ISLAMABAD - Chief Justice of Pakistan Mian Saqib Nisar on Tuesday again urged the people to consume the tap’s water after boiling it instead of consuming bottled water, adding that bottled water companies charged money on a single bottle and returned nothing.

Observing the bottled water as hazardous for human health, the chief justice expressed displeasure on the mineral water companies for extracting the water without paying the amount to government.

Chief justice has also summoned the owners of mineral water companies in-person on next date of hearing scheduled for November 13. A three-judge bench headed by Chief Justice Mian Saqib Nisar resumed the hearing of suo motu regarding selling of bottled water extracted from the ground without any charge and its fitness for human consumption.

During the hearing, Punjab’s law officer informed that the government is considering to fix the cost on extraction by water companies.  During the hearing, the CJ also observed that the owners of water companies are approaching the high-ups for fixing Rs10 cost per litre.

He questioned why only Rs10 per litre should be imposed, adding that the companies minting hefty amount. He remarked that on his visit to Nestle Plant at Port Qasim accompanied with expert, it was revealed upon him that 5 tube-wells were operative but water was substandard.  He added that Nestle is extracting 20 thousand tons water per hour.  “Some of the quantity after usage is being again introduced in the ground and this practice has transformed the water into dangerous poison,” chief justice observed.  Sindh’s law officer informed the bench that fixation of cost per litre is being considered by the cabinet.

“Whether a sensible person would want to deteriorate his own health on the bottle costing Rs54,” chief justice questioned, adding the plastic bottles become dangerous for health due to sun's heat.  The law officer from Khyber Pakhtunkhwa informed the bench that the government has no data regarding extraction of water.

Meanwhile, an audit report regarding Nestle Pakistan was submitted before the bench.  Nestle Pakistan has virtually paid no amount to any government department for water extracted during 2013 to 2017.

According to the figures contained in the audit report, a total of 4.43 billion litres of water has been extracted from all the wells of three sites in last five years.

The sold water is 2.515 billion litres while 1.916 billion litre making 46 per cent.  The management of the company informed that 15 per cent was wasted during reverse osmosis process. “However, no justification has been put forward regarding remaining 28 per cent wastage of water.

Audit team is further probing the matter to ascertain the exact percentage of water wastage.  It is evident from the costing data that total cost to make and sell bottled water of 18.90 litre capacity is much higher in the case of Nestle Pakistan which comes to Rs160.84 per bottle as against Rs. 69.46 per bottle provided by WASA, Faisalabad plant.

The main increase in costs is high selling, distribution and other costs which is Rs97.39 per bottle incurred by Nestle as against Rs. 30 per bottle provided by WASA Faisalabad.  “The audit team is also seeking cost data from other leading bottled water companies like Pepsi Co, Coca Cola, Sufi, Gourmet and Qureshi etc for comparative analysis of cost of bottled water products.”

Analytically that total fixed costs of Nestle Bottled Water business were Rs14.34 billion against total costs of Rs34.288 billion in last five years which ranged from 40per cent to 47per cent of total cost.

The fixed cost appears to on higher side and is a major factor to affect the profitability of Bottled Water business as well as consumer.  During 2017, Nestle Pakistan earned net profit of Rs739.480 million, excluding accessories, and the distributors and retailers’ revenue were Rs2.042 billion which is 276per cent of Nestle’s net profit.

The view of audit team is that distributors and retailers margins are very high as compared to Nestle’s earnings and seems unjustified.  Regarding excessive sales discounts of Rs1.129 billion against sale of Rs8.964 billion, the audit observed that the management had given excessive sales discounts to its distributors and sub-distributors.

Last five years analysis depicts that in 2016 total sales discounts were 183.10per cent of net profit earned, 258.46per cent in 2015 and 347.640 per cent in 2014 which seems excessive and unreasonable.  It was observed that the management of Nestle Pakistan has been booking huge warehouse expenses which seem to be unjustified.