Coca-Cola knocks on FIPB doors to keep Indian ops bubbling

Jan 16 2013, 00:51 IST
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SummaryIn order to continue the flow of investments from its parent firm to India operations, the Indian arm of beverage giant Coca-Cola is knocking on the doors of Foreign Investment Promotion Board to extend the date for redemption of preference shares that was allotted by Hindustan Coca-Cola Beverages, the manufacturing and distribution arm of Coca-Cola India, to Hindustan Coca-Cola Holding, the holding arm, in March 2005.

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.

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