The Tea Totallers

When Tata Tea decided to hand over 24,000 hectares of its tea estates in Kerala to the company's 12,000 employees, it was seen as an experiment doomed to failure, and not because it came on April 1 this year. It was also perceived as a clever ploy by the management to hand over its loss-making plantations to its workforce. True, the Tatas were exiting because 17 of their plantations in the Munnar hills had been in the red for four successive years. In fact, other tea majors in the region had already sold off their estates, unable to sustain recurring losses.

But six months down, this experiment in worker participatory management seems to have paid off. How well, it may be too early to tell. But its turnover in the quarter ending June 2005 was Rs 27.81 crore as against the previous year's Rs 22.46 crore, a production jump of 24 per cent. The new venture, now christened the Kannan Devan Hills Plantation Company Ltd (KDHP), is also poised to register another upward trend in the second quarter despite the seasonal drag on production. The "magic", as managing director T.V. Alexander calls it, owes to rightsizing, congenial weather and the enthusiasm of the new worker-turned-shareholder.

Alexander, who has bought 2 lakh shares in the company for Rs 20 lakh, each share priced at Rs 10, and Muniyaswamy, 50, a third generation Tata Tea worker, who has 300 shares at Rs 3,000, have one aim in common: to make the company a success so that besides the yield from annual dividend, shares too would appreciate. "This is what we're planning. Soon we'll create our own branded tea (currently the brands are being marketed by Tata Tea) and go in for a public offering on the strength of our own fundamentals," says Alexander.

The worker's share makes up 38 per cent in the new entity while the management staff equity is 30 per cent. Together, workers and staff own more than 68 per cent equity in KDHP while the Tata Tea stake is limited to 19 per cent, 7 per cent is with a KDHP welfare trust, 6 per cent with ex-staff and Tata Tea employees.

Before KDHP was floated, all workers were offered a VRS option. Under it, 3,400 employees of the original 15,000-strong workforce quit. The rest were offered a loan of Rs 3,000 to buy shares and exposed to a mass awareness campaign on the plans. Within a week, out of the remaining 12,441 workers, 97 per cent purchased equity at an average 300 shares worth Rs 3,000. KDHP's existing factories include seven estates, amalgamated from the 17 estates comprising 24,000 ha, of which tea is grown only on 9,000 ha.

There was enough reason for KDHP to land on all fours. It shed the burden of maintaining offices in Calcutta, Kochi and Bangalore, saving it nearly Rs 10 crore. And with Tata Tea continuing to fund and maintain the High Range School, Tata Hospital and charitable organisations such as the Srishti complex, KDHP is spared another Rs 3-4 crore expense.

Lest the experiment flounder, KDHP has set up division advisory committees at the estates and factory advisory committees for strategic planning every fortnight, all of whom have women and management staff on board. Each estate has a joint consultative committee; each factory a joint factory consultative committee that meets once a month. At the apex is the central management committee, which meets every three months. "This gives us ample scope for planning and review," says Chella Dorai, a worker who owns Rs 3 lakh worth of shares.

And for the days when the weather can play spoiler to the temperature-sensitive plants, KDHP's non-tea wing has many a diversification idea. Part of the estates have already been set aside for high-end plantation tourism. Other plans include adventure and corporate tourism, floriculture, bio-pesticides, mineral water bottling and farming of medicinal plants, says Chacko Thomas, head, non-tea operations.

Many are disappointed the Tatas haveexited. But they're also glad the estates weren't sold off. Says KDHP chief R. Thangavel, both of whose parents were Tata employees: "I feel Tatas shouldn't have left the plantations. But now this is both a challenge and an opportunity for us. We at least have our jobs with us, unlike our counterparts in other plantations."