Kannan Devan once again but, Tata is missing

This time the under-paid women workers of KDHPC, a plantation company supposedly owned by them through their cooperative, are creating history by rejecting their traditional leaders. Public memory as synthesized by media is short: The article copied below was written and published by me in the Passline, five years ago when the present leader of opposition, VS Achuthanandan was the Chief Minister of Kerala.

By Engr. K Vijayachandran FIE

Chief Minister VS Achuthanandan started his Munnar mission some three years ago: It degenerated into an unseemly political controversy, as demolition squads and their JCBs attacked small settlers and property owners, in and around Munnar town. It was clear from the very beginning, that the operations personally guided by the Chief Minister, had lacked direction and purpose, as well as logistics and strategy. As demolition squads beat a clumsy retreat, its members were harassed and humiliated by punitive action, legal as well as administrative.

Tatas and other plantation interests were alleged to be the major violators of land-laws by Government sources as well as political leaders. For long time, local officials of Tatas did not come out in the open to defend the House of Tatas: They preferred to field Kannan Devan Hills Plantations Company (P) Ltd (KDHPC), a joint venture of Tata Tea Ltd (TTL) with its workers, to do the job. KDHPC was founded in 2005 with the blessings of Central plantation minister, Jairam Rajesh, and his highly innovative tea plantations rehabilitation program. However, the later allegations of illegal construction of check dams in Government property and other acts of forest encroachment in KDH area by TTL have forced the Tata bureaucracy in Kerala, to come out in open defense of the House of Tatas.

TTL along with KDHPC had approached Kerala High Court against the reported threat from the State Government to demolish the dams and take over of Munnar township inherited from James Finlay in 1963, and indifferently maintained by TTL, for more than four decades. Encouraged by their earlier successes with the courts and the immense potential for bungling by State Government, at every possible level, TTL and its lawyers were looking forward to an easy walkover in the High Court. In fact, they did get the immediate relief asked for and the case was transferred to the Green Bench.
However, an unfriendly debate was picking up momentum outside of the court in the meanwhile, especially in the streets of Munnar town. And, the latest action taken report, filed by Kerala Government in Kerala High Court had virtually branded TTL as a major encroacher of forests in KDH area. This, no doubt, was influenced by the ongoing grass root level political debate in the Munnar area. In order to counter this offensive, TTL have launched big action outside of the court as well, with a massive media campaign including full page advertisements in leading newspapers, explaining its position, as well as highlighting the Tata traditions in Corporate Social Responsibility (CSR).

Tatas and their check dams in Munnar were live issues in Kerala media, visual as well as print, for a couple of weeks and it has subsided now, for the moment. Tata is a great brand name in global market: With some 3.5 million shareholders, 350,000 employees and market capitalization of Rs.3,18,097 Crore (US$ 68.41 bn) as on 11th February 2010 (www.tata.com-presentation.pdf), Tata Group’s annual revenue from the several sectors of industry served by it, was around ten times that of the annual budget of Kerala Government. Encouraged by their past successes in courts and counting on public support and sympathy, the local bureaucracy of TTL went on an offensive against its marauders, by leaking information to the media on favours received from them by public men, including political leaders and trade union activists of Munnar. The shadow political economy of Munnar Town is now being discussed in the open, by its narrow dirty streets, which are collapsing under the weight of a totally unplanned insurgency by tourism industry. Local population of Munnar now debates about the liberation of their town from the inadequacies and misrule by the corporate bureaucracy of Tatas.

TTL, in its present form of an Indian MNC with a current annual turnover of around Rs. 1500 Crore and asset base of Rs.1425 Crore (March 2006), had emerged as a result of a series of take overs, mergers and acquisitions within and outside the country, very typical of the Tata group of companies, presently numbering around one hundred. Reserves and surpluses of TTL account of for more than 80 percent of its funds deployed, and bulk of this is deployed in other Tata companies. It is interesting to read the story of TTL and its corporate dreams, as given out in the official brochure of Tata Group: “Set up in 1962 as a joint venture between Tata Sons and the UK-based tea plantation company, James Finlay and Company, the Tata Tea group of companies, which includes the UK-based Tetley Group, now represents the world’s second largest global branded tea operation with a presence in over 70 countries…

…Tata Tea’s subsidiary, Tata Coffee, is the largest integrated coffee plantation company in the world. The company has now re-articulated its vision to look well beyond tea and coffee and to transform itself into a significant global player in the ‘good for you beverages’ space. The company set out on this global ambition with the acquisition of Tetley in 2000. This was followed by a string of strategic acquisitions including Good Earth, Jemca, Vitax, Eight O’ Clock Coffee and Himalayan Water. Beginning as a plantation company in India, Tata Tea forayed into the branded packaged tea business in 1985. ….

…With an enhanced focus on building and marketing strong brands, the company took a decision to devolve itself from the plantations businesses. The plantations were remodeled into a unique ownership structure, with significant equity placed with its workers, setting in place a sustainable growth model for the business. The Tata Tea group’s ongoing strategic focus is to strengthen its presence in the existing geographies, create an organic or inorganic presence in hitherto untapped geographies and build its business through innovation in tea, ready-to-drink teas, energy drinks and water. The company is addressing opportunities for the aggressive growth of its existing portfolios through a series of strategic investments and acquisitions.”

That is fine, so far as the global dreams and priorities of the House of Tatas, which had been growing rapidly in terms of group revenues, as a result of its strategic re-structuring initiated in 1991 (see Charts on Group Revenue, and Change-Post 1991). TTL is a cash-rich company and a super performer in global financial markets. However, the fact remains that, TTL plantations in India had gone unviable in recent years and public funds were pumped in, for salvaging its Kannan Devan plantations, as part of a rehabilitation program initiated by the GOI. Reorganization of Kannan Devan plantations is referred to in the Tata brochure, quoted above, as remodeling “into a unique ownership structure, with significant equity placed with its workers.”

This experiment is often quoted as a unique CSR initiative by the House of Tatas. Reportedly, some 13,000 workers including retirees along with other promoting institutions are holding majority shares of KDHPC, in which TTL’s share is 19 percent. Working details of this private limited company and the role of TTL in its management, other than marketing the produce, are not available on the Internet. News Bulletins of KDHPC, published on the net, mainly deals with environmental and social audits of the region: they hardly reveal any factual data on its operations.

However, the participatory management model adopted by this company has been a great success, according to Ratan Tata, Chairman of Tata Sons: He had told the Business Line in last November: “I am very proud that we have given it (the company) to the workers and employees instead of selling it, as some other entrepreneurs would have done..The workers and employees have operated it successfully and profitably, making it a win-win situation for everyone”. He was speaking on the sidelines of the silver jubilee celebrations of Tata Tea’s High Range School in Munnar: When asked, if the successful model was being replicated in other centres, Mr R.K. Krishna Kumar, Vice-Chairman of Tata Tea and Indian Hotels had said: “the model was being extended to Tata Tea’s North Indian plantations. The project was being implemented over the past one year and it is just stabilizing. Much like this, but they are much larger operations in scale in Assam and West Bengal”.

Several of the details regarding the TTL-KDHPC deal are yet to be made public, and this is adversely affecting the civic administration of Munnar Township and adjoining Panchayats. KDHPC was refused succession rights for electricity supply in Munnar and neighborhood, because it failed to submit the details asked for by the Kerala State Electricity Regulatory Commission. Mr. PT Thomas MP has alleged that, nearly 2,500 acres of land had been encroached on in Munnar, Devikulam, Chinnakanal, Chokramudy and Gap areas and it was only by a proper and elaborate inquiry, the extent of encroachment could be revealed. The forest lands, leased in by the original plantation company more than a century ago, were fragmented and alienated over the years, during the foreign rule as well as Tatas regime. It appears that, an unholy nexus among company officials, bureaucrats, political leaders and trade union leaders at various levels had misused the formation of KDHPC for stripping the assets of TTL, the parent company.

Stories of forest encroachments in KDH areas dates back to the colonial days: Raja of Poonjar had given 588 square kilometers (145,300 Acres) in Munnar, on lease to J.D. Munro, an official of Travancore government. The Munro company was later transferred to Kannan Devan Hills Producing Company, and registered in Britain in 1897. Ten years after its takeover by Tata, Kerala government introduced the Kannan Devan Hills (Resumption of Lands) Act of 1971, with a view to distributing the unmutilated and underutilized tracts of land held by the company, to poor farmers, agricultural laborers, tribal people and others. This Act was for bringing under Government control, the entire land of Kannan Devan Hills, held by the Tata-Finlay group. Subsequently, a survey was done by Kerala State Land Board and the company was allowed to keep 57,000 acres and vested the remaining land with state government for redistribution.

However, the nearly 50 tracts of forest land vested in the government, that lay between TTL’s estates, were never taken over as planned, and continued as virtual no man’s land and open for encroachment. Reorganization of TTL as well as the formation of the new private limited company taking over its operations provided an excellent opportunity for playing mischief with such legal lacuna and complexities involving several departments of the State and Central Governments.

Kerala High Court has now blocked all State Government initiatives and without going into the legal complexities it has referred the issue to the Green Bench. However its forest department has submitted an action-taken report which has put TTL on the dock. Jairam Ramesh, the Central Minister for environment and forests has, in the meanwhile, announced an experts committee to look into the problems.

Farmers in the area are agitating against the forest minister for branding their farmlands as ecologically fragile. And, yet another Central team has been announced for making a comprehensive evaluation of the ecological situation. And in the meanwhile, the local people have started agitating for self-rule and better civic amenities in Munnar Town and nearby villages.