Videsh Sanchar Nigam Limited (VSNL)

Videsh Sanchar Nigam Limited (VSNL) 

 

 

DISINVESTMENT IN VIDESH SANCHAR NIGAM LIMITED

  1. Government has approved sale of 25% equity share holding out of a total government share holding of 52.97% in Videsh Sanchar Nigam Limited (VSNL)  on 5.02.2002 . The total paid-up capital of VSNL is Rs.285 crore, the Govt. holding being Rs.151crore. Rs.71.25crore of this equity is being sold to M/s Panatone (Tata Group) at a price of Rs. 1439 crore.

  2. Government had decided to disinvest in VSNL in January 2001 and the advertisement for inviting Expression of Interest was issued in February 2001. Several interested parties had submitted their Expression of Interest. After the process of due diligence was completed and the transaction documents frozen, financial bids were invited from the bidders on 1.2.2002. Two bids were received.

  3. SBI Capital Markets Ltd. and CSFB were appointed as the advisors at a fee of 0.19% of the transaction value. M/s Crawford Bayley & Co. is the legal advisor and the asset valuer is Pricewaterhouse Coopers Ltd. After considering the Advisor's report, the Evaluation Committee/IMG/CGD submitted their recommendations regarding acceptance of the higher bid to the CCD.

  4. The Government has in the process of disinvestment in VSNL received approximately Rs. 3689 crores, Rs. 1439 crores as the bid price, Rs. 1887 crore as dividend and Rs. 363 crore as dividend tax (table attached). Thus, the Government has sold its shares at a price of Rs. 202 per share, taken additional amount as dividend, special dividend and dividend tax. Besides the Government has also taken measures to take out surplus, yet very valuable land (value Rs. 778 crore) from VSNL, and also restrict use/sale of land through provisions in transaction documents.

  5. The market price of VSNL shares as on 1.2.2002 was Rs.158/-. The Government had earned Rs.10.4 cr per year on 25% of its equity in the last eight years. This year the Government has earned Rs. 3689 crore from sale of VSNL and if this money is kept in the bank it would earn an interest of 368.9 crore, i.e. the Government would gain more than Rs. 350 crore every year.

  6. The strategic partner has been provided a call option for the 5th year subject to the condition that the Government would be retaining at least one share and hence one vote position to enforce its affirmative vote on assets. In addition, 1.97% share were  given to employees, at concessional rates.