Chidambaram: Green signal

New Delhi, May 9: The government today cleared a foreign direct investment (FDI) proposal worth Rs 8,000 crore of the Essar group and a Rs 1,000-crore proposal of Chennai-based Rakindo Developers.

These proposals had been cleared by the Foreign Investment Promotion Board but required cabinet approval as they involved investments of more than Rs 600 crore.

Essar Power Limited will bring in Rs 8,000 crore through Mauritius-based Essar Power Holdings for investments in power-related activities.

Rakindo will infuse FDI into a holding company for making investments in real estate development and construction activities.

“The approval will allow Essar Power to invest in permitted downstream activities, including power and coal mining for captive consumption by power projects,” finance minister P. Chidambaram told reporters after a meeting of the cabinet committee on economic affairs.

After the infusion of Rs 8,000 crore, Essar Power Holdings Limited will hold 100 per cent in Essar Power Limited.

Essar Global Limited, a company incorporated in Cayman Islands, is the holding company of Essar Power Holdings Limited. Essar Global has diverse investments in India and other countries.

At present, Essar Power Limited is the operating company of the Essar group in the power sector. It owns and operates a 515-megawatt (MW) power plant at Hazira in Gujarat.

Essar Power Limited has lined up plans to invest over Rs 20,000 crore in the next couple of years.

It plans to increase its installed capacity to 6,000MW by 2012, which include power plants of 1,200 MW each in Madhya Pradesh, Gujarat and Jharkhand.

Rakindo move

Rakindo Developers plans to set up a wholly owned subsidiary with Rs 1,000 crore FDI from Dubai-based Rakeen Development.

The realty firm has plans of building a Rs 6,000-crore integrated township in Coimbatore, Tamil Nadu.

Rakindo will be a holding company that will build and operate townships through special purpose vehicles.

It is a joint venture company formed by Rakeen, a company promoted by the Ral al Khaimah group, UAE, and Chennai-based mineral group Trimex owned by Koneru Prasad.

The special purpose vehicles will be engaged in infrastructure construction development projects, which include integrated township, IT parks, hotels, resorts, hospitals, housing, retail, office and commercial premises, educational institutions and special economic zones across the country.

The Cabinet also gave its ex-post-facto (retroactive) approval for a proposal of NBCC Ltd. It involves the redemption of 7 per cent non-cumulative preference shares by the company that was due in 2006-07.

The shares would now be regularised in the previous fiscal instead of 2006-07.