With the FIs and a section of shareholders adopting a tough posture at the AGM on the equity restructuring scheme, the resolutions were clearedonly after an amendment that prior approval of FIs is necessary for their implementation.

Significantly, the FIs made the company amend another resolution, which in effect means that Escorts can subscribe to only its rights entitlement (38.19 lakh equity shares) in the proposed rights issue of Escorts Finance Ltd. The FIs rejected the resolution pertaining to subscription to an additional amount of 1.44 crore equity shares, which was over the entitlement.

Sources said that the company's management would be meeting the institutions next week in Mumbai to discuss the proposals.

FI sources said, "The scheme looks good at the outset", but has to be studied in detail before arriving at any decision. The FIs feel that a buyback proposal may have been "more transparent", instead of the company's innovative scheme.

The company could have gone for an enabling resolution on buyback pending the government's clearance if required. "But they have avoided the buyback route because of its liquidity position",quipped an institutional source.

A section of the company's shareholders also expressed their reservation at the AGM about the equity restructuring scheme saying that they are getting better returns on investing in institutional bonds. They also felt that the scheme should not be made mandatory. "It is an ill-advised move and we will not let it happen," a shareholder added.