Staff Reporter

New initiatives are being looked at with optimism

  • Efforts are in progress for a negotiated settlement of financial liability
  • A 10-year business plan has been prepared to extend financial support

    KOCHI: The announcement by the Union Government of a Special Purpose Tea Fund has brought a ray of hope to tea estates affected by the crisis in the plantation sector.

    Though the plantation sector in general, and tea plantations in particular, are not satisfied with the measures, the new initiatives are being looked at with optimism.

    More than 9,000 acres of tea estates of Ram Bahadur Takur Ltd. (RBT Ltd.) spread over Elappara, Peerumedu and Vandiperiyar had been going through troubled times for the past few years. The Government's efforts to help the plantation sector has now given a thrust to the revival plans of the company, which is expected to resume normal operations within a few months. Efforts are in progress for a negotiated settlement of financial liability. Initiatives such as plantation tourism could be part of the renewal programmes, according to sources in the industry.

    A severe crisis in the plantations in Munnar under the Tata Tea Ltd. was warded off by the timely execution of a revival plan. The formation of a participatory management company titled Kanan Devan Hills Plantations Company Pvt. Ltd. was part of this plan.

    The Tata Tea management had made known its intention to exit plantations in 2002. This was in line with the overall business strategy of focussing on brands, as plantation business was no longer an attractive proposition for large corporates, according to a top official of the company. After trying with the cooperative model, the management decided to explore the `employee buyout' model. Employees became part-owners of the business enterprise under this system. A 10-year business plan was prepared and a private sector bank came forward to extend financial support.

    The Kanan Devan Hills Plantations Company was formed with the participation of over 12,000 employees, holding about 70% of the equity stake. A committee consisting of elected members from among the workers and the management advises the estate on daily administrative functions. The committee holds weekly meetings to discuss matters on manpower deployment, materials requirement, etc. There are advisory committees at the factory level also.

    When the company completed one year of operations in 2006, the annual income showed a post-tax surplus of Rs.2.37 crore. The company declared 14% dividend. The `employee buyout' model is being considered as an alternative by several other companies.