Govt defers decision on FDI hike in Unitech telecom arm

Govt defers decision on FDI hike in Unitech telecom arm
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First Published: Tue, Jun 09 2009. 10 57 PM IST

Mounting woes: The government has also deferred the proposal of Vijay Mallya-promoted Kingfisher Airlines to raise Rs708 crore. Harikrishna Katragadda / Mint
Mounting woes: The government has also deferred the proposal of Vijay Mallya-promoted Kingfisher Airlines to raise Rs708 crore. Harikrishna Katragadda / Mint
Updated: Tue, Jun 09 2009. 10 57 PM IST
New Delhi: India has deferred decision on a proposal by the telecom unit of Unitech Ltd to increase foreign shareholding to up to 74%, the government said in a statement on Tuesday.
It did not give any reason for the deferral. Norway’s Telenor ASA is taking about 67% stake in Unitech’s telecom arm.
Mounting woes: The government has also deferred the proposal of Vijay Mallya-promoted Kingfisher Airlines to raise Rs708 crore. Harikrishna Katragadda / Mint
Private air-carrier Kingfisher Airlines Ltd’s proposal was also deferred. The Vijay Mallya-promoted company has exceeded the foreign direct investment ceiling of 49% as per the new foreign direct investment (FDI) guidelines, which the company says could not be applied retrospectively.
The discrepancy was pointed out by the finance ministry in the light of changes in FDI norms, as specified in Press Note II issued earlier this year, while considering the company’s proposal to raise Rs708 crore through fully convertible warrants.
Prior to the Press Note II, the FDI component in Kingfisher Airline was just 16.45%.
People close to the development said that in view of the new guidelines, the ministry is believed to have opined that the company should either “divest or compound” to set things in order.
When contacted, a Kingfisher Airlines spokesperson said, “Press Note II does not apply retrospectively to existing shareholdings.”
The spokesperson said “Kingfisher Airlines is committed to raise equity and infusion of fresh capital will have collateral effect of diluting the UB Group’s stake. Hence there is nothing inconsistent with our plans.”
Separately, the Union government approved 23 foreign investment proposals for about Rs565 crore, it said in a statement.
These include Dubai-based Damas Llc.’ plan for retail trading in jewellery and Danone SA’s plans to re-enter food products space after quitting Britannia Industries Ltd earlier this year.
A proposal by Damas to set up a joint venture with Gitanjali Lifestyles for retail trading of jewelleries will bring in FDI of Rs180 crore, while Danone’s plans for food products business do not have any definite FDI content as the company for this purpose is yet to be incorporated.
(‘PTI’ contributed to this story.)
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First Published: Tue, Jun 09 2009. 10 57 PM IST
More Topics: Telecom | Unitech | Telenor | FDI | Vijay Mallya |