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Coke plans to set up Rs 1,200-cr unit in AP; Nellore to be biggest greenfield facility in Asia

The Economic Times:  March, 2014

Hyderabad: The world's largest beverage firm, Coca-Cola, plans to set up its biggest greenfield manufacturing facility in Asia at a cost of about Rs 1,200 crore in Nellore district of Andhra Pradesh to take on its rival PepsiCo, which has decided to build a similar unit in the same state.

"Coca-Cola's Indian representatives, who are currently waiting for clearances from their headquarters, are expected to sign an initial lease agreement with IFFCO over the next couple of weeks. The facility would come up over 150 acres of land in the industrial zones being developed by IFFCO in the region," the person told ET.

Coca-Cola's move to choose the district is to bridge a growing demand for its products in the three southern states of Andhra Pradesh, Karnataka and Tamil Nadu, a person familiar with the development said. State officials confirmed Coca Cola's move and a company spokesperson said on condition of anonymity that talks were held with IFFCO for setting up the facility.

"They had approached us earlier with a proposal but it was then not very clear whether they would set up the project on their own or one of their franchisees would invest," a senior bureaucrat with the state industries ministry said, "Pepsi-Co setting up its facility in Chittoor district may have prompted Coca Cola to expedite their plans and locate their unit close to their rival to compete on resources as well as markets."

Coca-Cola trails behind its own Thums Up and Sprite aerated drinks as well as rival Pepsi in India. This has prompted the Atlanta-based beverage giant to invest in one of the most expensive print advertising campaigns recently. India is the seventh largest market for Coca-Cola. The company has announced incremental investments of $5 billion (Rs 30,500 crore) along with its partner from 2012 to 2020.

The company, which has 58 bottling plants in India, has four plants in Hyderabad. Its leading bottling partner Hindustan Coca-Cola Beverages owns 24 plants spread across the country.

IFFCO is developing Kisan special economic zones spread across 2,776 acres at Naidupet in Nellore, where nearly a dozen dairy and food processing companies have already set up their facilities and another 10 have signed initial agreements involving more than Rs 3,000 crore of investments.