The Tata Group will increase its stake in group company Videsh Sanchar Nigam Limited (VSNL) through market acquisitions instead of buying the government’s 26.12% residual stake in VSNL through the exercise of a call option.
The Tata Group has a combined effective shareholding of over 50% in VSNL. The government divested VSNL in 2001, with Tatas acquiring the majority stake in the company. However, the government was holding on to 26.12% stake in the company that gave it a controlling power and two nominees on its board.
Panatone Finvest (a Tata Group entity) holds 40.7% in VSNL, while Tata Sons has 8.51%, Tata Power holds 0.09% and Government of India holds 26.12%. Institutional investors and individuals hold the remaining stake in the company. The government was earlier ready to dispose of the residual stake, but had asked for a golden share in the company. A golden share means that the government would sell its 26.12 per cent stake in the company and in return ask for a single share with controlling stake. This was not acceptable to the Tatas.
Read the Business Standard article.
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