Nearly a year ago, when the Karnataka government put NGEF on the block for privatisation, the response from these companies was overwhelming. In addition to ABB and the Kirloskar group, two foreign merchant bankers had also approached the SBI Caps, the nodal agency appointed to find a suitor.

When contacted, Kirloskar Electric Company officials said here on Monday that the company was eyeing a controlling equity stake in NGEF. However, it was still to decide on whether to take over a division of the company or in full.

It is learnt that Kirloskars were also in different stages of talks for acquiring another ailing firm Mysore Electrical Industries from theKarnataka government. Recently the company acquired an industrial battery unit from a Calcutta-based firm for an undisclosed sum.

NGEF Ltd managing director Vijay N Gore told The Financial Express that these companies were unlikely to make a direct approach to discuss buyout proposals. ``They will have to contact SBI Caps for the purpose,'' he added.

Going by the high-voltage transformer manufacturing company's market value and reputed products like AC and DC motors, Gore is confident that before the year-end a firm decision could be arrived. During the fiscal 1998-99 the company had posted a net loss of Rs 37.38 crore (Rs 17.08 crore) on a turnover of Rs 155.23 crore (Rs 175.78 crore). However, operating losses have come down significantly to Rs 25.04 crore (Rs 37.06 crore) during the period.

``Companies like Kirloskar Electric, ABB and BSES have diversification and capacity expansion plans and they will be the probable suitors. Though the central PSU Bharat Heavy Electricals Ltd had set its eyeon NGEF earlier, the company may not be a contender this time,'' an industry analyst said.

According to the company's proposal for disinvestment, the Karnataka government, in association with EHG Elektroholding GmbH of Germany (which holds 9.72 per cent stake in NGEF) is putting the entire equity with management control of the company.

However, the prospective buyers should bid for at least 51 per cent equity stake upfront, with an obligation to acquire the residual shareholding within a period of three years. Alternatively, NGEF could also offer 100 per cent equity stake with management control in the hived off divisions - NGEF Hubli Ltd, a wholly-owned arm of NGEF - to the suitor. The strategic investor is expected to run NGEF or hived off divisions as a going concern on commercially sound lines.