Pune-based Sandvik Asia, a publicly-listed company in India in which Sweden-based Sandvik has a 91% stake and its partner Gujarat-based Eimco Elecon may possibily begin quarreling over the contentious Press Note 1 guidelines on foreign direct investment. Sweden-based Sandvik has a 91% stake in Sandvik Asia. Another subsidiary, Sandvik Mining and Construction, owns 25.1% in Eimco whose Indian promoter Mr Bhanubhai Patel holds 48%. A few months ago, Sandvik Asia sought Foreign Investment Promotion Board approval to acquire a majority, but undisclosed, stake in Tamil Nadu-based drilling equipment manufacturer Revathi Equipment for INR 500 crore to expand its mining and construction business. In December, Eimco told the government that Sandvik has to take a “no-objection certificate” required under foreign direct investment norms, laid down in Press Note 1. In its representation to FIPB, Eimco Elecon has said Sandvik controls 25.10% of the company’s paid up capital. After Sandvik became a joint venture partner, the Swedish giant signed three technology transfer agreements. Eimco has contended that if the new JV of Sandvik is allowed, there would be confusion as products offered by different manufacturers using the same technology would be available in the same market creating confusion. The Press Note stipulates that a foreign company with a joint venture in India must get an NOC from the current partner, if it is setting up another joint venture or subsidiary in the same or a similar business.
