preference shares would be redeemed after 14 years from the date of allotment," the company said in its application. It also said that an extension of period of redemption of the preference shares will not in any manner change the shareholding patterns of HCCH or HCCB.
Both these entities are owned and controlled by two Singapore-based entities - Hindustan Coca-Cola Overseas Holdings and Bharat Coca-Cola Overseas Holding. The formation of HCCH was allowed by a Cabinet decision in late 1990s to be set up with 100% foreign equity as a holding company which will then invest in the non-alcoholic beverage business of The Coca-Cola Company (TCCC), USA. The government also allowed HCCH to set up a downstream operating subsidiary to engage in the preparation, packaging and sales and distribution of non-alcoholic beverages. Sources said, HCCB suffered financial losses since its early days. After restructuring of its balance sheet, a balance of around R803.36 crore remained unused.
Sources said at this juncture, the holding company (HCCH) had the option of either repatriating the said amount or subject to government approval, utilise the amount by way of investment in preference shares in its downstream subsidiary as TCCC would be in an investment mode in India for the long-term. HCCH opted for investments in the form of preference shares of HCCB.