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26% selloff clause waiver for Shell
P Vaidyanathan Iyer & Sidhartha in New Delhi |
August 09, 2004 08:35 IST
The government has exempt Shell India from the 26 per cent mandatory divestment clause, and also allowed the global oil major to open 2,000 retail outlets in the country. Shell India had approached the Foreign Investment Promotion Board at least twice over the past three years seeking a deletion of the divestment clause. The proposal was finally cleared by Finance Minister P Chidambaram last week.
The Divestment Development: Complete Coverage
Finance ministry officials said Shell International had agreed to the divestment condition when it entered India through its wholly owned subsidiary, Shell India.
The company had committed to sell 26 per cent of its paid-up capital to resident Indian shareholders within a stipulated timeframe.
Vikram Mehta, chairman, Shell group of companies in India, told Business Standard: "We are yet to hear from the FIPB. The clause had been imposed when we wanted to undertake bitumen trading. Since then, Shell India is no longer engaged in trading activities."
Shell had contended that the government had subsequently allowed 100 per cent foreign shareholding in the trading of chemicals and petrochemicals and hence the divestment clause should be done away with.
Earlier, it had represented to the FIPB that the company only intended to trade in chemicals and petrochemicals and the board should take a view in tune with the prevalent foreign direct investment norms.
Mehta said Shell Marketing India would roll out retail outlets this year but refused to disclose details. "We got permission to open retail outlets only last week, and we will set up the 2,000 outlets in a phased manner," Mehta said.
When asked about the fulfillment of the Rs 2,000 crore (Rs 20 billion) investment criterion for entry into the retail segment, Mehta said: "We have a presence in India through eight or nine companies and we have spent significantly more than Rs 2,000 crore. It could be close to Rs 3,000 crore (Rs 30 billion)."
Decks cleared
Shell India had approached the FIPB at least twice over the past three years for a waiver of the selloff clause
The company says it has met the criterion of investing Rs 2,000 cr in India for entry in the retail sector
The finance ministry said Shell had committed to the divestment clause when it had forayed into India