Financial Daily from THE HINDU group of publications
Thursday, Nov 14, 2002
Financial Daily from THE HINDU group of publications Thursday, Nov 14, 2002 |
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Restructuring Corporate - Restructuring Coke seeks to uncork Rs 803 crore Ambarish Mukherjee
NEW DELHI, Nov. 13 HINDUSTAN Coca-Cola Holdings Private Ltd (HCCHPL), the holding company for Coca-Cola's bottling operations in India, has sought the approval of the Government for a massive capital restructuring of its bottling operations. Coke's bottling operations are undertaken by HCCHPL's downstream Indian subsidiary, Hindustan Coca-Cola Beverages Private Ltd (HCCBPL). HCCHPL has filed an application with the Foreign Investment Promotion Board (FIPB) seeking permission to use the Rs 803 crore invested by it in HCCBPL and lying as an unused balance in the `advance against share capital' account of HCCBPL. The company has sought FIPB's permission to invest this amount in fully paid-up one per cent dividend redeemable non-cumulative, non-participating preference shares of HCCBPL having a face value of Rs 10 each. The company proposes to redeem the preference shares in one instalment after seven years from the date of allotment of the shares. Going by the sheer size of restructuring, this is probably the single largest capital reduction exercise undertaken by any company in the country. FIPB will take up the proposal for consideration at its meeting scheduled for Thursday. The company, in its application, has informed the Government that HCCHPL has invested around Rs 3,308 crore in HCCBPL so far. But HCCBPL has incurred huge losses during the course of its business and accumulated losses as on March 2001 stood at Rs 2,086 crore which it now plans to set off against the Rs 2,100 crore lying in the share premium account of the bottling company. HCCBPL received this amount from HCCHPL when it has issued 1.05 crore equity shares of Rs 10 each carrying a premium of Rs 200 to the holding company. As per the plan, out of the Rs 3,308 crore invested by HCCHPL in HCCBPL, Rs 405 crore will represent the issued and paid-up equity capital of the company, Rs 2,086 crore accumulated losses will be set off against the Rs 2,100 crore lying idle in the securities premium account of the company and the balance Rs 803 crore will be invested in the preference share of the bottling company.
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