Govt not to oppose Coke plan to hike stake in bottling subsidiary

New Delhi, Nov 16 | Updated: Nov 17 2005, 06:20am hrs
The government on Wednesday said that Coke investments in its bottling subsidiary was fine if it was being done as per law.

Commerce and industries minister, Kamal Nath said that the government was not opposed to soft drink major Coca Cola's plans to raise its stake to 100% in its bottling arm.

Speaking to media persons on the sidelines of the second Indo-US economic summit, Mr Nath said: "We are not opposed to the proposal as long as they (coke's proposal to raise its stake from 51% to 100% by buying out Indian shareholders) is not impacting the law of the land."

The soft drink major Hindustan Coca Cola Holdings (HCCH) had recently sought government approval for an investment of $120 million in its bottling subsidiary Hindustan Coca Cola Beverages (HCCB).

The investments in the bottling arm were meant to buy out the Indian shareholders, mainly Indian financial institutions and banks, who hold 49% stake.

The government had allowed HCCH to start operations in India back in 1997 under conditions of a divestment clause after five years through a public offer.

Legal Fineprint
Coke investment in its bottling subsidiary was fine if it was being done as per law
Government will not oppose Coca Cola's plan to raise its stake to 100% in its bottling arm
HCCH had recently sought government approval for an investment of $120 million in its bottling subsidiary HCCB
The government had allowed HCCH to start operations in India back in 1997 under conditions of a divestment clause after five years through a public offer
In 2002, HCCH announced plans for private placements to various Indian partners, including banks, financial institutions and strategic investors and was given time till 2003 by the government to complete the divestment.

This year, HCCH had applied to the foreign investment promotion board seeking approval to buy back shares in its bottling unit.