Mondelez India Foods in Troubled Waters
Code : GOV0066 |
Region : Asia |
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COMPANY BACKGROUND: In 1824, John Cadbury started selling tea, coffee, and drinking chocolate in Bull Street in Birmingham, England, UK. In 1847, he joined hands with his brother Benjamin and named the company “Cadbury Brothers”. Over the years, the company added chocolate and cocoa in cake and powder forms to its product line and received its first Royal Warrant as ‘manufacturers of cocoa and chocolate to Queen Victoria’ in 1854. In 1899, Cadbury became a private limited company and in 1905, it launched its popular product Dairy Milk Bar.. ALLEGATIONS OFUNLAWFUL TAX EXEMPTION: In May 2005, MIFL (then CIL) set up a manufacturing unit at Sandholi village of Baddi, Himachal Pradesh, India, for manufacturing malt-based food (Bournvita). After two years, the company planned to set up a second unit for its products “5 Star” and “Gems”. In order to avail of the tax benefits for 10 additional years, MIFL applied for an amalgamation of the two units and thought of having its second unit as a composite in the existing facility. In March 7, 2008, this amalgamation proposal was approved by the Directorate of Industries. On July 30, 2009, the company started production at its second unit. And at the same time, it asked for tax benefits by showcasing its second unit as operational.. |
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During the entire process of investigation, MIFL denied the allegations and said that its executives had acted in good faith based on legal advice for availing of excise benefits for this plant. The company also claimed that it had started an internal investigation on the day of Nair’s complaint. MIFL said it had interviewed its employees to find out the truth behind Nair’s complaint. Meanwhile, the Excise Department started putting pressure on MIFL over the unpaid taxes and undertook a two-year-long investigation..
OTHER ALLEGED UNETHICAL PRACTICES
MIFL had faced allegations of unethical practice in other instances as well. Over the years, the company had faced various issues which had resulted in its being dragged to court. In 2016, the company got embroiled in a case related to the presence of insects in Cadbury’s chocolates (roast almond). MIFL was fined Rs. 50,000 by the Consumer Forum of Guntur in the state of Andhra Pradesh, India, for supplying bacteria-contaminated chocolates to a consumer..
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