Vodafone-Essar spat intensifies

Essar, however, dismissed these allegations and said the company has already clarified its stand.

Essar has proposed to merge its Essar Telecommunications Holding Private Limited (ETHPL), which has 11 per cent interest in Vodafone-Essar joint venture, with another listed company Indian Securities Limited (ISL) of the group. Vodafone has objected to this merger saying the move may distort the valuation of the JV.

"The merger scheme between India Securities Ltd and ETHPL is fully compliant with all applicable Indian laws, capital and financial sector regulations," Essar said.

"Vodafone has not blocked Essar from conducting an IPO of its interest in Vodafone Essar. We have no objection if Essar wishes to IPO its stake," Vodafone said in a statement but it continues to object to the proposed merger saying this was contrary to what has been stated in the ISL merger scheme document and it was not disclosed to the shareholders of the ISL.

"Vodafone continues to believe that material information has not been provided to the market and it has raised its objections with the Madras High Court and the BSE and the SEBI," Vodafone said in a statement.

The British company had last week written to the market regulator Sebi to probe sudden spurt in the prices of ISL shares alleging insider trading in the scrip. Essar had termed the allegations absolutely baseless.

Vodafone-Essar is the third largest telecom operator in India with over 124 million mobile subscribers. Vodafone has about 67 per cent interest while the remaining is with Ruias-led Essar in the joint venture.

Essar had earlier attacked Vodafone saying that the British company is trying to gain 100 per cent control of the telecom JV Vodafone-Essar at an "artificially depressed value" and that was the reason it was objecting the proposed merger.

"The merger scheme between India Securities Ltd and ETHPL is fully compliant with all applicable Indian laws, capital and financial sector regulations," Essar had said.
Vodafone, which has sought to intervene in the proceedings governing the merger scheme in the Madras High Court, is neither a shareholder nor a creditor of any of these companies and has no legal capacity to challenge this merger, it had said.

Vodafone, on the other hand, has alleged that the consent of the ISL shareholders appears to have been obtained without material disclosure as the merger scheme document does not even mention Vodafone Essar.

Essar also states that Vodafone’s objections are factually incorrect, but does not elaborate and say which allegation is incorrect, Vodafone statement said adding "Our allegations are all based on facts found within Essar company documents filed with various exchanges and government agencies by a number of different Essar controlled companies."