Fis Averse To Itc Classic Bailout Sans Partner

Financial institutions appear to be averse to cigarettes major ITC Ltd pumping in funds to bail out financial services company ITC Classic, unless there is a firm indication that a new partner will be roped in to help turn the company around. ITC, on its part, is sending out clear signals that it will treat Classic as a trade investment and not as a subsidiary on the eve of ITCs board meeting. The meeting, which will be held over the week-end, will also take up the annual accounts of ITC Ltd, issues relating to ConAgra and ITC Agro Tech and the final composition of the ITC management committee which will replace the Committee of Directors (CoD).

 

However, a discussion on the entry of BAT Industries foreign brands into India has been put on the backburner as some key issues remain to be resolved.

FI sources told Business Stan-dard yesterday that there was no reason to support a turnaround plan for Classic unless a ``promoter is identified who would also be ready to pump in funds. ``As shareholders, how can anyone support a plan without knowing where the company would stand later? The sources said ITC could not wait endlessly for the process of finding a partner to be completed. ``There must have been a reason why ITC, through its subsidiaries, invested only 49 per cent and not 51 per cent in Classic. It was not as if ITC fell short of funds and did not go for 51 per cent, they said.

The sources added that ITCs decision to invest smaller amounts in buying up assets and properties held by Classic was unrelated to the bailout, and aimed at helping Classic sustain itself till a new strategic promoter was identified. ``ITC is getting good assets for the money. Therefore, it can pump in the smaller amounts. A top ITC executive said: ``ITC Classic is a trade investment for ITC. The board will, anyway, discuss the issue through.

Meanwhile, confusion prevails within ITC over the industries ministrys directive to BAT to obtain a no-objection from ITC before setting up its proposed 100 per cent subsidiary. Company sources said they were puzzled since ITC is not a partner with BAT, but is, in a way, promoted by BAT itself. ``In that case, even VST, where BAT is involved, should have to give such a certificate, said sources in the ITC board.