Tatas, Govt work on blueprint for compromise

There were parleys between VSNL, Tata officials and top officials of the Communications Ministry last night where there was an attempt to break the ice and it was agreed that the two sides would resolve their differences amicably.

But the more important consultations were at Mahajan’s Safdar Jang Road residence where Tarun Das alongwith top Tata officials including Kishore Chauker, Srinath, Mukund Rajan accompanied by Tarun Das. Tarun Das first wrote to Mahajan on June 1, and then held three rounds of discussions with the minister and senior officials. This was then followed by the meeting between the minister and senior Tata officials yesterday.

According to sources, the compromise formula being worked out revolves around a two point agenda. According to the Communications Ministry, the diversion of Rs 1,200 crore from VSNL to Tata Teleservices which is the company handling the basic services business should be reconsidered by the VSNL Board afresh.

‘‘The ministry is interested that the value of VSNL’s new investments increase in value and not diminish over time. Given this objective the ministry has no choice but to step in and protect shreholders’ interests and this cannot be called meddling in corporate affairs,’’ said a ministry source.

The other option that is being floated is that if VSNL has to go ahead with investment in Tata Tele, the valuation of the company will have to be done by independent valuers who will certify that for VSNL’s 1,200 crore for a 25 per cent share in Tata Tele is at the right price.

The Tatas have so far been prepared to scale down the investments but seem to be unwilling to backtrack completely.

Highly placed sources in the ministry say that MTNL which is a top telecom company with licences to operate Mumbai and Delhi the two premier basic service markets in the country and 45 lakh subscribers, has a market valuation of Rs 8,000 crore.

When compared with this, a 25 per cent stake in Tata Tele which is essentially what Communications Ministry parlance refers to as a ‘‘Kakinada, Vijaywada licence,’’ (Tata Tele has one operative licence for Andhra Pradesh with 1.5 lakh subscribers and four new licences which have yet to take off) is far to high at Rs 1,200 crore.

According to sources, the Tatas have been citing section 372 A in Company Law saying that this section exempts infrastructure companies from making detailed agenda before a board meeting but the fact is that when this section was amended in 1998, the original section of 372 was not deleted and hence the government may still have a legal case if all negotiations for peace fail.