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Ambarish Mukherjee

NEW DELHI, Sept. 16

Adding a new twist to the issue of disinvestment of 49 per cent equity in favour of Indian shareholders by Coca-Cola in its Indian subsidiary Hindustan Coca-Cola Holdings Private Ltd (HCHPL), the Department of Company Affairs (DCA) has asked the Department of Industrial Policy and Promotion (DIPP) to provide details about the disinvestment conditions laid down on the US-based soft drink multinational when it was permitted to re-enter India in 1997.

The DCA has also asked the DIPP to provide all other relevant information and materials regarding how Coca-Cola is opting for private placement route for disinvestment instead of an initial public offering (IPO), as was agreed by the company and the Government earlier.

Government sources, on conditions of anonymity, told Business Line that though the Foreign Investment Promotion Board (FIPB), under the administrative control of the DIPP, had initially rejected Coke's plea for a waiver of the disinvestment condition or at least an extension of five years, tremendous pressure from certain sections of the US Government smoothened the way for Coca-Cola, which had now announced that it would disinvest in favour of private investors, business partners and resident Indian employees' welfare and stock options trusts.

Senior US officials had taken up the issue of Coke disinvestment with the Principal Secretary to the Prime Minister, Mr Brajesh Mishra, and the then Commerce Secretary, Mr Dipak Chatterjee, and requested their intervention in the matter, Government sources revealed.

The DCA move follows complaints launched by the Bhartiya Janata Party (BJP) Member of the Lok Sabha, Mr Kirit Somaiya.

Mr Somaiya, in a letter to the DCA Secretary, Mr Vinod Dhall, has said that, "Initially Coca-Cola, Pepsi and other MNCs asked for exemption. On refusal, now they have come up with a noble idea. The basic concept will be defeated. Such type of offloading of 49 per cent shares to sister front companies, investors, suppliers, employees should not be allowed.''

The ruling party MP has also urged the DCA Secretary that "I would once again request you that the benefit of licence given to these MNCs must be made available to common public, small investors.

The companies should be forced to come out with public issue in a normal manner. No exemption should be allowed. All the loopholes should be plugged.''

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