Coke gets six months break for divestment

NEW DELHI: The government has granted Coca-Cola another six months (till February 28, 2003) to complete the divestment of 49 per cent equity in its Indian arm in favour of Indian participants following a representation by the company committing to comply with the divestment condition and listing the steps it has already initiated for this.
‘‘In view of the fact that Hindustan Coca-Cola Holdings Pvt Ltd has agreed to comply with the divestment condition, the government, after taking into consideration the steps taken and proposed to be taken by the company to implement the divestment condition, extended the time for fulfilment of the divestment condition from August 16, 2002, to February 28, 2003,’’ an official statement said.
The company has proposed to divest around 39 per cent of its equity holdings in Hindustan Coca-Cola Beverages Pvt Ltd to private investors and business partners and the balance 10 per cent in favour of local resident Indian employees welfare and stock option trusts. The divestment in favour of employees and business partners is proposed to be completed by October 17, 2002, and the balance by February 28, 2003.
On Hindustan Coca-Cola Holdings was given an exemption from making a public offer as part of the stipulated divestment due to pressure from the US, the government clarified: ‘‘As per existing conditions, Indian participation can be in the form of participation by individuals/joint venture partners or general public or both.’’
Representations made by the company for deletion of the divestment condition were considered twice by the government in 1997 and twice by FIPB at its meeting on December 12, 2000, and October 4, 2001. The proposals were rejected on all occasions. The company made yet another representation in April 2002 which was also rejected. The mandatory divestment clause was included in the approval granted to Coke’s Indian arm way back in 1997.