The sale price will not be lower than the net book value of the contract manufacturing business.

Speaking about the exit rational director, operations, V A Raghu says, "The contract manufacturing business is becoming competitive. It is high mix and low volume business. So we decided to exit and were looking for a buyer for the past eight months."

According to him the final valuation of the contract manufacturing business will be known around this April. "All the employees, around 250, will now be part of Incap Corporation. The new venture will serve the existing customers.

The Rs259-crore turnover TVS Electronics will use the sale proceeds for retiring some debt and for expanding its core business viz dot matrix printers, computer keyboards and customer support business. In the dot matrix printer segment the company commands 38 per cent market share.

The company has hived off its customer support business including its call centre into a separate subsidiary and also for its Uttaranchal plant.

The Rs17.67 crore equity based company will make a preferential issue of 36 lakh warrants, underlying equity shares to its promoter, TVS Investments at one equity share for every one warrant.