UTI holds an 18 per cent stake in HPCL. The scrip is at present hovering at the Rs 260 levels.

Top UTI sources said that the attempt to offload these shares through a GDR is on hold considering the dampened investor sentiment in the international markets. The recent troubles at UTI too have cast a shadow on the trust being able to push through with such a large scale global offering.

"The move is on hold as of now," a top UTI official said. It had been suggested that the block sale of this holding would be beneficial to UTI in many ways, observers say. First, being a large asset manager, it would ideally like to enter and exitfrom stocks without affecting market prices significantly.

Two, selling in the domestic market will lead to a significant fall in stock prices, whereas the sale of a sizable portion abroad through a GDR issue will even allow UTI to get a good price for the shares.

HPCL cannot go in for a GDR issue at this stage as government holding in the PSU is already down to the minimum 51 per cent. The secondary sale, if it eventually goes through, would lead to HPCL's shares being listed in the international market giving it more visibility abroad. This, experts say, will help the corporation raise foreign debt for its joint ventures and expansion plans.

There is still no indication if this first-of-a-kind proposal was vetted by the ministry of finance. It would have, obviously, required approval from the Foreign Investment Promotion Board (FIPB), the Reserve Bank of India (RBI) apart from seeking legal counsel on some aspects of the issue.

The key issue here is that the proposal would not have helped HPCL inany way apart from giving it some leeway in sourcing debt overseas. UTI would have had the responsibility of appointing the lead manager, while HPCL's task would have been confined to providing relevant information for preparing the prospectus.

Interestingly, before this proposal was made by the investment banker concerned, sources say UTI had mooted a similar plan to the government around three years ago where it could be permitted to offload shares in companies where it had a huge stake. This was to have been by way of an international offering termed an `unsponsored GDR', akin to an offer of sale.

Here, while the sale modalities would be worked out by the shareholder, the company would chip in its bit by way of making an offer document with all relevant disclosures. However, it is learnt that the government did not show much interest in the proposal and UTI subsequently did not push for it, either. At that time, the centre was too bogged down with offloading its own stake in select PSUs.

Oil majortold to evaluate corporate performances

Even while the GDR proposal is temporarily shelved, UTI has invited HPCL to make a presentation during the first week of November. This presentation, the first by a petroleum major, comes in the wake of similar ones made by some corporates including Reliance Industries in recent times.

The idea behind these presentations is to get a first hand feel of the performance of the corporate in which UTI is a significant shareholder.

"We have asked HPCL to give us a presentation as well. We are asking all companies where we have a sizable stake to make presentations to us after declaration of their results. We will be spreading these presentations across a few days as a number of companies will be coming out with their results in a short span," a top UTI source said.

There is, however, an interesting twist to these presentations with the Jaipur bourse chief reportedly expressing concern on the grounds that these provide an unfair advantage to UTI over otherinvestors.