An internal team of the company which is studying options of raising additional equity has zeroed in the options of rights issue and preferential allotment since they found that such a move would improve investor confidence in the company.

"We are considering a rights issue or preferential allotment and there is no plan for private placement," Rajiv Srivastava, head of corporate finance and accounts of the company told PTI.

He said the report of company's internal team would be submitted to the government this month for an early action to launch its equity raising programme by October.

Union cabinet had in June cleared the company's proposal to raise additional equity worth Rs 9.85 crore thereby bringing down the government stake in the compnay from the current 83.31 per cent to 51 per cent.

Srivastava said the report of the team would be submitted to the government this month. It would also contain company's proposal on the pricing of equity, lead managers for the issue and the timing of the programme. Although CMC had been allowed a paid-up capital upto Rs 35 crore, the company has raised only Rs 15.15 crore, of which the government has been holding 83.13 per cent equity.

The company had been considering private placement of equity, preferntial allotment to existing shareholders and rights issue to increase its equity base.

Company sources said it planned to raise about Rs 120 crore through the fresh equity programme on the face value of Rs 9.85 crore.

Established in 1976, CMC is a premier information technology solution provider with about 18 offices and over 100 service locations in India and abroad. The company has over 2,800 employees and had reported over Rs. 300 crore turnover last year.

CMC has a wholly owned subsidiary in the US Known Asbaton Rouge International (BRI), which has been reporting over 10 million turnover for the last few years.

The company had recently set up a Java competency centre in Hyderabad in collaboration with Sun Microsystems, Department of Electronics and National Association of Software and Service Companies (Nasscom).