A memorandum of understanding (MoU) to this effect was signed in the presence of Andhra Pradesh Chief Minister N Chandrababu Naidu at a simple function here today.

Anil Ambani, director of Reliance Industries and Deepak Parekh, chairman of HDFC on behalf of the ISB and Hariharan, principal secretary, municipal administration representing state government, signed the MoU.

Mumbai, Chennai and Bangalore were the other cities which offered to house the ISB but the board decided in favour of Hyderabad, Ambani told reporters after signing the MoU. Besides Ambani, the business school project was initiated by Rahul Bajaj (Bajaj), Kumaramangalam Birla (Birla), K B Dadiseth (Hindustan Lever), Y C Deveshwar (ITC) Adi Godrej (Godrej), K V Kamath (ICICI), AnandMahindra (Mahindra and Mahindra) and others.

Ambani said it was a difficult task for the board to decide on the location of ISB "but as our project exactly fits into the vision envisaged by state government which offers a tailor-made policy to suit our needs, we opted Hyderabad".

Godrej, Kamath and Mahindra expressed confidence that the ISB would be developed into a major knowledge destination.

The chief minister said his government has plans to convert the state capital into a knowledge hub of the nation and it would be the transit point between Europe and China in the coming days.

The ISB would be an independent, non-profit making institution affiliated to leading business schools -- Wharton School of the University of Pennsylvania and J L Kellog Graduate School of Management at North-Western University -- for curriculum development, student-faculty exchange and research.

The school would provide world class academic and residential facilities to students and faculty. The state has offered apackage of 250 acres land with road access and other infrastructure. ISB is likely to start functioning from the academic year 2000-01.