Moving closer to signing a deal with June Min-promoted Nano-Tech Silicon India Ltd for the proposed fab facility in Hyderabad, both as a technology partner and an equity-holder, Intel Corporation senior vice-president and Intel Capital president Arvind Sodhani met Chief Minister Y S Rajasekhara Reddy, along with the promoters of NTSI, to discuss the final agreement including the issue of equity participation by the Andhra Pradesh government.
During this crucial meeting, the chief minister has formally announced the government's decision to take equity to the tune of $24 million in the project, besides providing infrastructure and tax exemptions.
According to sources close to the development, Sodhani apprised Reddy of his company's plans to become a technology partner in the fab facility, in addition to its intention to hold an equity worth $32 million in the project.
The sources said the meeting cleared the decks for signing a formal agreement by the stakeholders, including the state government, for setting up the project.
Although initially, the Andhra Pradesh government proposed to take $32 million equity on par with UTI and Intel, the chief minister on Wednesday told the Sodhani-led team and Min that the government would invest only about $8 million for the first phase and another $16 million for the second phase of the project, totalling $24 million as its equity.
The reason for the reduced equity is not immediately known. Reddy is also learnt to have told the promoters of NTSI that the government would release its share of equity only after other parties invest in the project.
The meeting was also attended by Dasari Jairamesh, chairman of Viay Electricals and Koteshwar Rao, on behalf of Prabhakar Rao of Nuziveedu Seeds Ltd, who are also expected to be the equity-holders in the project.
Both are likely to take a much bigger stake than Intel Corp, to the tune of over $40 million, according to reports. UTI officials were also present in the meeting.
Meanwhile, discussions with Videocon, one of the leading players in electronic consumer durables in the country, which is said to be very keen on holding a major equity stake in the project, are said to be on. According to sources, NTSI has offered over $80 million equity in the project.
Though NTSI had originally worked out the total equity size at $160 million, the financial structure is expected to change, as the company is learnt to have increased the original investment size, which was $600 million.
It may be recalled that in December 2004, Min signed a memorandum of understanding with the state government to form a joint venture company for setting up a semiconductor manufacturing facility in Hyderabad.
Subsequently, he incorporated NTSI, to produce a range of products including wireless communication chips, PC chips, digital consumer electronic chips, automobile ICs and memories.Do you want to discuss stock tips? Do you know a hot one? Join the Stock Market Investments Discussion Group
