There is disquiet among Coca-Cola India’s franchise bottlers over the proposed monetisation plan of the company’s bottling arm Hindustan Coca-Cola Beverages (HCCB), industry sources have told FE.
Some of the 8-10 third-party franchise bottlers, who manufacture and distribute Coca-Cola’s beverages in India, are interested in participating in the proposed pre-initial public offering (IPO) investment round of HCCB, sources familiar with the matter said. HCCB is offering around a 40% stake to potential investors during the pre-IPO stage, valuing the firm at around $4 billion (Rs 30,000-33,000 crore), they added.
HCCB is reportedly in talks with the Burman family of Dabur and the Bhartias of the Jubilant group, among others, for the proposed investment. It is reliably learned that these two groups are open to investing around $1.2 billion (Rs 12,000-13,000 crore) during the pre-IPO stage.
Some franchise bottlers are eager to participate in the pre-IPO round and have been in discussions with HCCB regarding this. However, informed sources indicated that it remains unclear whether these bottlers will be given the opportunity to invest, which has contributed to the unease. When contacted, HCCB declined to comment.
HCCB is reportedly inclined to involve larger groups in the pre-IPO stage, as this could help boost investor interest ahead of its proposed IPO. HCCB remains the largest bottler of Coca-Cola in India, operating 16 plants nationwide, with a revenue of Rs 12,840 crore for FY23, reflecting a year-on-year growth of 40%.
In January of this year, HCCB announced the sale of its bottling operations in Rajasthan, Bihar, the northeast, and select areas in West Bengal to franchise bottlers. Some of these franchise bottlers believe they have the financial strength to participate in the pre-IPO stage, since they handle large markets for the beverage major.
Coca-Cola has evenly divided its bottling operations in India, with HCCB managing most markets in the south and west, while franchise bottlers oversee key markets in the north and east.
Overall, franchise bottlers are estimated to have reported sales of Rs 10,000-12,000 crore for FY23. Profit numbers for these bottlers for the same period could not be immediately determined.
HCCB’s FY23 net profit, meanwhile, jumped two-fold to Rs 809 crore, its regulatory filings for the period show. FY24 numbers of HCCB are not available yet with the Registrar of Companies.
From: financialexpress
Financial News
