New Delhi: Coca-Cola India’s holding company has sought the extension of preference shares it holds in its bottling unit in keeping with the company’s need to continue investing in the business in the country.
The non-cumulative, non-participative preference shares represent Rs.803 crore invested in Hindustan Coca-Cola Beverages (HCCB), the bottling unit, by holding company Hindustan Coca-Cola Holdings (HCCH) in 2005. The Coca-Cola Co. India has submitted a proposal to the foreign investment promotion board (FIPB) seeking extension of the seven-year instrument by a similar period ending March 2019. The proposal is to be disucssed by FIPB on Friday.
“HCCB has had accumulated losses over a significant period, that it has operated in India. The company has reported profits over the last three years. However, at this point, it is important to continue to invest in capabilities and resources and fuel overall economic growth while capturing the opportunity in the packaged beverage segment. We have therefore sought an extension for the redemption of preference shares till March 2019,” the company said in an email response. “The shares carry a coupon rate of 1%.”
HCCB accounts for 65% of Coca-Cola India’s bottling operations. Coca-Cola India has already invested $2 billion in India and plans to pump in another $5 billion over eight years to expand capacity and improve its distribution network.