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Saturday, Apr 20, 2002

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Caltex gets buy-out okay with 5-yr rider

Ambarish Mukherjee

NEW DELHI, April 19

THE Government has permitted the US-based Caltex to buy out the 49 per cent stake held by Indian shareholders in the company's joint venture Indian subsidiary for a consideration of Rs 175 crore with a mandatory disinvestment clause.

The clearance is subject to the condition that the US company would have to offer a minimum of 26 per cent equity to Indian shareholders within five years from the date of approval.

The disinvestment clause has been imposed by the Foreign Investment Promotion Board (FIPB) at the behest of the Ministry of Petroleum and Natural Gas, which has said that foreign equity in this sector has been capped at 74 per cent.

However, recently the Government has permitted 100 per cent foreign equity selectively for actual trading and marketing of petroleum products subject to the 26 per cent divestment clause. A written commitment on this has also been sought from the company.

Caltex has given a written undertaking that it will off load 26 per cent equity to Indian shareholders within a period of five years following which its proposal has been approved by the FIPB. The decision taken by the (FIPB) assumes significance as soft drinks major Coca-Cola had also given a commitment to divest 49 per cent equity stake in its 100 per cent Indian subsidiary by July this year. However, it has now sought a waiver of this mandatory disinvestment clause.

Caltex Oil Corporation (COC) had recently applied to the FIPB seeking amendment in the foreign collaboration agreement permitting 100 per cent foreign equity participation in the company from the present 51 per cent.

The company intends to increase the foreign holding by way of acquiring up to 4,41,00,000 equity shares of Rs 10 each accounting for 49 per cent stake in the company from the resident shareholders either directly or through its wholly-owned subsidiary, namely, Caltex Lubricants India Ltd (CLIL). The acquisition will be made by direct infusion of funds by the US parent either through COC or CLIL in the revised paid up capital of Caltex Gas India Private Ltd (formerly Caltex Spic India Pvt Ltd), the implementing company.

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