The Hindu Business Line : `Govt must infuse funds in TCIL to ease cash crunch'

Liquidity crunch
Company has invested Rs 37.5 crore in Bharti rights issue
Had Rs 52.5-crore cash reserve at the time of investment, which has been reduced to nil
Govt funding will raise company's authorised share capital to Rs 70 crore

Advertisement

New Delhi Feb. 10 The Department of Telecom has decided not to divest the 30 per cent stake held by Telecommunications Consultant India Ltd in Bharti Hexacom and has instead proposed that the Government invest Rs 40 crore in the equity of TCIL to tide over the funds crunch faced by the state-owned consulting firm. This will increase the authorised share capital of the company to Rs 70 crore.

TCIL had informed the Government that it was facing severe cash crunch on account of investing Rs 37.5 crore in subscribing to a rights issue of Bharti Hexacom, which offers cellular services in Rajasthan. The company had participated in the rights issue on the instructions of DoT, which had decided that TCIL should make the payments from its internal resources. TCIL had a cash reserve of Rs 52.5 crore when the decision was taken to go for the rights issue. This reserve has now been reduced to nil.

Earlier the Government had considered divesting the 30 per cent stake and had got an offer from Bharti Airtel for Rs 262.5 crore. TCIL has so far invested Rs 91.26 crore in the joint venture. Now, however, DoT has decided to infuse fresh funds into the company to take care of its requirements.

TCIL in its presentation to DoT said that the acute crunch in liquidity was undermining its competitiveness and costly borrowings from banks could spoil its chances of bagging major contracts. It therefore sought interest-free funding from the Government. TCIL undertakes turnkey projects and has projects in over 58 countries. The company has given dividends totalling Rs 164 crore to the Government since its inception in 1978.

More Stories on : Telecommunications | PSU | Policy

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
`Govt must infuse funds in TCIL to ease cash crunch'

C-DoT Alcatel to launch low cost equipment

IT firms in Bangalore may down shutters on Monday

Hindujas to partner Qatar Telecom, Altimo for Hutch

Yashraj Films, FXLabs partner for `Dhoom 2' PC game