``We have decided to exit the venture and just concentrate on our other two telecom businesses - Hughes Escort Communications Ltd (HECL) and Escotel,'' Swaroop said.

Though he refused to divulge financial details of the transaction, Swaroop said with this deal, Escorts would move out of the telecom hardware manufacturing business.

Under Escorts Communications, Escorts was manufacturing PBX and rural automated exchanges. However, Escorts Communications had eroded its net worth and fallen under the purview of the Board for Industrial and Financial Reconstruction (BIFR).

But now with the LG group company having already picked up close to 49 per cent stake in the venture, the company has changed its product portfolio to include CDMA-based WLL equipment. Since that is LGIC's proprietary technology, we would not have much to do there and so are exiting the venture,'' he added.

``We feel that we are not creating much value to the venture and so have decided to move out of it,'' he said.

Escorts has divested 23 per cent stake in Hughes Escorts in favour of its foreign partner Hughes Network Systems of the United States and ICICI Ltd. Under the deal, Escorts Ltd will be entitled to 50 per cent of the appreciation in value of shares over and above 75 per cent in three years.HECL was floated as a 51-49 joint venture with Hughes controlling the majority stake. However, due to change in the guidelines, the foreign partner had to reduce its holding to 49 per cent and two per cent stake was transferred to a trust.

Escorts Communications had come out of the purview of BIFR following the equity infusion by LGIC. The Korean company had picked up 49 per cent stake in the company for Rs 9.99 crore, taking the total net worth of Escorts Communication to Rs 19.99 crore compared to accumulated losses of Rs 18.89 crore.

The BIFR had noted that since the company had succeeded in making its net worth exceed the accumulated losses, it ceased to be a sick company.LG's investment plans gain significance since Escorts Communications, a 100 per cent subsidiary of Rs 3,200 crore Escorts group, had approached BIFR following complete net worth erosion by accumulated losses of Rs 16.89 crore.The venture has now emerged as the lowest bidder in the $24 million wireless in local loop (WLL) tender of the Department of Telecom (DOT). The company would begin supplies to DOT by June this year.

The contract involves equipment supply for laying down 40,000 basic telephony lines. It is also in talks with other basic service providers for supplying equipment.

Talks have already been initiated with Shyam Telecom and some more orders, albeit small, are in the pipeline.