Reworked Pageco Proposal Cleared

The reworked proposal of Pageco India, in which the company has brought down the foreign equity component to 74 per cent against the 95 per cent proposed earlier, has been cleared by the Foreign Investment Promotion Board (FIPB).

In the revised proposal, Pageco International Inc of Canada will bring in 74 per cent of the equity (amounting to Rs 2.77 crore), while the Indian partner, Capital Trust Ltd, will contribute 26 per cent of the equity (Rs 97.50 lakh). The board had rejected the earlier proposal of Pageco for foreign equity participation of 95 per cent, amounting to Rs 3.56 crore in the paid-up capital of Rs 3.75 crore, to be picked up by Pageco International. The remaining five per cent equity was to be brought in by Capital Trust, a merchant banking company.

 

Capital Trust had written to FIPB that it did not have the idea of running a dry cleaning unit.The operations of the JV would have to be controlled by Pageco International. Capital Trust, being merely a catalyst in the project, was reluctant to invest too much money initially. Since Capital Trust had made all the efforts in bringing new technology to the country, it would not be interested in bringing another Indian partner into the venture. However, the FIPB rejected the proposal on the ground that the high level of foreign direct investment was not justified in view of the proposed activities of dry cleaning and laundry services.

After looking into the revised equity structure, the board felt that it could not be treated purely as a consumer item as it was related more to the services sector. Therefore, the proposal needed to be considered favourably, said the board. The FIPB has also approved a rise in paid-up capital of E-Wha Foam India Ltd from Rs 4.75 crore to Rs 6.10 crore with the approved foreign equity level going up from 21.56 per cent (amounting to Rs 1.02 cr) to 32.52 per cent (Rs 1.98 cr).

The non-resident Indian equity will remain unchanged at Rs 50 lakh. As a result, it will go down in percentage terms from 9.67 per cent to 8.19 per cent. The company had earlier been granted foreign collaboration approval for manufacture of cellular polyethylene and polypropylene sheets. At present, the foreign equity in E-Wha Foam India amounts to 19.45 per cent (Rs 1 crore) in the paid-up capital of Rs 5.12 crore. In support of its fresh proposal, the company had submitted that its entire plant and machinery had been damaged in a fire on January 25, 1997, resulting in complete stoppage of all operations. A substantial amount was required for replacement of equipment.

The FIPB has also cleared the proposal of Balsara Extrusions to enter into aJV with Macro Traders, an OFM Group company based in Bangladesh.

The venture, with 49 per cent foreign equity participation amounting to Rs 47.67 lakh, would manufacture mosquito repellent coils and other intermediates such as powder premix of mosquito repellent coils with a capacity of 115,200,000 double coils. The foreign collaborator would provide the technology free of cost.