The Hindu Business Line : Proposals for investment in Unitech Group entities withdrawn

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Proposals for investment in Unitech Group entities withdrawn

3 firms had earlier made applications to FIPB

The proposals pertain to converting the three newly incorporated entities into foreign-owned holding companies for holding downstream investment in SEZ and other projects.

Moumita Bakshi Chatterjee

New Delhi, Nov 6 On the heels of some queries by the Revenue Department on a complex set of proposals, three newly incorporated entities Avens Properties, Jalore Properties, and Miraj Builders have withdrawn their applications from the Foreign Investment Promotion Board (FIPB) for making investments in Unitech Group entities.

The proposals pertain to converting the three newly incorporated entities into foreign-owned holding companies for holding downstream investment in SEZ and other projects.

In its application to the FIPB, Avens Properties Pvt Ltd, a newly incorporated private limited company, said it proposes to invest in special economic zones (SEZs) and industrial parks, through downstream investments in project companies, which actually carry out the developmental activities.

Avens, currently, has a nominal share capital of Rs 5 lakh held by Indian resident subscribers and the entire equity holding of the company is proposed to be acquired by Kortel Ltd (a company incorporated under the laws of Cyprus and an overseas group subsidiary of Unitech Ltd), through its affiliates and subsidiaries.

As part of the plans, Avens, by way of downstream investment, proposes to acquire up to 40 per cent of the shareholding of Unitech Developers and Projects Ltd (UDPL) which is held by Unitech Ltd at present.

The other 60 per cent is currently held by Gladiolys Realty Inc, Mauritius.

According to sources, through a complex application, approval was sought for induction of foreign equity by Kortel Ltd through a subsidiary company to be held by its sponsored Singapore Business Trust, up to 100 per cent amounting to $33 million by way of acquisition of entire share capital of Rs 5 lakh held by resident subscribers and also by way of subscription and/or purchase on need basis for downstream investment for acquiring shares of UDPL.

FIPB Deliberation

However, during the FIPB deliberation on the proposal, the Revenue Department sought additional details from the company including the source of funding for the acquisition of the three Indian entities, rationale behind the complex, multi-tiered structure, and details about the Singapore Business Trust.

“The proposals involved a maze of companies at various levels. All the three applications have now been withdrawn by the companies concerned. However, the Revenue Department scrutiny on the issue may continue,” official sources pointed out.

When contacted, Unitech refused to comment on the issue.

Jalore’s proposal

The proposal of Jalore Properties is similar to that of Avens Properties.

In this case, the entire equity capital of Jalore Properties is proposed to be acquired by Kortel Ltd, through its subsidiaries and affiliates, by way of acquisition of shares from the existing resident Indian shareholders, as well as subscription of fresh issue of capital amounting to about $29 million.

Jalore by way of downstream investment proposes to acquire up to 36 per cent of the shareholding of Unitech Hi-Tech Structure Ltd (UHTSL), which is currently held by Unitech.

While UHTSL has an agreement to co-develop an IT/ITES SEZ on a 19.58 acre site located in West Bengal, UDPL has an agreement to co-develop an IT/ITES SEZ on a 28.62 acre site in Gurgaon.

According to sources, the proposal of Miraj Builders is also on similar lines.