The Ruias managed Essar group already holds 33% stake in Hutchison Essar, while Hutchison Whampoa holds 52%. Essar currently holds 6.19% through Essar Mauritius. This evening Essar got an approval from the FIPB to increase its stake by means of foreign holdings from 6.19% to 22% which will take FDI in the joint venture to the ceiling of 74% as prescribed by the Government of India.
But why does Essar want to be an FI ? I can think of two reasons, Mauritius based companies get some kind of tax benefit and the other reason could be the growing rift between the two promoters has prompted Essar to block further growth of Hutch in the joint venture. Hopefully, both the partners will come on an amicable platform before Hutch CEO, Asim Gosh quits and moves to green pasture, Reliance Telecom which is aggressively expanding in the GSM segment.
Tags: Telecom India , Mobile India , Hutch , Essar Tele
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