The Hindu Business Line : Coke in talks with NeST to hand over Kerala plant operations

According to industry sources, the soft drink major is in talks with the Rs 500-crore Kerala-based NeST Group to hand over operations of its controversial plant to the latter.

Coca-Cola India's Kerala plant hit the headlines last summer, when the company was accused with the allegation that its plant in Plachimada was producing hazardous sludge.

According to sources, the possibility of the deal working out is strong, considering that NeST and Coca-Cola already have an existing alliance.

NeST has been a co-packer for Kinley, Coca-Cola's packaged water brand, for the last couple of years.

When contacted by Business Line, a top official at NeST Group confirmed that Coca-Cola officials have been in talks with NeST for a possible deal in the soft drinks business as well.

"We already have an existing association with Coca-Cola. So it is natural that when the multinational firm is facing so many allegations regarding its soft drink plant, they have sought our assistance.

Coke is looking for local support, and we will be happy to help them," the official said.

A Coca-Cola official declined to comment on the same.

According to industry sources, if the deal does work out, it would be beneficial to both parties.

While the sludge and groundwater controversies have snowballed into major political issues and led to mounting anti-Coke sentiments in Kerala, the possible takeover would bring the NeST group closer to the national-level FMCG business.

The NeST Group has conventionally been into the business of hardware manufacturing, niche contract manufacturing, electronic components, education and training, network integration, software engineering and business applications.

Coca-Cola India has invested close to Rs 80 crore at its Kerala plant since the time the plant began operations in 1999.

Meanwhile, the recently released Joint Parliamentary Committee (JPC) report on pesticides in soft drinks has stated that ground water level in many parts of the country was getting depleted, and upheld the Kerala High Court's judgement that water is free only for domestic and agricultural users.

The JPC report notes, since ground water belongs to the public its commercial use should be restricted even though there is no law governing the issue.

Last year, activist groups in Palakkad had alleged that Coke's Kerala unit draws more than its share of water, leaving locals without access to ground water.

More Stories on : Beverages | Mergers & Acquisitions | Water

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