The Hindu Business Line : Fluid state of water battles

ABOUT two weeks ago, Plachimada in Kerala celebrated the 1000th day of protest against the global giant Coke's alleged exploitation of groundwater there. Action council that is spearheading the movement wants the closure of the unit. But Kerala is not alone. In Chandigarh too, teachers and students have joined the locals to protest against Pepsi and Coke because the nearly hundred plants of these companies use about 5 crore litres of ground water.

On the ongoing tiff, the US media has reported that `Quit India' notices have been served to 45 plants in the country during the nationwide campaign, and recounted for the benefit of foreign readers that the slogan was coined by Mahatma Gandhi in 1942 during the independence struggle against British rule. Well, that seems to be an unethical hijack.

The Research Foundation for Science, Technology and Ecology claims that at least a lakh people participated in its campaign against the MNCs, though spokesmen of Coke and Pepsi saw only a handful of people.

But I guess www.karmabanque.com will go by the numbers submitted by the grandly named Foundation, because it supports such protests.

Karmabanque wants to hit offending companies "not with sticks and stones, but where it really hurts - their stock prices." But, how?

For answer, you may have to hit a news release on www.hedgemedia.com, dated December 1, 2004. It is about a new fund launched by Max Keiser who started www.Karmabanque.com several years ago, and Zac Goldsmith, Editor of The Ecologist. Aim of the `hedge fund' is to short its way into political activism. To do this, the fund would buy put options, or short a stock, and expect the target company's shares to fall, to punish it for `misdeeds' and at the same time profit themselves in the process.

A case of activism with an advantage, you may say, but the promoters are quite generous in their intentions. "A portion of profits will go towards `mending the social wounds inflicted by target companies'," and that should include people of Plachimada, perhaps. Keiser wants to increase the size of the hedge fund by £5,000, "for every 1,000 new boycotters", and this may explain that disputed figure of one lakh protestors. In the absence of any giveaways, I'm only reminded of our plantation scamsters!

To know `Why boycott Coca Cola?' I read a piece by Mohammed Mesbahi, Chair and Founder Share the World's Resources, on www.scoop.co.nz, and he supports the idea of Keiser. Mesbahi is worried that soon Coke, Pepsi and Nestle will be "the three main corporations selling bottled water, an iniquitous market, often depriving people of their local source of spring water, and selling it back to them at unaffordable prices." But there are many smaller firms too that profit from water shortage and earn tons for lorry-loads and can refills.

Since I'm only able to access a cached version of Karmabanque, I read what Mesbahi says about KbQ rating and BVR (boycott vulnerability ratio) from Keiser. BVR indicates, I learn, how susceptible a company's stock price is to a consumer boycott.

This is computed by dividing market cap by trailing annual sales. "Currently, ExxonMobil's BVR is close to $1, whereas Coca-Cola's is closer to $5. In other words the Coca Cola Corporation is five times more vulnerable to a boycott than ExxonMobil."

It is probable that soft-drink majors may yield in due course to demands of closure, though one is doubtful if such a victory would translate into greater economic benefit and ecological balance, or simply provide a pacifier to the egos of activists till they find a new target to attack.

E&OE@TheHindu.co.in

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