Company sources said that the deal was finalised at Rs 16 per share. The company, which manufactures telecom switches, has an equity base of Rs 45 crore. The book value of its equity share stands at Rs 5.50 per share, sources said.

A joint statement issued by ModiCorp and Alcatel said that both the partners have decided to concentrate on their respective areas of competence and have reached the following agreement.

ModiCorp stated that it will be focussing its capital and human resources towards achieving a leadership position in the telecommunications services sector (cellular telephony and the Internet) and information technology.

ModiCorp chairman BK Modi said that ModiCorp had decided to exit from the telecom equipment manufacturing business. Alcatel,in line with its strategy and commitment towards India, has decided to reinforce its presence in the Indian telecommunications market and introduce further advanced technologies in the country. Alcatel will have to take the approval of the Foreign Investment Promotion Board (FIPB) for buying out ModiCorp's stake.

The company, which has manufacturing facilities at Gurgaon on the outskirts of Delhi, began operations in 1992. The company did well in the first couple of years. Its turnover jumped to nearly Rs 500 crore in about two years. However, it suffered a heavy loss last year due to poor orders from the department of telecommunications, its main customer.