Higher foreign equity in Essar, Samsung okayed

NEW DELHI, February 26: The Foreign Investment Promotion Board (FIPB) on Thursday cleared the proposal of Essar Oil Ltd to hike the foreign ...

NEW DELHI, February 26: The Foreign Investment Promotion Board (FIPB) on Thursday cleared the proposal of Essar Oil Ltd to hike the foreign equity in the company to over 49 per cent from the present level of 25 per cent.

The board has also approved Korea’s Samsung Electronics’ proposal to increase its stake in Samsung India Electronics from 51 per cent to 74 per cent. Other proposals cleared by the board include Caltex Oil, Orissa Power Generation Corporation, ABB Daimler Benz, Polysindo (Hong Kong) and Shriram Capital.

FIPB took up a record number of about 135 proposals. These included proposals to set up wholly owned subsidiaries, fresh joint ventures and increase in foreign stakes in existing joint ventures.

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The hike in foreign stake in Essar Oil would come through capital infusion of a global depository receipts (GDR) issue or foreign currency convertible bonds (FCCBs) issue.

The funds are intended to be raised abroad for the 9 million tonne refinery being put up by Essar. While the plant wouldbe able to increase its capacity to over 10 mtpa, it would produce LPG, naphtha, kerosene/ATF, diesel, fuel oil, bitumen and sulphur. The 1992 estimates of the project cost was pegged at Rs 4,050 crore, but has escalated since.

The $ 19 billion Samsung Electronics Company (SEC) of the $ 92 billion Samsung group will bring in $ 28 million to subscribe to additional shares in its consumer electronics and domestic appliances subsidiary. The fresh infusion of investment, which will be made through a preference share issue at par, will expand the equity base of Samsung India Electronics Ltd to Rs 60 crore from the present level of Rs 32 crore.

Samsung India Electronics manufactures colour televisions at a facility in Noida. The company is also setting up a facility to manufacture refrigerators at the same site.