Nestlé quashes rumours of Punjab pull-out

20-May-2013 - Last updated on 21-May-2013 at 11:41 GMT

Nestlé India has quashed rumours that it will withdraw from its first dairy unit in the country by committing to a Rs250 crore (US$45m) expansion to the Moga plant in Punjab.

Meeting with the state’s chief minister, Parkash Singh Badal, the chief of Nestlé’s local subsidiary, Antonio Helio Waszyk, said the company had already invested nearly Rs250 crore in the plant, while the same amount again would be set aside for the expansion and modernisation of the plant over the next two years.

Since its arrival in India, the company says it has invested Rs9,500 crore (US$1.7bn) in the country.

Opposition’s work

Badal said he suspected the rumours about Nestlé’s withdrawal from Moga, which employs a total workforce of 25,000, had come from an opposition party. Waszyk has referred to the plant as the “jewel in the crown” of Nestlé’s investments across the globe.

Waszyk said the company had launched its first Indian unit in Moga and termed it as “Jewel in the Crown” of their investments across the globe. With a 90% local workforce, the Punjabi factory procures milk worth up to Rs700 crore (US$127m) each year from over 100,000 dairy farmers across the state.

At the same time, Badal announced that the government would extend all political support to Nestlé’s investment plans. This co-operation would extend, he said, towards the issue of the exemption of purchase tax on the procurement of milk, which Badal said he would tell the state’s excise and taxation commissioner to look at in detail.

"The interests of all stakeholders, including dairy farmers, procurement agencies and the state government will be safeguarded while we resolve this issue," he said, adding that he will also take up the issue of proposed general sales tax with the Centre.

Composite centre

Badal has also proposed plans to establish a composite dairy centre in the state in collaboration with Nestlé. It will feature a veterinary hospital, model dairy farm, a breeding centre and a training facility for dairy entrepreneurs.

Nestlé India, which first set up its production plant in Moga in 1961, operates seven manufacturing facilities in Tamil Nadu, Karnataka, Haryana, Goa, Uttarakhand and Himachal Pradesh.

The company is currently involved in four segments—milk and nutrition, foods, coffee and beverages and confectionery—and reported net profit of Rs280 crore (US$51m) and net sales of Rs225 crore (US$40.8m) for the quarter ended March 31.