VSNL residual stake sale after realty demerger

The government will take up the sale of its residual stake in Videsh Sanchar Nigam Ltd (VSNL) after the demerger of the telecom giant's surplus real estate into a separate company, an official told Business Standard.

The Centre delayed the sale of its 26 per cent equity in VSNL -- approved by the Cabinet Committee on Disinvestment in July last year -- so that it could emerge as the majority shareholder in the real estate company whenever it was formed.

When the Tata group had purchased VSNL from the government in February, 2002, they had not paid for the surplus real estate of 773.13 acres with the company.

It was agreed that a separate company, with shareholding pattern akin to the VSNL equity-holding, would be set up as owner of the fixed asset. The government will thus have a 26 per cent stake in the real estate company.

It was also decided that Tata would give to the government free of cost another 25 per cent in the company, thus making it the majority shareholder of the company with an equity of 51 per cent. This prompted the government to put-off its residual stake sale in VSNL till the demerger was completed.

The official said the proposal for the demerger of the realty company had to be presented to the Bombay High Court and not the Department of Company Affairs, as VSNL was a private entity. "The board of the company and the Department of Telecommunications have been deliberating over the plans for the proposed demerger," he said.

The government hopes to rake in Rs 1,000 crore from the VSNL residual stake sale in the next fiscal. The surplus land of the company is located at Pune, Kolkata, New Delhi and Chennai.