Coca Cola Case Study- Be

7/31/2019 Coca Cola Case Study- Be

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PLACHIMADA- THIRSTING FROM COCA COLAIs the company ethically out of order?

Situated in a remote location in the interiors of Kerala is the village Plachimada.Plachimada is a rain shadow region in Chittur taluk of the Palakkad district. The year2000 brought a dramatic change in the landscape of the village and the lives of theinhabitants forever. The beverage giant Coca-Cola opened a plant here, to produce1.2m litres of coke on a daily basis.This change brought a wave of revolution in the village and today the people ofPlachimada, except a few who work in the plant, stand united against the plant and areof the opinion that it must be closed down immediately. The issue that needs to bebrought to light here is how an MNC has exploited the natural resource of the peopleand challenged the constitutional powers of the local body. There is a need to discussthe political and legal dimensions of this situation and how to safeguard the interests ofthe people of the region.Being a rain shadow area, the region gets very little rainfall compared to other parts of

the state, the groundwater reserves, however, was self providing for the domesticpurposes of the people. The Groundwater Department of Kerala acknowledges this factby stating, Although the area has less rainfall than the coastal region of the state,conditions for groundwater recharge are better here because of the gently undulatingnature of the terrain. The region has to rely upon dam irrigation canals and groundwater resources for domestic and agricultural water requirements.

THE HINDUSTAN COCA-COLA BEVERAGES Pvt. Ltd.

Coke in India has a variety of products in its kitty, catering to the requirements of a largepopulation. The two major factors that have helped the company to gain strong roots

here are its huge investment capabilities and its ability to woe the Government. After itsban of 16 years, the Coca-Cola Company reintroduced the brand Coca-Cola in India onOctober 23, 1993. Most of the products ranging from Coca-Cola, diet Coke, Sprite,Fanta, Schweppes, Thums Up, Limca, Maaza, Citra, Gold Spot, Kinley water, Sunfillconcentrate, Shock and Rimsim are consumed by both urban and rural areas. Afterreceiving an approval from the government in the year 1996, the Coca-Cola Companyset up a holding company investing US$700 million in downstream operatingsubsidiaries to engage in the preparation, packaging, sale and distribution of beverages.In July 1997, the holding company was permitted by the government to operationalizeits bottling subsidiaries. The bottling subsidiary at present owns and operates 26 bottlingplants and 60 distribution centers across the territory of the country. In addition, it uses

20 contract packers to support its production capacity and cater to the increasingdemand of beverages. The company claims to employ over 7,000 workers. Not onlythis, for every direct job in the system, seven indirect jobs are created in the supplychain. However this claim falls short at Plachimada where only 30 men were employedthat too indirectly. According to the company, over the last decade, it has invested morethan US$827 million in India, US$805 million of which has been invested in its bottlingsubsidiary, giving it the privilege of a major investor of the country. Though there is nofactual evidence but many are of the opinion the company used unethical


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methods to overcome FDI ownership regulations, which stipulates that foreigncompanies must hold an initial public offering (IPO) when establishing acompany, allowing the locals to buy a stake.The bottling plant at Plachimada in the Perumatty Panchayat is located around threekilometers to the north of the Meenkara dam reservoir and a few hundred meters west

of the Kambalathara and Vengalakkayam storage reservoirs. The Moolanthodu maincanal originates from the Moolathara barrage passes less than 10 metres north of thefactory compound and the nearby Chitoorpuzha itself is two kilometers north of the plantsite.The bottling plant became operational in 1998 on a stretch of 42 acre plot inviolation of the Kerala Land Utilization Act, 1967. The Act was intended to protectthe use of agricultural land from non-agricultural purposes. The land was in thename of different individuals from whom a Mr. O.G. Sunil, Ernakulam, got it registeredfor the Coca-Cola Company and then transferred it, keeping two acres for himself. Atpresent, the Company is paying the land tax only for 34 acres to the panchayat. To addto the misery of the locals, a narrow Panchayat road, which cuts across the land, was

also illegally acquired without anybodys notice.The very existence of the plant is illegal and can be challenged. The powergeneration inside the plant is also dubious in nature since it does not draw from thecommon grid.According to one of the protest leaders, the company had employed only 30-50local residents and that too indirectly as contract labourers. The wage rate for theworkers is exceptionally low. A male contract worker gets Rs. 60 per day and the femalegets Rs.50. However, the temporary workers recommended by the political leaders getan amount of Rs.100 per day.The working capacity of the unit is 1,500,000 liters of water-based products. Around85 truckloads of beverage products carrying approx. 600 cases and each case holding24 units of 300ml. bottles are dispatched on a regular basis. From the note of thefactory dated 16.6.02, the plant claims that it has only two open wells and sixfunctioning bore wells which take out about 0.4 to 0.6 million liters of water. Assuming330 working days per year, the quantity of water pumped out per year, as claimed bythe Company is 132 to 218 million litres. Two open wells that yield 135 cubic meterseach. The conditional license granted by the local panchayat authorized the use ofmotorized pumps. But the company drilled more than six wells & illegally installed high-powered electric pumps to extract millions of litres of pure water. The level of the watertable fell from 45 to 150 metres below the surface.Dr. A. Acuthan, a noted hydrologist and environmentalist, has a different story to tell. Heestimates that the quantity of water extracted per day is about 1.1 million litres. Dr.Achuthan has also put a question mark on the Companys estimation of the quantity ofwater recharged by water harvesting. The Company claims that it is putting back waterinto the aquifer through water harvesting an amount of water equivalent to the amount itpumps out.The pivotal point of concern is that the extraction is from the deeper aquifer,whereas the recharge goes to the gravity zone only. Therefore, pumping cancause depletion of ground water continuously. Dr. Achuthan questions therelevance this plant, which is located in a declared drought prone area.


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Wastes in the form of plastic, metal and paper are also generated. Initially the sludgewas given off to farmers as manure and further the factory claimed that the StatePollution Control Board (SPCB) had cleared that there was no harmful ingredients in thewaste sludge. The company started dumping waste outside causing a serious health

hazard. By the agreement with the Chittoor taluk authorities the Company is supplying 3loads of water for the public during the summer.

THE ROLE OF THE CENTRAL AND STATE GOVERNMENT

The Plachimada issue also has to be perceived in this background of an MNCencroaching the very right to water of the poor Adivasi (tribal) people residing aroundthe factory. With reference to the ground water extraction, there are nearly no laws orregulations in India. There are two core bodies-the Central Groundwater Board (CGWB)and the Central Groundwater Authority (CGWA) -who deal with all matters pertaining to

groundwater, but they can only act as advisory bodies. Both fall under the Unionministry of water resources. While CGWB is responsible for advising states on mattersrelating to groundwater, the CGWA was constituted under the Environment (Protection)Act, 1986, to regulate and control groundwater management.

The role of the Government of Kerala had also been gray since from the beginning, andtook contradictory decisions all through the issue. It is the Left Democratic Frontgovernment, who has pledged itself against global capital investments, gave sanction tothe Coca-Cola Company to start its bottling plant at Plachimada in 1998.

In the year April 2002, a revolt was initiated in Plachimada attracting a considerableamount of international media coverage. The theft of water was not only limited toKerala. Overexploitation of groundwater soon started in Kaladera. As a result, similarstruggles against Coca-Cola and the exploitation of scarce groundwater resources forits sake, gained momentum in Sivaganga in Tamilnadu and in Orissa.

For years they have been agitating against the human rights violation of the factory. OnApril 22nd 2002, around 2000 men, women and children dwelling around the HindustanCoca-Cola Beverages Pvt. Ltd at Plachimada, picketed the factory and gave anultimatum to the authorities to quit immediately. The Adivasi Gotrasabha leader Ms.C.K.Janu inaugurated the overwhelming function. The police arrested all the peopleparticipated in the function. Blockades, Dharna and Picketing were all resorted to duringthis continuous protest against the wrongs of the mighty by the poor and the weak. Thepolice accusing them of raising slogans against the multinational company, blocking theworkers from entering the factory and indulging in anti-social activities, registeredseveral cases against these poor people and their leaders. The company filed a case(OP No.11598) in the High Court demanding police protection from these anti - socialelements.


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The MNC was clever enough to influence the media not to give coverage to thestruggle. Obviously the news papers except a few cannot go against the interests of theMNCs like the HCC. The company, in usual fashion, denied any wrongdoing, blaming"outsiders" for the increasing local community opposition.

THE MAJOR ISSUES AND DEMANDS

Depletion of water and its contamination are the major issues brought to light by theprotestors and the media. Government departments, International and National mediapersonnel and a few independent social organizations had conducted investigations onthese lines which depicted the seriousness of the problem to a great extend. The testresults of the well water and the sludge have proved the cause and effect of theproblem beyond doubt. However, problems related to livelihood, health, employmentand legal rights are not addressed or studied so far.Immediate closure of the plant and right compensation to all those who havesuffered heavy losses due to the unethical functioning of the Company are some

of the demand put forth by the protestors. The State Government due to variouspolitical and other pressures did not show any positive response to the demands, rathertook a passive and at times a pro-company stand which indirectly helped the Companyto continue its activities undeterred.

WATER: FACING THREAT

Summers are particularly intense in the area, when water shortages are most acute.Moreover summer months are also when Coca-Cola reaches its peak production. Inless than three years since when the factory was set up, the local inhabitants startedcomplaining of water shortages. The people residing around the factory complained thatthe factorys consumption of a huge quantity of ground water through borewells hadcaused depletion of ground water resources and dried up their open wells. Whateverlittle water is left behind in the wells have become hard and saline and unfit for domesticuse.

CONCLUSION

From the above findings of the study it can be definitely assumed that the problem iswide ranging, affecting the water sources of the locality and the livelihood of the peopleat large. It is affected due to the indiscriminate corporate crime of a multi-national giantcommitted against the poorest people of a third world country. This crime manifests indifferent layers with varying effect and long-term consequences.The plant is depleting water sources by excessive extraction of ground water resources,denying the very right of water to the local inhabitants.Destruction of agriculture by depleting water and dumping toxic waste on the field hasresulted in reduced cultivable land and resulting in a loss of agriculture.Over extraction of ground water causes pollution in the nearby wells whereas the sludgedumped on the field contaminates the ground water. It is believed that the toxic


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chemicals found in the sludge are from the washout water collected after the washing ofthe empty bottles. The company had not set up adequate waste treatment facilities eventodayThe company was distributing the sludge to the local farmers; impressing them that it isgood manure. They also concealed the fact that the sludge contains toxic chemicals

that are very harmful to human health and environment at large.The Company violated the Kerala Land Utilization Act of 1967 by converting theagricultural land into non-agricultural purposes.The Company is not paying market charges for the water they extract and use. In fact,the water being used by the plant is not a small quantity but a mega 5 to 6 lakhs litresper day and which is at the cost of the poorest lot residing around the factory.Denial of water is a violation of the basic right of the people. The company created asituation that the women folk have to walk kilometers to fetch pure drinking water. Alsoby not paying the right remuneration to the labourers hired, the company has violatedseveral human rights.Several uncommon diseases such as abnormal hair falling and itching over the body

were observed after the company started functioning and people started using thecontaminated water, thus posing various health hazards.

Coca-Cola Threatens Top Indian Photographer with Lawsuit

Billboard by: Sharad Haksar


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COKES Corporate Social Responsibility - A Scam?

The Coca-Cola steps up its corporate social responsibility announcing to the

world that it is a green and socially responsible company. --- but this was not

the case at Plachi


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Exhibits


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Coca Cola Case Study- Be

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