Private air-carrier Kingfisher Airlines has exceeded the foreign direct investment ceiling of 49 per cent as per the new FDI guidelines, which the company says could not be applied retrospectively.
The discrepancy was pointed out by the Finance Ministry in the light of changes in foreign direct investment (FDI) norms, as specified in Press Note II issued earlier this year, while considering the company's proposal to raise Rs 708 crore through fully convertible warrants.
Prior to the Press Note II, the FDI component in Kingfisher Airline was just 16.45 per cent.
Sources in the know said that in view of the new guidelines the Ministry is believed to have opined that the company should either "divest or compound" to set things in order.
When contacted, Kingfisher Airlines spokesperson said, "Press Note II does not apply retrospectively to existing shareholdings."
He said "Kingfisher Airlines is committed to raise equity and infusion of fresh capital will have collateral effect of diluting the UB Group's stake. Hence there is nothing inconsistent with our plans."
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