NEW DELHI, December 23: The UK-based Rothmans of Pall Mall believes that its 2 per cent stake in ITC should not call for a board resolution for setting up a 100 per cent owned subsidiary.

"This equity shareholding in ITC was not an issue with Foreign Investment Promotion Board (FIPB) in granting us a 50:50 joint venture approval with GTC nor indeed was it an issue for a previous license agreement with Godfrey Philips (India)," Rothmans director (public affairs) Bob Fletcher said in a letter to The Financial Express.

He said Rothmans' minor stake in ITC, which was made in 1934, is distinctly different from that of any sizeable strategic interest in a company.

Rothmans has neither sought to use its share to influence the management decisions of the company nor could it possibly hope to do so.

"In simple terms, Rothmans receives its dividend on this longstanding investment in the same way that any other public shareholder would do," Fletcher stated. "We have every confidence that the FIPB will recognise this in considering Rothmans' recent application to establish a 100 per cent subsidiary. The proposal merits an independent judgement from the FIPB which has been championing the cause of attracting sound direct foreign investments into various sectors of the fast growing Indian economy," he said.

The company has stressed that it has credible corporate plans for India that begin with the establishment of a wholly-owned subsidiary with an authorised share capital of $150 million.

According to Fletcher, export earnings of a minimum $10 million per annum, wide ranging agronomic developments for domestic tobacco farmers, transfer of new technology to train Indian personnel, creation of substantial direct and indirect employment, are some of the key benefits that will accrue from operations of the new venture in the country.

The new venture will see the introduction of international brands of Rothmans.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.