The average acquisition cost of ITC Classic in the books of Summit works out to Rs 82.55. The company is entitled to 5,67,960 shares of ICICI in exchange following the amalgamation.

In view of the possible permanent diminution in the value of long- term investments held by Summit, its directors estimated the diminution in value at Rs 31 crore which has been provided in the profit and loss account for the year to March 31, 1998.

The directors of Summit state that the provision amount has been arrived at by taking a 10-year view of the investments in ICICI. They add that ``such provision will be subjected to review every three years or earlier, as may be necessary.''

Thedirectors have also noted that though the investment in Classic ``may appear to be at a high cost as compared to the current market price, in the long- run such investment (after conversion into equity shares of ICICI) may hold significant potential for gain.''

In addition, Summit holds shares of ITC Bhadrachalam, International Travel House, ITC Agro Tech etc. The directors have pointed out that the company's value would be enhanced by ``strategic restructuring in the foreseeable future.''

The restructuring of investment companies of the group has already begun with the announced merger of Pinnacle Investments with Sage Investments, subject to statutory approvals. The merger will be effective from January 1, 1998.

No provisions have been made in the books of either Pinnacle or Sage in the year to March 31, 1998, on account of diminution in the value of long- term investments. In the case of Pinnacle, the directors are of the view that there is no need for provision based on ``current valuations and thevaluations at which the assets and liabilities of the company (Pinnacle) are being taken over by Sage Investments.''

Incidentally, Pinnacle's long- term investments, at cost, amount to Rs 132.17 crore, bulk of which is accounted for by ITC Bhadrachalam, ITC Agro Tech and International Travel House. Its market value on March 31, 1998 was only Rs 58.72 crore.

As regards Classic Share and Stockbroking and Classic Home Finance, both wholly-owned subsidiaries of ITC Classic which have reverted to the ITC group post merger, the company is still exploring sell-off options.

These two companies do not find a place in the latest annual report. The report, however, discloses that the company has made a non-refundable advance of Rs 16.50 crore against shares of these companies held by ITC Classic. The idea is to ``disengage'' from these companies at the earliest.