Press Trust Of India / New Delhi Jun 10, 2009, 00:37 IST
Private air-carrier Kingfisher Airlines has exceeded the foreign direct investment (FDI) ceiling of 49 per cent under the new FDI guidelines, which the company says could not be applied retrospectively.
The discrepancy was pointed out by the finance ministry in the light of changes in FDI norms, as specified in Press Note II issued earlier this year, while considering the company’s proposal to raise Rs 708 crore through the fully convertible warrants.
Prior to Press Note II, the FDI component in Kingfisher Airline was just 16.45 per cent.
Sources in the know said that in view of the new guidelines, the ministry was believed to have opined that the company should either “divest or compound” to set things in order.
When contacted, Kingfisher Airlines spokesperson said, “Press Note II does not apply retrospectively to existing shareholdings.” He said: “Kingfisher Airlines is committed to raise equity and infusion of fresh capital will have collateral effect of diluting UB Group’s stake. Hence there is nothing inconsistent with our plans.”
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