Coca-Cola India has offered to buy back shares in its bottling subsidiary -- Hindustan Coca-Cola Beverages -- from its bottlers as well as the financial institutions in the next three years.
In its agreement with the investors, the company has offered a 10 per cent assured return on investments every year for the next three years. After this, the company will have the option of buying back its shares. This translates into a return of about 33 per cent in three years.
The agreement adds that, in case the investors do not sell back the shares after three years, the subsequent buyback price would be determined on the basis of the profitability of the company or the value at which any other company/investor picks up the stake in HCCB at that time.
Most bottlers feel the return on investment is good, considering that they get an average return of 5-6 per cent on their investment in the beverage plants. The company officials, however, refused to comment on the issue.
Coca-Cola India had recently divested 49 per cent of its stake in HCCB to the Indian shareholders. While the company transferred 10 per cent of its shares in HCCB to two employee and welfare trusts in October last year, it recently placed a little over six per cent with former and current bottlers and suppliers.
The remaining stake was placed with private, high networth investors and financial investors including HDFC and ICICI.
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