UK-based telecom player Vodafone’s Rs 10,141 crore proposal to buy out minority shareholders in its Indian arm was today approved by the FIPB.
Vodafone’s Rs 10,141 crore FDI proposal has been cleared,sources said after the meeting of Foreign Investment Promotion Board (FIPB) here.
The telecom major,which holds a 64.38 per cent stake in the Indian unit,will buy remaining outstanding shares from minority shareholders like Ajay Piramal and Analjit Singh.
Piramal holds an 10.97 per cent stake in India’s second-largest telecom company by subscribers,while Singh,who is Vodafone India’s non-executive chairman,holds 24.65 per cent.
Vodafone Group Plc will pay Analjit Singh Rs 1,241 crore and Piramal Enterprises Rs 8,900 crore for their stakes in Vodafone India as part of a proposal.
CGP India Investments Ltd,an indirect Mauritian subsidiary of Vodafone International Holdings BV,had sought FIPB approval to buy the stake held by minority shareholders in Vodafone India Ltd.
The decision on the Vodafone application was deferred at the previous meeting as comments from the Ministry of Home Affairs were awaited.
Vodafone asked to reply on conciliation proposal by tom: FM
Vodafone has been asked to give the final reply by tomorrow on the government proposal for a non-binding conciliation to settle the Rs 11,200 crore tax dispute,Finance Minister P Chidambaram has said.
“The conciliation has not started. Why has it not started? As the CEO of Vodafone told me they have multiple legal advisors and they do not seem to know which is the correct legal advice.
“We have written to them recalling the promise made by the CEO when he met me that they will give a final answer in about 2-3 weeks. I think we have told them to give us the final answer by the 31st of December,” Chidambaram said in a TV interview.
Seeking to resolve the long-standing tax dispute with Vodafone,the Cabinet in June had approved non-binding conciliation with the British telecom major.
The outcome of the conciliation,however,needs to be ultimately vetted by Parliament as it would require amendment to the Income-tax Act.
Vodafone has been asked to pay Rs 11,200 crore tax on its 2007 acquisition of Hutchison Whampoa¿s stake in Hutchison Essar.
The conciliation has been proposed under the Indian arbitration law and not under the UNCITRAL as sought by Vodafone. However,no timeframe has been set for conclusion of the conciliation proceeding.
The Supreme Court last year had ruled in Vodafone’s favour,saying that it was not liable to pay any tax over the acquisition of mobile phone assets in India from the Hong Kong-based Hutchison.
But the government,later in the year,changed the rules to enable it to make retroactive tax claims on the already-concluded deals.