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Coca Cola planning to go public

Coca Cola India is planning to enter the capital market.

"CCI is planning to go public in pursuance of the Foreign Investment Promotion Board direction that the company must offload 49 per cent of its equity within five years,'' company sources said.

The Atlanta-based beverages major has already approached its bottlers to share the equity with them. ''In case the bottlers cannot account for this 49 per cent stake, we will go public,'' the sources said.

However, a concrete decision on this matter is awaited. The size of the issue and other details would be decided later

Within five years, the sources said, 49 per cent of the company's equity will be in the hands of the public, which includes its bottlers.

The idea, as stated by Coca Cola President and Chief Executive Officer Donald Short recently, was to have a regional company comprising Coca Cola India, its bottlers, and the general public. The company would have a centralised purchasing system.

It may be recalled that the FIPB approval envisaged that Coca Cola South Asia Holdings Inc (CCSAH) can set up two wholly-owned Indian holding companies for bringing in foreign capital for investment in production and distribution of non-alcoholic beverages. It further permitted that these downstream subsidiaries should ensure Indian participation up to 49 per cent over a period of five years.

The company is also investing 50 million dollars to set up a greenfield plant in Ahmedabad. ''This bottling unit, being set up entirely from the company's internal accruals, will have all the latest equipments. We are not leveraging our equity to raise loans for this plant,'' the sources said.

The company's franchisee contract with its bottlers is scheduled to end in 1998. ''Certain contracts might be renewed but a majority of the bottlers have been asked to join the company in the joint venture. The company is now meeting the bottlers so as to give them time to assess their desire to be part of the regional bottling companies,'' the sources said.

Short had earlier this month announced that the company would buy out the bottlers who do not want to be part of its bottling joint venture.

He had further stated the company intends to sell soft drinks at Rs 5. The company is said to be offering the bottlers a lot of money through independent valuers, who would be evaluating the price of the bottling units.

The bottling joint venture is part of CCI's larger plan of setting up an integrated bottling infrastructure.

It may be recalled that when the Centre had this summer increased the excise duty by around 17 per cent, the company asked its bottlers to absorb the raise and not to pass it on to the consumers. It then hiked the concentrate prices by 10 per cent and stated that the hike would be returned to the performing bottlers as cheques.

Faced with a crisis situation when its bottlers went on a warpath, the company announced that prices of all its brands would be increased by Re 1 and would be sold at a uniform price of Rs 8 across the country.

Within a month of this announcement, the company withdrew the incentives being offered to the bottlers and to add to their woes, effected a further five per cent hike in concentrate prices.

It, however, announced that a marketing fund would be created to support the bottlers who could not benefit from the price hike. But this plan was also dropped and CCI has finally come up with a differential tariff structure under which concentrates would be supplied to certain bottlers at reduced rates.

UNI