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INDIA
BUSINESS WORLD -
NOVEMBER 2005
THE MONTH THAT WAS
COKE TO BUY BACK BOTTLING ARM STAKE FOR $120M
Three years after
Coca-Cola India was forced to divest 49% stake in its bottling
subsidiary, Hindustan Coco-Cola Beverages (HCCB), the cola
major has now proposed to buy back the entire stake. Though
the exact price at which Coca Cola will buy out a host of
investors - some high net worth individuals, some bottlers,
financial institutions and employees - in the bottling subsidiary,
the total buyout will cost the cola major $120 million.
This will result
in HCCB becoming a whollyowned subsidiary of the holding company,
Hindustan Coca-Cola Holding. The Foreign Investment Promotion
Board is expected to consider the proposal at its next meeting.
This buyout is part of an on-going consolidation of India
operations which started out in July this year.
Confirming the
application, Coca Cola India spokesperson said, "The
additional investment will enable HCCB to increase its urban
and rural penetration and diversify its range of beverages
and will help to secure a strong future for the company."
The restructuring
process at Coca-Cola India began in July this year by setting
up of a twocompany structure in the country, after hiving
off its companyowned bottling unit. John Ustas had on July
1 taken over as CEO of HCCB, which manages the company-owned
bottling operations (COBOs).
Of the 50-odd bottling
plants in the country, 24 are company-owned and the remaining
are franchisee-operated. The loss-making COBO operations account
for nearly 80% of sales of Coca-Cola India business, valued
at around Rs 3,000 crore. In September Atul Singh took charge
as president of India Division, replacing Sanjiv Gupta, who
quit the company, following differences with top management
over running of India-operations. Before revamp of India operations,
Coca Cola India division comprised India, Sri Lanka, Bhutan
and franchisees as well as bottling operations in India.
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