Puncom: Disinvestment disaster

Capital Equipment worth some $11.2 million - capability upto 2.5 Gbps and 
40 GHz, an air-conditioned Assembly Area of 300,000 square feet, Standby Captive Power Generation of 3 MW, one of the country's latest SMT Assembly Lines, a net worth of $ 41 million (with zero debt), 42 approved Telecom products and a Countrywide After Sales Support Network. Yet there are no buyers for Puncom, one of the largest PSU's in the telecom sector, of Punjab. 

Videocon, which was keen to buy the company at some stage, opted out without citing any reasons. Earlier, HFCL, Videocon, Shyam Telecom, Motorola and Bharat Hotels had also submitted their expression of interests (EOIs) for Puncom, but had subsequently withdrawn. And the quotes of Shyam Telecom, the only company that did submit a bid, was rejected by the Cabinet Committee of Disinvestment (CCD) of Punjab as it was much lower than the government's expected reserve price.

So what now? A highly placed source in the government said that within a month's time the government would re-open the bids once again, and KR Lakhanpal, finance-cum-industry secretary, has been directed to review the plan of action. 

The bidders had conducted a due diligence of the company over the past three months and apparently could not foresee a viable RoI in the near future. Moreover, the share purchase agreement had had an 'employee protection clause' and a 'prevention of asset stripping' clause, both valid for three years. The real problem could lie in the fact that Puncom is solely reliable on C-Dot technology, and has been consistently missing out on newer technology adaptations and development, which is ironic, as according to a highly placed source within the government, Puncom has enough cash reserves to do the needful. "What is lacking is the will and not the money," he added. Meanwhile, it is alleged that some Puncom employees are being forced to take VRS by the management. 

Cyber News Service

(CNS)