The sad story of Supplyco's financial decline and its latest misadventure in the bottled water business?

Supplyco tries to reign in hundreds of crores in subsidy losses by selling bottled water that could raise water costs overall in Kerala

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Pravin J P Arapurakal, Aranmula, June 21, 2019, updated at 8.30 pm

Supplyco diversifies once again to stray even further away from its core mission:

In April 2019, Supplyco, and its parent the Kerala Civil Supplies Corporation started selling “Sabari” bottled water at Rs 11 per liter bottle through its network of Maveli stores. A move that appears to take it further away from its core mission to reduce market costs of essential commodities”. This article takes a look at some of the organization's challenges and also looks at alternative ways of transferring subsidies to consumers.

The Kerala government which has relied most for revenue on liquor and lottery ticket sales is now getting people to pay for and drink bottled water. Instead of having water kiosks dispense water to customers who bring their own containers, Supplyco is increasing customer costs for water and putting further pressure on the environment by selling pre-packaged water (albeit for higher margins),

Supplyco and later the Maveli Stores were begun with the goal of reducing the market prices of food commodities on a no-profit, no loss basis

Supplyco is 45 years old this year. It was formed on June 24, 1974 during the Achutha Menon Ministry, in an effort to reduce market prices of food commodities. In 1980, the then Food and Civil Supplies Minister E Chandrasekharan Nair, launched the concept of “Maveli Stores and successfully impacted the price of food commodities by buying and holding grain while selling grain through the Maveli Stores. 

At that point, the understanding was that Supplyco was to function on a no profit no loss basis so the fledgling organization began to diversify into related commodities where it could make profits which would compensate for its losses on grain sales. SUPPLYCO achieved this for many years but a study of its finances (by the Center for Public Policy) indicates that after 2011, the subsidies got completely out of hand. 

The story of how this break even was achieved is told by C. Balagopal in his book “Maveli and Market Intervention: How Supplyco Helped to Hold the Price Line.” (a review of this fascinating book is provided at the conclusion of this article).

Supplyco is reeling from its losses:

An article in the Mathrubhumi (by K Radhakrishnan, dated February 11, 2019)*1 asserts that  Supplyco losses in 2017-18 were Rs 431 crore and in November 2018, Supplyco had already racked up losses of Rs 210 crore, up to November in the 2018-19 financial year.
Mr. Radhakrishnan also follows up on February 14, 2019 with details of insurance losses, *2 says he, “the Kerala Civil Supplies Corporation known as Supplyco has suffered a huge (further) loss of Rs 113 crore after the officials failed to get (approval for) the insurance claim of the rice and paddy which was (spoiled) in the floods. 

Radhakrisnan continues “Supplyco (had) informed the insurance company that the food grains were damaged in the floods multiple times from August 16 to 18 and on August 21. They however filed the application requesting insurance claim, two months after the floods”. Why was there a delay in filing an insurance claim, no-one knows for sure!

Can the sale of bottled water reduce Supplyco losses, is it worth the environmental cost?  
An article in the Times of India updated on June 18, 2019 proposes that bottled water be declared an essential commodity in an effort to reduce price gouging for bottled water. Labeling bottled water an essential commodity would be a travesty as the common man needs access to clean potable water in his home, and not in a bottle. Water dispensers that filter chilled water into customer containers are now widely available.

The problem of Supplyco losses is not going to go away. One assumes that this diversification into bottled water is more profitable and will help it reduce the huge government subsidies needed to keep it afloat.

Water is the ultimate essential commodity one might say, but bottled water is not essential. In fact industry observers would agree that it depletes water resources for all by diverting them to people who can afford to pay the premium for bottled water. Bottled water is wasteful of energy, environmentally harmful and diverts water resources that belong to all the people of Kerala.

The Week, magazine, dated July 3, 2018*3 would have us know that “Kerala produces 480 tonnes of plastic waste per day as the administration fails to enforce a ban on plastic material below 50 microns”. 

Supplyco sells plastic bottled water while the rest of the state moves away from it

TJ Sreejith writing in the Mathrubumi online on June 27, 2018 *4 says “State Pollution Control Board has decided to ban bottled water at star hotels, resorts, houseboats and hospitals with more than 500 beds. In the next phase, plastic should already have been “banned at all tourism centres. At present plastic below 50 microns (in thickness) are banned in Kerala. Tourism and health sectors were to have been given six months’ time from June 2018 to get rid of plastic bottled waters. They (were) instructed to replace plastic bottles with glass bottles.

Has the time come to consider more efficient ways of subsidizing consumers? 

A research study*5 conducted in 2018 by researchers Deepthi Mary Mathew, Senior Research Associate and Nimmish Sany, Research Assistant, at the Center for Public Policy Research offers a harsh indictment of what Supplyco has now become: The study claims, “ that "to transfer the intended subsidy benefits worth ₹121.60 per person per month, the government spends an additional ₹61 per person per month for running Supplyco!” The paper goes on to make a strong case for dismantling the infrastructure of Supplyco and explore ways to paying subsidy benefits directly to consumers electronically through DBT (Direct Benefits Transfer) for example.

Balagopal also weighs in briefly on the Center for Public Policy Research study on Supplyco, Bala says, " High prices for many Supplyco items appear to have underlying structural reasons. Unless these are tackled, a mere subsidy in the form of lower retail prices in Supplyco outlets will not impact market prices. It is in the wholesale trade that prices need to be controlled."

Can we help Supplyco become more efficient and relevant? Watch this space, we hope to be talking to the folks at the Center for Public Policy Research and Supplyco.

Check out our review of C. Balagopal's book:
Maveli and Market Intervention, how SUPPLYCO helped to hold the price-line.


Civil Supplies Corporation
Food commodity prices
Chandrasekhar Balagopal
Food Pricing policy
Food Corporation of India


  1. What is a burden to public need to be dismantled. We need to strongly oppose this move that will not only be a burden to our pocket but also to the environment

  2. The object was to reduce market prices. We are having a discussion with the Center for Public Policy and Mr C Balagopal who was once Supplyco's GM Operations on whether Supplyco's business model can be modified to reduce losses and impact Market prices. The results of that discussion will be a follow up article. Thanks for caring and sharing my friend!


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