Moneycontrol Bureau
Shares of Tata Communication rose 7 percent, hitting 7-year high at Rs 519 per share. It has jumped 12 percent in last two days. Traders are actively buying shares of Tata Communication as the government is actively looking at demerging surplus land of VSNL land that it owns.
Tata Communications had bought 45 percent stake in VSNL for around Rs 1,500 crore, as part of a government asset-sale programme in 2002. The government gives tax exemption for demerger of surplus land and now Tata Communication can transfer land without paying capital gains tax.
The land sale will help Tata Communications to raise equity funding and also portion of the land locked with the surplus land can freed up.
According to Bank of America Merill Lynch, the land parcel is valued at RS 103 per share, which is at 75 percent discount to the estimated market value of Rs 412 per share.
IDFC says post capital gains and dividend distribution tax net realisable value per share value for the asset is estimated at Rs 200-210 per share.
Lok Sabha approved Taxation Laws (Amendment) Bill, 2016 which seeks to expand definition of "demerger" to facilitate the splitting or reconstruction of erstwhile public sector companies.
Finance Minister Arun Jaitley said it would help in using a large chunk of VSNL land by the government. The vacant land can be used for various purposes including construction of houses for government employees, he said, adding "therefore it will be a great asset."Posted by Nasrin Sultana
(With inputs from PTI)
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