Chauhans To Sell Bottling Rights

Ramesh Chauhan is close to clinching a deal with soft drinks giant Coca-Cola to sell off his franchise rights to bottle and market the multinational's products in Delhi and Mumbai.

In what is slated to be a much bigger deal than the $40 million sell-off of his popular beverages brands in 1993, Ramesh Chauhan will get between Rs 150 crore and Rs 200 crore from Coke as his share. The latest deal also includes Ramesh Chauhan's brother, Prakash Chauhan, who oversees the Mumbai operation and who is a more or less equal partner in the Parle business.

The two brothers have agreed to split the bottling business once the sell-out agreement is signed with Coke.

 

Under the agreement being worked out, the Chauhans will also sell the plant and machinery in the various units to the multinational.

However, they will retain control of the prime land in Delhi and Mumbai on which the factories are located.

At the moment, the Chauhan brothers control four bottling plants, two each in Mumbai and Delhi. While Ramesh has 100 per cent equity in one of the bottling units in Delhi, in the second bottling unit he has equal equity with his brother. Similarly Prakash controls one bottling unit in Mumbai on his own while in the second he has Ramesh as his equal partner.

Under the agreement being worked out each brother will buy out the other's equity in one of the bottling units which is held jointly, to become to sole owner.

At the moment, while the Delhi operations are overseen by Ramesh, Prakash is in control of the Mumbai operations.

Chauhan's latest deal with Coke is much bigger than the headline hitting initial deal of October 1993 under which he sold popular beverage brands Thums Up, Limca, Gold Spot and Citra, among others to the multinational.

A couple of years later, Chauhan was also paid an undisclosed amount by Coke to give up the rights offered to him to set up bottling plants in Pune and Bangalore, which was a part of the 1993 buy-out agreement.

The rights had become a bone of contention between the multinational and Chauhan.

The Chauhan deal falls in line with Coke's strategy in India of buying out bottlers and bringing them under two subsidiaries which have been set up for it in India.

A few years ago, Coke had offered its bottlers the option to sell their bottling units and in return pick up equity in the two Coke bottling subsidiaries.

The multinational at present has 54 bottling plants in the country.