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Coke may confer with govt again on IPO

BS Bureau

Coca-Cola India is expected to renegotiate with the government afresh for exemption from issue of shares to the Indian public in view of the changed profile of the company's business and the layered nature of its corporate structure.

"The indication is that the company would like the heat to settle down in the next few months before reworking the proposal. At present, Coca-Cola is focussed on launching new products and brands in the country in the beverages sector", sources close to the development said.

The concentrate for its products like Coke are sold worldwide by The Coca-Cola Company, which is also known by its New York Stock Exchange code of 'KO'.

The bottling operations are carried out through 'anchor' bottlers elsewhere in Asia but in India these are mostly owned by Coke India.

The company is understandably reluctant to go public with the closely-guarded TCCC operations of concentrate selling and new concentrate research and development.

"As a major foreign investor the company can be optimistic that the government would take a considered view on the subject of domestic issue of shares, which, ironically, had been voluntarily offered by the company when it re-entered the country", said the source.

Coca-Cola had applied to the government seeking exemption from making a public issue citing its loss-making status for the last three years.

The government had turned down the request despite the net loss reported by the company and insisted that it would have to offload shares as it had promised.

Elsewhere in Asia, the issue of listing and issue of shares was decided after consultation with the business partner, i.e., the anchor bottler.

Very often, the decision would be that of the partner. However, there was better news on the new brands front. After the recently launched 'Shock', the company was planning to bring across the berry-based drink 'Portello' to India.

Portello is the hot seller in Sri Lanka. Other beverages in the ready to drink segment, like tea or coffee-base drinks were also reportedly under study.

"The motto is to go local to satisfy customer demand wherever possible. As tea or coffee represent almost three-fourths of the Indian non-alcoholic beverages market, any beverage maker would like to be there", the source said.

Interestingly, Coke's biggest-selling brand in Japan is not Coca-Cola but a locally flavoured drink.

The largest foreign investor in the country with invested funds of Rs 34 billion, Coca-Cola operates in a double layered structure.

One layer represents the concentrate selling operations while the other represents the capital intensive, high volume bottling operations. In India the two are merged into one entity.

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