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The Essar Group on Thursday said it has no plans to sell out of Hutchison Essar, increasing the pressure on Britain’s Vodafone to come up with a workable shareholder arrangement with the company that could end up being its main partner in India.

Ravi Ruia, Essar vice-chairman, said after a meeting at his home in Mumbai with Vodafone chief executive Arun Sarin that he would not surrender the 33 per cent stake in the mobile company his family had helped to build with Hong Kong’s Hutchison.

“We are very clear that Essar is a long-term player in the telecom business and there is no talk whatsoever for us to exit either this company or the business,” Mr Ruia told journalists outside his house.

Vodafone will be keen to avoid the fractious relationship that Essar had with Hutchison Telecommunications International, which some say was behind the Hong Kong company’s decision to sell its 67 per cent stake in their joint venture.

The UK-based company, the world’s largest mobile operator, won a closely fought four-way contest last weekend for Hutchison Telecommunications’ stake in a deal valuing the company at $19bn.

But until Thursday, it was not clear whether the Essar group had planned to stay on in the joint venture or would follow suit and sell its minority holding to Vodafone, a move that would have made the Ruias one of India’s richest families in terms of cash.

Mr Sarin said this week his “first, second and third preference” was for the Essar group to stay. But the relationship has already got off to a rocky start.

Moves by Vodafone unilaterally to negotiate an agreement with Bharti Airtel, the industry leader in India, to share telecom towers after it takes over Hutchison Essar have received a frosty reception from the Essar group.

The Indian group maintains that under existing shareholder agreements it should be consulted on major operational issues.

Mr Sarin said on Thursday the “objective” of the talks with the Ruias was to iron out differences between the two sides and come up with an arrangement for how to run the company going forward.

But he said nothing had been decided, including a schedule for the next round of meetings.

“We are talking about partnership in the future and that is our respective goal but partnerships take a little while to kind of make sure we understand aspirations and everything else and we’ll work it out in time,” said Mr Sarin.

The Essar group has battled with Hutchison over a variety of issues in the past few years, including whether it has the right of first refusal over any stake sale by the Hong Kong company.

Documents filed with Hong Kong regulators show that Vodafone remains concerned enough about the possibility of litigation that it has reserved the right to walk away from the planned purchase if court action seeking to thwart its takeover is instigated.

Copyright The Financial Times Limited 2017. All rights reserved.
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