A decision to this effect is learnt to have been taken last week with both the Chief Minister and the Cabinet sub-committee giving the sale the required clearance. GCEL is the second PSU in Gujarat to be privatised after the sale of Gujarat Tractors Limited to Mahindra & Mahindra. GCEL had been on the block for almost two years now. It was among the state PSUs identified by the Asian Development Bank for privatisation as a pre-condition for disbursing a $100 million loan to the state under an economic restructuring programme. However, nothing had been finalised on the sale of GCEL thus far.

Among the other PSus which have been identified by ADB for privatisation are the Gujarat Export Corporation, the Gujarat Mineral Development Corporation, the Gujarat Industrial Investment Corporation, the Gujarat State Finance Corporation and the Gujarat Agro Industries Limited.

According to reliable sources, the privatisation of GCEL in particular was been watched with great interest by the IT industry since GCEL is among the few specialised hardware manufacturers in the country. The company, with a turnover of over Rs 115 crore, is mainly into manufacturing navigational aids, Omega wind-finding systems, hybrid micro circuits as well as DVOR systems. GCEL also claims to be an undisputed leader in the fields of broadcast, navigation and telecom hardware.

In fact, among the bidders which had evinced interest in acquiring GCEL are the fertiliser major - Gujarat Narmada Valley Fertiliser Corporation (GNFC) which has been bullish on the IT sector of late and has even established a full-fledged infotower in Gujarat recently. Even soaps and detergent major Nirma Limited was among the contenders for GCEL.

Once among the most profitable navratnas of the Gujarat government, the PSU had in the past few years amassed enormous losses largely on account of gross overstaffing. With a task force of almost 20,000 employees, a major restructuring exercise was undertaken some time back in which the state government trimmed the flab by as many as 17,000 employees - either through a Rs 22 crore VRS package or by providing alternative employment.

Despite this, and notwithstanding the fact that GCEL registered a net loss in 1998-99, the company, according to sources, still retains a positive net worth. The new owners of the company, Parekh Platinum apart from taking over the liabilities, will also pay Rs 4 crore for a 51 per cent majority stake with a commitment to invest another Rs 7.5 crore in upgradation of the company.

For Parekh Platinum which spun off a separate IT hardware company, Arraycom, five years ago, the acquisition of GCEL is expected to provide a fillip to its existing business which has now diversified into communications systems apart from the core business of IT hardware.