The old music hall joke says, Ode to a Greek urn? What’s a Greek urn? About
two-fifty a day. Boom-boom. In the case of Athens-based Coca-Cola Hellenic
Bottling Company, the answer is more like 127m euros a year on a turnover of
more than 4.2bn euros, derived from selling Coke products, juices and water
throughout central and eastern Europe, Ireland and Nigeria. The man in charge of
working out how much this Greek multinational earns is chief financial officer
Nik Jhangiani. And while he has to do those calculations using both
international financial reporting standards and US GAAP, he is at least pleased
that, from 1 January 2005, he doesn’t have to use Greek accounting standards any
“Greek GAAP is, you know, Greek GAAP. I’ll leave it at that.” Jhangiani
shrugs, perhaps not wanting to cause offence to the accounting authorities in
Athens and leaving the full horrors of those standards to our imagination.
The ability to drop Greek accounting has a more symbolic significance,
though. Coca-Cola Hellenic (CCHBC) was formed in 2000 from the merger of an
Athens-based Coke bottling company and another bottler, London-based Coca-Cola
Beverages (CCB). Jhangiani, born in India but American-educated, and a US
certified public accountant, joined about the time of the merger as an audit
director. He became group CFO last year.
Much of his work has involved bringing together the two businesses and their
financial systems. After a year and a half of integrating their internal audit
functions – CCB had its own internal auditors while the Greek business
outsourced – Jhangiani became CCHBC’s corporate controller, charged with
creating a single financial team out of the two. The first problem was in trying
to figure out what finance staff skills would be needed in Athens and who in
London had the necessary technical ability and the willingness to move to Greece
to fill the remaining gaps.
This was much more than an international relocation initiative, however.
Jhangiani was trying to create a new kind of finance department out of the
merger. “The new structure I was trying to create was very much focused on being
a provider of services to the rest of the organisation, and very much focused on
partnering-up with the commercial function. It was really around finance being
seen as a value-adding function as opposed to accountants who had to collate and
The task was made more difficult because of the raw material he had to work
with. “The CCB side, I would say, was probably a little more ‘partnering-up’,
but I don’t think it had been taken to that next step of truly being perceived
as a value-adding partner,” he explains. “On the [Hellenic] side, it was
completely number-crunching: pulling together reports, very little data
analysis, very little real understanding of the drivers behind the business and
being able to provide that information to management on a timely basis to drive
the right decisions.”
The board decided to make Jhangiani’s task a little more difficult by
throwing in a decision to report additionally under international financial
reporting standards, even though that wasn’t absolutely necessary at the time –
Greek GAAP would have sufficed from a regulatory standpoint. Then, just to make
things really interesting, they also decided to go for a New York Stock Exchange
listing. Jhangiani says the reason for the US move was to increase the
visibility of the group with investors, particularly relative to its peers, its
fellow Coca-Cola bottlers who are also US-listed. To make that move worthwhile,
to maximise the drive for visibility and to really be seen by investors as a
true player, Jhangiani and his then CFO decided they had to report under full US
GAAP as well, not simply provide the minimum necessary reconciliations. “It was
an interesting time,” he says.
The finance department that Jhangiani helped create in the early 2000s – and
over which he took full control when he was promoted to CFO in May last year –
has changed the way decisions are made by the group. Previously, at least on the
Hellenic side, management looked at the financial data provided to them and drew
their own conclusions. “But it wasn’t finance sitting across the table with
them, assisting, challenging some of the decisions they were thinking of making
based on the information that they had or the analysis that they had done,”
Jhangiani explains. “Having said that, I think it was a successful business,” he
admits. “I think people were able to do the right things in that business, but
not necessarily with the support they could have gotten from finance in driving
some of that.”
Now, finance provides much more support, especially in areas such as capital
investment and more rigorous customer profitability analysis. The business has
also adopted value-based management (VBM) principles, putting much more emphasis
on returns on invested capital. (It’s not a complete coincidence that The
Coca-Cola Company itself was one of the early adopters of VBM and economic
value-added metrics in the 1980s.) Returns at CCHBC had been running at about 2%
– value-destroying compared with a cost of capital of about 15%. An aggressive
target was set to generate returns in excess of the cost of capital by 2006.
Jhangiani says that after generating returns of 8.5% last year, he’s confident
of beating his value-creation target in 2005 – a year ahead of schedule.
The finance department has also accelerated the management reporting times
from anything up to a couple of months after the month end to five days
for the first set of financial data. “It was also about providing information
that was relevant from a management reporting perspective as opposed to a Greek
GAAP perspective,” he says.
And so the ability to drop Greek GAAP from the beginning of this year really
was quite a symbolic, even cathartic, event. That still leaves full IFRS and US
GAAP reporting, however. Moreover, CCHBC is listed on no fewer than four stock
exchanges: it inherited a Sydney listing from Coca-Cola Beverages, which
demerged from Aussie bottler Coca-Cola Amatil in the 1990s; it listed in London
when the merger went through in 2000; it listed on Wall Street in October 2002;
and, of course, it still has a listing in Athens. No wonder, then, that
Jhangiani spends about 30% of his time on investor relations.
“We haven’t necessarily had every large brokerage house covering us from the
sell side and so we’ve been doing a lot of roadshows to get people interested in
our story,” he says. “Most people are familiar with, obviously, Coca-Cola
Enterprises and Femsa and Amatil [see below] because they’ve both had US
listings and had a much more active investor relations programme in the US.
We’re new, we’ve only been around for four years, but we have a great growth
story that we’re trying to get people aware of.”
That message probably won’t be heard so loudly and clearly in Australia
before too long. CCHBC is currently trying to delist from Sydney and hopes to
complete that process by the end of this year.
More surprising, perhaps, Jhangiani is also considering dropping the London
listing, keeping Athens and New York as its main exchanges. He is currently
“questioning” the usefulness of the London listing “to see what kind of value
we’re really getting out of that, and to see if it makes sense to continue”.
CCHBC’s major shareholders – the Coke company itself and Kar-Tess Group, the
Greek-Cypriot Leventis family’s business interests – jointly own just under 55%
of the company (split 24% and 30%). Of the rest of the shares, roughly half the
free float is US-owned, while the balance is about one-third Greek and
two-thirds UK. But it’s the Athens exchange where most of the share trading
takes place in Europe, not London, so, while no decision has been made yet, the
London listing has “some additional reporting requirements” but appears to offer
little benefit in terms of share dealing liquidity or valuation.
CCHBC completed its New York listing in October 2002, just weeks after
Sarbanes-Oxley hit the US statute books. “Lucky us,” says Jhangiani. But he’s
upbeat about it, really. Despite the extra workload and the demands for huge
amounts of documentation, he believes “it’s a short-term pain we need to go
through but, at the end of the day, it is going to bring value to us. I think
the markets do credit organisations with good controls and good corporate
Having joined CCHBC as an audit director (and before that having spent two
years as Asia-Pacific audit manager for the Coke company in Atlanta), Jhangiani
naturally thinks the company has a strong control environment and awareness.
“I’m always asked, if you were thinking about listing post-Sarbanes-Oxley what
would you be doing? And I would say, we would still go ahead with it.”
Geographically, the company operates in some of the most challenging emerging
markets in the world, not least Russia and Nigeria. When we asked which was the
most difficult territory in which to recruit finance staff, however, he says the
Balkans. “We probably have not been able to get the right level of talent there
so we’ve moved people around within the organisation,” he explains.
“But I think that’s another important part of our philosophy: to make sure
that people get exposure to the different markets in which we operate so they’re
not just one-market centred. They also get a chance to work in head office so
they get a good understanding of what we do there. So, I would say, out of the
60-odd people that I have in the finance part, 20% are probably coming in on a
rotational basis, anywhere from three months to three years on assignment, so
they can then gain some experiences and even move back to their own country, or
to another country.”
From a business perspective, Russia is the most challenging place in which to
do business. “It’s an extremely interesting, challenging and fruitful
environment in terms of evolution and change,” he says – and it sounds like he’s
talking in euphemisms. CCHBC has been operating in Russia for about 15 years. It
has acquired a lot of experience and has built up a strong local team. But he
says that with “some of the uncertainty in an environment like that, with the
current regime, there are risks. The returns you get from a market like that are
phenomenal and you’ve got to balance the risk and reward side of things.”
CCHBC, jointly with the Coke company, recently acquired a $336m turnover
juice business in Russia. “I was asked, given the state of things in Russia
today, why were we going ahead, especially as some multinationals have been more
hesitant? At the end of the day, we have been pleased with the way we’ve been
able to manage an environment like that, despite some of the challenges. And
we’ll continue to make sure we have the right people devoted to providing us
with the right support there.”
YOU’VE GOT TO HAVE THE SYSTEM
The Coca-Cola System keeps the maker of the brown syrupy stuff linked with
the bottlers around the world that squirt it into a mixture of water and carbon
dioxide, while keeping the two operations at arm’s length. The company that
controls the TV and billboard advertising has to work together with the
businesses that, between them, have carved up the globe and look after the
retailers’ coolers and the pavement cafés’ branded umbrellas.
The Coca-Cola Company (TCCC)
Known as Big Red, it manufactures the secret formula Coke concentrate, which
it then sells to the individual bottling companies around the world in return
for a percentage of sales, and it owns the brand names and the main trademarks.
NYSE-listed (ticker symbol: KO). 2004 sales $22.0bn; market cap $102.8bn.
Coca-Cola Hellenic Bottling Company (CCHBC)
Based in Athens, formed from the 2000 merger of Hellenic Bottling Company SA
and Coca-Cola Beverages plc, which was the European operations spin-off of
Coca-Cola Amatil. Serves eastern Europe, Russia, northern Italy, Austria,
Switzerland, Ireland and Nigeria. In some territories, it also sells brands such
as Schweppes, Nestea and various juices and bottled waters. Listed in Athens
(ticker: EEEK), Australia, London (ticker: CCB) and NYSE (ticker: CCH). 2004
sales $5.5bn; market cap $6.2bn.
Serves US, Canada, UK, France and Benelux. NYSE-listed (CCE). 2004 sales
$18.2bn; market cap $10.0bn.
Bottling operation serving Mexico and parts of South America particularly
Argentina, Brazil and Colombia. Listed in Mexico and NYSE. 2004 sales $4.2bn;
market cap $4.8bn.
Bottling operation for Australia, New Zealand, Indonesia, South Korea.
Listed in Australia and on NYSE. 2004 sales $2.7bn; market cap $4.3bn.
*Bottlers may not serve 100% of markets listed.
Name: Nik Jhangiani
Qualifications: AICPA, trained with Touche Ross, New York
(Deloitte & Touche)
2000 – Coca-Cola Hellenic Bottling Company: director of corporate audit
(2000-02); corporate controller (2002-04); chief financial officer
1998 – 2000 The Coca-Cola Company (Atlanta): international audit manager
1995 – 1998 Colgate-Palmolive (Africa division): various roles, including
finance director of Nigerian start-up
1992 – 1995 Bristol-Myers Squibb: internal auditor
Biggest challenge: Today, I would say prices of raw
materials – it keeps me up at night.
Biggest hassle: Traffic in Athens is a bitch, but I shouldn’t
complain because it has gotten a lot better post the Olympics.
Could you ever see yourself as the FD of Pepsi? Probably not. I
think I’d have a rough time making that adjustment. I’m a die-hard Coke fan, so
I don’t think I could go over there and sing the same tune as I do with my kids
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