Over 5,000 FMCG distributors in the state of Kerala will be staging a one-day protest against Tata Consumer Products Ltd (TCPL) on June 24. Led by the All Kerala Distributors Association (AKDA), distributors have alleged 'Distributor Hostile Initiatives’ by the company.
As part of the protest, the distribution of all FMCG products in the state will be suspended on June 24 and around 10,000 FMCG delivery vehicles will remain off the road. According to a statement from AKDA, there will also be "Dharnas" at around 900 points in the state, strictly adhering to the COVID-19 protocol.
According to distributors, post the merger of Tata Chemicals Ltd and Tata Global Beverages Ltd, the company has altered its distribution model, which they claim is causing them losses and operational burdens.
According to Ayaapa Nair, president of AKDA, TCPL withdrew a 15-day credit facility that was in place for distributors for several decades and moved to an advance payment system. He also alleged that the company withdrew a 0.5 percent cash deposit that is offered on advance payment.
"On top of this, TCPL demoted around 20 distributors to sub-stockists and reduced their gross margin of profit by 0.8 percent," he added.
According to the distributors, the company terminated 25 of them, against which they have been agitating since April 1, 2021. However, he further claims that the company then terminated another 42 distributors during these agitations. In total, 67 distributors have been terminated by the company.
"These 67 distributors depend on this work for their livelihood and terminating them during the pandemic will cause their families a lot of financial distress," Nair added.
A Tata Consumer Products spokesperson told CNBC-TV18 in a statement that posts the integration of the Tata Chemicals Foods business and Tata Global Beverages into TCPL, the company sought to rework its existing distribution network across the country, including Kerala, as part of its integration into one common system.
These changes commenced in September 2020 and have now been completed across the country, except in Kerala where this is currently underway.
"The change proposed is in line with the way most FMCG companies operate and will have the benefit of a stronger reach and distribution as well as the creation of more job opportunities overall in Kerala," the spokesperson added.
While the company has claimed that it has held several discussions with nearly all the distributors in Kerala to understand their concerns and agree on a resolution, Nair said the company met with them in October and agreed to withdraw some of the new conditions, while agreeing on revised terms such as ensuring all distributors move to the company’s billing software and maintaining a cash discount of 0.5 percent.
"But on March 23, they issued a circular that no further cash discount will be offered," Nair added. He further claims that the company has refused to hold discussions with the association over the past 2-3 months and only spoke to around 30-odd distributors, who also didn't agree to the new terms.
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TCPL further said in a statement that only a minority of distributors who were unwilling to agree to the revised terms were served termination notices, and alternatives appointed.
"A minority of distributors have been trying to create a false picture that TCPL has been unfair and has resorted to the reduction in business terms without consultation. They have insisted that they would continue to operate as before, in a manner that was not tenable as terms of trade need to be mutually acceptable for parties to engage in business. We would like to reiterate that, at TCPL, we value our relationships with our channel partners and have also communicated extensively with all old distributors who had been given a first right of refusal to continue as distributors for TCPL," the company added.
First Published: IST