Financial Daily from THE HINDU group of publications
Monday, Dec 16, 2002
Industry & Economy - Disinvestment
Divestment panel draws roadmap for TCIL `Merge Semiconductor Complex with a PSU'
NEW DELHI, Dec. 15
THE Disinvestment Commission has suggested the privatisation of Telecommunications Consultants India Ltd (TCIL) through strategic sale and merger of Semiconductor Complex Ltd (SCL) with another PSU in a related line of business such as Bharat Electronics Ltd (BEL).
In its latest report submitted to the Government, the Commission has recommended that the Government should offload a minimum of 51 per cent of its equity in TCIL to a strategic partner after withdrawing surplus cash reserves from the company.
Moreover, after privatisation, the Government should hold at least 26 per cent stake in TCIL for a period of 3 - 5 years.
The transaction documents for the sale should make adequate provisions to ensure that TCIL may take on deputation engineers and experts from the Department of Telecommunications (DoT)/Bharat Sanchar Nigam Ltd for 3 - 5 years.
Similarly, the Commission has suggested that DoT's association with TCIL for sourcing expertise as well as for business development, for a few years, would ensure continuity and provide comfort to the clients and prospective partners.
Appropriate clauses in this regard may be included in the transaction documents of strategic sale.
The Commission has also said that the Government should explore suitable incentive schemes such as employee stock option plan/employee stock purchase scheme to ensure retention of employees on deputation from TCIL as well as of other technical workforce.
The Commision suggested that the Government should also draw up a financial and corporate restructuring package for TCIL in consultation with prospective buyers prior to disinvestment to enhance its value.
In the case of SCL, the Commission was of the view that disinvestment of SCL did not appear to be desirable at this stage due to the fact that SCL is the only Very Large Scale Integrated Circuits (VLSI) facility of its kind in the country that can meet certain specific requirements of the strategic sector.
Merging SCL with BEL would eventually result in SCL becoming a division of BEL or its subsidiary.
While such a merger would reduce the losses to the Government, it may not make business sense for BEL from the point of view of profitability.
" The Government would, therefore, need to take a decision in this regard keeping in view the nation's strategic interests on one hand and the financial concerns of the different stakeholders of BEL on the other,'' the Commission said.
In case a merger with BEL is not considered feasible, the Government could explore the possibility of integration of VLSI facilities of Bangalore (Society for Integrated Circuits Technology and Applied Research) and GAETEC with SCL to achieve synergy and optimisation of resources as well as to strengthen the national capability in the field of semiconductor/micro-electronics, the Commission concluded.
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