Iti Plans To Be A Service-Based Entity Now

Investment Trust of India (ITI) is readying a business plan to convert itself into a service-based company from its present fund-based activities by using over Rs 120 crore from the proceeds of the sale of its stake in Pioneer ITI Asset Management Company.

The business plan envisages a foray into stock broking business as well as expansion of its leasing and hire purchasing activities.

Pioneer ITI Asset Management Company announced yesterday that Franklin Templeton Investments, the US-based financial services firm, had signed a memorandum of understanding (MoU) with it.

The MoU might lead to Templeton acquiring the 100 per cent stake of the Chennai-based AMC subject to necessary approvals.

The deal was expected to be worth Rs 250 crore. Once it goes through, ITI would receive nearly Rs 120 crore for its 47.5 per cent stake in Pioneer ITI. The American mutual fund Pioneer would also receive the same amount from the deal. The balance would go to the employees of Pioneer ITI who hold 5 per cent stake in the company.

The new business plan would be in place in May as it would take Templeton at least another three months to complete due-diligence of Pioneer ITI and to obtain clearances from concerned authorities. Pioneer ITI has been on the block for quite some time.

ITI has already kicked off the new business initiative by setting up a stock broking office in Chennai. Now, it intends to spread its network in the other parts of the country as well. In addition, the leasing and hire purchasing business, which currently manages assets worth nearly Rs 40 crore, would be expanded.

However, the proposed business plan was not enough to absorb the entire Rs 120 crore expected to be received from the Pioneer ITI sale.

"We are putting our heads together to chalk out the avenues in which the amount could be invested. But, we have some time as money is not likely to come before May. By then, we will be ready with a future road map," ITI sources said.

ITI was promoted by the H C Kothari family and was acquired by the Kolkata-based T C K Finance & Leasing Company nearly two-and-a-half years ago. The Kolkata-based company holds nearly 67 per cent stake in ITI while the balance is widely held by the public.