The Union Cabinet on Saturday approved the proposal of the U.S.-based soft drinks major, Pepsico Holdings Pvt. Ltd., to inject additional equity of $200 million (around Rs.930 crore) into its Indian arm within three years. A few months ago the company had announced plans to pump in $200 million in 2010 on expanding manufacturing capacity, market infrastructure, supply chain and R&D.
The investment was approved at the meeting of the Cabinet Committee on Economic Affairs headed by Prime Minister Manmohan Singh. It would take Pepsico’s total FDI into the country to $655 million. The company had said of the planned $220 million investments, $170 million would be from Pepsico while $50 million would come from its bottling partners. The approval is to invest the money within three years but the company has plans to spend it within a year. The $200 million is part of PepsiCo’s $500-million investment plans, spread over three years, announced by the company’s India-born global head Indra Nooyi during her visit to the country last year. Pepsico, which held its high-profile global board meeting in India in November, had announced that it would triple its business in the country every five years.
In addition to $200-million approved, Pepsico had earlier said it would set up four new plants over three years, out of which three would be for beverages business and one for snacks.
According to industry estimates, on an average it costs around $30 million to set up a beverages plant and around $50-60 million for a food plant. The company is in the process of identifying locations for these plants.
At present, Pepsico has 43 soft drinks plants in India. It has three plants for the snacks business. For the food business, it already has three plants.
