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PRESS TRUST OF INDIA
NEW DELHI, SEPT 23: Ramesh Chauhan, former owner of Thumps Up, Limca and three other leading soft drink brands, has finally sold his bottling units in New Delhi to the Atlanta-based soft drink multi-national, Coca Cola.
A memorandum of understanding (MoU) to this effect was signed yesterday with Coca Cola and the sale would be completed by mid-October, Chauhan said. Though Chauhan remained tightlipped about the price of the two units, Coolaid and Delhi Bottling Company (DBC), industry sources said it could be close to Rs 100 crore.
Coolaid is wholly-owned by Ramesh Chauhan while he and his brother Prakash Chauhan hold 50 per cent each in Delhi Bottling Company (DBC). Ramesh Chauhan has already signed an agreement with his brother to buy out his 50 per cent stake in DBC for an undisclosed sum.
The bottling plant in Mumbai, where both the brothers have an equal stake, would also be sold to Coca Cola in a month's time, Chauhan said. Together Mumbai and Delhi are expected to fetch around Rs 250 crore for the Chauhans, who had earlier sold their soft drink brands to Coca Cola in 1993 for a reported $ 60 million, giving a major boost to Coca Cola over Pepsi.
"Details of the Mumbai plant sale are being worked out. We (Ramesh and Prakash) will split the operations vertically between two of us," Chauhan said. According to the MoU signed with Coca Cola, Chauhan would sell assets and businesses of DBC and Coolaid while keeping the land and building to himself.
The sale would include physical transfer of machinery, 45 trucks and the entire marketing personnel to Coca Cola fold. DBC and Coolaid combined, bottle two million cases a year as compared to seven million cases by the Mumbai bottling unit.
Chauhan said he would now concentrate on building Bisleri mineral water brand, which is targetting a Rs 1,000 crore turnover by the turn of the century. He said he would set up new lines at the two plants for manufacturing Bisleri soda and Bisleri mineral water.
Incidentally, Bisleri soda's five year bottling agreement with Coca Cola is ending in November. He said Bisleri had tied up with Cadbury Schweppes to bottle the soda in their units after the agreement with Coca Cola expires. The sale of the bottling units would bring down the curtain on a turbulent relationship between the two.
Ramesh Chauhan, a staunch critic of foreign investment in soft drinks, has been at loggerheads with Coke on a variety of issues including moves to set up holding companies for "integrating" bottling units.
EEB adds: Due to its constant fracas with its bottlers, Coca Cola India has set up four new companies for each region for buying off its bottlers. While the bottlers are given an option to pick up a minority stake in these companies, Coca Cola has decided to retain 51 per cent equity. The company has even deciedd to offer a part of its equity in these bottling companies to Indian public.
Though many bottlers were opposing the plans of Coca Cola India to takeover their plants, they do not have the funds to invest in new bottling lines and technology. With the help of these four companies, Coca Cola plans to invest more it consolidating its bottling companies under one umbrella.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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This story was printed from Net Express located at http://www.expressindia.com. Net Express provides a portal to India, with news from The Indian Express and The Financial Express along with sites on travel and tourism, the entertainment industry, the power sector, the environment and much more.
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