At an extraordinary general meeting, institutions contented that the book value was not attested by the firm's auditors. The institutions passed all the resolutions related to the planned restructuring, but moved an amendment on the method of valuation.

Blue Star corporate affairs senior manager Sanjay Mallya says: "The valuation could not be attested by the auditors, as the process is currently on. The new company was formed effective from October 1, 1998, and the valuation will have to be taken up from the date. After this we will make a detailed presentation of the valuation to the institutions. The valuation is currently being undertaken by internal auditors, KS Aiyar and Company ."

The valuation process is still on, therefore a finalfigure has not yet been put forward to the institutions. But it is believed that the auditors have estimated Blue Star Infotech's start-up value to be around Rs 10 crore on the basis of book value.

The final figure, say company sources, may vary slightly from the estimate. There would be a cash adjustment on the residual amount, and Blue Star Infotech would pay capital gains tax on the amount.

The institutions together hold about 9.5 per cent stake in Blue Star, which includes GIC's 7.5 per cent, UTI's 1.55 and LIC's 0.5 per cent. The promoters, led by Ashok M Advani, own 40 per cent stake.

Mallya says, "The institutions have only insisted that they should be taken into confidence on the formation of the new company. The promoters of Blue Star have also voted in favour of their amendment. The institutions have voted in favour of all the main resolutions."

According to institution sources: "Generally there are two independent valuers but Blue Star is a special case, as the shares are being transferredto the shareholders of the company itself and there is no involvement of any outside party. Therefore, appointment of an independent valuer per se is not necessary. But a final decision will depend on the presentation of the valuation of the company."