The Sodexo drama

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.

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18 responses to “The Sodexo drama

  1. Not to mention that fact that you rarely receive change for sodexos.

  2. Useless article. Sodexho coupons used to have a fairly long expiry date and wide acceptability from neighborhood Mom and Pop stores to retailers in super markets. Can’t remember that I ever felt forced to buy something to use these coupons. And all such coupons will have an expiry date (they can’t have life time expiry). With food costs being so high, with some amount of discipline, 6 months worth of coupons will get consumed in two month’s time and the coupons would have an expiry of around a year. The company issuing such coupons will of course make some money (they are not operating for charity). The businesses also benefit since this ensures some clientale for them (somewhat similar to them accepting credit cards). And the users are benefitted because they save tax. Have lived in three countries in my life and am yet to meet someone who does not rejoice on the idea of saving tax. Why should Indian population not save tax and rather pay to an inept government who returns us nothing for the taxes paid. In India, people arrange everything privately from education to healthcare to library facilities to even basic amenities like electricity and water and sometimes security. Author of the article is suggesting paying even more taxes to the Government. In fact, Government must also be getting lots in taxes from Sodexho since they have allowed them to operate in India. What would be better would be a Indian company replacing Sodexho so that the profits stay within the country. Otherwise I did not find the above article useful at all.

    • Why are u so against to govt, also this article is quiet informative.

    • i too agree with you naveen, i am paying around 12k in the form of taxes to the govt every month and still staying in a place where there are no basic amenities like water and road. Hell with govt. Useless article in all sense.

  3. 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.
    >> 20 days from when? From actual purchase by a customer? If so, where is the purchase date mentioned in the coupon?
    Also, it would have been good if you had given some references to the facts you have mentioned.

    • i dont think its the customer purchase date. it must be a cycle like a weekly news paper. if they collected it from the retailer on 1st, their next visit would be on 20th i think this is what the author meant.

  4. why can’t indian goverment make some 1000-2000 pm tax free without involving sodexho in between. I am sure every employee would spend that much in a metro city for food.

  5. The reason we save tax on Sodexo coupons is because company allowance for food during working hours is not taxable according to the rules.

    For getting the tax benefit, as per the rules, only places serving freshly prepared/readily consumable packed food should accept Sodexo coupons. Big Bazaar and other Kirana stores are already breaking some rules for accepting sodexo coupons for buying pillow covers and basmati rice.

  6. I stopped taking sodexho coupons in my company. But they might not give me money as part of those coupons. And I do not have need of coupons, as I can use them only in retail chains. I do take very rarely outside food. And you know many of medium size restaurants here in bangalore my area stopped accepting coupons. Now I do not have clue what should I do. Can I compel my company to give me cash in place of coupons ?

  7. Don’t worry about the government all the politicians are filling there pocket with our money paid as tax….and coming to building infrastructure
    I don’t see any improvement…so it is better to save tax by having sodexo coupon and the expiry date is almost 1year from the date of issuing of the coupon

  8. Crapshit. Looks like the author of this article has lost his mind and senses in bootlicking this government ineptly. Looks like he has been inspired & mentored by nonsensical & filthy stinky sibals, abishek singhvi & manish tiwaris of the United Poaching Alliance.

    • lol….askin you to pay tax and help to build society had become a crapshit.
      First of all it was informative and then i dnt think i will decide what to do with my money – tax or no tax dnt depend on this article.
      He was suggesting best practices so calm down.
      Agree with u on “nonsensical & filthy stinky sibals, abishek singhvi & manish tiwaris of the United Poaching Alliance”

  9. http://www.business-standard.com/india/news/retailers-refuse-sodexo-passes/461102/

    Its not 5% according to above link.

    Still good read and informative apart from the figures

  10. Saving tax is no crime, but evading is!
    I look at Sodexo as tax saving. This is true as long as the coupons are used for food and consumables(including ready-to-eat food, cosmetics, pillow covers & basmati rice) and not for buying properties, durables, luxury items and invesments. This is my view and may be legally incorrect.
    One missed point of view : one’s expenditure is another’s income.. Sodexo is a catalyst to the economic process which is good.

    What we should now do is : Welcome an Indian competion to Sodexo!

    Prasad Nair

  11. Since all these MNCs are strugling very hard to earn their bread due to slowdown etc., they thoght they will target India to extract some money on account of increase in commission and delay in payment. One way its a good step by retailers to threaten them. Also I would suggest, why Sodexho, cant any Indian company do this business? At least our money will be within our country…

  12. Dear all,
    Sorry to tell we are living in water well. We all express our feeling in the net or some other equal person only. We will not raise our voice on higher authorities. Like boss or politician or big fellows, because of afraid. We are unable to teach lessons ourselves and big fellows. If there is any short cut then we will only break the rules and after that we will try to scold other people who will use it. And we will keep quit when if the person is a politician. PLEASE STOP THESE THINGS. AND START FOR BUILDING A GOOD SECURE AND RELAIBLE INDIA FOR THE FUTURE GENERATIONS.

  13. One more Mindless Article.
    Goverment itself giving a way to this Greedy MNC companies who are trying to Monoplay in industry.
    Doesn’t an Employee is human being?
    He is and surely he will have his lunch and dinner why cant government make 3000\2200 tax free instead of this stupid coupons.

    Think beyond dont comment why can guys give there money for goverment we are already giving a lot and Govrment is not even Respending @60%
    Be wise not a fool

  14. Sodexo is useful for employees is correct. Why is sodoxo charging 5 % to retailer even they collecting full money from company? Why govt to allow Foreign MNC in this business? why can’t govt give direct tax benefit to employees.

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