ORGANIZATION STUDY OF

KANAN DEVAN HILLS PLANTATIONS COMPANY (P) LIMITED

Submitted in partial fulfillment of the requirements for the award of the Degree of

MASTER OF BUSINESS ADMINISTRATIONOf the Mahatma Gandhi University.

Submitted byANOOP MOHANRegn No: 211210

Under the guidance of ALPHONSE MARIA GEORGE

June 2011

DC School of Management and TechnologyPullikkanam, Vagamon, Idukki 685503Tel: 04869 – 248322, 248323

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DECLARATION

I hereby declare that the organization study of ‘KANAN DEVAN HILLS

PLANTATION PVT LTD’ submitted to Mahatma Gandhi University is a

record of the original work done by me and no part of it has been submitted

earlier for any Degree, Post Graduation or similar of any other university or

institution.

Place: Pullikkanam

Date Name: ANOOP MOHAN

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Certificate on DCSMAT Letterhead

CERTIFICATE

This is to certify that the organization study titled ORGANIZATION STUDY OF KANAN DEVAN HILLS PLANTATIONS PVT LTD is a bonafide record of the work done by Anoop Mohan, 3rd semester MBA Student of DC School of Management and Technology, submitted in partial fulfillment of the requirements for the award of the Masters Degree in Business Administration of Mahatma Gandhi University, Kottayam, Kerala.

Faculty Guide Principal

Date:Place: Pullikkanam

________________________________________________________________________

Examiner I Examiner II

SignatureNameDate

SignatureNameDate

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Institution Seal

Certificate from the Company

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ACKNOWLEDGEMENT

I would like to take this opportunity to express my sincere

gratitude to all those who have helped me throughout this organizational

internship study. It gives me immense pleasure to acknowledge all those

who have rendered encouragement and support for the successful

completion of this work.

I express my heartfelt thanks to Mr. SANJITH P RAJU, ASSISTANT

MANAGER-HUMAN RESOURCE DEPARTMANT, KANAN DEVAN

HILLS PLANTATIONS COMPANY for his constant encouragement and

support during the entire project work.

I also extend my sincere gratitude to Mis ALPHONSE MARIA GEORGE,

faculty, DC SCHOOL OF MANAGEMENT AND TECHNOLOGY,

Pullikkanam whose advice and guidance helped me in the successful

completion of this study.

ANOOP MOHAN

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CONTENT

Chapters Title Page No.

Chapter-1 Introduction 8-10

Chapter-2 Industry profile 12-13

Chapter-3 Company profile 15-22

Chapter-4 PMS and EBO 24-25 Chapter-5 Management structure at KDHP 27-29

Chapter-6 Department profile 31-43 Chapter-7 Corporate social responsibility 45-46

Chapter-8 Environment and sustainable development 48

Chapter-9 SWOT analysis 50-51

Chapter-10 Conclusion and Recommendation 53-54

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CHAPTER 1

INTRODUCTION

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INTRODUCTION

An organization is a social arrangement which pursues collective goals,

controls its own performance, and has a boundary separating it from its

environment. Management is interested in organization mainly from an

instrumental point of view. For a company, organization is a means to an

end to achieve its goals - which are to create value for its stakeholders

(stockholders, employees, customers, suppliers, community).

Organizational studies encompasses the study of

organizations from multiple viewpoints, methods, and levels of analysis An

organization study involves the study of the structure and functioning

of its department. Organizing or organization is one of the important

function of the management. Generally, all the organizations are different

but, they have certain common features. They are group of people linked

together by formal and informal relationship, in hierarchical order that

are engaged in co-operative activities and everyone has identical

boundaries. So the study of people in organization is important for future

manager.

Whenever people interact in organizations, many

factors come into play. Modern organizational studies attempt to understand

and model these factors. Like all modernist social sciences, organizational

studies seek to control, predict, and explain. It is vital to study the structure

and functioning of successful organization so they will guide directorial

towards successful and profitable functioning The swift changes in the

field of science and technology has revolutionized the organizational

system. Such changes have become inevitable to achieve the basic objective

of the firm. 8

IMPORTANCE OF THE STUDY

1. To familiarize with a business organization.

2. To understand the operations of the various departments within the

company.

SCOPE OF THE STUDY

Internship training will help Management graduates to know about the

functioning of an organisation. It is a means for bridging the gap between

theory and practice.

OBJECTIVES OF THE STUDY

1) To know about the tea industry and its history.

2) To know about functions carried out in various departments.

3) To study the products of the company.

4) To study the structure of various departments and its function.

5) To carry out a SWOT analysis of the organization

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ASSUMPTIONS OF THE STUDY

This study is based on the following Assumption

1) The data given by the company official are true and unbiased.

2) The data collected from various secondary sources are true.

LIMITATIONS OF THE STUDY

Allotted time span has been the main limitation.

TECHNIQUES OF DATA COLLECTION

1. PRIMARY DATA

Information’s were collected by conducting personal interviews and

discussions with officials, employees of the company and also by direct

observation

2. SECONDARY DATA

The secondary data can be collected through financial records,

brouchers, company records etc.

Secondary data are collected from: Annual reports Company documents & Company websites.

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CHAPTER 2

INDUSTRY PROFILE

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TEA INDUSTRY IN INDIA

The tea industry in India is about 172 years old. It occupies an importantPlace and plays a very useful part in the national economy. Robert Bruce in 1823 discovered tea plants growing wild in upper Brahmaputra Valley. In 1838 the first Indian tea from Assam was sent to United Kingdom for public sale. Thereafter, it was extended to other parts of the country between 50's and 60's of the last century. However, owing to certain specific soil and climatic requirements its cultivation was confined to only certain parts of the country. Tea plantations in India are mainly located in rural hills and backward areas of North-eastern and Southern States. Major tea growing areas of the country are concentrated in Assam, West Bengal, Tamil Nadu and Kerala. The other areas where tea is grown to a small extent are Karnataka, Tripura, Himachal Pradesh, Uttaranchal, Arunachal Pradesh, Manipur, Sikkim, Nagaland, Meghalaya, Mizoram, and Bihar. Unlike most other tea producing and exporting countries, India has dual manufacturing base. India produces both CTC and Orthodox teas in addition to green tea. The weightage lies with the former due to domestic consumers’ preference. Orthodox tea production is balanced basically with the export demand. Production of green tea in India is small. The competitors to India in tea export are Sri Lanka, Kenya, China, Indonesia and Vietnam.

Tea is an agro-based commodity and is subjected to vagaries of nature. Despite adverse agro climatic condition experienced in tea growing areas in many years, Indian Tea Plantation Industry is able to maintain substantial growth in relation to volume of Indian tea production during the last one decade. There has been a dramatic tilt in tea disposal in favor of domestic market since fifties. While at the time of Independence only 79 M.Kgs or about 31% of total production of 255 M.Kgs of tea was retained for internal consumption, in 2008 as much as 802 M.Kgs or about 82% of total production of 981 M.Kgs of tea went for domestic consumption. Such a massive increase in domestic consumption has been due to increase in population, greater urbanization, increase in income and standard of living etc. Indian tea export has been an important foreign exchange earner for the country.

12There was an inherent growth in export earnings from tea over the years. Till 70s’, UK was the major buyer of Indian tea Since 80s’ USSR became the largest buyer of Indian tea due to existence of the trade agreement between India and erstwhile USSR. USSR happened to be the major buyer of Indian tea accounting for more than 50% of the total Indian export till 1991. However, with the disintegration of USSR and abolition of Central Buying Mechanism, Indian tea exports suffered a setback from 1992-93. However, Indian Tea exports to Russian countries recovered from the setback since 1993 under Rupee Debt Repayment Route facilities as also due to long term agreement on tea entered into between Russia and India. Depressed scenario again started since 2001 due to change in consumption pattern, i.e. switch over from CTC to Orthodox as per consumer preference and thus India has lost the Russian market. Another reason for decline in export of Indian tea to Russia is offering of teas at lower prices by China, South Asian countries like Indonesia and Vietnam.

The major competitive countries in tea in the world are Sri Lanka, Kenya, China and Indonesia. China is the major producer of green tea while Sri Lanka and Indonesia are producing mainly orthodox varieties of tea. Kenya is basically a CTC tea producing country. While India is facing competition from Sri Lanka and Indonesia with regard to export of orthodox teas and from China with regard to green tea export, it is facing competition from Kenya and from other African countries in exporting CTC teas. Because of absence of large domestic base and due to comparatively small range of exportable items, Sri Lanka and Kenya have an edge over India to offload their teas in any international markets. This is one of the reasons of higher volume of export by Sri Lanka and Kenya compared to India. Another important point is that, U.K has substantial interest in tea cultivation in Kenya.

Most of the sterling companies, after the implementation of FERA Act started tea cultivation in Kenya. So, it makes business sense for U.K. to buy tea from Kenya and Kenya became the largest supplier of tea to U.K. Tea is an essential item of domestic consumption and is the major beverage in India. Tea is also considered as the cheapest beverage amongst the beverages available in India. Tea Industry provides gainful direct employment to more than a Million workers are mainly drawn from the backward and socially weaker section of the society. It is also a substantial foreign exchange earner and provides sizeable amount of revenue to the State and Central Exchequer.

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CHAPTER 3

COMPANY PROFILE

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COMPANY HISTORY

India being one of the largest producers and exporters of tea in the world represents a unique model of plantation agriculture. HUL controls nearly 40% of packed tea market in India followed by TGB with a market share of 21% . Traditionally, Indian tea was rated as one of the best in the world and therefore, was enjoying a good export market. But since last few years, the tea industry has been in a perilous position with excess of production, declining prices for its producers and severe competition from the rest of the world. The rising cost of production with falling prices made big tea companies sell the plantations and exit from tea cropping activity. While HUL sold its tea plantations to some private parties, TTL in their South Indian Plantation Operations (SIPO) in Munnar followed a unique model of selling the plantations to the employees of the company. A few years back in 2005, the company had carried out the employee-buy-out (EBO) leading to the birth of Kanan Devan Hills Plantations Company (P) Limited (KDHPCPL), which is considered as a milestone in the history of tea plantations in India. Nearly all 13,000 employees of the organisation became the shareholders of the new company. In sharp contrast to the situation in the tea industry experiencing closures affecting thousands of employees, KDHPCPL could not only recover within a year the loss of Rs 13 crore run up by TTL, but could also register a post tax surplus of Rs 2.37 crore as on 31 March 2006. The new company was unique in its model. The notion of participatory management (PMS) was en-trenched in the very objectives, vision and mission statements of the company. This seemed to be a radical shift from the past where the management of tea plantations witnessed a typical hierarchical top-down approach.

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KANAN DEVAN HILLS PLANTATIONS COMPANY (P) LIMITED

The Kanan Devan Hills Plantations Company Private Limited (KDHP) succeeded Tata Tea Limited on 1st April 2005, when the latter exited most of its plantations in Munnar to focus on the growth of its branded tea business. With its 7 extensive gardens covering approximately 24,000 hectares, the company is today the largest tea corporate in South India with an annual production of 21 million kg of tea. Virtually all its 12,000 - plus employees are its shareholders.

The company is fully conscious of the social obligations to its employees as well as the public at large and spares no effort to fulfill these, often well exceeding the statutory requirements. Further, it is strongly committed to preserving the fragile ecology and rich bio-diversity of the area in which it operates.

The company funds important initiatives and activities of the High Range Wildlife and Environment Preservation Association, evolved specifically for a comprehensive environment management and sustainable development, of the High Ranges. All the officers of the company are members, and selected few are designated as Honorary Wardens of specific areas under their operation.

The efforts taken by the association in protecting the flora and fauna of the High Ranges is a well recognized fact by the state forest officials, to the extent that, even today the Eravikulam National Park, an environmental hotspot is under the joint management of the association and the Kerala Forest Department. The company also has undertaken extensive shola regeneration and rejuvenation programmes to maintain the eco balance of the area.

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MISSION OF KDHP

To produce a consistently high quality product, exceeding customer expectations, at the lowest cost and creating an environment for work excellence, ensuring sustained growth with commitment towards social and environmental values.

VISION OF KDHP

To collectively create a unique and sustainable business with the commitment and involvement of all the employees as partners.

VALUES OF KDHP

To conduct our business with complete transparency while aiming for treating people with care and compassion

KDHP NEWS

The KDHP news is the in house magazine of the company which is published twice in a year.

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TEA GARDENS AND FACTORIES OF KDHP

The tea gardens of KDHP is spread around 7 estates. They are:

ChundavurraiGunderale GundumallayLetchmiMadupattyNullataniNyamakad

The KDHP Company is having 16 factories. Among these 7 are orthodox teas producing factories and 9 are ctc (crush tear curl) tea producing factories.They are:

Arivikad - ODXChittavurrai – ODXChokanad - CTCChundavurrai-ODXDevikulam-ODXGunderale-CTCGundumallay-CTCKadalaar-ODXKalaar-CTCKanniamallay-CTCLetchmi-CTCMadupatty-CTCPeriavurrai-CTCThenmallay-ODXVagavurrai-CTCYellapatty-ODX

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KDHP SALES OUTLET

A wide variety of products are available in the exclusive sales outlet operated by KDHP Company. The Tea and non tea products available in the outlet are:

Tea products

Factory fresh teasFlavored teasRTD mix (ready to drink)White teaOrganic tea

Non tea products

Dry fruitsGrape seedChocolate preservesSpicesRose oilAlmondCashew

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NON TEA OPERATIONS OF KDHP

The company is also having some non tea operations which include:

Tea museum

This is the country’s first ever tea museum; located at KDHP’s Nullatanni estate in Munnar. The thousands of tourists who visit Munnar for sightseeing can carry home impressions of the distant past of this tea planting district in Idukki’s high ranges. The aim of the tea museum is to depict the growth of these more-than-a-century-old tea plantations, from the rudimentary tea roller to the present fully automated tea factory of Madupatty. It also gives firsthand knowledge to tourists about tea processing and the operations that go into the making of black tea.

Aromatic plantsOn the anvil is a foray in the field of rasing various aromatic plants. The company is in an advanced stage of propagating rose, geranium, Rosemary, Chamomile, Clarysage, Cypruss, Acacia and Eucalyptus, Globulous and Citradora plants for extraction, distillation and sale.

Vetiver in tea plantations

        The Company is a pioneer in adopting VGT (vetiver grass technology) in tea plantations and carried out extensive studies on various aspects/applications of the same. Vetiver was introduced in tea plantations of the High Range (Kerala), south India for preventing soil erosion and moisture conservation by the R&D Department. Use of this technology by establishing live hedges of vetiver grass resulted in replacement of conventional revetments for soil and moisture conservation. When planted as a contour hedge it acts as a continuous filtering system that slows down rainfall runoff resulting in reduction of rilling and gullying, and collects soil sediments at the hedge face. Soil and nutrient loss is reduced, soil moisture and ground water improves significantly, and natural terraces and ground leveling develops behind the hedge. An important feature is that Vetiver grass takes up minimal space and is virtually non competitive with adjacent crops. A germplasm with more than 40 cultivars collected from various sources has been established and their suitability for various technical applications is being studied periodically

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Bio fertilizer and control agents

KDHP Vermiderma is a an unique bio-formulation prepared with high quality Vermicompost prepared scientifically from spent tea leaves enriched with Trichoderma viride which is a proven non-pathogenic and ecofriendly microbe which can control many pathogen causing damping off, root rot, rhizome rot, stem rot and wilt in many crop species. It can be applied using the application method described to most food crops grown in green house, shade houses and agricultural fields. The presence of desired nutrients in the carrier material will enhance the multiplication and viability of Trichoderma and the number of Colony forming units (CFUs) will increase unlike other talc-based products.

Sales outlet

The first one being attached to its corporate office displays the company’s extensive line of products for purchase. Its location with plenty of parking makes it a convenient shopping outlet for visitors and tourists. The sales staff with their thorough knowledge of the products can help the customers with their choice, from a wide product range that include Variety of tea like- Orthodox, CTC, Green, Organic, Flavored, White Tea etc. The other outlets are located at Rajamallay one of the major tourist attractions in Munnar and at Madurai- the Temple City in Tamil Nadu.

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ORGANISATIONAL STRUCTURE

MANAGING DIRECTORMANAGING DIRECTOR

HEAD FACTORY OPERATIONS HEAD FACTORY OPERATIONS HEAD FIELD OPERATIONSKALAMASSERY PLANT

HEAD FIELD OPERATIONSKALAMASSERY PLANT

NON-TEA OPERATIONS& FUEL & BROUGHT LEAF OPERATIONNON-TEA OPERATIONS& FUEL & BROUGHT LEAF OPERATION

FINANCE &SYSTEMS AND MISDKALAMASSERY PLANT

FINANCE &SYSTEMS AND MISDKALAMASSERY PLANT

MARKETING DEPARTMENTKALAMASSERY PLANT

MARKETING DEPARTMENTKALAMASSERY PLANT

INDUSTRIAL RELATIONS DEPARTMENTKALAMASSERY PLANT

INDUSTRIAL RELATIONS DEPARTMENTKALAMASSERY PLANT

HUMAN RESOURCE DEPARTMENT

KALAMASSERY PLANT

HUMAN RESOURCE DEPARTMENT

KALAMASSERY PLANT

ENGINEERING DEPARTMENTENGINEERING DEPARTMENT

MD SECRETARIATEKALAMASSERY PLANT

MD SECRETARIATEKALAMASSERY PLANT

QUALITY CONTROL DEPARTMENTKALAMASSERY PLANT

QUALITY CONTROL DEPARTMENTKALAMASSERY PLANT

RESEARCH AND DEVELOPMENT DEPARTMENTKALAMASSERY PLANT

RESEARCH AND DEVELOPMENT DEPARTMENTKALAMASSERY PLANT

PURCHASE & LOGISTICS DEPARTMENTKALAMASSERY PLANT

PURCHASE & LOGISTICS DEPARTMENTKALAMASSERY PLANT

ADMINISTRATION & LEGAL DEPARTMENTKALAMASSERY PLANT

ADMINISTRATION & LEGAL DEPARTMENTKALAMASSERY PLANT

BOARD OF DIRECTORSBOARD OF DIRECTORS

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CHAPTER 4

PMS AND EBO

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EMPLOYEE BUY OUT (EBO)

EBO can be defined as a transaction in which the employees of a business join with the financing institutions to buy the business from its present owners. The highlights of EBOs in the past have demonstrated substantial increase in motivation, participation, productivity and profitability in the organizations following an EBO. The report further reinstates that an EBO model may not be appropriate under all situations. A willing seller, an effective employee team with capable management and a financially viable proposition are critical success factors for EBO.

Elaborating the above, the owners may be forced to sell the company due to any of the following reasons – retirement, realization of investment, divestment, and business in distress or privatization. An EBO might also be carried out through an Employee Share Ownership Plan (ESOP) or might result in a cooperative or a private limited company. The study supports many arguments in favor of an EBO. First, the fact that the employees have a share in the company’s success leads to increased motivation and morale of the employees. Second, equally happy would be the existing owner of the business on selling the business to people who have been a part of the business and are most likely to continue with the company’s traditions.

Third, the workforce and the status quo of the company are maintained, eliminating the uncertainty arising from selling the business to an outside party. Fourth, an EBO is also socially supportive, in the sense that wealth is spread across a larger number of people. The system can also raise more equity which would result in the transaction being less dependent on external debt financing.

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PARTICIPATORY MANAGEMENT STRUCTURE

Participative management has been broadly adopted as a strategy in organizational development wherein it not only encourages workers to identify with their own duties and improve their performance but is also seen as a mechanism to enhance the performance of the company. Robbins (1991) defines participative management as a kind of management style in which the subordinates share a significant degree of decision-making power with their supervisors. Participatory management can occupy three distinct forms of interpretations. First, it can be seen as a socio-political concept of industrial democracy under which the ownership is vested in employees whose business is managed by employees or a group elected by employees themselves.

Forms involving worker directors, collective wage earner funds and worker cooperatives fall within this category. Second, participation is viewed as a term to represent the processes and institutions which involve subordinate employees in one or more aspects of organizational decision-making like simple information giving or joint consultation and regulation. Third, it may denote a distinct evolutionary development to promote greater employee influence within the organisation. The tangible dimension of participatory management includes parameters like productivity, quality of product, turnover rate, absenteeism rate and labour management dispute rate.

The intangible dimension includes work morale, organizational climate, employee motivation and job satisfaction. It is accomplished by many authors that participatory management has a positive effect on organizational performance. It was seen that participation in management promoted organizational morale and work motivation which has a direct impact on organizational performance. In addition, participatory management is said to reduce labour management disputes and benefit overall organizational effectiveness.

Since employees are given more power under participative management to express opinions in the decision-making procedure, they are more likely to carry out the decisions made, to accept technical changes and adopt innovations. Participatory management is a good way to achieve long-term employee satisfaction in terms of turnover, absenteeism and a positive state of mind of the individual employees.

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CHAPTER 5

MANAGEMENT STRUCTURE

26PARTICIPATORY MANAGEMENT STRUCTURE AT KDHP

The new company had adopted a unique model which is the first of its kind as far as the plantation sector in the country is concerned. The notion of participatory management was embedded in the very objectives, vision and mission statements. The specific objectives for the functioning of the company include providing employees a better understanding of their role and importance in the working of the company, to involve all levels of employees in the decision-making process whereby a sense of ownership is fostered and their urge for self expression is satisfied.

This seems to be a radical shift from the past where the management of tea plantations witnessed hierarchical top-down approach. What gave KDHPCL a truly participatory nature were facts like 68% of its shares held by nearly 12,441 employees, a workers’ representative and a staff representative on the board of directors, and several advisory and consultative participatory management committees – comprising a cross section of employees – at every level of functioning of the company. Most of the estates, under the Tata’s, had been run by estate managers who in charge were responsible for the management of plantations of TTL. But under KDHPCL, the management plan was bottom up diverting from the traditional top-down approach.

Participatory management system was made functional through a set of committees consisting of representatives of all categories of shareholding employees at division/factory, estate and the company levels. The membership to the committees was limited to those employees who are shareholders of the company who had to assume definite advisory/consultative roles under the participatory management. A total of 82 Divisional Advisory Committees (DACs) and 16 Factory Advisory Committees (FACs) are functioning at present. At the second level there are Joint Estate Consultative Committees (JECC) and Joint Factory Consultative Committees (JFCC) and at the apex level is the Central Management Committee (CMC). The managing director of the company is the convener of CMC. The DAC and the FAC are at the grass-roots of the functioning of the estates/factories. They comprise six members, two women workers and two men workers, one staff and one assistant manager or management assistant. The members were to be elected by secret ballot from the division/factory with the term of office for three years. The meetings of the committees are held once in a month on a predetermined day.

27The functions of DAC include monthly work planning, manpower deployment, adherence to field policies, review of efficiencies, material requirement and the follow up on action plan. In addition the DAC would discuss on certain aspects of welfare and safety measures ensuring continuous water supply, sanitation, other income generating opportunities, etc. Similarly, the FAC was held responsible for making fortnightly work planning, manpower deployment, and update on material requirement for the factory, review the efficiency parameters and ensure that standardization norms such as HACCP are adhered to. The DAC/FAC was to coordinate with joint estate/factory consultative Committees.

The representatives of DAC/FAC were to be nominated to these committees of which the estate/factory manager was the convener. The JECC comprises of 17-26 members; 6-13 fieldworkers/supervisors, two field staff, one medical officer, three to five assistant manager/MA, one manager, one welfare officer, one office staff and one driver and a blacksmith. It is seen that three to six women workers represent in the committee. To ensure full and equal participation of the members of all DACs in JECC, their membership to this committee will be on rotation basis, whose period of representation will not exceed more than a few months at a time, as decided by the convener of this committee. In the area of operations the JECC had to set its own targets within the approved budgets and analyze reasons for shortfall while reviewing the targets and make plans accordingly for improving the same. It also had to look into the statutory compliance and monitor and curtail absenteeism among the workers.

In addition the JECC had to implement the recommendations and decisions of the CMC or the subcommittees formed by the CMC. The welfare measures recommended by the DACs were to be reviewed by the JECC while organizing and monitoring the welfare promotional activities to improve health, hygiene and sanitation of the estate population and protect the environment. Similarly, the JFCC comprising 9-12 members with the factory manager as the convener had to take steps necessary at factory level to promote Rationalize production, improve methods, layout and processes, improve productivity, eliminate waste, eliminate defective work and improve the quality of products, improve the upkeep and care of machinery, tools and instruments.

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These two consultative committees would report to the CMC which would comprise directors representing the workers/supervisors/non-staff/staff and heads of key departments like sales, tea production, industrial relations (IR), finance and non-tea production. The CMC comprised 11 members. One director from workers/supervisors, two directors from management staff, two tea production heads, one sales heads, managing director, one IR head, one non-tea production head, one finance head and one director from staff/non-staff. The term of office is for three years. The CMC met once in a quarter to study operational results and advise on the overall performance of the company. The CMC had to advise the company on all matters concerning the working of the industry in the fields of production and of employee welfare and to advice on any other matter referred to it by the JECCs and the JFCCs. However, larger issues like wages/salaries, allowances, etc, are outside the purview of discussion in these meetings.

Other than the committees set up for the routine functioning of the plantations and the factories, the CMC appoints 16 sub-committees to set up for diversification and meeting special purposes which comprised members at all levels of employment. This provided for direct representation of problems in those areas in the CMC. The records of the meetings of all the committees were well maintained and monitored and were scrutinized by the higher authorities at every stage of functioning. The system thus provided for participatory management, but with a hierarchical accountability.

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CHAPTER 6 DEPARTMENT PROFILE

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TEA MANUFACTURE DEPARTMENT

The operations and the production of all the 16 factories i.e., 7 orthodox and 9 CTC factories fall under this department.

The main functions of the department are:

Preparation of monthly manufacturing and disposal plan for each factory

Responsible for proper implementation of the manufacturing policy Preparation of yearly and mid-term manufacturing plan for own and

bought leaf Yearly maintenance of the factories Carries out an annual inspection of all the factories on which a

detailed report for each factory is made It monitors stock movement from the factories on a daily basis Responsible for any enquiries relating to production from any of the

factories Monitoring grade percentage and outturn achieved by each factory The department generates statements on:

Daily statement on factory-wise stock A fortnightly report on grade percentage Monthly stock check report Monthly statement of waste percentage of made tea to

green leaf Fortnightly report on sifted tea outturn

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FIELD DEPARTMENT

The department is mainly responsible for preparation and implementation of all agricultural policy and practices which includes:

Preparation of guidelines for estates revenue budgets as well as verifications

Responsible for mid-term revision of budgets Annual inspection of all the 7 estates is carried out by this department

followed by a detailed report Handling capital expenditure of all the estates Daily handling of leaf diversions to the different factories from the

estates depending on the factories and market requirements based on the manufacturing plan

Depending upon planting and infilling requirements for all the estates, plant allocation is done from this department

All tea board inspections and sanctions for subsidy are looked after by this department

This department conducts in-house training programs on agricultural practices for management staff as well as general staff, supervisors and workers.

Organizing and conducting training programs for new assistants A considerable amount of day to day correspondence between the

department, estate and other departments is handled Generation of reports on fuel operation policies implementation and

monitoring, felling and planting programs, allocation of firewood to factories and estates and inter-estate transfer of firewood

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NON TEA OPERATIONS DEPARTMENT

Though tea production is KDHP’s mainstay, to insulate itself against the vagaries of the tea market and to sustain its profitability, the company took a strategic step to diversify into other agricultural as well as non-agricultural activities. Some of these projects include plantation tourism, floriculture, horticulture, medicinal and Aromatic plant propagation and fuel operations.

The functions of this department are;

All matters related to the non tea operations Matters related to the sales outlet attached to the corporate office as

well as at Rajamallay and at Madurai The tea museum located at Nullatanni estate is been promoted as a

major attraction and is under this department. Firewood for the factories is arranged by this department

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FINANCE DEPARTMENT

Finance is the life blood of business. It rightly termed as the science of

money. Without adequate finance, it is impossible for any business firm to

carry out its activities. The term finance refers to money or funds available

to a firm. There is a necessity of managing the funds properly and efficiently

for achieving the object of the business. Financial activity is concerned with

the planning and controlling of the firm financial resources. Business finance

is concerned with the acquisition and utilization of funds in a business

enterprise. It involves raising the needed funds, judicial use of funds and

controlling the funds used in business. Financial management is an integral

part of the overall management. This department handles all matters relating

to estates and companies accounting procedures and financial reporting. The

functions of the departments:

All taxes related works filing of returns, income tax, KGST/CST/VAT, etc

Estate fund management Payroll preparation and reconciliation of all the departments Department budgeting Audit reports All stock accounts reconciliation PF reconciliation for all staff Gratuity returns Current bill collection and accounting Sundry debtor and creditor’s ledger maintenance Building fee collection from Munnar town Telephone bills remittance and reconciliation Inter-estate accounts and reconciliation Journal keying Tea transfer reconciliation Job invoice reconciliation

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MARKETING DEPARTMENT

Marketing being the most important it is concerned with analyzing the

market , discovering the opportunities , formulating marketing strategies ,

developing the special strategies and tactics, proposing a budget and

establishing a set of control. Tea trading in the domestic market is done in

two ways, Auction and private selling. Auction sale is considered to be the

best method for sale of tea because tea is a commodity with infinite variety

and with wide spectrum of buyers. The functions of the departments are;

Look for exports

Send samples to various buyers and finalize the blend prices for

exports

Look for tie-ups for marketing of our tea with various companies

Try to increase the sale through other channels like consignments to

find alternate markets

Closely monitoring of stocks at the factories to ensure that there is

minimal stock build up

To ensure packing, blending and dispatch of poly packs

To anticipate market movements to ensure the movement of tea

without compromising on prices

To find new markets for value added teas like organic tea, green tea

etc

Visit markets to get feedback from buyers and communicate the

requirements to the factories to maximize the prices

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INDUSTRIAL RELATIONS DEPARTMENT

This department handles all matters relating to the service conditions of the

employee, disciplinary actions, industrial disputes etc. the functions of the

department are;

All matters concerning appointment, salary, fringe benefits, statutory

benefits, transfers, retrials etc of all categories of employees.

Co-ordinate handling of all legal matters with our legal firms

Posting of acting nurses for leave vacancies in the estate hospitals

Determination of workers as well as staff bonus and productivity

Linked incentives

Represents the management in case of any industrial disputes

Handles eviction cases, compensation cases etc

Conducts domestic enquiry courses covering all estates on how to

conduct an enquiry

Liaison with trade unions

Conducting DAC/FAC etc.

All matters relating to security agencies

Assisting community development and social welfare works and

welfare activities

Determination of parameters for plucking incentives schemes for each

month

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ADMINISTRATIVE AND LEGAL DEPARTMENT

This is the legal department of the company and deals with legal, land and

other legislation at all level with the government. The functions of the

department are:

Handling of all land matters concerning TGB and KDHP

All civil, criminal and such others cases related to KDHP

Land survey and area certificate preparation

Preparation of deeds and agreements

All central excise matters pertaining to the company

Factory license renewal

Renewal of petroleum license

Management of staff profession tax

All matters relating to patent application, weights and measures,

pollution control acts and rules

Matters relating to high range estate schools

Panchayat building tax and plantation tax

Insurance matters relating to all the estates

Road tax remittance, company vehicles checklist

KDHP house cash transactions

KDHP house employees leave register

Forest passes application and all connected works

Filing of Kerala payment of wage returns

Kerala factories half-yearly returns and applications of any

amendments

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SYSTEMS DEPARTMENT

The ultimate goal of this department is complete automation of all systems.

Plantations being an industry quite different from any other industry, where

age –old traditions still exist, achieving this change seemed difficult. With

this view in mind the company started a project called ‘T-SOFT’ where the

source data once entered should be available and reachable for everyone

when needed. Thus under this scheme weighing machines were introduced

and each estate and factory office was fully computerized with internet

facilities. The major functions of the department are;

Monthly preparation of an efficiency report of field and factory

Monthly expenditure analysis

Monthly financial reporting to the MD and chairman of the company

Monthly generation of production reconciliation statement

Generating budget compilation statements

Accounting by EDP

Generating payroll

All trouble shooting exercise of both software and hardware

Lending support to all the department

Provider of intranet facility

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QUALITY CONTROL DEPARTMENT

The qualitative assessment of tea cannot be determined by any chemical

analysis, even in today’s techno-savvy world there is no substitute for the

taster’s trained and sensitive taste buds, in the evaluation of the tea. The

main functions of the department are;

End product evaluation based on various criteria like dry leaf,

appearance, infusion and liquor strength.

Daily tasting sessions on the teas manufactured are undertaken and the

feedback on the teas with approvals to various destinations is

informed to factories through daily tasting reports

Generates and circulates fortnightly and to-date ranking reports

Monthly setting of benchmark and standard samples for auction marks

Conducts monthly brokers tea tasting sessions

Preparation and evaluation of blends and blending of teas based on the

market requirements

Responsible for allowing only quality teas to enter the market

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HUMAN RESOURCE DEPARTMENT

Man power or human resources or people at work of an organization

consists at all individuals engaged in any of the organization activities

regard less of levels. Manpower is one of the primary resources. Personal

management is that part of the process of management which is primarily

concerned the human aspects of an organ. Its purpose is to establish and

maintain good personal relations at all levels of an organization. Without

efficient use of human resources, management can never accomplish

organizational objectives. Personal management is also called personal

administration, labour management, and manpower management. The

functions of the department are:

Planning, recruitment, selection, induction and placement

Performance management system

Potential assessment system

Training and career development programs

Implementation and follow up on various certifications that deal

with monitoring statutory compliances

Responsible for the editorial of the in house magazine KDHP news

Involve in special projects and tasks as and when advised by the

top management

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ENGINEERING DEPARTMENT

The functions of the department are;

Maintenance and repair works of all the vehicles belonging to the company as well as TGB

Distribution of vehicles stationed in the workshop Electrical current distribution and maintenance works for whole

Munnar town Land inspection near and around Munnar town area Maintenance of buildings and other civil works in and around area Preparing estimates, supervision and verification of any civil works

for both KDHP and TGB Matters regarding statutory requirements of factories.

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MD’S SECRETARIAT

The functions of the department are:

All matters pertaining to the functioning of the guest houses in Munnar

Maintenance of bungalow inventory account All administrative matters relating to management staff-transfer,

leave, allowance, vehicle loans, leave processing and their follow up All routine correspondence from MD to various estates, factories,

department and external sources All arrangements concerning company visitors Advice the finance department for crediting any reimbursement to the

management staff account All matters of correspondence concerning management staff

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PURCHASE AND LOGISTIC DEPARTMENT

The purchase section is responsible for discharge of the purchase functions. The functions of the department are:

Vendor selection and development Preparation and dispatch of purchase orders to vendors Processing of purchase document after receipt of materials Intimation and follow up of rejection and shortage to the vendors Follow up of pending purchase orders

The functions of the logistic department are:

Truck arrangement for local and auction teas without interruption Truck arrangement for outstation loads Issuance of sales tax forms to the fleet/factories and maintenance of

registers and follow up Arrangement of travel/accommodation/transport/bias for management

staff with follow up and verifications Preparation of tender on sale of scrap Maintains EMD statements Notes and minutes of the transport committee meetings Travel bill, verification, passing and follow up Sale of non performing assets after adopting the statutory formalities Meeting the requirements of NTO for their upcoming projects

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CHAPTER 7CORPORATE SOCIAL RESPONSIBILITY

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CORPORATE SOCIAL RESPONSIBILITY

KDHP Company has always strived through its endeavors to make a positive contribution by engaging and supporting a wide range of Socio Economic, Educational, Sports and Health initiatives in the community that it operates. Responsibility towards the society is one of the key objectives of the company, a fact that is evident from its mission statement. Apart from ensuring that it strictly abides with all statutory and welfare measures as per provisions of the various enactments applicable to the plantations, the company has provided welfare schemes on its own like, free electricity for certain category of employees, assistance for procuring LPG connection, Fuel Subsidy, facilities for cattle rearing, land for maintaining Kitchen garden, free issue of hot tea at the work spot, sanitation workers for cleaning the surroundings of housing provided and a whole lot of other facilities for sports, recreation and cultural activities. Welfare of the employees of the company has been one of the core values that the company has always believed in.

The Participatory Management Structure has helped employees voice their concerns and requirements from the divisional level. The company also engages an independent expert to conduct a social audit every year and rewards the Best Estate and Best Hospital based on the scores received in the audit. All aspects of labour welfare are covered in this audit. Rice being a major requirement for the work force and the instability in its price at the local market, lead the company to intervene and procure rice in bulk directly from the mill, and distribute it to the employees at cost price with credit facility, which has helped in making considerable monthly savings for every family.

Progress without complimenting development of the society does not yield a sustainable development for any organization; a principle the company bears in mind in all the policies that it adopts. One such initiative that the company has given thrust upon to uplift the condition of the women and empower them is the aid given in formation of Self Help Groups across its seven estates. The project was carried out in such zeal that, today there are nearly 300 SHG's with total membership counting to 5150. These groups carry out activities like micro finance, stitching bags, producing phenyl, soaps along with carrying out welfare activities. These groups have become a blessing to the families with low income level, and have shown our women who are the backbone of the industry, additional ways of generating income. 45

The company has always played a supportive role towards their activities by giving them guidance and providing training facilities. The company provides free schooling up to primary level for the children of the employees. Apart from this, it extends its appreciation for meritorious students through rewards and felicitations every year. As part of its recruitment policy, the company absorbs qualified children of its employees. The company has introduced the KDHP Scholarship, which is given to the student achieving the highest marks in twelfth standard exams from the KDHP family. The dedicated welfare wing of the company helps employees to avail scholarships promoted by various bodies like UPASI, Tea Board etc for their children.

The company's Medical Department is involved in providing comprehensive health care to the employees and their family members, which includes maternal & Child welfare, immunization, family planning, environmental sanitation, potable water supply, health education, occupational health, Tribal welfare etc. The community& Social welfare development department conducts health exhibitions in each of the estate every year. The company provides facilities like playgrounds for football, cricket, volleyball, badminton etc. Inter estate tournaments for Football, athletics, caroms, badminton etc are conducted. The employees actively participate in these annual tournaments with Zest and Zeal with the pride of representing their respective estates.

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CHAPTER 8

ENVIRONMENT AND SUSTAINABLE

DEVELOPMENT

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ENVIRONMENT AND SUSTAINABLE DEVELOPMENT

The company has put in many efforts to preserve the ecosystem of the place. People are educated on energy efficient practices in factories and in the households of the employees. The company took over electricity business from TTL with effect from 1 July 2007 and since then has been distributing electricity. The company took several initiatives to reduce electricity distribution loss and improve quality of electricity to distant factories. The consumption of power and fuel per unit of production reduced from 0.8 units/kg of tea in the earlier system to 0.74 units with the new company.

There were efforts to convert all the incandescent light bulbs into compact fluorescent lamps (CFLs) which consume 75% less energy than the ordinary bulbs. The company actively supports the High Range Wildlife and Environment Preservation Association (HRW and EPA) which plays an active role in preserving the natural heritage of the Kanan Devan Hills and in protecting the environment and wildlife conservation of the area. The fuel plantations (eucalyptus grandis) have been raised by the company to meet its thermal energy requirements in the high range factories and fuel requirement of the employee households.

The famous Eravikulam National Park spread over an area of 97 square kilometers, and located in the High Ranges, is an integral part of the vast stretch of forests extending from Anamallais to the Palani Hills of Tamil Nadu. The park is unique with the shola grassland ecosystem at an average elevation of 2000 Meters. The climate here is temperate. The rolling grasslands hold the thin topsoil. And the area has remained undisturbed by human agency from time immemorial. Considering the ecological, floral, faunal and geo-morphological significance of this area, it is listed as one of the environmental ‘hot-spots’ in Asia.

The Eravikulam area was under the control of the erstwhile Kanan Devan Hills Produce Company Limited and maintained as a wildlife reserve by the Company for the endangered Nilgiri Tahr, well before the concept of Wildlife sanctuaries and National Parks came into force. This area was handed over to the Government of Kerala in 1971. Before the land use could be changed and such a rich biological hotspot misused, the timely intervention of the HRW&EPA, enabled the area to be declared as a wildlife sanctuary in 1975. 48

CHAPTER 9 SWOT ANALYZIS

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SWOT ANALYZIS

STRENGTH

Strong demand for tea in the domestic market Well maintained tea gardens Employee ownership in equity capital Salubrious climatic conditions for tea cultivation Strong production base Motivated manpower with experience and expertise in tea

production Strong research and development department Effective participative management structure Munnar gaining popularity in world tourism map Successful non-tea operations Largest tea corporate in south India Good export performance

WEAKNESS

Difficulty in mechanization due to geographical structure of land Bulk of Tea sales happens through auctions where the price is highly

unstable The company is not having an established brand in market Diminishing availability of labour Old age of the tea bushes

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OPPORTUNITIES

New international operations Growing demand for tea as a health attribute Develop branded tea by promoting RIPPLE which is presently in its

initial stage The plan of company in diversification of crops Huge scope available for tourism and related areas Establish itself as a premier agri-corporate

THREATS

Increasing labour costs and cost of production Changing climatic conditions can affect the yield of tea production Competitions faced in the domestic as well as international markets The need to support the huge man power Lack of manpower availability to meet labour intensive plantation

operations

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CHAPTER 10

CONCLUSION AND RECOMMENDATIONS

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CONCLUSION AND RECOMMENDATIONS

The EBO and the resultant participatory management system at Tata Tea’s southern operation in Munnar emerged as a solution to the long-standing crisis in the tea industry. Tata’s like the HUL wanted to walk out of the plantations operations and focus on the branded tea business. Participatory management through the buy-out of the company shares and forming a new company by the employees was seen as an amicable solution. The transition was however not without efforts of the management staff of TTL. The fact that such a huge number of employees could be convinced, though with initial apprehension, to become the shareholders of the company demonstrates the effectiveness of the communication cascade undertaken by the company staff. By facilitating the formation of KDHPCPL, the company claims to have ensured the long-term economic sustainability and better living conditions for its workers. This was also a radical shift from the past where the management of Tata Tea witnessed a hierarchical top-down approach. However, while speaking of the successful years of the company and the factors behind them, it is also essential to examine the sustainability of such models in plantation agriculture. It is essential to note that the timing of formation of KDHPCPL itself was quite favorable. That was the time when global markets for tea also witnessed a recovery.

Better price of tea in the auction market benefited KDHPCPL in earning profits in the first year of operation which was a crucial year to form expectations for the employees and boost their confidence in the system. This was an important achievement to take newly formed company to move to the next level of trajectory. Though KDHPCPL to a large extent has stabilized in terms of organizational structure, there are internal and external factors which can be a threat to sustainability of the model. Another round of long depression in the global tea market may threaten the financial stability of KDHPCL.

For this diversification of crop could be a prudent measure which the company is now venturing into. But at this point the diversification of crops is highly limited. Second, the average age of tea plantations is around 80 years which does not give rise to good quality of tea. The best of the tea is extracted when the bushes are 30-40 years old. However, the company is putting in efforts to replant the bushes in a phased manner.

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Third, the company so far has experienced a good export performance as compared to the earlier regime. However, there is much to do in this sphere of activity. It would be worthwhile to explore the major markets where the export share of India in those markets is quite minimal. Since the domestic consumption of tea is also very high and there is a vast potential in the rural markets, it would be wise to promote marketing and distribution strategies in rural India. However, the branding efforts of the company through tie ups with Gujarat Samachar and Elite Breads has not proved too successful. This calls for increased attention towards building up own brands. Hence the company has launched its own brand “RIPPLE” which is in its initial stage of market development. Concentrated efforts are on to meet the competition in the retail (branded) tea business.

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