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Coke seeks nod for 30 future projects

Kevin James in New Delhi

In an unpredented move, Coca Cola South Asia Holding has sought the Foreign Investment Promotion Board's clearance for about 30 future downstream projects for bottling ventures. The multinational has assured that it would keep the government informed on all individual downstream ventures as and when they are conceived.

Besides this advance approval, the multinational has sought the FIPB's approval for four bottling ventures. The units will be set up by its wholly-owned holding subsidiaries Bharat Coca Cola Private Limited and Hindustan Coca Cola Private Limited. A decision on the proposal will be taken by the FIPB next week.

A Coke spokesperson said the advance approval has been sought to save time and efforts involved in seeking clearance on a piece-meal basis. However, unless the projects are similar in nature, it might be difficult to give such ''in principle'' approval as the board resolutions of companies where equity has been taken over have to be submitted. This is mandatory according to the new guidelines for FDI approvals.

Going by the hints given by the Coke spokesman, all the future projects may not be greenfield ventures as it would involve huge investments from the multinational.

Significantly, after the FIPB slapped the 49 per cent disinvestment condition on Coca Cola, the multinational has tried several strategies to turn it into an advantage. In the first instance, the company approached all its bottlers with a buyout offer which involved handing over bottling plants in return for a small equity in one of the Coca-Cola subsidiaries.

Meanwhile, the FIPB has written to the Cabinet committee recommending a change in investment policy. The note says that soft drink MNCs should disinvest upto 49 per cent in downstream joint ventures.