PepsiCo India divests four plants in North India to RJ Corp

The divestment to Varun Beverages is part of a franchise agreement

PepsiCo India has divested its four plants in North India to its bottling partner Varun Beverages, a part of RJ Corp, as part of a franchise agreement.

"This transaction is aligned with PepsiCo's long-term strategy to grow our business in India, which is an important strategic market," PepsiCo India Chairman and CEO D Shivakumar said in a statement.

He further said: "We are expanding our partnership with a strategic partner who understands the local market and has continually demonstrated the ability to drive synergies and deliver strong market execution."

The company did not share the financials of the transaction.

As per the agreement, PepsiCo has franchised its beverage business in parts of Uttar Pradesh, Haryana, Chandigarh, Uttaranchal, Himachal Pradesh and Punjab.

Commenting on the development, RJ Corp Chairman Ravi Jaipuria said: "This transaction will enable VBL to integrate its operations across the north and east of the country and realise supply chain efficiencies, manufacturing economies of scale, greater efficiencies in inventory management, an optimized logistics network, improved customer service, and enhanced cost leverage."

PepsiCo India said: "With this new transaction, our India bottling footprint will consist of two contiguous territories - North and East, completely franchised - and South and West, largely maintained as a company-owned bottling operation."

PepsiCo India, however, added: "We have no plans to franchise our company owned bottling operations in South and West India."

To drive long term sustainable growth in this key market, PepsiCo is committed to continue investing and winning by strengthening both its company-owned operations and franchise partners, it added.

VBL, owned by USD one billion Dollar RJ Corp, is PepsiCo's largest independent bottler in India. It currently operates PepsiCo bottling operations across parts of Haryana, Uttar Pradesh, Madhya Pradesh and Rajasthan, North East, Goa, West Bengal and Delhi with nine plants in India.

It also handles PepsiCo bottling operations in Nepal, Sri Lanka, Zambia, Morocco and Mozambique.

In 2013, PepsiCo had announced an investment of Rs 33,000 crores by 2020. The company is strengthening its company-owned operations in India through multiple initiatives.

RJ Corp is a diversified group having franchise rights for global brands like Pizza Hut, KFC, Costa Coffee and has its own brand Vango. It has business interests in 16 countries of South Asia, Middle East, Africa and Australia and employs more than 20,000.