Tata Tea, HLL exit tea plantations

10 June 2005

HLL and Tata Tea, the two largest Indian tea companies exit the plantations end of the business. Mohini Bhatnagar reports.

Munnar: The two biggest Indian tea companies have in the past quarter divested from their plantations to focus on their packaged tea business.

For Tata Tea, the divestment has meant the formation of the Munnar-based Kanan Devan Hills Produce Company, which will soon figure among the biggest participatory management companies in the world. Its recently maiden offering, targeted exclusively at its employees, was subscribed by 97.16 per cent of the company's total workforce. The issue closing May 24 raised Rs9.04 crore against a target of Rs8 crore.

The entire management of the company along with 12,441 out of 12,770-strong workforce subscribed to the issue. The workers' contribution now constitutes 74 per cent of the paid-up equity in the company and of the remaining equity, 19 per cent will be subscribed by Tata Tea, and 7 per cent by a trust set up for the purpose.

According to Tata Tea officials, the company handed over management control of 55,529 acres of its tea plantations in Munnar to the newly formed Kannan Devan Hills Plantations Company Ltd in April this year and transferred 12,770 workers to it.

Tea estate workers, field staff and supervisory staff have all benefited from the divestment in a big way. ICICI Securities will extend debt to the new company, which will be used to provide loan facilities to workers to participate in the subscription process. Each worker of Tata Tea is entitled 300 shares of the newly formed company. Workers and staff will have a representative each on the board of the new company.