There is disquiet among Coca-Cola India’s franchise bottlers over the proposed monetisation plan of the company’s bottling arm Hindustan Coca-Cola Beverages (HCCB), industry sources have told FE.
Some of the franchise bottlers, of the total of around 8-10 third-party bottlers who manufacture and distribute Coca-Cola’s beverages in India, are keen to participate in the proposed pre-initial public offering (IPO) investment round of HCCB, sources in the know said. HCCB is offering around 40% in terms of stake to potential investors in the pre-IPO stage, valuing the firm at around $4 billion (Rs 30,000-33,000 crore), persons in the know said.
HCCB is understood to have tapped the Burmans of Dabur and the Bhartias of the Jubilant group among others for the proposed investment. The two groups are open to the idea of investing around $1.2 billion (Rs 12,000-13,000 crore) in the pre-IPO stage, it is reliably learnt.
Some of the franchise bottlers are keen to participate in the pre-IPO round and have been engaging with HCCB in this regard. However, it is unclear whether the franchise bottlers will be given an opportunity, informed sources said, prompting the unease. HCCB declined comment when contacted.
HCCB is said to be inclined towards having larger groups participate in the pre-IPO stage, which could help it increase investor interest ahead of its proposed IPO. HCCB remains the largest bottler of Coca-Cola in India, with 16 plants across the country and a revenue of Rs 12,840 crore for FY23, a year-on-year growth of 40%.
In January this year, HCCB had announced the sale of bottling operations in Rajasthan, Bihar, the north-east, and select areas in West Bengal to franchise bottlers. Some of the franchise bottlers believe they have the financial muscle to participate in the pre-IPO stage, since they handle large markets for the beverage major.
Coca-Cola has evenly split bottling operations in India, with HCCB handling most markets in the south and west. While franchise bottlers handle key markets in the north and east of the country.
As a whole, franchise bottlers are estimated to have turned in sales of Rs 10,000-12,000 crore for FY23. Profit numbers of franchise bottlers could not be immediately ascertained for the period.
HCCB’s FY23 net profit, meanwhile, jumped two-fold to Rs 809 crore, its regulatory filings for the period show. FY24 numbers of HCCB are not available yet with the Registrar of Companies.