"We would like to reiterate that HEL is FDI compliant. The foreign ownership in HEL is 74 per cent and there is absolutely no question that it is any higher," an HTIL spokesperson told PTI from Hong Kong.
The Foreign Investment Promotion Board has sought comments from Reserve Bank of India and Department of Telecom on the alleged breach of the country's FDI regulations by HTIL and possible violation of FEMA (Foreign Exchange Management Act) and licensing conditions.
FIPB is looking into complaints that foreign holding in HEL is aggregating to 89 per cent. This includes HTIL's 67 per cent stake and 22 per cent held by foreign entities of Indian partner Essar Group.
It has been alleged that HTIL, apart from its 52 per cent direct stake, also owns the additional 15 per cent stake in HEL by way of controlling interests in two Indian companies held by Analjit Singh and Asim Ghosh.
However, HEL officials said these were separate entities and there was no question of additional stake held by HTIL.
"The company's structure has been done according to the known rules and regulations in India and has long been approved by the government," the HTIL spokesperson said.
FIPB has also sought details about the stake held by minority shareholders Asim Ghosh and Analjit Singh in HEL.
The HTIL spokesperson said: "FIPB has written to HEL and HEL will reply to FIPB directly." The development comes just a few days ahead of HTIL seeking support of its shareholders on March 9 for sale of its controlling stake in HEL to British telecom giant Vodafone.
The officials at Mumbai-headquartered HEL said the company would reply to FIPB in due course. In addition, FIPB is also understood to have written to Bharti Airtel seeking details of Vodafone's stake in the country's largest mobile player.
FIPB's move followed after Vodafone approached the Board for approval to acquire controlling stake in Hutch-Essar from HTIL as well as for its investment plans for telecom business in the country.
Vodafone and Bharti had last month announced an agreement under which Bharti agreed to buy back 5.6 per cent direct stake from Vodafone for $1.6 billion on deferred payment basis, while the UK mobile giant would be retaining the balance indirect equity in the group.
Vodafone, which has agreed to acquire HTIL's stake in Hutch-Essar for $11.1 billion in cash and about $2 billion in debt assumptions, needs FIPB clearance under the government guidelines. The deal is subject to FIPB approval for Vodafone's exit from Bharti as well as acquisition of HTIL's stake in HEL.
The regulatory norms make it mandatory for a foreign investor to submit a No Objection Certificate from its existing Indian partner if permission is sought for another venture in the same sector.
Vodafone has submitted its board resolution and the NOC from Bharti, sources said, adding this should be sufficient to get the FIPB approval.
The race for Hutch-Essar: Complete coverage
