In return, the bottlers who join the multinational as a shareholder will have to merge their bottling company into one of the subsidiaries.
In the event of bottlers spurning the Coke offer, the multinational has decided to go on its own through the two subsidiaries and either rope in financial institutions or go public to subscribe to the remaining equity. Coke will have majority control through its 51 per cent holdings in the two ventures.
The offer is the main issue on the agenda in the crucial meeting between Douglas Daft, president, Middle and Far East group of The CocaCola Company, and the Indian bottlers scheduled on October 1 in London. Richard Nicholas, chief executive and president of CoCaCola India, will also be present at the meeting.
While Coke is expected to retain the existing bottlers by renewing their licences which come up for review in 1998-99, even in case of a refusal of the fresh offer, it will set up its own bottling lines of sizes above 1200 bottles per minute (compared with the existing sizes of around 400 BPM) which would make the existing bottlers marginal players in the business.
Moreover investments on promotional and marketing schemes will be operated through units controlled by the two subsidiaries and support to existing bottlers in these areas will be withdrawn.
If the plans go through, Coke would be operating in India through two outfits - CocaCola India and Cocacola South Asia Holdings. While CoCaCola India will be solely responsible for the manufacture and supply of soft drinks concentrate, it will transfer its prevailing functions of bottling, marketing and distribution to CocaCola South Asia Holdings.
Under the plan, Coke envisages only two bottling companies which will cover the entire
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country.
COKES NEW AGENDA
To offer 49% equity to its 53 franchisee bottlers in the two subsidiaries of CocaCola South Asia Holdings.
Bottlers picking up equity to merge their companies with one of the two subsidiaries.
If the bottlers refuse, Coke will rope in domestic financial institutions or go public for subscription to the remaining 49% equity.
CocaCola India to manufacture and supply soft drink concentrate and transfer bottling marketing and distribution functions to CocaCola South Asia Holdings.