Hemisphere Properties is the spun off holding company for the undeveloped land holdings of the erstwhile VSNL (post divestment Tata Communications). As per the terms of disinvestment of VSNL in 2003, the GoI and public minority shareholders retained ownership of these land assets post disinvestment to Tata Communications.
Consequently, a new entity ‘Hemisphere Properties’ was created to hold these land holdings which was recently listed on stock exchanges. The majority ownership of this company vests with GoI with rest owned by public shareholders.
The entity owns the following land parcels
The value of these land holdings is not clear but an exercise was done by a news entity in 2011 (not able to upload) and in 2013. Due to real estate sector suffering since then especially in NCR region, the land values might be lower now. Any boarders with Real estate background could be able to shed light on this.
The company is led by Govt staff and the aim is to monetize land.
The company has following liability
(a) Rs 750 cr advance by GoI towards change in title of land from erstwhile owners (Tata Comm, VSNL etc) to new entity
It could potentially have another liability in terms of charges for change of land use as current land use is not for residential/commercial development for some of the parcels. I am not aware how much this charge would be but it could be substantial and would have to be funded either by loan/advance from GoI or from other means.The mode of funding would have to be clarified.
The land could be sold to a buyer or exploited through a JV led development model.
Further, as the land parcels are large for the areas where they are located, it is not clear if it will have to be sold off in chunks/ exploited piece-meal or in stages. A lot of these are open areas and would have impact on the value of the land assets in terms of valuation and timelines of cash flow into company.
The cash flow from sale of land would invite LTCG and from monetization of land parcel through JV could invite other forms of taxation. Further, distribution of proceeds would invite taxation if through dividend/buyback route.
There is an upcoming AGM on 29-Dec-2020. I won’t be able to attend. If anybody is attending, would appreciate if following areas and any other questions of boarders are clarified.
(A) Value of land as per independent valuation by co/ co hired third party/circle rate
(B) Current and potential liabilities on co in terms of (i) stamp duty (b) change of land use © any other
© Monetization plans route (JV, outright sale, any other) and timelines for the same
(D) Mode of distribution of proceeds
Major beneficiary of monetization from all routes - stamp duty, land use change, LTCG/Taxation, DDT, Buyback Tax would be government. Consequently, there could be inherent bias or might even be done in objective manner. Knowledge of above would be helpful for minority shareholders.
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