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Corporate Apr 4, 2013

Vodafone hopeful of solution on tax case, says co chairman

New Delhi/Mumbai: Vodafone India non-executive Chairman Analjit Singh today exuded confidence that a solution would be found to the Rs 11,200 crore tax liability case. "We are hopeful of solution," Singh said after meeting
Finance Minister P Chidambaram here but refused to provide any further details. The issue relates to the British firm's acquisition of Indian telecom assets of Hutchison Whampoa.

Chidambaram too had said earlier that the government would find a solution for the tax issue. Vodafone has been slapped with an income tax demand notice of Rs 11,200 crore on its 2007 acquisition of Hong Kong-based Hutchison Whampoa's stake in its Indian telecom business.

AFP

Vodafone had written to the Finance Ministry seeking settlement of the tax issue. AFP

Vodafone had written to the Finance Ministry seeking settlement of the tax issue. This follows Finance Ministry's reminder notice to the UK-telcom giant Vodafone in January for payment of tax. The liability arose following the then Finance Minister Pranab Mukherjee amending the Income Tax Act, 1961 with retrospective effect to undo the Supreme Court judgement that had ruled in favour of the company.

Additionally, Piramal Healthcare today said it plans to offload its 11 percent stake in the company and is well on track.

"We had invested in Vodafone and it was 24-36 months exit plan. We are still within the track for that and we will exit either sometime this year or next year," Piramal Group Chairman Ajay Piramal told reporters on the sidelines of a conference here.

Pirmal Healthcare had picked up 11 percent stake for Rs 5,900 crore in two tranches in the Indian arm of Vodafone. The company had paid Rs 2,893 crore in August 2011 for 5.5 percent stake and then paid another Rs 3,007 crore in February last year for another 5.5 per cent holding.

Piramal said his company chose to invest in Vodafone for the short-term because of strong growth prospects. The company was expecting 17-20 percent return in around 18 months period. "We are merely a short-term investor in Vodafone. We don't want to be in the telecom sector for the long-term. We have three options to exit. We could exit whenever Vodafone comes out with its initial public offering (IPO), or we could sell our stake to other companies, or we could even sell it to Vodafone itself," Piramal earlier said.

To a question on his group's foray into the banking space, Piramal said the group is still evaluating the prospects."There are 100 people looking at entering into banking and there will be probably 5-6 licences. There is still time and we are still evaluating what we will do. We are in the process of evaluation," he said.The Ajay Piramal Group, at present flush with funds from the sale of its domestic formulations business, had evinced interest in banking business.

PTI

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