Thursday, May 07, 2015
India Cancels Coca-Cola Plant
It's hot in India, so people drink a lot of beverages and Coca-Cola cashed in on the demand. But local farmers and politicians feared the new plant approved by the government for Erode District in Tamil Nudu state near Perundurai would make water supply shortages worst and bring more pollution. Opponents of the plant said Coca-Cola had a bad environmental track record in India. The government listened this time and revoked Hindustan Coca-Cola Beverages' alloted land site. Coca-Cola claimed it would be a good corporate citizen, but its assurances did not satisfy locals. There has been a conflict over sharing the waters of River Cauvery between the states of Karnataka and Tamil Nadu. Water water there is is heavily polluted. The grounwater from Perundurai is colored dark red--the blood of Mother Earth--from industrial pollution. A strike organized by environmental activists in protest of the plant was very successful. A another plant owned by Coca-Cola in Kerala state was closed by the state government in 2004 because of toxic pollution from the plant. Legislation is pending to make it liable for $47 million in damages. Two more plants were also rejected in 2014 by local citizens, on of which, the Uttar Pradesh plant, was fully built at the cost of $25 million. Challenges to the international corporate behemoth are expected to increase as Indian water quality and quantity deteriorates. The corporation is facing declining sales in industrialized countries, so it is attempting to expand aggressively in developing nations. Not good news for Mr. Buffett, a major stockholder.