PS: Exit Subramanyam

"The probe will focus on a host of decisions," a senior ministry official told Outlook, adding: "Decisions which Subramanyam took as chairman and also some taken by his predecessor G.P. Gupta. uti fund managers' role in sanctioning such investments will be questioned. Another issue is the purchase of some stocks at higher values than market rates." Subramanyam defends decisions taken during his tenure. "It is easy to raise these issues after I have resigned," he says. "Besides, the markets are now low and stocks have crashed. But we were not the only company to have invested in ice stocks. There were many others as well who have taken a beating. It's a routine process in the stockmarkets."

Ministry officials say the probe will not just revolve around heavy purchase of Ketan Parekh scrips and bailout of companies which formed the K10 list, but also a slew of low credit-rated debentures and unlisted companies. Besides the K10 stocks, uti investments in controversial companies like Mesco and floundering media houses like Jain TV, Pioneer TV, Rathikant Basu-promoted Broadcast Worldwide and Business India Television will come under scrutiny.

Controversial uti deals, according to officials, include investments in Lucknow-based Cyberspace Infosys, whose promoters had placed shares at Rs 395, a figure which later crashed to Rs 5. The promoters are currently absconding. Besides, uti made huge investments in GeeKayExim, a loss-making Mumbai trading house, and Chennai-based Balaji Distilleries, which currently has negative cash flows. The probe will cover not only US-64, but also the mistiming of investments from other uti funds. For example, Mastergrowth '93, which should have had at least 50 per cent of its corpus in psu stocks, had a mere 22 per cent in them at the end of December 2000. Consequently, the fund missed out on the January-March spurt in psu stocks and posted a lowly 8.5 per cent as compared to the stocks' average gain of 27 per cent.

Finance ministry officials probing uti will coordinate their efforts with members of the Joint Parliamentary Committee and the cbi which is probing the Ketan Parekh-triggered Rs 4,000 crore scam that recently sent stockmarkets into a tailspin.