Coke Allowed To Retain 100% Stake In Arms

The Cabinet Committee on Foreign Investment yesterday permitted Coca-Cola to retain a 100 per cent stake in each of its two proposed bottling subsidiaries.

In a clarification issued to the beverage multinational, the CCFI has, however, asked the company to divest up to 49 per cent of its stake within five years in any downstream bottling venture that these two subsidiaries set up.

This clarifies the earlier approval obtained by Coke under which the company was asked to dilute its stake in the two wholly-owned bottling subsidiaries.

Last year, Coca-Cola South Asia had obtained a clearance to set up two wholly-owned bottling subsidiaries. The multinational had proposed to invest $700 million in 10 years through the two subsidiaries.

 

However, the earlier clearance had come with the rider that the company dilutes its stake to 51 per cent in five years by taking in Indian partners. Coke had written to the industry ministry asking it to amend the divestment clause.

Coke can now operate the two proposed companies as holding companies for investing in any bottling venture. Coke, which plans to set up an integrated bottling system, has already initiated talks with its domestic franchisee bottlers for joint ventures by offering to buy out their stakes in their respective companies. However, the talks have till now proved futile with bottlers rejecting Coke's sellout offer.

CCFI defers Tata-SIA plan proposal

The CCFI yesterday deferred discussion on the controversial Rs 2,400 Tata-Singapore International Airline venture. The proposal was not taken up as civil aviation minister C M Ibrahim was not in the Capital.