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The Foreign Investment Promotion Board (FIPB) could seek the Reserve Bank of India’s views on Hindustan Coca-Cola Beverages’ (HCCB’s) proposal for delayed redemption of preference shares in favour of its holding company, Hindustan Coca-Cola Holding (HCCH).
HCCH is the Indian arm of the US beverages major Coca-Cola. “It is a FEMA issue and thus the RBI has to give a view on it,” an Industry Ministry official told Business Line .
HCCB, which is the bottling arm of Coca-Cola India, had issued preference shares to its holding company HCCH in 2005.
The shares worth Rs 803 crore were to be redeemed by 2012.
HCCB now wants time till March 2019 to redeem the shares. The company, reportedly, wants to defer preference share redemption as it wants to meet its investment commitments for adhering to its 2020 goals of doubling revenues to $200 billion.
The proposal is on the agenda for the FIPB’s meeting scheduled for January 18.
It is not a complicated proposal as the company had only sought an extension of the time-line for redemption and not an exemption from the commitment, the official added.
“On the face of it, there is no reason why HCCB should not be given an extension. But it is a matter under the jurisdiction of the RBI and a go-ahead has to come from there. The FIPB, of course, will take a final view on the issue after weighing all inputs,” the official said.
The Department of Industrial Policy and Promotion has forwarded the company’s proposal to the FIPB.
Other companies
Other US-based companies that have placed their proposals before the FIPB for consideration this month include AWS True Power, a solar and wind energy company, and National Railway Equipment Company, a power equipment manufacturing company that also does consultancy work.
“AWS True Power has sought to invest Rs 13.5 crore in a limited liability partnership with 90 per cent ownership, while NREC wants to issue shares against its pre-occupational expenses,” the official said.
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