According to company officials, a 10-member team will be leaving for Dubai soon. ``The roadshows were planned after a host of queries were received from NRI investors regarding the offer for sale of 10 lakh shares of VSNL,'' said a top-ranking official of the company, adding that the lead managers had already carried out a preliminary survey in the region which revealed considerable appetite for the issue.

According to the lead managers, the fact that the minimum investment (market lot of 10 shares and a price of Rs 750 per share to be paid upfront) in the issue is relatively high at Rs 7500 was yet another reason for targeting the NRIs. ``Marketing the issue abroad will not be much of a problem, considering investors are familiar with VSNL,thanks to two GDR issues in the last two years. To top it, the monopoly in international telephony within the country as well as the unique revenue sharing arrangement with DoT which gives VSNL a protection against fluctuations in revenues, should ensure a good response to the issue,'' added the VSNL official.

Also, the fact that VSNL's shares can be traded only in the dematerialised form with effect from Janury 4, 1999, will go down well with investors abroad as the paperless trading ensures better transparency. (However, for those opting for shares in the physical form, there is a provision which allows trade up to a maximum of 500 shares under the odd-lot category). Apart from the demat shares, the other positives for the VSNL issue are that it has been priced at a 25 per cent discount to the current market price on BSE of Rs 940. Besides, post-issue, there will be no dilution in earnings as it is a divestment by the Government of India.

The only problem that investors could encounter is illiquidity inthe VSNL counter on BSE. At present, the daily traded volume is only around 100-150 shares.

Post-issue, the scenario is not likely to be very different, as the public shareholding will still be less than 2 per cent. The illiquidity is, in fact, one reason why the company has a very low discounting of 6.48 (based on the fiscal 1998-99 net profit of Rs 1324 crore). However, VSNL officials say plans are afoot to improve the liquidity in the counter.

``The first step is the offer for sale. We are contemplating other measures as well,'' added the company official. According to market sources, VSNL has very large reserves in excess of Rs 5000 crore on a relatively low equity of of 9.5 crore shares (or Rs 95 crore). Says a broker, ``Capitalisation of its reserves through an attractive bonus should be no problem for VSNL.'' Plus, the company has stated in its prospectus that ``it may consider options for raising any additional funds that may require, including debt financing an additional equity financing......''