The proposed decision may help NGEF to sail through without many hurdles in diluting a part of the state holding.

NGEF is a 23:77 per cent joint venture between Elektro Holding Gesellschaft (EHG) of Germany (the successor to AEG), a fully-owned subsidiary of Daimler-Benz Industrie, and the Karnataka government. At present, the Daimler Benz group also has an outfit in the country - AEG NGEF - through its arm EHG.

According to AEG-NGEF director PK Sehgal, EHG has been adopting a wait-and- watch policy. ``We will, however, not take a decision immediately in this regard. The Karnataka government and NGEF are our good partners since our entry into the country.

The company, which has a member on NGEF's board, would like NGEF to be handed over to a good party,'' he said.

The proposeddilution of the holding is unlikely to affect the technological capabilities of NGEF, as the company has acquired the technology from AEG. Now, AEG is not in a position to impart additional knowhow for NGEF's products manufactured in Bangalore.

During the last fiscal, Daimler Benz acquired the remaining 50 per cent stake in its Indian outfit AEG-NGEF from NGEF. The company purchased the balance 68,000 shares from NGEF for a consideration of DM3.4 million at a premium (around Rs 6 crore). The share capital of the company is made up of 1,36,000 shares of Rs 100 each. The German firm is now working on plans for the future business development of AEG-NGEF. The consolidation of stake is being made in line with the strategy pursued by the parent company. Earlier, AEG-NGEF was a 50:50 joint venture between EHG and NGEF.

AEG-NGEF will now concentrate on its core business - making and marketing of electric switchgears. The company plans to increase exports to Egypt, Malaysia and Germany. It also plans to expandits production capacity and unveil new ranges of low-voltage switch boards. Meanwhile, BSES, Kirloskar Electric Company and ABB are in the race to acquire a holding in NGEF. Along with them, unidentified major companies have also shown interest through two leading foreign-investment banks to enter into alliances.