Gujarat spanner in Guardian India plans
The Gujarat government has hit out against the clearance granted to American glass giant Guardian to set up a 100% subsidiary in India, introducing yet another twist to the tussle between the US multinational and Modi Rubber.
NEW DELHI: The Gujarat government has hit out against the clearance granted to American glass giant Guardian to set up a 100% subsidiary in India, introducing yet another twist to the tussle between the US multinational and Modi Rubber.
Gujarat Alkalies and Chemicals (GACL) and Gujarat Mineral Development (GMDC) — two Gujarat government-owned companies with 4.75% stake each in Gujarat Guardian — have been asked to insist that Guardian should not invest outside the state.
The two PSUs have also been told to insist that the American company should pump in fresh investments in collaboration with its existing partners in Gujarat Guardian — GACL, GMDC and Modi Rubber which holds 22.4%.
The Foreign Investment Promotion Board (FIPB) recently recommended that Guardian can be allowed to set up a wholly-owned subsidiary without no-objection certificates (NOCs) from its joint venture partners. The government approved the proposal, overruling objections of the partners who cited violation of Press Note 1.
The American company, which holds 50% stake in Gujarat Guardian, has said that the proposed subsidiary would be located outside Gujarat and it will not affect business of the joint venture.
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A major legal battle is also brewing as Modi Rubber has filed a case in the Ahmadabad High Court, seeking quashing of the permission granted to Guardian to set up a 100% subsidiary. The court has issued notice to the central government had hearing is expected soon. Government officials closely following the tussle said Guardian has sought transfer of the cases to Delhi High Court. The outgoing chairman and managing director of GACL, PK Taneja, said the Gujarat government’s view was that Guardian should invest in the state, in association with the existing partners.
Modi Rubber has made common cause with the two Gujarat government-owned companies, saying that capacity expansion by Gujarat Guardian was a better option than a fully-owned subsidiary of the American multinational.
Modi Rubber GACL and GMDC refused to provide NOC to Guardian for a 100% subsidiary. Guardian and Modi Rubber are also seeking to buy out each other, besides working out plans to buy the two Gujarat government-owned PSUs.
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Under such circumstances, it seems the ongoing litigation could decide the final fate of Gujarat Guardian the American company’s plans to set up a wholly-owned subsidiary here.Start a SIP with as low as ₹500 with ET Money App!
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