Jobs gone and business badly dented, workers and vendors in Rudrapur are looking ahead to ‘good days’ again with the arrival of the first supply truck.
On Friday, a truck carrying spice powders used for making ‘Maggi Masala’ arrived at Nestle’s plant in the Sidcul Industrial Area of Rudrapur in Uttarakhand — for the first time in over two months.
Within 24 hours of the Bombay High Court setting aside the ban on nine variants of Maggi noodles, hope has returned among workers, vendors and even truckers associated with Nestle in this small town that is home to one of the company’s eight instant noodles manufacturing plants in India.
“Samples of some of these powders (onion, garlic, chilli, etc) can be tested here or sent to Nestle’s plant in Moga. Following the approval of samples, which generally takes around a week, they can be used in manufacturing,” said a worker who has been involved with the plant for close to eight years.
The ban imposed by the Food Safety and Standards Authority of India (FSSAI) on June 5, which led to the closure of the plant, has seen job losses across the value chain of Maggi noodle production. Sources in the plant said that apart from regular staff, there were over 1,000 contractual workers at the plant when it was fully operational — after the ban, that number dipped to around 200.
The vendors associated with Nestle in Rudrapur have also seen a major dent in their business, particularly Shiv Shakti Processed Foods (SSPF) and Yadav Foods that account for 60 per cent of the maida requirement of the Sidcul plant.
SSPF has had to lay off at least 20 workers at its plant. “At least 40 per cent of our production capacity of 250 tonnes a day, was consumed directly by Nestle for Maggi noodles. Our production has come down significantly over the last three months. While we operated two shifts earlier, we have brought them down to one to reduce the variable cost involved with milling. This forced us to ask at least 20 of our workers to find work elsewhere for a few months,” said Piyush Mittal, a director of Shiv Shakti Processed Foods.
That is not all. Four out of the eight lorries of SSPF stopped plying and are parked as “dead stock”, forcing the company to ask its drivers to stay at home. Also, since wheat sourcing and production has gone down, loading and unloading work has shrunk leading to job losses for loaders.
Shiv Shakti had to infuse more capital into the company as its banker threatened to reduce the cash credit limit since the sales volume had gone down, Mittal said.
“Other vendors linked to Maggi Noodles are also facing similar stress, including sugar, seasoning and oil suppliers. While we paid our retrenched workers for a month, we told them to stay at home or work elsewhere till Nestle starts production of Maggi again,” said Mittal.
It’s a similar story for close to 100 vendors, whom Nestle calls ‘channel partners’ and who supply items needed for production of Maggi noodles across the country. The others on the chain who have been badly hit by the ban include farmers, traders, transporters and retailers.
Paras Spices, which catered to the Maggi plant in Moga, sacked almost 300 employees in June as it had to shut its plant temporarily following the ban.
For the first time in seven years, Nestle India too announced a net loss amounting to Rs 64 crore for the quarter ended June 2015 due to the exceptional item charge of Rs 451.6 crore on account of withdrawal of stocks of Maggi noodles. For the same quarter last year, the company had announced a net profit of Rs 287.8 crore and a profit of Rs 320 crore in the previous quarter ended March 2015.
Quantifying the loss, Nestle said, “In addition to loss of sales from the business disruption, ‘Net Sales’ worth Rs 288.4 crore has been reversed during the quarter in relation to MAGGI Noodle stocks already sold and withdrawn from the market.” It also said that the exceptional item relates to loss on account of stocks withdrawn.
Besides, while the Prepared Dishes and Cooking Aids (PDCA) segment, mostly comprising Maggi, contributed close to 30 per cent of the revenue for Nestle India, it has been the only volume driver for the company.
For the year ended December 2014, while the gross sales quantity (in metric tonne) for Nestle India contracted 0.6 per cent in 2013, the PDCA segment saw the sales quantity rise 3.7 per cent.
A channel partner said the company offered to pay them for their losses as their business was dependent upon them. “Some vendors have got the payment. I don’t think many companies offer such a payment,” said Mittal of Shiv Shakti.
While the transporters have been closely involved with getting Maggi stock from markets to cement plants to be destroyed, truck drivers recall the “good days” when the Rudrapur plant was operational.
On Friday, outside the plant, a huge parking area that can accommodate almost 50 trucks was almost vacant. “No plant in the area has such a huge parking area. There is a very good facility for drivers with a bathing area, beds to sleep, fans, refrigerator and a kitchen area with gas stoves where food could be cooked,” said Basant, a truck driver who has been transporting Maggi packets for the last seven years.
Another truck driver said that several trucks full of Maggi were taken to a cement plant in Rajasthan to be destroyed after the ban.
“I used to ferry goods for both for Nestle and Britannia (the plants are situated opposite each other) but now we are only carrying Britannia goods. Business has definitely gone down,” said Sunil, who had parked his truck outside the Nestle plant on Friday.
The ecosystem around the plant has also seen an impact – a tea vendor on bicycle, who was a permanent fixture outside the plant once, is now an irregular visitor. An employee of Ginger Hotel located adjacent to the plant said there has been a sharp decline in the number of Nestle officials staying there.
“The numbers were declining over the last one year after their own guest house came up, but it has come to a standstill over the last two to three months. But there are several other companies around, and our business is running fine,” said the employee.
A visible shift at the plant is the replacement of contractual employees. Almost 10 security personnel and a couple of maintenance employees that The Indian Express spoke to outside the plant said that they have joined the company recently.
“Since I joined the Maggi plant in July, only the coffee plant has been working. But the facility continues to be maintained well with housekeeping workers keeping it clean,” said a worker involved with maintenance.
While over 800 contractual employees with Nestle have directly been impacted, a worker said the company paid some money to them when they were asked to leave. But recently there have been some minor instances of sit-ins being staged by workers near the plant, alleging that some contractors are yet to pass on that money.
Yet, a day after the ban was lifted, the signs of hope are everywhere, especially on the faces of the workers.
“Some workers have got jobs with other plants and there are many who have taken up odd jobs. The Maggi plant was a good place to work. It provided us food for Rs 3 and tea for Rs 1,” said Ram Singh who worked at plant for a few years and is now working as a daily wager.
Mittal of Shiv Shakti Foods said he is in talks with other companies for supplying maida, including Baba Ramdev-owned Patanjali, which is looking start production of instant noodles in 2016.
“But even if we get business from other players we would like to work with Nestle because it treats vendors well,” said Mittal.
THE MAGGI MUDDLE
* On June 5, the FSSAI banned the sale of Maggi noodles saying it was “unsafe and hazardous” for human consumption after finding lead beyond permissible limit and presence of taste enhancer monosodium glutamate (MSG).
* Nestle India challenged the FSSAI decision and a similar order by the Maharashtra Food and Drug Authority (FDA) directing it to withdraw all variants of the noodles.
* The Bombay High Court set aside the ban on Thursday saying it was “arbitrary” and against the “principle of natural justice” but said that the company would have to test samples at three accredited labs within six weeks.
* The government has also filed a class action suit against Nestle India, seeking Rs 639.95 crore in damages for alleged ‘unfair trade practices’ and ‘gross negligence, apathy and callousness’.
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