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ITC may invest in rival VST

India's largest tobacco firm, ITC Ltd, said on Friday its investment subsidiary was free to pick up a stake in VST Industries, the nation's second-largest cigarette maker, but it was not seeking control.

"We have investment companies and they could make strategic decisions. They are free to do so," ITC chairman Y C Deveshwar told a news conference.

But he added: "It is not our objective to seek control of anything."

ITC's investment subsidiary, Russell Credit Ltd, was involved in a recent bidding war for control of VST.

British American Tobacco Plc, the world's second-largest cigarette maker, owns 32 per cent of VST and 31.7 percent of ITC.

Bright Star, an investment company owned by the Bombay-based Damani family, five months ago triggered a complicated battle for control of Hyderabad-based VST.

The move by Bright Star, which owned 15 per cent of VST at the time, to gain control of VST triggered a counter offer from the ITC investment arm, Russell Credit.

Bright Star succeeded in acquiring just a further 5 per cent stake through its open offer, which closed on June 13.

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