INDIA – Hindustan Coca-Cola Beverages Ltd (HCCBL), the bottling arm of Coca-Cola in India, reported a three-fold increase in net profit to Rs 2,808.31 crore (US$332.8M) for the fiscal year ending March 31, 2024.  

This surge came as the company’s revenue grew by 10.10 percent to Rs 14,021.54 crore 9US$1.67B), compared to Rs12,735.12 crore (US$1.5B) in the previous fiscal year.

HCCBL’s total income rose 10.77 percent while expenses increased by 10.48 percent to US$1.55 billion. 

HCCBL, which operates 16 factories across India and produces over 60 beverage products, including Coca-Cola, Thums Up, Sprite, Minute Maid, Maaza, and Fanta, also saw a trise in profit before tax, reaching US$440.7 million.  

However, its advertising and sales promotion expenses surged 69.21 percent to Rs 108.11 crore (US$12.8M), and inventory losses increased by 25.4 percent to Rs 94.07 crore (US$11.1M)during the year. 

Meanwhile, Coca-Cola India Pvt Ltd, responsible for brand management, recorded contrasting results. Its net profit dropped by 41.82 percent to US$49.8 million in FY24. 

Despite a modest revenue growth of 4.24 percent to US$558.7 million, Coca-Cola India’s total expenses increased by 16.27 percent. A significant factor in this rise was a 35.47 percent increase in advertising and promotional expenses, which reached US$180.15 million.  

Additionally, royalties paid to The Coca-Cola Company saw a 4.68 percent uptick, amounting to US$60.14 million. 

HCCBL also implemented a strategic asset-light approach during the fiscal year, divesting certain business undertakings through Business Transfer Agreements (BTA) and Asset Transfer Agreements (ATA).  

This move involved a “slump sale” of HCCBL’s operations related to the packaging, distribution, and sale of non-alcoholic beverages in key territories, including Rajasthan, Bihar, the northeast, and parts of West Bengal.  

These steps are in line with Coca-Cola’s global strategy of refranchising and optimizing operations. 

HCCB acquisition plans

Meanwhile, the Bhartia family, led by Shyam and Hari Bhartia of Jubilant Group, is in advanced negotiations with Goldman Sachs to jointly acquire a 40 percent stake in HCCBL.  

This acquisition would grant the Bhartias a significant interest in Coca-Cola’s fully-owned bottling operations in India, which is Coca-Cola’s fifth-largest market globally. 

Goldman Sachs plans to finance its portion of the deal through a Special Purpose Vehicle (SPV), committing between Rs 3,000 crore and Rs 3,500 crore via a convertible preferred equity structure, with a 20 percent internal rate of return (IRR) cap to provide downside protection.  

The Bhartia family is expected to match this contribution. The financing is set to convert upon HCCBL’s anticipated Initial Public Offering (IPO) in the next two to three years. 

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