By selling the shares to Raju without seeking competitive bids, they may have well lost out on a chance to make a hefty profit. In December 1997, ICICI had sold 2.95 lakh shares representing 1.8 per cent of Raasi's equity to BV Raju at Rs 100 per share. These shares were later sold by Raju to India Cements, when he threw in the towel in the takeover bout, at Rs 300 per share, pocketing a profit of Rs 200 per share at the expense of ICICI.ICICI seems to have lost yet again in Friday's sale. When contacted, RCL officials did not rule out the possibility of a higher counter-offer, but were not aware of being given any opportunity to do so.

RCL and BV Raju are currently locked in a very public legal battle to wrest control of SVCL. Also, ICICI had part-funded India Cements Ltd's (ICL) takeover of RCL. Considering the significant exposure it has in ICL, SVCL remaining with ICL group would have been more beneficial to it. Under the circumstances, seeking a competitive bid would have definitely made business sense.

This negotiated deal yet again rakes up the issue of fiduciary responsibility of FIs. In September last, FIs approved the transfer of SVCL shares held by RCL to ``nine independent investment companies'', subsequently accused by RCL in its legal suit of being Raju's front companies, at the face value of Rs 10 per share. Barely 10 months later, ICICI sold its holdings in SVCL for Rs 55 per share.

This implies that shareholders of RCL suffered a loss when the shares of SVCL held by their company were transferred at Rs 10 and FIs failed in their fiduciary responsibility to RCL members by not securing an adequate price at the time of approving the transfer last year.

What is interesting is that financial institutions (FIs) have an aggregate exposure of Rs 45 crore in SVCL which is a sick company with an accumulated loss of about Rs 14 crore as on March 31, 1997. Their exposure in the company would have been safer if SVCL was with RCL rather than being a stand-alone company.

Raju's decision to purchase the same shares at Rs 55 per share now will only lend credence to RCL's accusation that its shareholders were unfairly deprived by Raju's move to transfer shares at par out of RCL.

The transaction is likely to intensify the fight for control of SVCL and it would not be surprising if RCL starts consolidating its stake in the company.