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October 5, 2001
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Money > Business Headlines > Report October 5, 2001 |
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Food processing dept, DEA oppose Coke plea on IPOPartha Ghosh & Sunanda Sanganeria The department of economic affairs and the department of food processing industries are opposed to Coca-Cola India's plea to waive the condition that requires it to make an IPO by July 2002, even as the Foreign Investment Promotion Board on Thursday deferred a decision on the application put up by the company to this effect. The company was seeking deletion of an entry condition, and "all entry level conditions are required to be adhered to," a DEA official told Business Standard. DEA, therefore, is opposed to the proposal. The other administrative ministry, department of food processing industries, holds a similar view, as per officials. Hindustan Coca-Cola Holdings Pvt Ltd had also submitted that in case the condition for divestment is not waived or if a decision on the issue is pending, it be given another five years -- that is up to 2007 -- to come out with its IPO. The soft-drinks major, which has recently forayed into the bottled water business, has cited accumulated losses worth Rs 21.78 billion (subject to audit) as on March 31 2001 which has eroded its investments of Rs 33.08 billion by 66 per cent. The book value of a Rs 10 equity share of the company is now down to Rs 3. The company has also pointed out that it will not be able to meet the Securities and Exchange Board of India guidelines for an initial public offer. As per the guidelines set by the market regulator, a company should have distributable profits for at least three years of the immediate preceding five years to make a public issue. Besides, with the present financial health of the company and the accompanying lean phase of the soft drinks business, the offer will also not be attractive to the investing public. "Any offering under these circumstances will seriously impair our corporate image and that of our brand. It will also negatively impact an already depressed market. being the largest brand in the world, the company will not like to compromise its position in any way," a letter from the company to the FIPB stated. Powered by YOU MAY ALSO WANT TO READ:
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