Coca-Cola Forced to Suspend Operations in Plachimada
Associated Press
March 15, 2004

COCHIN, India - American soft-drink giant Coca-Cola on Monday suspended production at a south Indian plant after the government ordered the company to stop using groundwater until monsoon rains start in June, a company official said.

Coca-Cola has issued notices to its employees and the state government saying that it would be "left with no option but to close down its factory at Plachimada," the official said on condition of anonymity.

Last month, the government of southern Kerala state told Coca-Cola that villages in the area were facing an acute drought and that the soft-drink company should not use groundwater until June 15.

Plachimada is 150 kilometres north of Cochin, the state's main port city.

The Perumatty village council, which controls several villages including Plachimada, has alleged that the Coca-Cola plant draws 1.5 million litres of water daily through dozens of wells, leaving local farmers with parched fields.

Last month, Vijay Bhaskar Reddy, a Coca-Cola communications manager, described the state government's decision as discriminatory and an extreme step as the matter was pending in court.

A top court in Kerala in December ordered the Coca-Cola plant to stop using groundwater and arrange to get water through other sources. The company has challenged that order and the case is pending.

On Monday, the Coca-Cola official said the lack of protection from the state government was among the reasons for the plant's temporary shutdown.

The state had slapped the ban only on Coca-Cola without any scientific proof that it was exploiting groundwater, the official said.

Some 27 factories in the area have been using groundwater and there has been no attempt by the government to devise a nondiscriminatory scheme for drawing groundwater, the official said.

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