The Hindu : FIPB again defers HLL proposal to hike FII limit

Online edition of India's National Newspaper
Saturday, Sep 07, 2002

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FIPB again defers HLL proposal to hike FII limit

NEW DELHI SEPT. 6. The Foreign Investment Promotion Board is understood to have yet again deferred Hindustan Lever's proposal to increase foreign institutional investor limit to 49 per cent, saying the Government will first examine if any foreign exchange regulation provisions were violated in a previous acquisition by an HLL subsidiary.

The FIPB deferred HLL's proposal, which has been pending since February, even as the Government has opened up the tea plantation sector to foreign direct investment (FDI), sources said here.

They said HLL acquired Brook Bond Lipton India in 1997 and then merged the latter with itself. Subsequently, HLL subsidiary Lipton India Exports acquired stake in Rossel Industries.

"The Department of Economic Affairs observed that the shareholding pattern of Lipton India Exports will have to be examined before coming to any conclusion as to whether the acquisition of 24.59 per cent shares of Rossel Industries by Lipton from Y. K. Modi and his group companies did not attract Foreign Exchange Regulation Act/FEMA provisions,'' the sources said adding the proposal was deferred by two weeks at the FIPB meeting held recently.

However, another proposal by HLL to issue 1,375 shares to non-resident shareholders, consequent to the merger of a subsidiary International Best Foods with itself has been cleared by the FIPB, they said.

HLL's proposal to hike the FII limit is supported by a resolution passed by its board of directors.

In its application, HLL says it acquired the tea plantation business consequent to the merger of BBLIL with itself.

"HLL does not have any plantation business other than the one acquired through the merger of BBLIL. Tea plantation activities have since then continued to be an insignificant portion of HLL's total business activities as among the total business activities, fast moving consumer goods constitute over 87 per cent of the total business.''

As per the application, Unilever and its affiliates hold majority 51.57 per cent stake in HLL.

The FII holding is 12.10 per cent while foreign nationals hold 33,980 shares. Non-resident Indians hold 0.25 per cent of HLL's equity while overseas corporate bodies hold another 0.03 per cent.

PTI

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