Tata Communications says DoT being ingenuous on VSNL surplus land

Tata Communications (erstwhile Videsh Sanchar Nigam) today said the “surplus land” which came when it bought the company from the government did not vest in it and it made no money from the land, either.

Breaking their silence on the issue, Senior Vice President Srinivasa Addepalli said: “The Tata Group do not have any ownership rights over the surplus land, nor do they derive any value from it. Instead, as custodians of the surplus land for the ultimate owners, Tata Communications is bearing the responsibility of its maintenance and security. Further, the non-resolution of this issue has impeded Tata Communications’ ability to raise non-debt funding for its expansion plans.”

Adding: “In April 2005, the VSNL (now Tata Communications) board had considered a draft scheme for the demerger of the surplus land. Certain issues were raised, which led to a decision being deferred. It has been up to the government to decide on the proposed scheme, either to accept it or to make a counter proposal.”

DoT probe
The response comes on the heels of the Department of Telecom’s decision to set up a committee under an additional secretary to examine if the deal for divesting the erstwhile VSNL to the Tatas in 2002 was transparent and fair. The committee has been asked to give its report by March 31.

It will also look into whether the demerger of 773 acres of land was handled taking into consideration the interest of the investors and the government or not.

DoT says it was the responsibility of the strategic partner, in this case a subsidiary of Tata Sons, to not only hive off or demerge the surplus land into a resulting company but also forbid them from any acts that might adversely affect or delay the hiving off or demerger of the land. It has been contended that the Tatas were not interested in hiving off the surplus land.

Tata defence
The Tatas say the government should have transferred the surplus land before divesting the company. They add that the offer to buy back the land was part of the original shareholders’ agreement, which had a choice on land-demerger, auction or to allow the Tatas to buy the land by paying the owners, which included the government (which had a 26 per cent stake in VSNL ) and 20 per cent (which is with the public ).