Hutch Essar spat on, govt urged to defer FDI plea

Even as the Foreign Investment Promotion Board is believed to have cleared on Friday Hutchison Essar Ltd's application for taking note of the direct and indirect FDI in the company, the Indian promoter Essar Teleholdings Ltd had requested for a deferment of the proposal.

Essar has said that its Hong Kong-based partner Hutchison Telecom International Ltd (HTIL) had not informed the government about these changes.

The Hutch Essar proposal was scheduled to be discussed by the FIPB today.

Essar Teleholdings Ltd (ETL), an Essar group company, sent a written representation to Finance Secretary Adarsh Kishore and the DoT secretary.

In it, ETL said it was submitting a separate application to the FIPB reflecting the current direct and indirect foreign shareholding as well as a proposal for increasing the indirect foreign holding in Hutchison Essar Ltd.

Requesting for the deferment, Essar Teleholdings also asked the government to consider both the applications together.

Essar Teleholdings also informed the government that the computations in Hutchison Essar's application were based on the direct and indirect shareholding pattern as of March 7, 2006.

"The Essar group is a substantial shareholder in Hutch Essar. There have been changes in the indirect foreign shareholding in the company on account of changes in the shareholding of the Essar holding companies since then, which are not reflected in the application," the letter adds.

Essar group officials did not offer any details on the changes that they proposed to notify the government about.

This development is being interpreted as the latest twist to the ongoing battle for control at Hutchison Essar Ltd. It may be recalled that after Egypt-based mobile operator Orascom acquired a partial stake in HTIL earlier this year, Essar has raised a number of issues and written to the government on the matter.