VSNL surplus land’s worth Rs.6,156 crore

08 Aug 2011 Evaluate

The Tatas have informed the government that the sale of the surplus landheld by Tata Communications (formerly VSNL) can fetch revenues of about Rs.6,156 crore. This is the first time that the value of the land has beenestimated since 2003. The estimated value for the 770-acre land is based onprevailing government rates and also takes into account the fact that the landcannot be used for residential purposes. The stamp duty and registration coststowards demerging this land into a surplus company will cost around Rs. 427crore. The company has been spending about Rs. 3 crore per annum as runningcosts for maintaining this land. The Telecom Commission, the highestdecision-making arm of the communications ministry, will study these estimatesduring its meeting this week, before taking a ‘final decision’ to solve thesix-year dispute on the surplus land currently with Tata Communications. VSNLwas acquired by a subsidiary of Tata Sons, the holding company of the TataGroup, in 2002, when it was privatised by the NDA government. But the land,spread over five locations in Delhi, Kolkata, Chennai and Pune, was not part ofthe deal. While the government initially favoured spinning off the asset into aseparate company with the same shareholding that VSNL had before the selloff,the Tatas had objected to the demerger on the ground that they would have tobear the capital gains tax and stamp duty. According to the 2002 agreementbetween the buyer and seller, the strategic partner or the buyer (PanatoneFinvest, a Tata subsidiary) was responsible for spinning-off the surplus landinto a separate company.

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