Sodexo is a French MNC and one of the largest food services and facilities management companies in the world. With about 4 lakh employees, representing 130 nationalities, they earned revenues of 15.3 billion euros last year. In India they issue food coupons to employees through various companies and firms, who offer it in their compensation packages. They are in news, since recently retail stores across the country suddenly stopped accepting these coupons.
Well, the concept of Sodexo coupons is actually interesting. A coupon’s life cycle is as follows. Since employees save tax by using these coupons, an employee readily demands coupons worth a particular amount from his company. His company procures coupons for that amount against hard-cash from Sodexo agents. The coupons are used by employees in canteens, restaurants, and retail shops. Retailers and food vendors accept coupons under pressure to retain customers. A retailer can exchange these coupons with hard cash with Sodexo agents only at the end of 20 days, and pays 5% of the amount to Sodexo. Simple enough?
The employee greedily takes these coupons since they have a tag of tax-saving against them. Many corporate slaves actually classify these coupons as free money. Since these coupons have an expiry date, and since there is a mental pressure to liquidate these coupons, employees are compelled to spend it, even to buy commodities they wouldn’t otherwise. The retailers and food vendors incur a loss of 5%, but they are compelled to retain customers and compete with other retailers. The companies don’t make any profit, since they exchange these coupons against hard cash of the same amount.
It is the last and silent player, Sodexo, that makes huge profits here. Sodexo makes straight 5% gain from food vendors and retailers. Also, these coupons come with an expiry date. Once expired, no retail store would accept a coupon. However, Sodexo has already received the money from the company when they issued the coupon, and hence makes a 100% profit. To top it all, Sodexo receives the entire money from company at 0% interest. Till the coupon is used, it is practically free money for them, and they can invest this money, thereby making more money.
Sodexo makes these employees look cool with a coupon. Sodexo simply plays with the insecurities of the working class Indians, who ironically, would rather give away their money to a billion euro MNC than to our government who in-spite being ear down in foreign loan, is busy building roads, fly-overs and metro rails for these employees’ convenience.
Why have the retailers stopped accepting these coupons? Have they become ethical? Rumor has it. It is either due to increment of brokerage by Sodexo from 5% to 9%, or due to increase in their en-cashing cycle from 20 days to 60 days, or both. In any, retailers are at loss and Sodexo will probe deeper into India’s economy and make more profit. Well, I believe the problem of Sodexo coupons not being accepted by retailers will soon get resolved, because of several political reasons. But it leaves us with some serious and intriguing questions on the way we the people of India think, and act.