The Hindu Business Line : `Concept of Kanan Devan company a sustainable model'

Kochi April 5 The replication of the concept of participative management, introduced in the Kanan Devan Hills Plantation Company (KDHP) in Kerala could be a viable solution to extricate corporate tea plantations that are in the red.

There are around 32 estates already defunct in the Statedue to serious financial crisis. The concept introduced in KDHP "could therefore certainly be one of the solutions for them," a highly placed Tata official told Business Line.

However, he said, there are several Kerala-based corporates which are doing extremely well such as AVT, while still following the traditional business model.

Different situation

On the introduction of the same concept in the North-East, he said, when compared to Assam, the situation in Kerala is totally different. All the tea estates located in the Kanan Devan Hills are contiguous to each other with the same type of culture, similar growing conditions and an enlightened labour force. The unions are also attuned to the changing management-labour relations. Unlike Assam, these estates have been continuously making huge losses.

In Assam, the estates are not contiguous and are situated all over the valley with distances between them ranging by as much as 300 km. Therefore, there is not much homogeneity among them. Also, there are many unions, as against two the powerful one in Kerala. It is, therefore, difficult to replicate the Kerala model there. More importantly, the Assam estates have always been profitable and the workers have not faced a desperate situation as in Kerala, he pointed out.

The unions there feel that if the workers become the owners of the new company, Amalgamated Plantations, then they would not come under Standing Orders under the Plantation Act and would also lose the right of collective bargaining.

According to the official, the workers, in fact, are reportedly investing in the new company. The workers of KDHP have benefited from the new arrangement. This is the first time in the plantation history that participative management is being implemented with the representative of the workers sitting on the board of the company, he pointed out. The company has also instituted a system, where committees have been formed, which include workers and staff and joint decisions are taken on important matters. This has given a sense of belonging and pride to the workers with the company turning profitable in its first year of operations.

Rise in productivity

At the same time, there has been a marked increase both in labour as well as field productivity. This has brought down the cost of production significantly resulting in a total turnaround in the fortunes of the company.

KDHP was formed in April 2005 as a private limited company by the former employees of Tata Tea Ltd, when Tata Tea decided to exit from the tea plantation business due to the persistent crisis that endangered the very survival of plantation industry in Kerala.

Taking it as a challenge, about 13,000 employees, of whom 95 per cent are workers, collectively formed KDHP as shareholders, holding about 75 per cent of shares in the company. Incorporated under the Companies Act 1956, the primary objective of forming KDHP was to tide over the crisis in the tea industry, which resulted in the closure of many tea estates in Vandiperiyar, Peermade and Wayanad regions, rendering thousands of workers jobless and driving them to abject poverty.