The government is planning to divest its residual 26.12 per cent equity in the Tata-owned Videsh Sanchar Nigam Ltd (VSNL), now called Tata Communications.
It is unlikely, however, that the government will decide to sell its entire residual stake in the stock market before it resolves the issue of the surplus land of around 773 acres that was kept outside the disinvestment process.
The government owns nearly 53 per cent of the land bank and does not want to be reduced to a minority shareholder in VSNL since this would lower its control and realisation from the eventual sale of the land.
VSNL was a listed company when the government disinvested 25 per cent of its paid-up equity capital through a strategic sale in February 2002 to the Tata group. This reduced the government's stake to 27.97 per cent, of which 1.85 per cent was sold to VSNL employees. According to the shareholding agreement, the Tatas could exercise a "call" option for the government's residual shareholding, except one "golden" share, anytime between February 13, 2006, and February 12, 2007, at a fair value of the called shares. However, the Tatas did not exercise the option.
The golden share allows the government to appoint one non-retiring director on the Board, and grants it affirmative voting rights on the sale of the land or any change in its use.
Read more in The Busines Standard article.
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