NEW DELHI, June 11: The Foreign Investment Promotion Board (FIPB) has rejected a proposal from Koshika Telecom for a recast in its equity base to finance its expansion plan. The FIPB decision follows the recommendations of the ministry of communications.

The company had approached FIPB with a detailed expansion plan draft. The expansion of its network envisaged an increase in coverage and to build up backbone microwave.

FIPB sources said the company had worked out its requirement of funds in the form of zero per cent fully convertible debentures amounting to Rs 310 crore.The Indian promoters of the company, Usha group, and associate companies were to fund 61 per cent of the total requirement whereas the rest 39 per cent was to be arranged through foreign investment.

It needed an amendment in the equity clause of the company and therefore it had approached the FIPB for clearance.

The communications ministry had earlier rejected the proposal on the grounds that the orignal approval holders were being replaced. Such replacements are not permitted under the telecom policy. Koshika Telecom was granted foreign collaboration approval for cellular mobile telephone services with a foreign equity participation of 34 per cent.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.