Hutch's Ghosh: Waiting for the call

Fingers are crossed at peninsula corporate park, the Mumbai headquarters of Hutchison Telecom. The Foreign Investment Promotion Board (FIPB) is said to have not cleared Hutch's proposal to consolidate all its domestic operations under a single company. If true, this would throw a serious spanner in Hutch's plans for a big-budget IPO, slated for later this year. Hutch's MD and official spokesperson Asim Ghosh was away in New York and could not be contacted. However, the Indian mobile phone unit of Hutchison Whampoa does not figure in the list of 48 foreign direct investment (FDI) proposals cleared by Union Finance Minister P. Chidambaram at an FIPB meeting held on September 23, 2004. Proposals amounting to Rs 305.90 crore were approved, including three from the telecom sector.

The FIPB clearance is critical as Hutch plans to consolidate all its interests in Indian subsidiaries (see HTIL-India Interests) into one: Hutch Telecom India. This means that post consolidation, Hutch, which has plans of a $400-million (Rs 1,840-crore) IPO, will command a 42 per cent direct holding and 14 per cent non-direct or non-controlling interest through its JVs with Kotak, Essar and Hutchison International group companies. And this, say telecom analysts, is a grey area where it may have run afoul of FIPB. Current FDI guidelines in telecom only allow 49 per cent ownership. If the indirect holdings were to be included, it would, in effect, take Hutch's holdings to 56 per cent, way above the permissible limit.

Most, however, perceive this as a temporary glitch. Even in the unlikely event that the IPO doesn't come through, it won't be the end of the world for Li Ka Shing's mobile major. Given its balance sheet strength, and the mobile boom, it can always raise debt.

-Abir Pal

Motown Revs Up On Capacity
Some two million cars could be rolling out of factories in India soon. Where will they sell them?

Tumbling tariff barriers be damned, car makers are in a race to up their production capacities. Within the next two years, 5 lakh units will get added in capacity-that's half the existing volume in a market where 8 lakh cars are sold annually. And these are just the announced plans. If Volkswagen, BMW and maybe Nissan-Renault do set up manufacturing facilities in India as speculated, annual capacity may touch 2 million by 2007-08. "I don't think I want to be around in the business when all these capacities come up," says Maruti Udyog boss Jagdish Khattar in mock horror. A General Motors spokesperson, however, points out how the excess capacity will get used up: exports.

-Kushan Mitra