Govt to divest 24% equity in TCIL

The department of telecom is in favour of divesting 59 per cent stake in Telecommunications Consultants of India Ltd through the market route.

It has proposed to offload 24 per cent of the equity in overseas markets  either by issuing ADRs or GDRs and 25 per cent to be sold in the Indian market.

Another 10 per cent stake is being proposed to be given to TCIL's 600 employees. The remaining 41 per cent will be retained by the government as per the proposal.

Senior government officials said that while strategic sale has been the dominant method of privatisation, in TCIL's case the preferred way for divestment would be through the market route without a strategic partner.

"The reason for going for strategic partner is normally to improve the working of the organisation. In the case of TCIL,  its performance has been excellent and consistent. It has a brand name in foreign countries and the company is popular when it comes to implementation of turnkey projects," officials said.

They also said that since TCIL is involved in carrying out strategic projects for the defence forces it is important to keep management control with the government.

TCIL is also doing sensitive communication projects for other countries.

Officials said that the first step would be to go in for an IPO in the Indian market and then go in for ADR or GDR.

"The company in this format will be in a position to take up projects in strategic areas as the government will have the management control," said sources, adding that even after divestment defence forces will be able to share sensitive information with the company.

TCIL was formed in 1978 as a wholly owned subsidiary of the government for extending India's telecom expertise to other developing countries. Since then it has worked in more than 50 countries.

TCIL has a turnover of Rs 720 crore (Rs 7.20 billion), out of which 51 per cent is in foreign exchange. The net profit stood at Rs 62 crore (Rs 620 million) in the last financial year.

The turnover is expected to go over Rs 1,000 crore (Rs 10 billion) in the next one year. The net worth of the company is around Rs 368 crore (Rs 3.68 billion).