Calcutta, April 12: The Tatas have started shoring up their stake in Videsh Sanchar Nigam Ltd (VSNL) by way of creeping acquisition.

Tata Sons, the main investment firm of the group, has acquired a little over 37.2 lakh shares of VSNL from the market. This represents 1.31 per cent of the telecom major’s equity capital.

A spokesperson for the group confirmed the acquisition of the 37.2 lakh shares from the market. When asked if this was the beginning of a consolidation of the group’s stake in VSNL, he refused to comment on future stake hike plans.

The Tatas acquired a 25 per cent stake in the company from the union government in February last year, and bought another 20 per cent of VSNL’s shares through an open offer.

Along with the government’s 25 per cent stake in the company, the Tatas also obtained management control of the company.

The government still holds 26.12 per cent in the company, which it may offload in five years from the first tranche of divestment.

The Tatas, at present, hold 45 per cent through Panatone Finvest — an investment arm. If the Tatas exercise their ‘call option’ on the government’s balance holding of 26.12 per cent, its stake will rise to 71.12 per cent.

The Tatas bought 25 per cent of VSNL’s shares from the union government at an aggregate consideration of Rs 1,439 crore or Rs 202 per share.

However, since the open offer, VSNL’s share price has crashed as the company lost its monopoly in long distance telephony. VSNL is currently trading at around Rs 73.

Unit Trust of India and the most of other mutual funds have exited the stock. The foreign institutions joined the mutual funds in abandoning the stock. They hold a little under 2 per cent now.

Among the financial institutions, Life Insurance Corporation of India (LIC) abstained from the offer and holds a shade under 4 per cent at present. In fact, LIC has increased its holding in VSNL since the open offer. Of the balance, a little over 10 per cent of the company’s equity is traded on the New York Stock Exchange as American Depository Receipts, and the rest — around 7.5 per cent — is held by the public.