INDIA
BUSINESS WORLD - OCTOBER 2006
THE MONTH THAT WAS...
ELKEM'S CASH & CARRY TRADE IN GOVT CROSSHAIRS
ELKEM, among the largest Norwegian firms, has come under government scrutiny for breach of FDI norms — the commerce & industry ministry has recommended action against the company for violations under FEMA provisions. Part of Norway's $8.5-billion Orkla Group, Elkem has been allegedly undertaking cash and carry wholesale trading activities in India without permission.
As per the erstwhile FDI norms, cash and carry wholesale trading required prior Foreign Investment Promotion Board (FIPB) approval. But this was liberalised this February with this type of trading placed under the automatic route.
The case came up when Elkem applied to the FIPB for regularisation of its technical breach of FDI norms as it had carried out such activities in the interim. FIPB has rejected the proposal as it would tantamount to approving violations.
Elkem said it never had any malafide intention of violating norms, adding it has not repatriated profits via dividends for the last ten years. Elkem India's total royalty payment is also marginal in this period, it said. Elkem ASA, which clocked about $3.3 billion in sales in 2004, is a speciality materials company that supplies aluminium, ferroalloys, silicon metal, carbon and microsilica. Orkla took over the company last year.
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