The decision to offload its stake by 12.88 per cent comes in the wake of the state government injecting additional funds by converting loans worth Rs 92.77 crore into equity at a premium of Rs 25 per equity share of face value Rs 10.

This, in effect, is the half-way mark towards the pullout of EHG from electrical-related businesses in the Indian market. During the last fiscal, the group had sold a manufacturing plant of AEG-NGEF Ltd (a fully-owned arm of EHG) in Bangalore to GE Power Control for Rs 20 crore.

After the conversion, the state-owned company's equity share capital stands expanded to Rs 46.51 crore, with the government holding 90.28 per cent. Prior to the equity restructuring, the state government held about 77 per cent stake in the authorised capital of Rs 20 crore.

Theailing NGEF, which has been scouting about for prospective buyers as part of its privatisation, is a joint venture between the state government and EHG. A decision to raise the government stake in the venture was taken here on Monday at the company's annual general meeting.

According to NGEF managing director Vijay N Gore, the company has entered into a settlement agreement with Nuclear Power Corporation of India Ltd (NPC), under which 29.22 acres of land will be sold to the power-generating firm in lieu of dues of Rs 51.77 crore NGEF owes it.

The surplus cash realisations in the recently-concluded sale transactions with NPC will be utilised for the one-shot payment proposed to be made to financial institutions.

According to Gore, these measures will result in the long-term debt being reduced to zero, with significant savings in interest cost worth Rs 14 crore per annum.

As part of its disinvestment plan, the NGEF board has approved the release of formal advertisements in newspapers seeking expressionof interest and submission of bids by interested parties. A release here said the advertisement was scheduled to be released within a fortnight.