With this, Meltron will be the second public-undertaking company to be privatised after the State Industrial & Investment Corporation of Maharashtra. The government had divested 60 per cent stake of Sicom under the privatisation programme in 1993. The divestment of Maharashtra Agro Industries Development Corporation, Maharashtra Small Scale Industries Development Corporation, and Mafco are in the pipeline.

Mantralaya sources said that R&S Bick and Octopacy have formed a joint venture to pick up the stake. The government will transfer Rs 7.40 crore of the total share capital of Rs 10 crore to R&S Bick and Octopacy. As against this, the joint-venture company will contribute Rs 1 crore to the government. The proposal will befurther discussed by the high-power committee headed by the state chief secretary and the entire procedure of transfer of the 74 per cent stake to the joint-venture company will be completed within a month.

Meltron managing director AR Dalwai said that the company, which was a leading manufacturer of defence and telecommunications equipment till recently, has been facing severe competition after liberalisation. The accumulated losses incurred by Meltron has crossed Rs 30 crore.

Dalwai said that the company which employs about 650 employees at Mumbai, Nagpur, Aurangabad, Pune, Kudal, Delhi, and Bangalore has to spend a whopping Rs 85 lakh per month as salaries and administrative expenses. The company could make the payment of wages till March only after the grant of loan worth Rs 15 crore by the state government. The government has also sanctioned additional funds to make necessary payment of wages after March to the employees.

Dalwai said that the joint-venture company had assured not to retrench thepresent staff and was likely to pump in additional funds to make the company more competitive. Rhode & Schwarz is a major player in telecommunications, radio and engineering products.

The ruling alliance had promised to privatise Meltron in its new industrial policy announced in December 1995. However, following strong opposition by Meltron chairman D Sawant, the government had to go slow on its privatisation.

The government had accepted a bid from Natalco about two years ago. However, the company backed out as the government made changes in the original document. The bid had included Meltron's office space of 3,000 square feet situated in south Mumbai. The space was leased out to the government by a private trust which was managed by the close associates of Shiv Sena supremo Bal Thackeray.

Following the refusal by the trust for giving further extension of lease, the government had to return the space valued at about Rs 8 crore. The government later refunded the earnest money paid by Natalco.