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Coke may divest Rs 1,600-cr worth equity

Failing to get a relief from the Prime Minister's Office for a five-year moratorium till July 2007, US cola giant Coke may have to divest stake totalling about Rs 1,600 crore (Rs 16 billion) in Indian operations, where its equity investment now stands at Rs 3,307 crore.

Coke, which announced its decision to divest 49 per cent in Hindustan Coca Cola Beverages Private Ltd, had written to the Prime Minister's Office on July 17 saying 'enforcement of the 49 per cent divestment condition can in principle result in a repatriation of over Rs 1,600 crore of foreign direct investment.

"Divesting these shares at a premium will significantly increase the quantum of that capital repatriation," director Sanjiv Gupta had said in the letter addressed to the grievance cell of the PMO.

Company officials said that they did not get any response from the PMO on the communication which sought 'as an interim measure, extension of time till July 2007.'

Terming the stand taken by the Foreign Investment Promotion Board in October last year - that all entry conditions were binding and could not be relaxed as 'incorrect' and 'contrary to past precedent' - the HCCB communication said that divestment condition would only result in repatriation of FDI which had come into India.

" Coca-Cola has so far invested $785 million (equivalent to approximately Rs 3,307 crore, or Rs 33.07 billion) towards equity in its beverage subsidiary (apart from $20 million invested in the concentrate subsidiary)," HCCB said.

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