Vodafone India chief sees no hurdle to parent company's bid for higher stake

Vodafone India Chairman Analjit Singh, also a minority shareholder in the company, expects no hurdle to the British major’s application to raise its stake in the local unit to 100 per cent.

“Vodafone has made application to FIPB (Foreign Investment Promotion Board) to raise its stake to 100 per cent.... Vodafone’s application to buy out stake of Ajay Piramal and my group is with FIPB. Hope the board approves it in the next two months,” he said. Singh, also the founder-chairman of the Max Group, holds 6.24 per cent in Vodafone India. Ajay Piramal, owns a little over 11 per cent.

CEO might meet FM next month
Pending the settlement of its Rs 11,200-crore tax dispute with authorities in India, Vodafone’s Chief Executive Vittorio Colao might meet Finance Minister P Chidambaram during his visit to New Delhi in the first week of December, a source said.

 

Colao will be in New Delhi early next month, a source said, adding that he is expected to meet the minister and several senior officials.

 

The British telecom major is facing a tax liability of over Rs 11,200 crore, along with interest, on its 2007 acquisition of Hong Kong-based Hutchison Whampoa's stake in India's telecom major, Hutchison Essar.

 

Vodafone and the government are in pre-conciliation talks towards the settlement of long-pending tax dispute. While Vodafone has selected its senior official Mathew Kirk, the government has selected law Secretary P K Malhotra as its representative for the pre-conciliation talks.

 

The company has expressed keenness to reach an amicable settlement on the matter. It had offered to settle the dispute through conciliation to which government agreed, but there are differences over the rules under which it would take place.

 

While the British telecom major has indicated its preference for conciliation under the United Nations Commission on International Trade Law (UNCITRAL), India has proposed settlement under the Indian Arbitration and Conciliation Act.

 

The Supreme Court last year had ruled in Vodafone's favour, saying the British company was not liable to pay any tax over its 2007 acquisition of mobile phone assets in India.

 

The government later that year changed the rules to enable it to make retroactive tax claims on already-concluded deals, drawing criticism from global business groups.

 

Following amendment to the I-T Act 1961 last year, the Income Tax Department had issued a letter in January to Vodafone International Holdings BV stating that the company is required to pay the tax.

 

\Vodafone replied, saying that they do not owe anything to the Indian Government. Vodafone earlier wanted to take India to international arbitration but later offered conciliation on the issue.