Saturday, October 9, 2010

Govt defers nod to Jet Airways, GMR Airport proposals

New Delhi: The government today deferred a decision on giving approvals to Jet Airways' proposal for QIP and GMR Airports' plan for a foreign investor in the Bangalore Airport .
The Foreign Investment Promotion Board (FIPB) in a meeting earlier this month, however, cleared six foreign direct investment proposals worth Rs 5.46 crore, an official statement said.
The statement did not list any reason for deferring Jet and GMR Airport proposals.
"Based on the recommendations of the Foreign Investment Promotion Board (FIPB)... government has approved six proposals of Foreign Direct Investment (FDI) amounting to Rs 5.46 crore approximately," the statement added.
It also deferred consideration of seven proposals, including Jet Airways' equity investment through qualified institutional placement (QIP) route and GMR Airports Holding's intent to induct foreign equity in an investing company.
The government had also deferred the proposals of equity induction in Falcon Tyres and Telecordia Technologies among others.

Centre seeks clarifications on Jet Airways QIP

Bangalore: The fund-raising plan of Jet Airways, the market leader by passenger numbers, got pushed back again as the government on Thursday sought more clarification on the airline’s qualified institutional placement (QIP) issue.
Jet had submitted a proposal to the Foreign Investment Promotion Board for raising $400 million through QIP to deleverage its balance sheet and implement expansion plans.
Kapil Kaul, chief executive officer - India and Middle East of airline consultancy Centre for Asia Pacific Aviation, said it since the airline already has an in-principal approval from the government for raising funds from overseas the markets, it should eventually get through.
He said the impediment in getting the FIPB approval could be the sectoral limit for foreign direct investment (FDI) in the aviation sector, which is currently at 49%.
“FDI cap could be the only issue on which the government must have asked for clarification. On this front, the government could temporarily relax the (FDI) norm in Jet Airways’ case on one-off basis,” said Kaul.
Kaul speculated that the government may give its nod to Jet’s proposal to raise foreign funds on the condition that it would bring back its FDI within limits in the specified time.

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