rambhai.com - Coke, Pepsi divestment may be bottled after inquest

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News: Coke, Pepsi divestment may be bottled after inquest

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posted by patelarp 1353 days ago

NEW DELHI: Call it cola comparison, but it is not about fizz or pesticides. The government has decided to compare all aspects of the investments made by cola giants Pepsi and Coke in India to study if waiver of the divestment clause imposed on the two multinationals serves any purpose. The move is set to prolong PepsiCoâ€™s wait for waiver of the mandatory 49% divestment condition imposed when it obtained permission for investing in India. Coca-Cola India has already fulfiled that condition by diluting equity through private placement, only to buy the shares back and re-convert into fully-owned subsidiary of the American parent. The department of economic affairs in the finance ministry and the department of industrial policy & promotion have been given the responsibility of studying the rationale of the divestment condition placed on the two companies. The purpose of the comparison is to go into the depth of the divestment condition and see if it has been fulfiled, highly-placed government sources said. The impact of the private placement by Coca-Cola India, instead of an IPO, and the buy-back would also be part of the study, they added. According to a decision by the Foreign Investment Promotion Board (FIPB), the comparison would look into the following details: â€œWhat was the rationale of divestment condition placed in the approvals of PepsiCo and Coca-Cola?; What was the dispensation clause?; and What is the difference or similarity between the proposals of PepsiCo and Coca-Cola?â€ The policy intent for the condition must be ascertained and deliberated in the first place, the Board emphasised.
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