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Money > Business Headlines > Report April 11, 2002 | 1415 IST |
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Coke seeks 5-yr moratorium on public issueBS Bureaux Beverage major Coca-Cola India has once again petitioned the government seeking a five-year moratorium on the mandatory divestment of 49 per cent equity through an initial public offering about six months after the rejection of its earlier request. Like on the previous occasion, the company has requested the government to grant a deferment, pending a decision on the waiver front. This time, Hindustan Coca-Cola Holdings (Coca-Cola India) has cited several cases of delisting by multinational firms in the past one year to bolster its claim for waiving the initial public offering condition. It has said that the government has also in the past relaxed divestment conditions in the case of several sectors, and its petition should be seen in the light of these developments. The condition was imposed on the company in 1997 when it was allowed to bring in $700 million worth foreign direct investment, and also to acquire its franchise bottlers in India to set up an integrated bottling system. Coca-Cola had then agreed to off-load 49 per cent shareholders to resident Indians through a public offer. The company has invested close to $840 million in its Indian operations. In October last year, the government had turned down the company's proposal on the grounds that entry-level conditions have to be complied with. Sources in the food processing ministry today told Business Standard that it will have no objection to Coca-Cola's proposal. But in a complete turnaround from its earlier stance, officials in the commerce and industry ministry added that the government may seek the law ministry's advise on the matter. Coca-Cola's application was submitted with the secretariat for industrial assistance (SIA) on Tuesday. The case may come up for consideration at the Foreign Investment Promotion Board's meeting next week. A Coca-Cola spokesperson said: "We have submitted a proposal based on the recent policy directives and some precedents." In the last one year, about 25 companies have come out with open offers aimed at delisting their Indian subsidiaries from the stock exchanges. Sixteen of these have been multinationals which include among others Philips, Carrier Aircon, Otis and Reckitt Benckiser, etc. The soft-drink company has also urged the government that if a decision on the waiver is pending, it be allowed to defer its initial public offering plan. It has not been in making profits for several years and accumulated losses are in excess of Rs 2,000 crore as against a total investment of Rs 3,380 crore made in the Indian operations so far. Till March 2001, the accumulated losses of Rs 2,178 crore had eroded 66 per cent of its investments, reducing its book value to Rs 3. In the calendar year 2001, however, Coca-Cola has made an operating profit. Company officials said they may be ready to come out with an initial public offering in 2005. ALSO READ:
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