Andos Cocoa calls for Govt. bailout after Rs. 1 b investment goes sour

Monday, 20 June 2016 00:00 - - {{hitsCtrl.values.hits}}

By Charumini de Silva

Anods Cocoa Ltd., which has invested Rs.1 billion to export industrial chocolate to India, is on the verge of collapse due to the non-tariff barriers imposed by the Indian authorities and is seeking Government support to avoid bankruptcy as well as guidance to protect the firm.

Anods Cocoa representative Lakshman Weerasooriya presenting this unfortunate situation at the eighth Ease of Doing Business Forum organised by the Finance Ministry on Tuesday (14) appealed to the Finance Ministry to let the firm sell its products to the local market, exempt duty and fiscal levies payable for machinery imported under BOI agreement and allow to operate under a TIEP scheme until they find new buyers from Middle East, Bangladesh and Maldives.

He said the firm had a production capacity of 5,000MT of compound chocolate per annum and this volume could not be exported to other countries in the region as there was no demand and explained that India was the largest consumer of compound chocolate in the world which was why it had targeted the market.

Further he said that the Department of Commerce assured that chocolate and food preparations containing cocoa were not included in the negative list of India and eligible to claim zero basic duty free under the Indo-Lanka Free Trade Agreement (FTA). However, when the firm exported its products, the Food Safety and Standards Authority in India (FSSAI) stated that it had not gazetted regulations for compound chocolates and denied clearance. As a result, the firm had lost all its buyers in India and could not promote any products in the Indian market as well.

“We depend on a Government to Government agreement because we trust the Government. If one Government is violating the agreement, the other party should act. Relying on the assurance we employed an Indian consultant and invested about Rs.1 billion by way of a bank loan. Up to now they haven’t done anything as they have imposed non-tariff barriers,” he emphasised.

Weerasooriya said that in order to survive in the industry, the company needed to sell its products to the local market, but pointed that even in the local market the maximum demand was around 500MT per annum, which was one-tenth of Anods Cocoa’scapacity.

“Presently we have employed around 70 employees and we are in a dilemma as to what to do in this unfortunate situation.These machines are designed only for manufacturing compound chocolates and therefore we cannot change our products to alternative products. Hence, we request guidance and support to protect the firm,” he asserted. Responding to the grievances, Finance Minister Ravi Karunanayake said: “You seem have gone through a lot to be right on top of the situation. Write to us officially again. This is not something we would like to see. We are talking about an Economic and Technical Cooperation Agreement (ETCA) with India and going forward, we cannot have this type of things harassing our investors. We will look into this matter soon.”