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Modi's job bundle deficit: J & J's largest India facility at idle three years after completion

PENJERLA / NEW DELHI, India (Reuters) – It was intended to be Johnson & Johnson's largest manufacturing plant in India. It would eventually employ at least 1,500 people and help develop a rural area near Hyderabad in southern India. . – hectares of space, they are in sleep mode. Two sources familiar with J & J's operations in India and a government official told Reuters production at the factory, at Penjerla in the Telangana state, never started because of product demand. One said that demand was not as expected due to two shock political movements by Prime Minister Narendra Modi: a late 2016 ban on circulating valuable banknotes and the nationwide introduction of a commodity and service tax (GST) 201 7. [19659004] J&J spokesmen in the Mumbai India business and at their global headquarters in New Brunswick, New Jersey, declined to respond to a list of questions from Reuters. Modi office did not respond to a call and an email with questions. Intended to eradicate corruption and streamline the tax system, the dual whammy of demonetization and GST – were two of Modi's signature political traits. But, instead of encouraging economic activity, they did the opposite, at least 2016-2018, by increasing consumer demand, according to some economists. Many companies, particularly SMEs, publicly complained – some in their financial statements – that they were getting a decline in orders. The suspended J & J project is one of the most vibrant examples of impact on the broader investment image. During the…

PENJERLA / NEW DELHI, India (Reuters) – It was intended to be Johnson & Johnson’s largest manufacturing plant in India. It would eventually employ at least 1,500 people and help develop a rural area near Hyderabad in southern India. . – hectares of space, they are in sleep mode.

Two sources familiar with J & J’s operations in India and a government official told Reuters production at the factory, at Penjerla in the Telangana state, never started because of product demand.

One said that demand was not as expected due to two shock political movements by Prime Minister Narendra Modi: a late 2016 ban on circulating valuable banknotes and the nationwide introduction of a commodity and service tax (GST) 201

7. [19659004] J&J spokesmen in the Mumbai India business and at their global headquarters in New Brunswick, New Jersey, declined to respond to a list of questions from Reuters.

Modi office did not respond to a call and an email with questions.

Intended to eradicate corruption and streamline the tax system, the dual whammy of demonetization and GST – were two of Modi’s signature political traits. But, instead of encouraging economic activity, they did the opposite, at least 2016-2018, by increasing consumer demand, according to some economists.

Many companies, particularly SMEs, publicly complained – some in their financial statements – that they were getting a decline in orders. The suspended J & J project is one of the most vibrant examples of impact on the broader investment image.

During the first month after demonstration, some company surveys showed that sales of products such as shampoos and soap fell more than 20 percent.

Lack of job growth and an agricultural income crisis due to low crops have damaged Modi in the current election, according to several political strategists.

Yet, Modi and his ruling Hindu nationalist Bharatiya Janata Party are expected by many strategists to be able to get a second term – probably supported by other parties – when votes are counted Thursday, partly because of his strong stance on national security issues.

Big investments, high expectations

A number of Modi business politicians, such as bottling medical devices, forcing technology companies to store more data locally and stricter e-commerce regulations have damaged US multinational corporations such as J & J over the past two years. , Mastercard, Amazon and Walmart-owned Flipkart.

The J&J facility in Penjerla, its third in the country, was conducted with much fanfare in 2014, which was attended by Telangana State Chief Minister Chandrashekar Rao, who praised foreign investment as a major victory for local communities. A document dated April 2017 listing products that the company plans to do at the facility is sent to the Telangana government and reviewed by Reuters, name baby oil, baby shampoo, baby lotion, baby hair oil, face wash and creams.

Shaukat Ali, who runs a tea shop under a bamboo stall on uneven land outside the plant, said local workers are routinely checking in for possible vacancies at the J&J site, but nothing has come up this year.

At the local pollution control office, the member secretary Satyanarayana Reddy said that the J&J factory had all the necessary approvals and he was unsure why it had not started production.

“It is unusual for such a large plant to remain idle for so long,” he said. “But there is no problem on our part.”

Chandrasekhar Babu, chief executive of the Telangana industry, said that a J & J entrepreneur told him that the facility had not started due to lack of demand.

GST and Demonstration were two main reasons the plan did not kick off, one source said, adding that the lack of consumer demand since then drew the company’s plans.

The other source familiar with J & J’s plans said the company misunderstood Indian market demand.

On a recent visit by Reuters reporter to the J&J factory, plush, furnished conference rooms and lockers were inactive; M. Sairam, who said he was the site manager, told Reuters production areas with machines were idle as well.

PLANTED ADDITIONAL EXPANSION

Local officials had hoped that the first J & J plant would be just the beginning. After the pioneering 2014, Pradeep Chandra, who was Telangana’s special secretary of industry, told Business Today magazine “based on the country’s scope (J&J) we believe they see a much greater expansion here.” [19659004] Local media then reported that the J&J plant would employ about 1,500 people.

A J&J official, not identified by the name, was then reported in December 2016 in India’s Business Standard, which estimated that the $ 85 million factory would be in operation in 2018 after overcoming procedural delays. Officially quoted was that the company had earmarked another $ 100 million for expansion.

Vikas Srivastava, CEO of J & J Consumer (India), who was on pioneering 2014, did not respond to calls for comments.

Reuters also spoke with two workers outside a proliferating Procter & Gamble facility doing laundry and diapers adjacent to the J&J facility. They said they were part of the P&G plant’s production team and the plant had run below capacity.

A P&G spokesman denied it and said that the factory was “full capacity in line with our business plans”. “India is a prioritized market for P & G globally and in recent quarters, P & G’s operations in India have recorded a strong double-digit growth consistently,” the company said.

FILE PHOTO: The Johnson & Johnson factory is depicted in Penjerla on the outskirts of Hyderabad, India on April 16, 2019. REUTERS / Zeba Siddiqui

The weak rural economy, where most Indians work, has also damaged the growth of sales of basic items such as detergents and shampoos during the past year.

Hindustan Unilever Ltd, an industry watch that would compete with J & J and P & G in certain categories, said volume growth fell to 7 percent in the quarter ending March 31, down from double-digit growth over the past five quarters.

The company warned that the daily consumption segment in India was “recession-proof … not recession proof”.

Reporting by Zeba Siddiqui and Aditya Kalra; Editing by Martin Howell

Our Standards: Thomson Reuters Trust Principles.

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