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Tata Communications has blamed the Department of Telecom for the delay in demerging land held by Videsh Sanchar Nigam Ltd. In a letter to the Communication and IT Minister, Mr Kapil Sibal, the company said that it had submitted a proposal for demerger to DoT in 2005 and is still awaiting a response on the same.
“You would agree that the demerger of this surplus land is waiting for the government's response on the matter. You should also recognise that the Board of Tata Communications has two directors nominated by the government and they are apprised of all these issues,” said Mr Subodh Bhargava, Chairman, Tata Communications, in the letter to the Telecom Minister.
Sequence of events
Explaining the sequence of events, Mr Bhargava said the Tatas had sent a draft scheme of demerger of Tata Communications, which was placed before the Board of Tata Communications on April 11, 2005. These documents had been sent earlier to DoT on March 28, 2005. At the Board meeting, the Government Directors requested 15 days time to examine the scheme. However, DoT did not reply on grounds that it was seeking legal opinion on the proposed demerger scheme. A reminder was sent by Tata Communications on July 26, 2006. DoT replied a month later repeating its earlier position that it was still considering the scheme. “DoT response to the draft scheme of demerger is still awaited,” the letter stated.
The letter from the Tata company comes after Mr Sibal said that he had ordered a probe into the entire stake sale in VSNL by the Government. The Minister had said that the delay in demerging surplus land owned by VSNL was in violation of the shareholders agreement signed between the Government and the Tatas.
The issue relates to 773 acres owned by VSNL, which was not part of the sale agreement signed with the Tatas in 2002 by the NDA Government. While the land, spread across five cities, was supposed to have been demerged after the sale, so far it has not happened.
The Tatas, however, said that rather than gaining from the delay, Tata Communications has been unable to raise any non-debt funding during the last few years to support its investment and growth aspirations due to the non-resolution of this issue. “The surplus land remains secured and unused by the company, waiting for a resolution of the demerger issue. The company continues to bear the expenses toward the surplus land's upkeep and security as well as associated property taxes,” Mr Bhargava said.
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