Cross-holdings, of late, have always been a source of irritation for the group. A few shareholders, in the general meetings, have repeatedly accused the group of mismanaging funds while research analysts considered these investments unproductive. The decision to restructure the holdings was taken after taking into account the views expressed by shareholders, analysts, financial institutions, a senior group official said.

EID Parry held 26.67 lakh shares of Tube Investments at a cost of Rs 42.02 crore, while Tube Investments held 26.16 lakh shares in EID Parry worth Rs 42.80 crore. These investments have now been transferred to another group company Parry Agro Industries, a listed company. Investments made by Tube Investments in Parry Confectionery has been transferred to EID Parry as they are in related business, while shares of TI Diamond Chain have been transferred to Tube Investments for the same reason.

Explaining the rational for transferring the shares to Parry Agro Industries, the official said that it was a profit-making company with considerable cash flows and little growth plans which made it an ideal vehicle for transferring the investments.

The share transfers have been done by Cholamandalam Securities, a group trading company, through the Madras Stock Exchange at a price evaluated by ICICI Securities and approved by the board of respective companies. EID Parry has been transferred at Rs 99 per share, Parry Confectionery at Rs 238 per share while Tube Investments was transferred at Rs 60 per share.Though the transfer price may look to be on the lower side when compared to the average cost of acquisition of these investments as appearing in the 1997-98 annual accounts, the pricing should consider the fact that both EID Parry and Tube Investments have created an investment-fluctuation reserve to the extent of Rs 30 crore and Rs 10 crore to take care of the diminution in the value of these investments, the official said.

By virtue of this exercise, EID Parry has got a net cash inflow of Rs 7 crore while Tube Investments has realised Rs 18 crore which have been ploughed back into their respective businesses, he said.