The Chakra Of Deceit
- VSNL sold by NDA government in 2002. Tatas given several favours.
- 773 acres of prime land held as surplus should have been demerged
- Tatas create several problems in the proposed separation of the land from VSNL
- Tata writes to Shourie suggesting land be given to VSNL after payment of a nominal price
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The inability of the Arun Shourie-manned disinvestment ministry to demerge the 773.13 acres of surplus land from VSNL before its disinvestment landed the government in a complete mess. It owned a little over 51 per cent of the land and the rest belonged to a number of shareholders that included individuals, foreign institutional investors, banks and other corporate bodies. Now, caught between the proverbial rock and a hard place, it has three options:
- Try and demerge the land as originally envisaged into a realty company
- Let VSNL retain the land at a “fair compensation”
- Auction the land and distribute it to all stakeholders.
Strangely enough, Shourie and his team had enough examples before them when they pressed on with VSNL’s sale. They could have used the model used in the disinvestment of Indo-British Petroleum (IBP); its subsidiary Balmer Lawrie & Co Ltd was demerged prior to the disinvestment.
This option had also been flagged by a joint secretary of the disinvestment ministry in 2003. Recorded in the minutes of a meeting held on December 4, 2003, the joint secretary stated that a 100 per cent government-owned company could be formed on a “mirror-image” basis by filing a demerger scheme in the Delhi High Court. Had this been followed, it would have sorted out all problems and given back the government and other stakeholders the land they owned.
But for reasons that are not clear, this route was never accepted. Instead, the Tatas began an elaborate campaign to take over the land. The Tata campaign to delay the demerger kicked off with two letters—the first dated September 23, 2003, and the second dated November 3, 2003, addressed to the chairman, Telecom Commission. In September, the Tatas listed five reasons for its inability to demerge the land. In November, they offered to buy the land by paying 25 per cent of the Rs 151 crore (the low valuation of the land) to the government and another 20 per cent to other shareholders. Had they succeeded, land worth over Rs 8,000 crore would have gone for less than Rs 100 crore!
Panatone Finvest Ltd's Sep 23, 2003 Letter
Panatone Finvest Ltd's Nov 3, 2003 Letter
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