New Delhi:The Cabinet Committee on Economic Affairs on Wednesday approved a Department of Telecommunications proposal to allow its public sector unit ITI Ltd to offer 18 crore fresh equity shares to public through a further public offer (FPO) in the domestic market.
This will help ITI raise working capital for new projects, reduce its debt obligations and meet Sebi’s requirement of minimum 25% public shareholding, an official statement said.
The Cabinet nod will be followed by selection and appointment of an advisor to assist ITI in the proposed transaction and also the appointment of merchant bankers for book building process.
An FPO is a stock issue of additional shares made by a company that is already publicly listed and has gone through the IPO process.
The issued and subscribed equity capital of the company as on 31 December is Rs760 crore (76 crore of equity shares of face value of Rs10 each) out which 92.59% equity i.e. 70,36,87500 shares is held by Government of India.
ITI manufactures telecom products across six units in Bangalore (Karnataka), Raebareli, Naini and Mankapur (UP), Palakkad (Kerala) and Srinagar (J & K). The company is a supplier for the defence communication and networking needs and a major supplier of encryption products to the Indian Army.
The Cabinet also gave its nod for the formation of ‘C Corporation’ in Texas, US, which will be a 100% subsidiary of Telecommunications Consultants India Ltd.
The subsidiary has also been given authorization for registering in other states of the US for doing business subsequently.
TCIL from its internal resources will invest equity worth $5 million in C Corporation in a phased manner, an official statement said.
The said subsidiary will help the country earn foreign exchange, the statement said, adding that it will earn an estimated profit of around 10% in the initial years with turnover of $10 million, which may get increased subsequently depending upon the volume of work.
TCIL provides consultancy and turnkey project execution service from concept to completion, in the field of telecommunications, IT and civil infrastructure. It has customers in the gulf region and African countries as well and will now target the US market.
The consolidated net worth of TCIL as on 31 March was Rs2433.66 crore.