi | Published: January 5, 2018 6:37:48 AM

The department of telecommunications (DoT) is planning to monetise more than 773 acres of prime real estate worth around Rs 10,000-15,000 crore that it controls through Hemisphere Properties India (HPIL), the company created to take over surplus land from the erstwhile Videsh Sanchar Nigam (VSNL).

sale of 773 acres, prime real estate, windfall, department of telecommunications, prime real estateIn February 2002, a Tata Group company, Panatone Finvest, acquired a majority stake in VSNL, now called Tata Communications, for around Rs 1,400 crore as part of the then NDA government’s disinvestment programme. (Image: Reuters)

The department of telecommunications (DoT) is planning to monetise more than 773 acres of prime real estate worth around Rs 10,000-15,000 crore that it controls through Hemisphere Properties India (HPIL), the company created to take over surplus land from the erstwhile Videsh Sanchar Nigam (VSNL). In February 2002, a Tata Group company, Panatone Finvest, acquired a majority stake in VSNL, now called Tata Communications, for around Rs 1,400 crore as part of the then NDA government’s disinvestment programme. Sources told FE that Tata Communications has started the demerger process wherein it will transfer its shares in HPIL to the government and other minority shareholders. Following the demerger, the government will hold around 70% stake from the current 51.12%. Confirming the development, a senior government official said, “Government plans to monetise this land, but as of now, we are waiting for the demerger to get over, which is expected by March 2018. After this, DoT will chalk out plans on whether to sell land blocks or to develop the holdings and then lease and rent it like other PSUs.” The demerger could not take place earlier as the Tatas had raised the issue of capital gains tax (CGT) that needed to be paid while transferring land to the government.

However, following the passage of Taxation Laws (Amendment) Bill, 2016, exempting PSUs such as HPIL from paying CGT, the demerger seems well on track. Established in 2005, HPIL was formed to take over the surplus land of VSNL. It holds prime real estate of around 773.13 acres across Pune, Kolkata, New Delhi and Chennai. DoT deputy director general Saurabh Kumar Tiwari is the chairman and managing director of the company. During VSNL’s disinvestment, it was decided that surplus land will not be a part of the process and will be disposed of as per a shareholding agreement (SHA) and share purchase agreement (SPA) with the Tata Group.

The terms and conditions of the SPA required surplus land to be hived off or demerged into a separate company. Panatone was also required to gift, sell or transfer the shares of the demerged company to the government and the other shareholders. In December 2017, Tata Communications informed stock exchanges that its board had approved a draft scheme of arrangement between it and HPIL, which provides for demerger of HPIL by way of reconstruction or splitting up of the company by transfer of surplus land to HPIL and the consequent issue of equity shares by HPIL to shareholders.

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