Kodaikanal is a hill station in the southern state of Tamil Nadu. Famous locally for its temperate climate and beautiful forests, it drew international attention in 2001, when local environmental groups revealed that a thermometer factory had been dumping mercury-contaminated waste in scrap yards around town.

The factory was opened in 1983 to produce medical thermometers for export. In 1987, it was acquired by a subsidiary of Unilever, who operated it until its closure in March 2001.

In 2001, local residents and environmental groups brought the fact that the factory was improperly disposing of its waste material to the notice of the Tamil Nadu Pollution Control Board. According to news reports, the company had dumped 7.4 metric tons of mercury-tainted glass in a scrap yard in a densely populated section of Kodaikanal. Former factory workers also complained of a lack of safety measures, which led to mercury vapor escaping during the manufacturing process. Unilever closed down the factory, and in May 2003, removed 290 metric tons of mercury waste from the site.

Metallic mercury, as used in thermometers, evaporates to form mercury vapor, a colorless and odorless gas. Mercury is toxic in all forms. The inhalation of the vapor can kill at high levels of exposure, and can cause central nervous system and kidney dysfunctions at lower levels. Evaporated mercury spreads contamination as it enters the atmosphere and is distributed through rainfall and air currents, and builds up in the fatty tissues of fish.

A study done by Greenpeace using lichen near the factory showed that they carried mercury concentrations between 0.08 and 1.99 mg/kg, compared to a general background mercury level of about 0.2 mg/kg for Kodaikanal lichen. Lichen are good indicators of air pollution because they lack a root system and rely soley upon airborn nutrients for survival.

Local residents claim that 10 workers died from mercury poisoning. Other employees reported symptoms, which included nausea, skin problems, respiratory disorders, kidney dysfunction, loss of memory, tremors and depression.

Concerns also exist regarding water contamination. The plant was located on the edge of the Pambar Shola nature preserve, and had been given special permission to set up there on grounds that the factory was non-polluting. The Pambar stream runs through the forests below the back wall of the factory and flows down to the Kumbhakarai waterfalls, a popular tourist bathing site. Below the waterfalls, the stream continues to meet the canals flowing from the Vaigai dam. The slopes where the wastes are dumped are part of the Pambar Shola watershed, draining water through the Pambar River.

Unilever has committed to removing all soil that contaminated with mercury above the limit of 10 mg/kg, a Dutch government-set standard for human health protection. Greenpeace is pushing for a remediation target of 0.3 mg/kg.