Calcutta, August 12: The revival plan for ITC Classic Finance Ltd, which was supported by the ITC board at its June 30 meeting this year, is being pursued seriously by the management on the premise that it will receive the necessary support from banks and financial institutions, top sources in the group confirmed.

They added that it is important to remember that principal stakeholder ITC Ltd is committed to the revival of its associate financial services company. ITC will pump in Rs 325 crore into Classic in phases through a mix of fresh preference equity contribution and purchase of equity in group real-estate holdings.

At the board meeting of ITC Classic on Monday, it was decided to give the new managing director Mukesh Palta a free hand in selecting his key executives for important functions like credit risk management, treasury operations, marketing and stockbroking, among others.

The company has allowed Palta the option of recruiting suitable executives either from the market or from the group itself. "The idea is to find the right man for the right job," a senior director told The Financial Express.

He added that the company had not lost anything because of the sudden exit of some key personnel following the induction of Palta as managing director.The revival plan cleared by the ITC board in June envisages release of about Rs 100 crore locked in real estate and an injection of Rs 200 crore against a proposed issue of preference shares to ITC Ltd.

There will be no transfer of assets but some funds might be raised by disposal of investments and liquidating group investment companies like ITC BPL Finance, ITC Agrotech Finance and VST Investments.

The profit or loss arising from the sale will be shared pro rata among the co-owners of these companies. At present, ITC Classic's monthly cash flows are barely enough to meet its administrative expenses. To cut down its running costs, the company decided last month not to accept any fresh deposits from the public.

Instead, it is now concentrating on recovery of outstanding trade receivables.

Considering the tight liquidity position of the company, banks are believed to be amenable to rescheduling of their dues from the company. Fresh business in the current year will be limited to asset financing for blue chip clients only. In addition, the company will explore fee-based business opportunities mainly in the areas of corporate restructuring, mergers and amalgamations and loan syndication.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.