Panel slams Tata arm on VSNL land issue

Kapil Sibal-appointed committee headed by S. R. Rao to look into VSNL's demerger of 773 acres of surplus land has submitted its confidential report. While the report slams Panatone Finvest Ltd, a subsidiary of Tata Sons for failing to discharge its responsibility even though it was fully aware that it had to hive off or demerge the land into the resulting company, the report contends that Tatas knew this as being part of the scheme of arrangement according to sections 391 to 394 of the Companies Act, 1956.

The report states, "From the beginning Tata Communications' approach was to resist it on the pretext of various issues. They tried to push through other alternatives such as sale of surplus land by public auction, retention of surplus land by VSNL, etc. Incidentally, the department of disinvestment had said that Panatone is in default of discharging its legal obligations in terms of the Shareholders Agreement.

What is interesting is that the Committee recommends resorting to the original proposal ie, to demerge the surplus land through the Resulting Company and the balance activity for the purpose, including Cabinet approval should be initiated.

The Committee states that VSNL owns 70 acres surplus land in Greater Kailash, where a 300 sq mt plot is worth Rs 20 crore.

The Committee says that if the resulting company desired to develop it before sale, then even if 40 to 50 per cent of the land goes for roads and parks, the government would be left with 40 acres of saleable land, which would contain 600 such plots. At Rs 20 crore each, these would fetch Rs 12,000 crore. The development cost of basic amenities will not be Rs 4,000-5,000 per sq mt, the panel says.

The Committee says that the sale of the land at Greater Kailash will fetch the government at least Rs 10,000 crore, net of all developmental charges. This would compensate the creation and running cost of the resulting company. These 70 acres are part of the 773.13 acres vested with VSNL, now Tata Communications. If the land in different cities is sold at the current market rate, the government may get over Rs 30,000 crore. Tata Communications 'owns' disputed land in four other areas- Chattarpur (58 acres), Pune (524 acres), Kolkata (35 acres) and Chennai (85 acres).