Kannan Devan

KANAN DEVAN HILLS PLANTATIONS COMPANY PRIVATE LIMITED, MUNNAR

DESCRIPTION:

It is the largest tea plantation company in Kerala which manufactures black tea, green tea and some value added tea. It also has an oil extraction unit from flowers and plants. Its annual production is around 23 to 25 million Kg of tea.

HISTORY:

KDHPC (P) Ltd is spread over 58000 acres of land in Kanan Devan Hills Village of Devikulam Taluk, Idukki District. Out of the 58000 acres of land the company has developed 22000 acres of land as tea plantation and another 19900 acres as fuel trees cultivation. In the year 1877 the Poonjar Chief (One of the kings in olden days) had leased this area to the Europeans for development. After several agricultural activities it was found that this area is suitable for tea plantations. The Europeans forms Kanan Devan Hills Produce Company Limited with its Head Office in Glasgow and subsequently Tatas joined with Finlay Group and taken over these plantations as Tata-Finlay Limited. Tata-Finlay Limited subsequently became Tata Tea Limited. In the year 2005, Tata Tea Limited formed a new company viz. Kanan Devan Hills Plantations Company Private Limited and leased the entire area for their operation. Since 2005 the Kanan Devan Hills Plantations Company Private Limited is holding these plantations and operating it.

COMPANY PROFILE :

Date of Establishment : 2005

Revenue : 190 Crores

|Market Cap |: The Company is formed with the equity participation of over 70% intended for employees and a |
| |minority stake-holding for Tata Tea. Of this, the workers and staff hold nearly 38% of the equity. |
| |In all 12,800 employees of the company representing more than 97% of the workforce of the Company |
| |are shareholders in KDHPCPL, holding almost 70% of the equity stake, while Tata Tea holds 19% |
| |stake, and others the balance. The company’s shares are not yet offered to the public. |

Corporate office : KDHP HOUSE, MUNNAR – 685 612, KERALA STATE

No. of Employees : 13,000 including 12800 workers and staff and management staff

No. of estates : 7 Estates comprising an average of 3500 hectares of land

|Nature of Business | : Cultivation and manufacture of tea. Sale of its products |

| | |
| | |
|Market |: A major percentage of Indian population consumes tea. India is the biggest market TATA Tea. |
| |The company also exports tea to Middle East and Iran and Iraq |

|Production: | | |
| |Year |In Million Kgs. |
| | | |
| | 2005/06 |19.99 |
| | | |
| |2006/07 |20.39 |
| | | |
| |2007/08 |21.25 |
| | | |
| |2008/09 |22.70 |
| | | |
| |2009/10 |25.06 |
| | | |
| |2010/11 |19.73 |

|Financial – Year |Total Income |Profit After Tax |
|2005/06 |105.49 Crores |2.37 Crores |
|2006/07 |122.16 Crores |2.68 Crores |
|2007/08 |123.15 Crores |4.07 Crores |
|2008/09 |170.74 Crores |12.50 Crores |
|2009/10 |214.48 Crores |40.84 Crores |
|2010/11 |187.07 Crores |16.56 Crores |

BOARD OF DIRECTORS:

• Mr. T. Damu, Chairman • Mr. L. Krishnakumar • Mr. C.K. Unnikrishnan Nair • Mr. M.H. Ashraff • Mr. K. Venkataramanan • Mr. T. Samuel • Mrs. Mariammal • Mr. T.V. Alexander – Managing Director • Mr. P.M. Srikrishnan – Executive Director

Company Secretary – Mr. D. Ghosh

Bankers- • ICICI Bank Limited, Kochi • State Bank of Travancore, Munnar

VISION

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

MISSION

•“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”

KEY MILESTONES:

• Before 2005 April Tata Tea Limited was incurring loss year after year. • After taking over by Kanan Devan Hills Plantations Company Private Limited the overhead expenditure has been reduced by reduction of its employees by offering Voluntary retirement. The agricultural operation is mechanized. • Since it’s the share holders of this company are its own employees the ownership feeling of its employees has enhanced the productivity to a very high standard. • In the year 2009/10 it has achieved the record production of 25.06 Million Kgs. • In the year 2009/10 the company achieved the record yield of 2513 Kgs. per bearing hectare. • It is the first among the successful Employees Buy out company. • It functions in Participatory Management style wherein it has Advisory Committees for various operations. The members of these committees are among their own employees.

RESEARCH AND DEVELOPMENT:

The R & D center of KDHP Co. Pvt. Ltd., located at Madupatty Estate at Munnar, is the finest and most integrated R & D programme in the corporate sector of the Indian Tea industry. It covers the entire gamut of tea operations from cultivation to manufacture including product development & packing and is recognized by ‘the Department of Scientific and Industrial Research (DSIR) of Ministry of Science & Technology, Government of India’.

DEMOGRAPHY

In India, the population of each state has its own preference in the taste of tea they drink and accordingly, the company is trying to manufacture/blend its product to suit the population of each State by manufacturing different quality and grade of tea. The company also taking its efforts to satisfy the overseas buyers by producing the quality of tea the overseas buyers’ expectation.
The company is aiming to capture the market tea for hotels with its hotel blend.

CORPORATE AND SOCIAL RESPONSIBILITES:

• Conservation of forest and wildlife which are present between the tea fields and also help in replanting of degraded shoals with native species

• It also assists the Wildlife Officers of Eravikulam National Park in taking wildlife census and managing the Park by employing watchers, appointing Muthuvan watchers, educating school children and the public on wildlife and environment by arranging film shows, competition, etc.

• Efficient use of electricity across the organization.

• Sristi is a Welfare Complex situated in Nullatanni Estate, which houses the three units for rehabilitation of handicapped children and youth, namely DARE, ATHULYA and ARANYA, which got the Company the prestigious FICCI Award 1997-98 for its outstanding achievement in training and placement of persons with disability.

i) Developmental Activities in Rehabilitative Education (DARE) is the Company's School for Special Children, which started in November 1991. Dare today provides rehabilitative services to about 77 children falling between 5 and 15 years of age, with learning and other associated disabilities due to hearing / speech impairment, mental retardation of various degrees or mild /severe orthopedic handicap. Dare is the recipient of the Kerala State Award 1997 in recognition of its commendable services in rehabilitation of handicapped children.

ii) Aranya is the vegetable dye unit, providing vocational rehabilitation to 11 youths with physical handicap. The unit was started in 1995. This eco-responsible rehabilitation project uses only plant wastes, dried leaves, dried fruit rinds, weeds, etc., which are available locally, for dyeing yarns and fabrics.

iii) Athulya is the Vocational Training Centre for the handicapped youth which started in January 1991 with just 14 youths. Today it provides vocational rehabilitation to 32 youths, aged between 16 and 35, who have been trained by the unit in book binding, file making, paper ruling, and printing, envelop making, etc.

• Muthuvan Welfare The Company organizes regular health camps for the Muthuvans by way of sending its medical officers, welfare officers and paramedical staff to the distant Muthuvan Kudis to examine the adults and children for any health problem, to dispense General Hospital in munnar and to educate them on health topics. The Company also refers Muthuvan patients who require special treatment to super specialty hospitals elsewhere in the state.

EMPLOYEE WELFARE:

The Company adheres to the requirements on statutory welfare measures required to be provided to employees under the various enactments applicable to plantations such as Plantations Labour Act, Factories Act, Maternity Benefit Act, Workmen's Compensation Act, Payment of Wages Act, etc. The major statutory welfare measures provided to employees are as detailed below:

Housing: All permanent plantation workers are provided with free housing accommodation, which are electrified and have latrines, and are as per statutory standards. Free water supply is also provided to these houses. Annual upkeep/maintenance of the houses is carried out on a routine basis.

Medical Aid: All plantation workers and their families are given medical aid, free of cost at hospitals/dispensaries provided by the management on each estate, which are managed by qualified doctors and nurses. Patients are also referred to Tata Tea’s General Hospital in Munnar and to outside hospitals for specialized treatment as found necessary, at management’s cost.

Creches: Creches with trained ‘Ayahs’ are provided to take care of children of workers during the period the parents attend work. Such children who attend creches are provided with free food, milk, uniforms, etc. Undernourished children are given special nutrition, as well as vitamins and tonics.

Protective Clothing: Plantation workers are issued protective clothing such as Cumblies once each year at free of cost and Sleeping Blankets once each year at concessional rate. The other categories of employees are also issued with sleeping blankets once each year at concessional rate.

Water supply: The Company is maintaining 223 sources of water supply for the consumption of its employees in its land.

Smokeless Chula: In labor houses the conventional ‘aduppu’ (oven) was provided. Cooking in such ‘aduppu’ resulted in the kitchen being filled with smoke in spite of provision of smoke pipes. Studies conducted by different agencies in the country reveal that such smoke affects the health of women and children. Hence the Company has provided, at considerable cost, ‘Smokeless Chulas’ in labor houses, as these chulas were found to reduce the incidence of respiratory illnesses. Besides reducing smoke in kitchen, smokeless chulas are more fuel efficient and time required for cooking is also reduced.

Free issue of Hot Tea: a) Employees are provided with hot tea by the management, free of cost, every day at their work spot. b) Staff and Special Category employees are issued with free dry tea as a monthly allowance: Staff : Married - 1 kg per month Unmarried - 500 gm p m

Special Category Employees : Married - 700 gm p m Unmarried - 400 gm p m c) Staffs are issued with 12.0 kg of dry tea per annum, at concession rate. Other categories of employees are also issued with dry tea at 6.0 kg per annum, at actual cost of production.

Best Plucker Award: Workers engaged on plucking who harvest the maximum crop in each estate is presented with prizes.

Gift to Retiring Employees: Employees retiring from service are, in addition to the gratuity, issued with a watch as gift from the Company and staffs are granted Transport Allowance to transport their personal effects to their native place.

Cash Award: Children of company employees coming among the first three toppers of High Range School in Class X and Class XII Board examinations are given cash awards.

Project Works: Requests from children of employees pursuing their Degree/P.G. course for project works/internship are considered, and they are given opportunity and guidance in the Company’s establishments.

KDHP Scholarship: Awarded to one student each year after Class XII for higher studies.

TARGETED CUSTOMERS:

The Indian branded tea market is dominated by multinationals like Hindustan Lever, Tata Global Beverages, Brook band etc. Kanan Devan Hills Plantations Company Private Limited has already entered into the Kerala State Market by its branded tea by name “RIPPLE”.

In the year, 2010-2011 it has earned Export revenue of about Rs.11 crores. In addition to its destination of exports to Iran, Iraq and U.K. markets, it is also exploring the markets of Russia, Pakistan and Bangladesh.

FUTURE GOALS:

The company is also exploring the opportunities in acquiring tea estates in Ethiopia, Argentina and Vietnam. The company has also managed a tea plantation in Ethiopia with its knowledge of tea cultivation and manufacture.

COMPETITORS:

• Since marketing of tea is mostly done through Auctions the quality of tea is the parameter to get a sale in the auction. This company maintains it quality for marketing of tea in the auction centres. • It also enters into branded tea market; however it takes every effort to compete with the established brands of tea available in the market.

ACHIEVEMENTS & RECOGNITION:

• The Company’s product has been selected for year after year for Golden Leaf India Award in the Southern Tea Competition held in India and Dubai. • It has been awarded by the Kerala State for Energy conservation. This was achieved by using CFL bulbs in its establishments and employees quarters and also by fitting fuel efficient tractor engines to its 150 add tractors.

COMPARISON AND SALES:

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CHALLENGES:

• Tea cultivation depends on climate. Any variation in climate will affect the yield of tea plantations. • Tea always have cyclical nature of production every third year. • Tea companies have to undergo several Employee welfare scheme under the Plantation Labour Rules and accordingly its expenditure on wages, maintenance of employees residential buildings, free medical aid to its employees, etc. which consumes considerable amount of its revenue. • Low cost tea imported from Sri Lanka and Kenya • Mechanisation of all its operations as impossible due to the terrain of land (hilly terrain)