FIPB pulls up Jindals on foreign equity issue

Foreign direct investment (FDI) rules require FIPB permission for converting an operating company with FDI into an operating-cum-holding firm. When contacted, a JSWEL spokesperson said he was not in a position to comment on developments.

The company had proposed that Portview Investments Ltd (PIL) — incorporated in Cyprus — be allowed to raise its stake in JSWEL to 75 per cent. Sajjan Jindal and Sangita Jindal hold stakes in Portview Investments through another holding company, Banabridge Holding Ltd.

The shareholding pattern of JSWEL shows that ‘non-resident’ investors currently hold 8.41 per cent in the company. In view of this, JSWEL had sought approval that it be regarded as a foreign-owned Indian holding-cum-operating firm. The FIPB has taken ‘strong note’ of the fact that JSWEL, despite being a holding company, already had 8 per cent foreign equity without Government approval.

In addition, the Government did not find the response filed by JSWEL about the rationale behind the investment mechanism and the sources of funding to be satisfactory.

JSWEL is a Jindal South West (JSW) Group company. Other companies of the Group are JSW Steel Ltd, Jindal South West Mining Ltd, JSW Port and Jindal Praxair Oxygen Company Ltd. Some investment companies also belong to the Jindal stable. JSWEL owns and operates an independent power plant in Karnataka and is also engaged in providing operations and maintenance services to power plants of JSW Steel Ltd.

Besides, JSWEL has made substantial investments in eight other group companies. The company was originally promoted by the OP Jindal Group and Belgium’s Tractabel SA. Subsequently, the Jindals bought Tractabel SA out of the company.