J&J’s cosmetics plant remains idle for 3 years
It was supposed to be Johnson & Johnson's biggest manufacturing plant in India. It was to eventually employ at least 1,500 people and help bring development to a rural area near Hyderabad.
Yet, three years after the US healthcare company completed construction of production facilities for cosmetics and baby products on the 47-acre site, they stand idle.
Two sources familiar with J&J's operations in India and one state government official told Reuters production at the plant, at Penjerla in Telangana, never began because of a slowing in the growth in demand for the products.
One of them said that demand didn't rise as expected because of two shock policy moves by Prime Minister Narendra Modi: a late 2016 ban on high-value currency notes, and the nationwide introduction of the GST in 2017.
J&J spokespeople in its Mumbai operations in India and at its global headquarters in New Brunswick, New Jersey, declined to respond to a list of questions from Reuters.
Modi's office did not respond to a call and an email with questions.
In the first month after demonetisation, some business surveys showed that sales of products such as shampoos and soap fell more than 20 per cent.
The groundbreaking of the J&J facility in Penjerla, its third in the country, was carried out with much fanfare in 2014, attended by Telangana's Chief Minister Chandrashekar Rao, who hailed the foreign investment as a big win for local communities.
A document dated April 2017 that lists products the company planned to make at the facility, submitted to the Telangana government names baby oil, baby shampoo, baby lotion, baby hair oil, face wash and creams.
At the local pollution control board office, the member secretary Satyanarayana Reddy said the J&J plant had all the required approvals and he was not sure why it hadn't started production.
"It is unusual for such a big plant to stay idle for so long," he said. "But there is no problem from our side."
Chandrasekhar Babu, an additional director at the Telangana industries department, said a J&J company official told him the plant hadn't started due to lack of demand.
The second source familiar with J&J's plans said the company miscalculated Indian market demand.
On a recent visit by a Reuters reporter to the J&J plant, plush, furnished conference rooms and cubicles sat inactive; M. Sairam, the site manager, said production areas with machines were idle too.
— Reuters