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Ambarish Mukherjee

NEW DELHI, April 19

THE Government has turned down the Dubai-based Jumbo group's plan to convert Shaw Wallace and Falcon Tyres into 100 per cent NRI-held companies on the grounds that prosecution proceedings have been initiated by the Securities and Exchange Board of India (SEBI) against some of the promoters of both the companies.

The Foreign Investment Promotion Board (FIPB) has rejected outright the two applications filed by Jumbo World Holdings Ltd, a company incorporated in British Virgin Islands with a paid-up equity of $170 million and held entirely by late M.R. Chhabria, for acquiring 100 per cent share in Shaw Wallace and Falcon Tyres. The FIPB's decision is based on the recommendations by the Department of Economic Affairs (DEA) to reject the company's application. The reason cited is that prosecution proceedings have been initiated against certain promoters of the companies and the matter is pending before the Bombay High Court.

Earlier in February this year, Jumbo World Holdings had filed two separate applications with the FIPB for acquiring 100 per cent stake in the two companies, in phases.

In the first phase, Jumbo World Holdings wanted to acquire 18,38,825 shares of Falcon Tyres, constituting 30.65 per cent of the company's paid-up equity capital, held by group company Mather & Platt, at ruling market price and the 23,30,956 equity shares of Rs 10 each held by Mather & Platt accounting for 4.86 per cent stake in SWC following which the remaining would have been acquired through open market operations and open offers.

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