The Foreign Investment Promotion Board (FIPB) on 30 December 2013 approved the proposal of Vodafone to acquire the shares from Ajay Piramal and Analjit Singh for over 10000 crore rupees. This will make Vodafone a company with 100 percent shares in the venture and make Vodafone, the British telecom company among the largest foreign investors in India.
Apart from this, FIPB also allowed Tesco to set up the country’s first multi-brand retail chain with overseas funds. This was also the proposal of Vodafone to partnership the Tata group in Retain sector. Vodafone is buying 50 percent stakes in the Tata Group’s Trent Hypermarkets. It is also intends to open its stores In Maharashtra and Karnataka and thus it is ready to invest 110 million dollar (about 680 crore rupee).
In Vodafone, Pirmal holds about 11 percent stake in India and Analjit Singh, who is also the non executive Chairman of Vodafone’s India holds 24.65 percent stakes. After the approval of FIPB, Vodafone have will pay 1241 crore rupees to Ayanjit Singh and 8900 crore rupees to Parimal Enterprises for their stakes to convert Vodafone as a wholly owned entity.
Vodafone had first spent 11.1 billion dollar (about 49000 crore rupees) in 2007 to acquire a 67 percent economic interest in Hutch Essar.
Cabinet Committee on Economic Affairs nod is only awaited by Vodafone on the proposal that has been approved by FIPB before the transaction takes place. CCEA approval is need in every foreign investment proposal over 1200 crore rupees.
Vodafone’s investment in retail market comes after the WALMART has postponed its plan to enter India following the strict and rigid rules required by a foreign company to invest in India. As the norms of investment in India mentions investment in creation of a back-end infrastructure and a company will have to source 30 percent goods from the local companies.
FIPB has also approved the proposal of Johnson & Johnson for foreign investment. FIPB has postponed the proposal of HDFC Bank to raise equity from FIIs.
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