The Telegraph
Since 1st March, 1999
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FIPB dithers on Coke plan

New Delhi, March 6: Coca-Cola’s proposal to disallow voting rights to Indian shareholders to whom it had divested 49 per cent of its shares recently was taken up at a meeting of the Foreign Investment Promotion Board (FIPB) today.

However, the outcome of the application is not known and FIPB sources said a decision on the issue may have been deferred as it “remained a hot potato”.

Coke is known to have applied to FIPB to allow it to give the Indian shareholders who picked up stake in its downstream venture differential voting rights.

Sources said the proposal of Hindustan Coca-Cola Holdings Private Limited was there on the agenda for the FIPB meeting.

An official spokesperson for Coca-Cola India remained tight-lipped on the issue and said he was unaware of what happened at the meeting. The cola major had announced the completion of its divestment on February 27, a day ahead of the deadline set by the government for the mandatory divestment.

Hindustan Coca-Cola Holdings had privately placed the 49 per cent stake in its bottling subsidiary — Hindustan Coca-Cola Beverages — with select shareholders, including some former bottlers.

Analysts felt divestment would hold little meaning if voting rights were denied to Indian investors. However, a counter view was offered by another expert who saw differential voting rights as a permissible option, provided it is done in tune with relevant rules.

Today's FIPB meeting also considered applications from Quintiles Spectral India, Covana Woodplast, Mainetti India, Buttonvile Diamond tools (India), Network Appliances Inc, USA, Real Mazon India.

Coca-Cola had earlier divested 10 per cent of its equity stake in the downstream venture to two of the employee trust of HCCB. It divested the remaining 39 per cent last week. The company said on that day that of the remaining 39 per cent, a little over 6 per cent was placed with former and current bottlers and suppliers, representing the entire subscription applied by them. The remaining 33 per cent was placed with financial, private and high net worth investors.

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