GIC chairman Devdutt Sengupta said, "We view our investment in ITC as pure investment and will not mind selling the shares to BAT at an appropriate price."

The willingness of the corporation to sell its ITC stake assumes significance in view of the reported reluctance of the Government to grant a permission to Unit Trust of the India to offload its holding in ITC to BAT.

The UTI-BAT deal could not come through because the then advisor to the finance minister, Mohan Guruswamy, put a spoke in the wheel by advocating that the price being paid by the foreign collaborator was inappropriate. Subsequently, the deal was put off.

With Guruswamy out of office, the willingness of GIC to sell its stake in the ITC will find some takers in BAT which had been wanting to increaseits stake in the Indian company. GIC has the second-largest institutional shareholding in the ITC after UTI, which holds 15.90 per cent. Apart from UTI and GIC, the third-largest institutional shareholder in the company is Life Insurance Corporation (LIC) with 8.47 per cent equity.

BAT holds 37.14 per cent stake in the tobacco major and for long has been wanting to increase its stake to more than 51 per cent.

Although the issue of Indian insurance companies holding stake in the tobacco firms has been questioned on ethical grounds, Sengupta sees no harm in making such investments. According to the GIC chairman, "we had been buying ITC shares to secure decent returns on investments" And, he added, "we will not mind sell the ITC stake at right price." When asked, what would be the appropriate price, he said, "we will have to work that out."

BAT, it may be pointed out, for long has been wanting to consolidate its presence in the country over the past two-three years. Its previous bid to hike equity stake inITC in 1995-96 was thwarted by financial institutions as well as chairman YC Deveshwar. This led to a major stand-off between BAT and the ITC management.

BAT then tried to set up a 100 per cent subsidiary in the country which too was turned down by the Centre.

BAT finally introduced two of its cigarette brands -- 555 and Benson & Hedges -- through ITC in the local market about an year ago. The tie-up is believed to have eased much of the tension between BAT and ITC. It is also felt that ITC may no longer be averse to a hike in BAT's stake in the company.

ITC is, however, believed to be opposing Rothmans proposal to set up a 100 per cent subsidiary in the country. Rothmans recently announced plans to merge with BAT.