The Hindu Business Line : Flight of capital feared from tea plantations

THE exit of Tata Tea and Hindustan Lever from the business of tea plantations appears to have shaken industry associations and labour unions. They perceive greater adverse implication in this decision than the exit itself.

"The decision to disappear cannot be ignored. It can have serious implications in a labour-intensive industry passing through a bad phase with plummeting prices and low returns. However what really matters at this juncture is not the exit per se, but the reasons that prompted it," Mr C. Sankaranarayanan, Adviser, Planters' Association of Tamil Nadu (PAT), told Business Line.

Industry associations are apprehensive about what could follow. They are sure that after the exit of these renowned corporate players from tea plantation business, there would be no fresh infusion of capital or foreign direct investment in this space. "Flight of capital cannot be ruled out," he said.

According to him, any discerning corporate watcher would see and conclude this as the first stage in the exit route, but such structural changes would not augur well either in the workers' long-term interests or for the economy of the plantation sector.

Stating that a company such as Tata Tea with good business sense could afford to take the exit route to safeguard its image and reputation, Mr Sankaranarayanan observed that Tata Tea's model or example would be difficult to replicate by others in tea plantation business, especially if they were solely dependent on tea cultivation and manufacturing activities for profits and dividends.

(Tata Tea divested 16 estates in Kerala with 55,528 acres of tea and ancillary lands together with 12,770 workers to a newly formed company - Kannan Devan Hills Plantations Co Ltd. This venture is a participatory company of employees, workers, staff and executives holding 70 per cent of the shares.)

"The hype and optimism about the prospects of employees participating in the company is understandable, but the fact that the new company is the by-product of a long-term crisis and industrial sickness should not be forgotten. For profitable running of this venture, they will have to resort to productivity-linked performance, an aspect which plantation workers generally oppose, particularly in Kerala," Mr Sankaranarayanan said. The company's Tamil Nadu plantation is likely to change hands.

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Seafood industry on alert as US FDA detains shipments — Banned antibiotic in shrimp imports

Rubber steady on moderate enquiries

Steel units using blast furnace 'facing crisis' — Problem crops up as cement firms switch over to flyash from slag

Sugar production in UP may touch 48 lt

Flight of capital feared from tea plantations

GEAC defers decision on Bt cotton renewal

Coir products export top Rs 460 cr

`Flavourit' a hit, says Spices Board