TelecomLive January-2019

TCIL IPO Telecom LIVE January 2019 41 www.telecomlive.com mately in effect 25 per cent disinvestment of TCIL shares that goes by the spirit and decision of TC for TCIL to proceed with 25 per cent disinvestment of its equity. b) Present proposal of the TCIL falls in line with the disinvest- ment policy of the government, mandatory listing norms for unlisted CPSEs, fulfils TC direction to first start with TCIL's disinvestment. DIPAM vide letter dated Aug 9, 2018 has also conveyed no objection to 10 per cent piggyback transaction and have intimated that the process will be carried out by them and the costs will be bo r ne p r opo r t i ona l l y betweenTCIL andDIPAM. c) This arrangement would not only help to raise budgetary resources for the government but also help TCIL to meet its immediate working capital requirement, unlocking its full potential and to improve the profitability. Why the issue size should not be 35 per cent insteadof 25 per cent as proposedbyTCIL SBI Capital Markets Ltd were of the opinion that the maximum st issue size at the 1 instance is never more than 25 per cent. Rather in most cases, it is less than 25 per cent. Some of the recent issues are Rites Ltd 12 per cent (opened on 20.06.2018), HUDCO 10.20 per cent (opened on08.05.2017). SBI CapitalMarket Ltd informed that when the size of the issue is large the price quoted tends to be low. Moreover only 10 per cent holding with the public is required for the purpose of listing the shares in stockmarket. Issue expenses The IPO expenses would be kept at bare minimum keeping in mind the issue size and the likely value of the issue. Empowered Committee, whose members shall consist of DIPAM, DOT and CMD, D (F) of TCIL, would be dec iding on selection of merchant bankers, valuers, road shows etc and the expenditure shall be incurred judiciously. WorkingCapital requirement TCIL is facing cash crunch in execution of its project. The businessmodel in India and abroad has changed completely from cash contracts to deferred payment contracts or boot model contracts. Most of the state / central govern- ment departments and clients abroad are awarding works on deferred payment basis or on BOOT model which has resulted in requirement of more funds as working capital. Even in the case of contracts fromgovernment / PSUs, the payment s terms are not favourable requiring more working capital as there is no mobilization advance or 100 per cent payment on equipment portion only after supply/receipt of material in good condition. Details of funds of Rs 522.47 crores of TCIL blocked in various projects/investment along with minimum further working capital requirement of the Com- pany which amounts to Rs 588.86 crores was palso provided to DoT. Earlier, SBI Capital had also projected working capital gap of Rs 400 crores toRs 800 crores. Now, DoT has sought the approval of Digital Communica- tions Commission on the revised proposal of TCILBoard. T elecommunications Consultants India Ltd (TCIL) has sought g o v e r n m e n t ' s approval for fresh equity shares of 10 per cent in conjunction with government divesting 15 per cent of its equity through IPO. Earlier, in its meeting held on May 1, 2018, the Telecom Commis- sion had decided that TCIL should proceed with 25 per cent disinvest- ment of its equity and subsequent listing of the company, as per existing government policy, rather than contemplating the sale of 10 per cent stake of TCIL in Bharti HexacomLtd. Accordingly, on May 31, 2018, the DoT had requested Department of Investment and Public Asset Management ( DIPAM) to initiate the process for 25 per cent disin- vestment of TCIL equity and subsequent listing of the company. However, on Jun 8, 2018, TCIL sent a board approved proposal to DoT for the fresh equity shares of 10 per cent in conjunction with government divesting 15 per cent of its equity through IPO to meet the working capital requirement of the company. In support, it has provided the following justifica- tions. a) TCIL proposal for 10 per cent IPO and 15 per cent disinvest- ment of equity will be ulti- TCIL IPO 10 pc fresh equity plus 15 pc existing equity will be on offer