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Govt not likely to dip into remaining reserves of VSNL

Days before inviting price bids for privatisation of VSNL, the government is unlikely to further dip into the company's about Rs 20 billion reserves, left after a heavy dividend pay-out totalling about Rs 40 billion in the last four months.

"We would not transfer the remaining reserves of about Rs 20 billion, and they would be left at the disposal of the corporation for meeting contingency needs," official sources said.

Cabinet Committee on Divestment is likely to approve on December 26 the draft transaction documents to invite price bids, possibly next month, for sale of 25 per cent equity in VSNL to a strategic partner.

VSNL announced on December 14 a hefty dividend payout of 750 per cent amounting to about Rs 24 billion, and government in lieu of its 53 per cent stake received about Rs 12.75 billion.

Prior to this, VSNL declared a 500 per cent dividend.

Earlier this year, while approving the privatisation of VSNL, CCD had allowed the corporation to foray into new areas.

However, the government had opted to dilute the reserves after it felt the corporation failed to take advantage of the enlarged mandate.

Divestment Ministry had been insisting on reducing VSNL's cash surpluses ahead of its privatisation on the ground that these might not reflect fully in valuation and price bids.

The government will offload 25 per cent stake in VSNL to a strategic partner alongwith management control, while 1.9 per cent would be offered to the employees.

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