The Pollution Control Board in the south Indian state of Kerala has asked Coca-Cola not to emit sludge from its factory premises.
There have been protests against the cola giants
The board on Wednesday put out a statement alleging the presence of cadmium at toxic levels in sludge samples from the Coca-Cola plant at Plachimada, in Kerala's Palakkad district.
Earlier this week in a separate case, an environmental watchdog alleged that some Coca-Cola and Pepsi soft drinks sold in India contained more than the prescribed limit of toxic pesticides and insecticides.
Both companies strenuously deny that their products contain any harmful chemicals.
The Kerala state government ordered the sludge tests following a report by the BBC's Face the Facts programme in July.
Test results 'next week'
Kerala Health Minister P Shankaran told the BBC that Coca-Cola has also been asked by the Pollution Control Board to stop the distribution of their sludge as manure.
Mr Sankaran said the production and distribution of products manufactured at the Hindustan Coca-Cola Company in the state would be banned if the samples of the products were found to contain toxic levels of impurities.
"The government has collected samples of the Coca-Cola company's products from five districts in the state.
"These have been sent for analysis. The health department expects to receive the test results in a week's time," he told the BBC.
Coca-Cola general manager, Vijaya Bhaskara Reddy, said the management is also keen to study the details of the pollution board's findings.
"Effluents from Coca-Cola factories have been tested in various nationally and internationally-accredited laboratories and have been found to be well within the threshold prescribed in Europe and India," Mr Reddy said.
"We will look into the board's report and verify the methods of testing that they have used.
"The procedure used to analyse the sample has to be studied before concluding that the results are authentic," he added.
At least one Indian state government has said it intends to conduct spot checks on Coca-Cola and Pepsi drinks.
Kodela Siva Prasadrao, health minister of the southern state of Andhra Pradesh, said: "In the wake of the [Centre for Science and Environment (CSE)] report, we will conduct random tests. We have to establish the case, before we punish anybody."
The CSE report said on Tuesday its tests showed drinks sold by the Indian units of the US soft drink giants contained four toxic chemicals: lindane, DDT, malathion and chlorpyrifos.
Coca-Cola and Pepsi deny the allegations, and took out advertisements in the Indian press to try to allay customers' fears on Thursday.
CSE's report said no pesticides were found in tests on Coca-Cola and Pepsi soft drink brands sold in the US.
Demonstrations against both Coca-Cola and Pepsi have been led by activists from powerful political groups, including the ruling Bharatiya Janata Party (BJP) and the Samajwadi Party.
"Break bottle" campaigns have been staged in various places, including outside Churchgate railway station in Bombay on Thursday.
More than 100 protesters smashed bottles on the ground and trampled paper cups bearing the companies' names, chanting: "Coke and Pepsi quit India. You are playing with our lives."
Demonstrators elsewhere are tearing down posters of Bollywood stars who have advertised Coca-Cola and Pepsi in the country, including Shahrukh Khan, Aamir Khan and Kareena Kapoor.
Protesters want the companies to leave India
"The two multinationals have to get out of India. We are giving them 10 days by which time final test reports of these drinks
will come," warned Aslam Sheikh, president of the youth wing of the Samajwadi party.