The Hindu Business Line : ‘Financial institutions must exit ITC’

New Delhi, July 15 Mr Amar Singh — whose Samajwadi Party is the key to the survival of the ruling Congress-led UPA Government — wants the Unit Trust of India (UTI) and other public financial institutions to divest their stake in ITC Ltd in favour of British American Tobacco (BAT).

“If they (BAT) are offering a good price, then what is preventing UTI from offloading its stake? It appears that the institutions are being told to hold on to their shares just to protect one individual,” the General Secretary of SP told Business Line.

When prodded as to who the “individual” was, he said “I suppose it is the Chairman , as the Government is keen on his continuity.” Mr Singh said that his party was not opposed to disinvestment “as long as it is not selective and patronising”.

For a start, the Government (including public financial institutions) may shed stake in all companies where promoters are willing to give a good price for increasing their holding. “ITC is a good example. The Government should come clean on such cases rather than just looking at divestment in Navaratna public sector undertakings,” Mr Singh added.

Public financial institutions have a combined 34.31-per cent holding in ITC, which includes 11.90 per cent of UTI and 14.35 per cent of Life Insurance Corporation of India. This is more than the 32 per cent controlled by BAT through its associates.

Mr Singh’s observations come in the light of recent reports of UTI proposing to sell a substantial part of its 27.11 per cent stake in Axis Bank. A similar offloading of financial institution holdings in L&T and ITC has, however, been deferred. In L&T’s case, the apparent reason given is the company’s role in manufacture of strategic and defence-related products, while in ITC, the Government presumably wants to maintain restrictions on operations of foreign tobacco companies.

Mr Singh said that his party was “very strongly opposed” to foreign direct investment in the retail sector, but would have an “open mind” on insurance and pension reforms.

He also suggested that the setting up of nuclear power plants should not be restricted to the public sector. The Anil Dhirubhai Ambani Group and the Tatas were among those to have evinced interest in nuclear energy.

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