Law Minister clears Hutch-Essar shareholding structure

Law Minister clears Hutch-Essar shareholding structure
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First Published: Mon, Apr 23 2007. 10 29 AM IST
Updated: Mon, Apr 23 2007. 10 29 AM IST
Reuters
Mumbai: India’s law ministry has cleared the shareholding structure in mobile phone operator Hutchison Essar, ahead of a meeting of the Foreign Investment Promotion Board on 23 April.
The ownership of Hutchison Essar is being examined before the FIPB, which vets foreign investments in Indian firms, considers Vodafone Group Plc’s deal to buy the stake controlled by Hutchison Telecommunications International.
The Vodafone application is listed on the agenda for a meeting of the FIPB and the application has been deferred from previous meetings, and could be deferred again if the issue of the current ownership structure is not resolved.
The FIPB board is expected to take a decision “largely” based on the law ministry’s comments. The FIPB may take the view that minority stakes held by two Indians in Hutch Essar should be seen as foreign holdings. Analjit Singh and Hutch Essar Chief Executive Asim Ghosh hold 12.3% in Hutch Essar.
According to sources, the legal department’s clearance would pave the way for the finance ministry to give a green signal to Vodafone’s proposed acquisition. The Ministry of Home Affairs had called for a further probe of some aspects of the deal.
Vodafone agreed in February to buy 67% in Hutch Essar, India’s fourth biggest mobile firm, from Hutchison Telecom for $11.1 bn (Rs 49,950 crore).
Hutchison Telecom directly owns 52% of Hutch Essar and India’s Essar Group owns 33%, 22% of which is held overseas as foreign holding. India allows foreign shareholding of up to 74% in telecom firms.
Hong Kong-based HTIL has said it is in full compliance with the law and Vodafone has said it expects the deal to close in the second quarter.
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First Published: Mon, Apr 23 2007. 10 29 AM IST
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