A senior government official told The Financial Express: "The Government has decided to bring down its stake in CMC to 26 per cent as against the proposed disinvestment of 51 per cent earlier, to give the company a more competitive edge and autonomy.''

As per the original plans the government stake in CMC was supposed to come down to 51 per cent from 83 per cent following a fresh equity issue by the company. However the proposal was hanging for over six months as the IT Ministry was yet to give the green signal. Shifting from its earlier stand, the Ministry of Information Technology has decided to sell a part of the equity in the company to a private strategic partner, which could be a foreign infotech major. The government is the largest shareholder in CMC with a 83.33 per cent stake. The rest is held by public and financial institutions.

According to the plans of the government, the private equity partner would only have a minority stake in the state-owned enterprise. CMC had an equity base of Rs 15 crore, which was supposed to be hiked through an issue of 96 lakh shares, including 80 lakh shares for the public offer and the rest for ESOPs.

CMC's areas of operations are software development and maintenance, system integration, education & training and products business. Despite its vast area of operations and infrastructure CMC failed to interest any investors due to its PSU status.

The company is hopeful that with the disinvestment there will be a change. The decision to disinvest was first taken at the CMC board meeting on December 27, 1999.

With disinvestment on the cards, CMC is planning to forge joint ventures in various segments such as oil and petroleum, banking, transportation and hi-tech VLSI designing. The plan is to develop software applications in these areas with the help of the proposed partners, who would bring in their core competencies and CMC would chip in with technical expertise.

The company was finding it difficult to attract talented professionals due to its PSU status and the non-availability of ESOP for its employees. As many as 16 lakh equity shares would be given at discounts between 40 and 60 per cent to the employees at a price fixed for further issue of share capital to the public and institutions.