Financial Daily from THE HINDU group of publications
Wednesday, Apr 24, 2002
Financial Daily from THE HINDU group of publications Wednesday, Apr 24, 2002 |
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Corporate
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Mergers & Acquisitions `Disregard MNCs' plea for waiver of divestment clause' Our Bureau
NEW DELHI, April 23 NOTWITHSTANDING representations from a slew of multinational companies including Coca-Cola for a waiver of the mandatory divestment clause, the Standing Committee on Finance has made it clear that the Government should not concede to such requests. The rationale given by the committee is that the sagging capital markets need a fillip and that any relaxation of the mandatory divestment clause would go against this objective. The committee, which has voiced its concern over the delisting of several MNCs, has also recommended formulation of clear policy guidelines on this front. "Delisting will erode investors confidence. On the one hand, the MNCs are postponing their IPOs on various grounds and on the other they have started delisting from the bourses," the committee stated in its report tabled in Parliament here on Tuesday. Chaired by Mr N. Janardhana Reddy, the panel has suggested that no extension of time be given to such MNCs for complying with the condition (mandatory divestment clause) on offering a part of their equity to the public. According to the Department of Industrial Policy and Promotion (DIPP), 21 companies have been permitted by the Foreign Investment Promotion Board (FIPB) to bring in foreign direct investment (FDI) with the stipulation that they would make a public offering. Some of the companies that had been granted FDI approval after stipulating the divestment condition are Hindustan Coca-Cola Holdings Pvt Ltd, Esso Petroleum India Pvt Ltd, BG Plc UK, Shell India Pvt Ltd, PepsiCo India Holdings Ltd (for downstream investments), Elf Gas India Pvt Ltd. According to SEBI, no MNC has come out with an IPO during the last five years to comply with the relevant Government guidelines.
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