Bat To Move Fipb To Raise Holding In Vst Industries

The UK-based BAT Plc has decided to apply to the Foreign Investment Promotion Board to up its stake in VST Industries, though it is yet to ask for a no-objection certificate from ITC Ltd. BAT already holds 32.17 per cent in the Hyderabad-based tobacco company. Speaking to Business Standard from London a BAT spokesperson said: "Yes we will go to the FIPB and put in an application soon".

The spokesperson, however, refused to comment on whether the UK multinational had communicated to the ITC management with a request for a no-objection certificate from them which is a pre-requisite as part of the government policy. A top source in ITC however said: " We have had no communication from BAT asking for a no-objection certificate. Our stand is any case clear, we will not give any no-objection certificate on the matter. "

 

BAT also has over 32 per cent in ITC Ltd and under the policy it has to get a go-ahead from the board if it wants to hike its stake in VST were it also has an interest as they are in the same area of business.

The move comes close on the heels of VST board's decision to support BAT in its bid to increase its stake, citing BAT's long association and commitment to the Hyderabad-based company. "It (BAT) is our promoter and has been with us for the last 70 years supporting us all the way. It has funded the company. It should be allowed to increase its stake in the company," VST chairman Abhijit Basu had said after the board meeting.

The FIPB application, however, is expected to face problems from the government which had in numerous earlier occasions rejected proposals of foreign tobacco companies to make fresh investments in this sector. Also with ITC openly against providing an NoC and with Industry Minister Murosali Maran clearly stating that the government will go by the existing guidelines the application would become a test case once again for BAT.