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Tatas not to lay off VSNL employees

Ratan Tata has ruled out any possibility of laying off existing Videsh Sanchar Nigam Limited employees and assured them that the telecom major was manned adequately and the Tata Group would leverage its strength in an effective manner.

The Tatas on Wednesday took charge of VSNL after signing the shareholders' agreement with the Union government for acquisition of 25 per cent stake in the telecom major for Rs 14.39 billion.

Immediately after signing of the agreement, Ratan Tata took over as the chairman of the reconstituted board and held its first meeting on Wednesday morning in Mumbai.

"Integration of VSNL into the group has filled a major gap and it will be our endeavour to provide end-to-end solutions to the consumers and connectivity outside the country," Ratan Tata said.

Tatas would now make an open offer acquiring 20 per cent floating equity as mandated under the Securities and Exchange Board of India rules.

"After acquisition, the most difficult task now lies ahead in order to achieve a painless integration," he said.

He pointed out that the corporation was without any flab and employees were its biggest strength which his group would leverage to reach new highs.

Meanwhile, Union Communications Minister Pramod Mahajan said the Tatas could leverage the virtual monopoly of VSNL in overseas communication emanating from commitment of MTNL and BSNL to route their traffic on competitive tariff for the next two years.

Mahajan said the VSNL employees had nothing to fear as the Tatas had assured the Centre both legally and otherwise that under no circumstances the staff would be retrenched.

"VSNL employees need not worry about their future which is now in the hands of the new management," Mahajan said. "The group has great respect for the VSNL workforce and its people and capabilities would be critical component of the Tata Group's telecom strategy."

The Tatas would now make an open offer on April 10 to acquire the 20 per cent at Rs 202 per share with an maximum outgo of Rs 11.54 billion.

"In all, the Tatas will have to shell out around Rs 26 billion for the complete acquisition," Tata Industries managing director Kishore Chaukar said.

The funds for the open offer would be provided by Tata Sons, Tata Power Company Ltd and through borrowings and internal resources, he said.

The offer closes on May 9 and JM Morgan Stanley Pvt Ltd are the managers to the offer.

Panatone Finvest Ltd along with its principals, Tata Sons Ltd, Tata Power Company Ltd, Tata Iron & Steel Company are making the open offer to acquire up to 20 per cent stake in VSNL.

The offer is being made pursuant to the government's decision to disinvest 25 per cent of its shareholding in VSNL to Tatas.

On February 5, Panatone Finvest, Tata Group's special purpose vehicle, had won the mandate for the sale of 7,12,50,000 fully paid up equity shares of VSNL at Rs 202 per share aggregating Rs 14.39billion.

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