PRESS: Campaign Hurts Coca-Cola Profits in India
Profits Drop, Coca-Cola Misleads Regulators, Investors
For Immediate Release
December 2, 2014
San Francisco: Profits for Coca-Cola’s largest bottler in India have been hurt by the campaign’s successful efforts to reject Coca-Cola’s $25 million bottling plant in Mehdiganj village in Varanasi in India earlier this year.
In filings to the Ministry of Corporate Affairs last month, Hindustan Coca-Cola Beverages Private Limited (HCCBPL) – which accounts for nearly 65% of Coca-Cola sales in India – has reported a 30% drop in profits for the fiscal year 2013-14, to INR 1.95 billion (approx. US$32 million).
This follows a drop of 26% in profits in the last fiscal year 2012-13.
In a statement to the media, the bottler stated that “investment in Varanasi could not be put to commercial production, due to inordinate regulatory delays” as being one reasons for the drop in profits.
Coca-Cola was forced to abandon the $25 million fully built facility in Varanasi in August this year as the result of a two-year long campaign which opposed Coca-Cola’s expansion plant because of the deteriorating groundwater conditions in the area.
Campaigners have welcomed the drop in profits for Coca-Cola’s bottler for the second consecutive year and warned that Coca-Cola will not have a smooth ride in India as it attempts to gain new markets in India.
Along with the questionable water management practices of the company across India which are sure to lead to further water conflicts, the company is also being increasingly challenged by consumers who are concerned about the negative public health impacts of Coca-Cola products – based on the experiences of the western industrialized countries.
Coca-Cola Misleading Regulators, Investors
The campaign is also concerned about the unethical manner in which Coca-Cola is attempting to represent the facts around the company’s failure to obtain the necessary license to operate the now-abandoned bottling plant in Varanasi.
Coca-Cola has stated that the Varanasi operations could not begin commercial operations because of “inordinate delays.”
However, the reality is that the Varanasi operations could not commence commercial operations because the government regulators had rejected Coca-Cola’s application to expand – well before Coca-Cola announced that it will walk away from the fully built plant due to “inordinate delays.”
Coca-Cola informed the National Green Tribunal, India’s environmental court, on August 25, 2014 that “they are no more interested in expanding the existing unit at the place in question and have accordingly communicated their intentions to the authorities vide letters dated 23.08.2014 addressed to the CGWA and 22.08.2014 to the Chief Secretary, State of U.P.”
However, the Central Ground Water Authority had already informed Coca-Cola that the application for expansion had been rejected – in a letter dated August 12, 2014, at least 10 days before Coca-Cola announced that it was no longer interested in the fully built $25 million expanded plant.
The India Resource Center has called Coca-Cola’s suggestion that the company was voluntarily walking away from the plant as “bizarre” and a face-saving measure.
“An admission by Coca-Cola that they were forced to abandon a fully built bottling plant because the government rejected their plans would further damage the Coca-Cola brand, and the company will go to lengths to omit this key fact from the government, their investors and the media,” said Amit Srivastava of the India Resource Center.
“Coca-Cola’s investors should be worried that its Indian subsidiary is misleading the Indian government and company shareholders, and engaging in such risky behavior can have major legal, reputational and even financial implications down the line,” said Srivastava.
For more information, visit www.IndiaResource.org
Amit Srivastava +1 415 336 7584 E: info (AT) IndiaResource.org
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