TANMAY OBSERVES!

TATACOMM Cmp Rs.489----Looks value buy---

The Telecom Commission will decide on August 26 on the seven-year-old spat between the Government and Tata Group over hiving off Videsh Sanchar Nigam Ltd’s (now called Tata Communications) surplus land into a separate company. The Commission, which is the apex decision making body in the Department of Telecom comprising representative from the Ministry of Finance, has three options to deal with 773 acres located in four cities. The options are to hive off the surplus land into a realty company, allow the Tatas to retain the land at a ‘fair consideration’, or auction the land to a third party.

http://www.thehindubusinessline.com/2009/08/13/stories/2009081351730400.htm


Technical View:-
TATA COMM has formed an island reversal and the stock can return 15-20% from current levels in weeks to come. Buy in cash as investment for target near Rs 580-600 in 6-8 months time.

Previous Developments:-
Tata Sons hikes stake in Tata Comm

Tata Sons, one of the promoters of Tata Communication, has increased its stake to 10.88% - up 2.37%
The company acquired 67.53 lakh shares through an inter se transfer i.e. transfer among group companies. Current holding of Tata Sons is now 3.10 crore shares.
http://www.business-standard.com/india/news/tata-sons-hikes-stake-in-tata-comm/19/56/51627/on
Surplus land valuation
Tata Communications holds 773 acres of surplus land across various parts of India. According to the "Share Purchase Agreement" entered between the promoter Panatone Finvest, a subsidiary of the Tata Group and the government, the surplus land must be split into a separate entity and the shares or the proceeds on the sales of the land must be distributed pro-rata among the shareholder on record, prior to the stake sale to the Tata group in 2002. Until this split, the land will remain in possession of TCOM.
The government will get 51% of the proceeds of the land based on the 25% stake it sold to the Tata group and its existing share holding of 26%. The Tata group will transfer 20% of the land proceeds for the stake they acquired through an open offer to the external shareholders who tendered their shares to the Tata group (based on the terms of the open offer). The benefit on additional 5% stake, which the Tata group acquired from the open market will be retained by the Tata Group. The balance of 24% will accrue to current shareholders of TCOM as they hold the TCOM share including the land.

Over the last five years, the sale of the surplus land has been fraught with regulatory and bureaucratic issues, which delayed the process of the split or sale of the surplus land. The Tata group has refused liability on the capital gains and stamp duty to be paid from the sale of the land, based on the share purchase agreement with the government. Company management has also noted that the original land was classified for telecom use and the government will have to intervene to allow the land to be used for residential and commercial purpose.

The location and valuation of the land bank:-

Location	Land Area
	Acres	Mn Sq Ft
Delhi - Greater Kailash	70	3.05
Delhi - Chhattarpur	58	2.53
Pune - Dighi	524	22.83
Kolkatta - Halisahar	35	1.53
Chennai - Padinallur	86	3.74
Total	773	33.68

Brokerage House	Value per Share	Time
IIFL	141	Jul-08
JP Morgan	198	Oct-06
Kotak	169	Oct-06
BNP Paribas	151	Apr-08
CLSA	180	Jun-08
IndiaBulls	126	Aug-08
Religare	110	Sep-07

Govt fiscal deficit is running high so it would like to mop-up revenue by selling stake in PSUs. TATACOMM surplus land minority stake in Companies like MARUTI and TATACOMM can get disinvested in future. 


Valuation of TATA COMM LAND http://www.4shared.com/file/124744149/e618185/TATACOMM.html