Former telecom minister Arun Shourie attacked the telecom minister Kapil Sibal’s decision to set up a probe into the disinvestment of India’s former international long distance monopoly, Videsh Sanchar Nigam (VSNL).
He denied Sibal’s contention that the government’s interests may have been “adversely affected” by the 2002 sell off that saw the Tatas beat Mukesh Ambani led Reliance Industries to snap up the firm for Rs1,439 crore, or Rs202 per share.
“This probe will boomerang on Kapil Sibal and the Congress,” said Arun Shourie, the telecom minister at the time of the disinvestment in 2002.
Shourie pointed out that his government had put in safeguards in the disinvestment deal as well as in the shareholders’ agreement between the government, the Tatas and the others that required that the 773 acres of land be returned to the original shareholders from whom Tata was purchasing the stock. This was to be done by demerging the land to a separate company and issuing stocks in this firm to the government and the original shareholders who had tendered their VSNL shares when Tatas made an open offer as part of the take over. Tatas had purchased 25% from the government and another 20% from the public.
Shourie pointed out that while he, and the BJP-led government, had done their duty by inserting the safeguard clauses, it was the Congress-led UPA government that failed to put the safeguards into action. Congress has remained in power continuously since 2004. “What has it been doing for six years,” he asked.
According to indications, the value of the land -- spread over five plots in New Delhi, Pune, Kolkata and Chennai -- is higher than that of the company itself.
For example, in 2008, Tata Finvest, the investment firm which bought the original shares from the government and the public, valued the “landless” shares at Rs204 each -- almost the same price at which it bought them six years ago.
At that time, the value of the normal (landed) shares in the share market was Rs510, indicating that the land accounted for nearly 60% of the value of the company.
Tata has already welcomed the probe, pointing out that its own plans to sell equity in the company were stuck because of the land issue.
It said it has “repeatedly requested” the government to conduct the demerger of the land from the company “in the best interests of the company and its shareholders” and has not benefited from the land so far.
Sibal had ordered in the inquiry, to be completed by the end of the month, after noting that “The strategic partner [Tatas] has enjoyed the precious government land without paying a single rupee for it” for nine years.
