The institutions thought that there was a good chance of M&M stepping into the picture, which would have paved the way for a speedy clearance of their dues. The entire process of restructuring was expected to be a long one and the FIs were, logically, willing to wait till then. With M&M stepping out, they are expected to immediately call for a meeting with Peugeot and PAL shortly.

Top institutionalsources say that they would go all out now to recover their dues and would also seek legal counsel, if necessary. The FIs have sunk Rs 125 crore in the form of partly convertible debentures in January, 1996. ICICI has the maximum exposure of Rs 52 crore, followed by UTI (Rs 36 crore), IDBI (Rs 26 crore), IIBI (Rs 6.5 crore), I-Sec (Rs 1.6 crore) and IL&FS (Rs 1.8 crore). None of the institutions has term-loan exposure in the project. They were forced to pick up the PCDs as 91 per cent of the Rs 137 crore issue devolved on them. Peugeot and PAL contributed Rs 84 crore each to the project, representing an equity stake of around 32 per cent each. The joint-venture company entered the capital market in December, 1995, with simultaneous and linked public issue of equity shares at par and 15 per cent secured redeemable partly convertible debentures of Rs 50 each.

Besides being forced to subscribe to the partly convertible debentures (PCD) six institutions - ICICI, IDBI, IFCI, UTI, LIC and the erstwhile SCICI -also picked up 35 lakh equity shares on a firm allotment basis.