"We discussed the issue threadbare, but have decided to put off a final decision till we meet again some time closer to the ACC board meeting scheduled for January 7," Unit Trust of India chairman PS Subramanyam said after the meeting.

"We have time on our hands. In the meantime, developments can take place," he said, although he said he did not wish to comment on what `developments' the financial institution chiefs expect over the next fortnight on the controversial proposal.

It is believed that the institutions discussed both the stated objections to the preferential allotment and the Tata defence issued through a note on Sunday.

The institutions are a crucial shareholding group in ACC as they hold around 26 per cent and can block the resolution at the EGM, if they so wish. At the same time, ACC would also requireto borrow from the institutions to fund the expansion plans that its board has lined up.

The financial institutions began questioning the preferential allotment on the basis of what was perceived as the low price of the issue, which, as the Tatas have pointed out, has been priced exactly in accordance with Sebi guidelines.

Sebi guidelines state that the issue price of a preferential offer has to be arrived at on the basis of the average of the closing price of the scrips for the six months prior to the issue.

Apart from the pricing, another controversial aspect of the preferential allotment is the fact that while in 1995--in a prospectus for a rights issue--the company claimed it was "professionally managed" and therefore no lock-in should apply to shares owned by any holder, this time--in a notice to the stock exchange--the company has claimed that it wishes to issue shares on a preferential basis to its "existing promoters".

The Tatas have come out with a defence against this, stating that the grouphas since hiked its stake in the company, and that it had nominee directors on the board of the company.

The Tata group has come out in defence of its proposed stake hike in cement major ACC through a now-controversial preferential allotment citing a dried-up cash position of ACC and, hence, an immediate requirement of funds infusion into it.

A statement issued by Tata Sons finance director NA Soonawala implies that it is because ACC does not have a comfortable funds position to meet its expansion and modernisation requirement that the preferential allotment route has been preferred.

Soonawala says the Tatas have already increased their stake to around 14 per cent through creeping acquisition, and any additional mop-up of shares would have triggered the takeover code.

While the Tatas do not require a a 34 per cent stake in ACC (which would be the Tata holding if they were to make a 20 per cent open offer), market purchases would not benefit the cement major as these funds would not flow into ACC'scoffers.

The `statement of facts' from Soonawala is believed to be in response to the IDBI chairman GP Gupta's statement that the financial institutions may block the preferential allotment.