Govt prevents Coca Cola from using 3,500 tonnes stored sugar

The government,following an inspection in mid-July,alleged that Coca Cola had stocked excess sugar on its premises and thus had violated the Acts. This was followed by the district collectorate restricting Coca Cola from consuming its stock. According to officials,the stock is worth Rs 8.51 crore,when calculated at the rate of Rs 24 per kg.

“We should arrive at a decision soon. We have issued a show cause notice to Coca Cola for violating the Sugar Control Act; they have replied. Our team is now scrutinising the reply,” said R K Gaikwad,additional collector.

Coca Cola has denied the charge,saying the sugar was not for sale as was marked for consumption at its Pirangut plant. In a statement,Coke said it had already replied to a show cause notice issued on August 25: “The company has submitted that the show-cause notice is unjustified,void and illegal as the company has not breached any provisions of Essential Commodities Act or the Sugar Control Act. The inventory of sugar is not meant for sale,but for its bonafide consumption. The company has further demanded that the stocks of sugar which is a critical raw material for its manufacturing operations should be released immediately.”

This case could set a precedent as the Union government issued a similar notice on August 22 which has spurred many state governments to get proactive and take on the industry without waiting for the 21-day grace period to get over.

“Anyone who is into the food business which involves sugar — confectioneries,soft drinks,chocolates,biscuits — is facing a similar problem. The FICCI represents over 4,500 food companies and a large section of these companies will face a similar problem,” said Sameer Barde,deputy director,FICCI. “Industry is not against this,we have only raised some concerns and have asked for some time,” he said.

Some companies may have stocked sugar for 45-60 days; it is unrealistic to expect them to liquidate the stock within 15 days as per the government notification,he said. “Companies may resort to importing sugar to get around this regulation,but even that will take some time,” Barde said.

It is not clear how much sugar Coke needs for running its plant on a regular basis. Without putting a figure on its monthly requirement,a public relations company on behalf of Coke said the quantity of sugar required depended on the “seasonality and demand”. Coca Cola also did not specify how long its stock of 3,500 tonnes would last.

It was on March 26 that the state government declared that wholesale dealers would not be able to stock more than 200 tonnes of sugar while the limit for retail trade was kept at 20 tonnes. Also traders were prohibited from stocking this sugar for more than 30 days. It was in the latter half of July that following an inspection by the Khed tehsildar,the district collectorate disallowed Coke from consuming its sugar.

“They may not be dealers,but we are examining if it is correct for a company to buy from the market for its production line,at a time when there is a shortage,leading to price rise. They have told us that the warehouse was started in February while they procured sugar separately,” said a senior district official.