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Tea Trading demerger plan before Cabinet

New Delhi, March 14: The Cabinet is likely to take up on Monday the proposal to demerge loss-making Tea Trading Corporation Ltd (TTCL) from its parent State Trading Corporation (STC).

The commerce ministry has forwarded a proposal to separate TTCL from STC and transfer it to Project Engineering Corporation, another public sector firm, under its administrative control.

The government proposes to disinvest close to 65 per cent stake in the STC through a strategic sale along with transfer of management control, while it would retain 16 per cent of the equity. The remaining would be offered to employees. Ernst and Young has been appointed as global advisers.

There were over 10 bidders in the race for acquiring STC, including the Cargill group, Videocon and the Adanis.

STC has an equity base of Rs 30 crore of which government shareholding stands at Rs 27 crore. It had a net worth of Rs 420 crore as on March 2001, while net profits stood at Rs 26 crore.

The Cabinet is also likely to take up for consideration the amendment to the Banking Regulation Act for relaxation in voting rights of investors, which are now capped at 10 per cent, irrespective of shareholding of investors. The finance minister had announced this relaxation in his budget speech.

The decision on the proposed amendment is expected to give a fillip both to banks, now starved of technological inputs, and investors, particularly the foreign entities in private sector banks.

The budget had announced higher FDI limit in private sector banks up to at least 74 per cent from all sources from the present limit of 49 per cent.

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