Hindustan Coca-Cola shuts down Jaipur plant

Hindustan Coca-Cola Beverages (HCCB) has shut down its bottling plant at Kala Dera in Jaipur due to depletion of underground water level and poor conditions of plant machinery. The closure comes after three shutdowns or postponement of expansion activity by HCCB since 2014.

HCCB is the Indian subsidiary of Bottling Investment Group of Coca-Cola, which bottles, distributes and sells its products in the country.

When contacted, HCCB termed the stalling of operation 'temporary'. However, a petition filed by the company in a civil court at Jaipur clearly states HCCB's inability to run operations owing to lower ground water level and erosion of machinery in the plant.

Since the plant is no longer commercially viable and given the various difficulties it is facing in running operations, "there is no possibility of resuming the production", HCCB told the court.

"Ground water level at the plant has gone down…. Machines at the plant are very old and we are facing continuous difficulty in production," the petition read. The difficulties also led to significant economic loss for HCCB, it added. "Production cost has gone up leading to loss in business."

In a statement on Wednesday, the company said: "While we have suspended manufacturing, we are continuing with all other operations at Kala Dera. We also retain the licence to produce at this plant, which is testimony to the fact that should there be a change in demand and volume, we may utilise this latent capacity at the Kala Dera plant."

Coca-Cola started operation in the plants in December 1999. HCCB has been under pressure from various groups including India Resource Centre - a body which leads movements against corporate globalisation - and local Kala Dera Sangharsh Samiti for years. Ground-water depletion as a result of using water as raw materials for the plant has been the bone of contention between the company and various bodies.

"Our area was already water-scarce. And, Coca-Cola's indiscriminate use of ground water worsened the situation in recent years," Mahesh Yogi of Kala Dera Sangharsh Samiti told Business Standard. "Coca-Cola must also be held accountable for the damages it has caused to the farmers, to the watershed and to the community."

On a request from Coca-Cola, The Energy and Resources Institute had conducted a study on the Kala Dera plant in 2009. It recommended Coca-Cola shut down the plant because "the plant's operations in this area would continue to be one of the contributors to a worsening water situation and a source of stress to the communities around".

Labour unrest and agitation that followed the shutdown on January 25, 2016 led HCCB to approach the lower civil court at Jaipur for obtaining security for the plant and easy passage of inventories there in. The Kala Dera plant employs 115 permanent employees and 170 contractual workers.

"We are going through a process of consolidation where new state-of-the art facilities are being built and existing production capacities are being optimised. These decisions are taken in keeping with the plant capacity utilisation considerations, based on market demands and projections. A plant's capacity also becomes viable or unviable on the basis of the availability of raw materials," the statement by HCCB noted.