NEW DELHI: The government will engage state-run construction company NBCC India Ltd to monetise around 771 acre of prime land held by erstwhile VSNL, a company that the government had sold to the Tata group in 2002 as part of its asset-sale programme. The land assets of VSNL, however, were not part of the strategic sale. The government is expected to raise around Rs.15,000 crore from monetising this land in which NBCC will take development charges.
A senior government official confirmed the development and said the process is likely to start by the end of this year. “It is being worked out. NBCC will redevelop the land and take a certain fee, the remaining amount will flow into government and other shareholders,“ he said. An NBCC executive also confirmed the preliminary deliberations, giving a ballpark estimate of about Rs.15,000 crore for the developed prime land in Delhi, Kolkata and Pune.
“We will set up a subsidiary to which the land will be transferred and then we will redevelop those parcels depending upon their location,“ he added. The government has already designated NBCC as the land management agency to dispose of land assets of loss-making state-run firms. NBCC will get a fee of 0.5% of the value realised from disposal of such land, subject to a cap of Rs.1 crore.
At present, the government owns 51% of the demerged VSNL land entity through a special purpose entity. Tata group had renamed VSNL as Tata Communications. The other stakeholders in the land asset are largely institutional investors. In August, the Lok Sabha had given its assent to the Taxation Laws (Amendment) Bill, which exempts asset sale by public sector companies from capital gains tax. This will ensure there is no capital gains tax levied on the transfer of this land for development. The monetisation of this land is likely to be spread over a period of time as the asset is developed.
Last week, the cabinet committee on economic affairs (CCEA) had given an in-principle approval to strategic stake sale and divestment in around 20 companies, recommended by Niti Aayog. “In principle, the cabinet has approved the recommendations with regard to some of the units. Specific cases would now come up after detailed examination,“ Finance minister Arun Jaitley had said. The department of investment and public asset management (DIPAM) will take up each case separately and hold discussions with the respective administrative ministry about the suitability as well as the modality of the strategic sale.
It is likely that the process may free up more land. The government has budgeted Rs.56,500 crore through disinvestment proceeds this year, of which Rs.20,500 crore is to come through strategic stake sale.
Credits ET Realty