More security after Coca Cola attack

Coca Cola's India operation has been plagued with problems

The authorities in the southern Indian state of Andhra Pradesh have tightened security for multinational firms following an attack on a Coca-Cola bottling plant by an outlawed left-wing rebel group.

All our operations are Indianised. All our 5,500 employees are Indians

Statement from Coca Cola's India HQ

Police said that in the attack on Sunday, the militants - known as the People's War Group - left a note saying the attack was in retaliation for American attacks on Afghanistan.

Coca Cola have deplored the incident, denying it is a "big, bad multinational".

No-one was injured in the attack but damage to the plant is estimated at some 7,000,000 rupees ($140,000).

The People's War Group called for a strike to be observed throughout Andhra Pradesh on Monday.

A BBC correspondent in the state capital, Hyderabad, says it went almost unnoticed there.

However, he sayd it had a good response in northern areas of the state, where the militants are strongest.

Staff overpowered

According to local police, 12 members of the People's War Group dressed in military fatigues attacked the plant in the district of Guntur armed with guns, knives and swords.

They overpowered local staff and locked them up before detonating a number of explosives.

The main production unit of the factory, which can produce 600 bottles a minute, was reported not to have been destroyed.

The People's War Group "mentioned they would attack MNC's (multinational corporations) especially American MNCs, Mehandra Kumawat of the Andhra Pradesh police told Reuters news agency.

"We have asked officers in the districts to ensure that security is beefed up," the officer said.

Coca Cola also said it was strengthening its own security arrangements at its factories in India.

Marketing rethink

This is the first attack the People's War Group has carried out on an American target.

The group's demands include radical land reform to benefit small farmers.

Coca Cola is one of a number of foreign companies that moved into India in the 1990s as the economy was liberalised.

But a number of high-profile companies have since pulled out, complaining of overwhelming bureaucratic obstacles and state interference.

Coca Cola itself last year was forced to rethink its marketing policies.

The company incurred huge bills buying out and restructuring local drinks manufacturers, particularly Parle with its Thums Up brand.

But lavish spending on advertising and marketing failed to produce enough extra sales to justify the cost.

It appears that Coca-Cola greatly overestimated the eagerness of consumers in India and other developing nations to pay premium prices to quench their thirst with a famous American brand.

Critics have pointed out that, in comparison to local income levels, a glass of Coke bought in India can seem as expensive as a glass of high-quality champagne does to a consumer in the west.