Tatas win management control in VSNL

Santosh Menon

NEW DELHI: The government, in a revival of its flagging privatization

program, said on Tuesday the Tata group had won the bidding for a stake in

telecoms giant VSNL and state-run Indian Oil Corp won a slice of petrol firm IBP

Ltd.

Tata, one of India's largest conglomerates, paid Rs 14.39 billion for a

controlling 25 per cent stake in Videsh Sanchar Nigam Ltd., Disinvestment

Minister Arun Shourie told reporters. VSNL, also listed on the New York Stock

Exchange, has a monopoly on international calls until end-March and is one of

India's biggest Internet service providers.

Indian Oil Corp (IOC) paid Rs 11.54 billion for a controlling 33.6 per cent

in IBP, which runs a chain of 1,500 petrol stations, mainly in northern India.

The government hopes the sales -- the most ambitious so far in its decade-old

privatization program -- will boost the painfully slow pace of asset sales,

which has so far raised just Rs 207 billion, less than half the target.

The proceeds are seen as crucial to helping battle the budget deficit,

estimated at 4.7 per cent of Gross Domestic Product in fiscal 2001/02

(April-March). India's Central Statistics Office said earlier on Tuesday the

economy was expected to grow 5.4 per cent in the year ending March 31, broadly

in line with market expectations.

The government received only one other offer for VSNL in which it held almost

53 per cent before the sale from the Reliance group, another leading Indian

conglomerate.

Bidders for IBP included state firms Indian Oil Corp, Bharat Petroleum Corp,

Hindustan Petroleum Corp Ltd, the Reliance group and foreign firms Royal

Dutch/Shell and Kuwait Petroleum.

The government owned 59.6 per cent of IBP. What started as a government

"disinvestment" exercise involving the sale of piecemeal stakes has

now become a fully-fledged privatisation program with New Delhi seeking to sell

strategic chunks along with management control.

Last fiscal year, it sold loss-making breadmaker Modern Foods and the Bharat

Aluminium Company (BALCO) to private strategic partners. This year, it has

parted with computer software and maintenance firm CMC Ltd., telecoms gear maker

Hindustan Teleprinters Ltd. and almost 10 hotel properties.

(C) Reuters Limited.