Indian corporates invested $5.6 bn abroad through Mauritius in 2016-17

Biggies of Indian business may vacation in rainy London but balmy Mauritius gets their money first

For long Mauritius and more recently Singapore have been the preferred conduits for global financial transactions by Indian companies. Reserve Bank of India (RBI) data shows that both countries have become equally mouth watering destinations for Indian corporates to fund global operations, buy stakes in overseas companies or pay off their international loans. While Singapore attracted $5.7 billion from Indian companies, Mauritius saw $5.6 billion flowing in the country from India in 2016-17. The key similarity between Indian investments in these two countries was that most of the money was invested in equity and corporate guarantees in foreign subsidiaries. Loans formed a comparatively smaller component of the investment portfolios of Indian companies.

One of the most notable names who have invested through Mauritius is the Godrej Group. For instance in August 2016, Godrej invested $8.5 million in two of its Mauritius based subsidiaries – Godrej Tanzania Holdings Limited and Godrej Africa Holdings Mauritius Limited. In September 2016, the Godrej group again invested $10 million into its Mauritius based subsidiary Godrej Consumer Products Mauritius Limited. “Our investments through Mauritius were largely for servicing loans. We also have operations in Africa through the Darling group in which we acquired a 90% stake. We operate in around 9 nations in Sub Saharan Africa” said V Srinivasan, Chief Financial Officer of Godrej Consumer Products Limited.

While Godrej uses the Mauritius route to regularly service its loans, there are others like Bharti Airtel who may use it for other purposes. Bharti Airtel was one of the biggest investors through Mauritius in 2017. RBI data shows that it invested $450 million in a company called Network I2I Limited based in Mauritius. The company’s spokesperson Prem Subedi pointed out that this was an equity investment made in February 2017.  Bharti’s $450 million investment through Mauritius was aimed at restructuring its shareholding in various international subsidiaries for “de-layering and simplification of structure and synergies without any change in ultimate ownership over the subsidiaries.” This is what Bharti Airtel achieved through this transaction: Network I2I is a Bharti Airtel held company based in Mauritius. By pumping $450 million into Network I2I, it ensured that the company inturn holds the entire shareholding of three other international subsidiaries – Bharti Airtel International (Mauritius) Limited, Bharti Airtel International (Netherlands) BV and Bharti International (Singapore) Pte.

This effectively means that Bharti Airtel’s entire international operations are being run by two companies based in Mauritius and Singapore with the parent company operating out of India. That is because Bharti Airtel International (Netherlands) BV whose ownership was completely transferred to Network I2I controls the entire ownership of all African companies of Bharti Airtel. Meanwhile Bharti International (Singapore) Pte whose ownership was also completely transferred to Network I2I is the holding company of Bharti Airtel’s US, UK and Hong Kong subsidiaries. According to the company’s regulatory filings, Bharti International (Mauritius) Limited was the most valuable subsidiary taken over by Network I2I the company alone contributing over Rs 20000 crore to the group’s net-worth. This represented a quarter of the net worth added during 2016-17 to the group.

There are other interesting names that have chosen the Mauritius route whose purpose is not as clear as that of Bharti Airtel and Godrej. For instance one of those regularly routing money through Mauritius is Pallava Dwellers Private Limited, a company owned by the Lodha group which has a tie up with US President Donald Trump’s family business for a real estate project in Mumbai. In March 2017, Pallava Dwellers invested almost $13 million in Lodha Developers International (Mauritius) Limited. In 2016, the company had made many investments ranging from $11 million to over $5 million through this route. However in contrast to other companies, most of this money being routed to Lodha International (Mauritius) Limited was in the form of loans rather than equity or corporate guarantees. Another prominent name in the list is GMR Infrastructure Private Limited, which had in February this year restructured its burgeoning debt of Rs 8,800 crore.  

GMR Infrastructure routed $60 million in April 2016 to its Mauritius based subsidiary GMR Infrastructure (Mauritius) Limited. Then in May 20116, another $49 million was sent to the same Mauritius-based subsidiary. Both these were in the form of corporate guarantees. Other GMR group companies like GMR Energy Private Limited have also routed less than $1 million on multiple occasions in 2016 to GMR Energy (Mauritius) Limited. Yet another eye-popping investment to Mauritius during 2016-17 was by Vadinagar Oil Terminal Limited owned by the Essar group. An amount of $170 million was invested as equity in a joint venture with a Mauritius based entity named Enneagon Limited. Questions sent to spokespersons of Lodha, GMR and Essar did not elicit a response till the time of publication.  

In 2016-17, India corporates invested $23 billion abroad overwhelmingly through Mauritius and Singapore. However, this was around $10 billion less than what was invested by Indian companies across the world in 2015-16. A look at the investment figures show that both Mauritius and Singapore also continue to attract more Indian companies compared to other investment friendly free market nations like UK and US. In 2016-17, the UK managed to attract a little over $2 billion from India corporates. For instance one of the biggest investments totaling $390 million from India in UK in March 2017 was made by engineering company Mothersun Sumi Systems Limited for a joint venture with its subsidiary. Another key investor during the month was Ashok Leyland which invested over $3 million in a joint venture with its British bus making subsidiary Optare PLC. Investments to the US meanwhile also stood a little over $2 billion in 2016-17. Most of the investments to the US in March 20117 were less than a million dollars with medium companies rather than big names investing there. Clearly, the biggies of Indian business may love to vacation in rainy London, but its balmy Mauritius that continues to attract their money for a brief stopover on their investment journey across the world.