Financial Daily from THE HINDU group of publications
Thursday, Feb 14, 2002
Industry & Economy - Disinvestment
Info-Tech - Telecommunications
Corporate - Mergers & Acquisitions
VSNL enters Tata family
MUMBAI, Feb. 13
THE Tatas formally acquired 25 per cent equity stake in Videsh Sanchar Nigam Ltd (VSNL) on Wednesday by signing the shareholders' agreement with the Government.
Mr Ratan Tata, Chairman of the Tata group, handed over a cheque for Rs 1,439 crore to Mr Pramod Mahajan, Union Minister for Parliamentary Affairs, Information Technology and Communications.
The Tatas can now have four directors on VSNL's reconstituted board. Those already aboard include Mr Ratan Tata himself as VSNL's non-executive Chairman, Mr S.K. Gupta, reaffirmed as VSNL's Managing Director and Mr N. Srinath, CEO, Tata Internet, who joins as Executive Director.
Mr R.S.P. Sinha, VSNL's Finance Director, was made an offer, but he declined it. The consequent vacancy has not been filled yet. Independent directors are yet to be named.
Earlier in the day, Mr Tata chaired his first board meeting at VSNL. He said that disinvestment at VSNL was "a vindication of the Government's intent to privatise major companies''.
VSNL will be integrated into the telecom plans of the Tatas. "We will develop those synergies over the next few days or weeks. By and large, we will try to find synergic solutions,'' Mr Tata said when asked how he proposed to handle the separate Internet services of VSNL and TataNova.
Speaking to newspersons after signing the agreement, he said that a committee would be set up to oversee the larger process of integrating VSNL. From the Tatas' side, Mr Srinath may head the committee.
There are no plans to introduce any voluntary retirement scheme (VRS) at VSNL.
"The organisation has been aptly manned, it is not flabby,'' Mr Tata said, adding that wherever the Tatas provided VRS, the schemes had been "generous''. The telecom major's name is also being retained.
According to Mr Tata, the stake acquisition does not significantly alter the group's telecom plans, except by way of reorienting the "integration plans'' now that VSNL is part of it.
In a presentation on the telecom sector, Mr Kishore Chaukar, Managing Director, Tata Industries, said that the Tatas aimed to capture a significant market share of the 25 million subscribers in the private sector - from a total base of 85 million - forecast for 2006.
10-lakh block deal
VSNL shares registered an increase in volumes as well as price on the bourses today. Total shares traded on the Bombay Stock Exchange were 21.46 lakh, against 2.98 lakh shares traded on Tuesday. On NSE, traded volumes were 21.76 lakh shares, up from 6.35 lakh shares.
A dealer said there was a block deal of 10 lakh shares on BSE. Other deals were of smaller quantities.
The new board
VSNL has informed the Bombay Stock Exchange of its reconstituted board.
According to its statement, the new board consists of Mr Ratan Tata - Chairman; Mr S.K. Gupta - Managing Director; Mr N. Srinath - Director (Operations), Ms Sadhana Dikshit - Director; Mr Rakesh Kumar - Director and Mr N.R. Narayana Murthy - Director.
Mr Rajneesh Gupta, Director (Network) and Mr R.S.P. Sinha, Director (Finance), have resigned.
"The holding of the Government stands reduced to 27.97 per cent," the statement said.
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