Said GIC chairman Devdutt Sengupta, "we view our investment in the ITC shares as pure investment and will not mind selling the shares to BAT at an appropriate price." The willingness of the GIC to sell its stake in the ITC assumes significance in view of the reported reluctance of the government to grant a permission to Unit Trust of the India to offload its shareholding in ITC to the UK-based parent company.

The UTI-BAT deal could not come through because the then adviser to the finance minister Mohan Guruswamy put a spoke in the wheel by advocating that the price being paid by the foreign collaborator was inappropriate. Subsequently, the deal was put off.

With Guruswamy out of office, the willingness of the GIC to sell its stake in the ITCwill find some takers in the BAT which had been wanting to increase its stake in the Indian company. The GIC has the second largest institutional shareholding in the ITC after UTI which holds 15.90 per cent shares in the tobacco company. Apart from UTI and GIC, the third largest institutional shareholder in the company is Life Insurance Corporation (LIC) with 8.47 per cent equity. BAT holds 37.14 per cent stake in the tobacco major and for long has been wanting to increase its shareholding to more than 51 per cent in the ITC. Although the issue of Indian insurance companies holding stake in the tobacco firms has been questioned on ethical grounds, Sengupta sees no harm in making such investments. According to the GIC chairman, "we had been buying ITC shares to secure decent returns on investments" And, he added, "we will not mind sell the ITC stake at right price." When asked, what would be the appropriate price, he said, "we will have to work that out."

BAT, it may be pointed out, for long has been wantingto consolidate its presence in the country over the past two-three years. Its previous bid to hike equity stake in ITC in 1995-96 was thwarted by the financial institutions as well as chairman Y C Deveshwar. This led to a major stand-off between BAT and the ITC management.

BAT then tried to set up a 100% subsidiary in the country which proposal too was turned down by the union government. BAT finally introduced two of its cigarette brands -- 555 and Benson & Hedges -- through ITC in the Indian market about an year ago. The tie-up is believed to have eased much of the tension between BAT and ITC. It is also felt that ITC may no longer be averse to hike in BAT's stake in the company. ITC believed to be opposing Rothmans proposal to set up a 100% subsidiary in the country.

Crop insurance

MUMBAI: General Insurance Corporation is negotiating with the US-based Federal Crop Corporation for devising a novel re-insurance coverage called stop-loss risk coverage for the recently launched Rs 2000-croredomestic crop insurance scheme. This is for the first time the GIC going for re-insurance of the crop insurance business. The ministry of agriculture is floating a Rs 100-crore subsidiary in collaboration with the GIC to undertake the new crop insurance scheme.