CHAPTER: 2

OVERVIEW OF THE
LETEKUJAN TEA
ESTATE, GOLAGHAT
2.1 INTRODUCTION

2.2 INDUSTRY PROFILE

2.3 AN OVERVIEW OF TEA BOARD IN INDIA

2.1 INTRODUCTION:

My project report is entitled “Savings and Investment behaviour of Tea estate

workers”- A case study of Letekujan Tea Estate, Golaghat. For the fulfilment of the
project, I have chosen to study the savings and investment behaviour of tea estate workers at
Letekujan Tea Estate. It is a tea industry situated at Letekujan in Golaghat District. The estate
is situated on NH-39, adjoining the boundary of Numaligarh Refinery Limited (NRL). The
tea estate covers 717.27 hectares of land. The name of the estate derived from the name of
local village ‘Letekusapori’. The estate belonged to James Finlay & company, who came all
the way from Scotland to Assam. The estate came under the ownership of Tata Tea in
March1983 and in March 2007, Amalgamated Plantation Pvt. Ltd, took up the reins of the
plantation.

2.2 INDUSTRY PROFILE:

The Letekujan Tea Estate is under the ownership of ‘Amalgamated Plantation Pvt.
Ltd.’ (APPL). The required land statuses of the estate are:-

Land under Tea 500.87 hectares

Land suitable for 12.80 hectares
Planting
Land used for 200.13 hectares
factory requirements
Land used for 2.77 hectares
Kitchen Gardens
Land Requisitioned/ 0.70 hectares
Leased out
Total 717.27 hectares

Tea factory of Letekujan Tea Estate has the capacity to produce 10 lakh kilograms of Tea
which are the final products that it has to offer. The plucking season here, begins in March
and runs through the rest of the year and ends in December. Fresh green tea leaves from the
garden are plucked and processed in the factory which is located within the estate. The
produce is manually stored and individually graded. They are then packed separately into PP
woven sacks, sealed and marked with hand rollers using non-porous ink.

Welfare commitments of the Estate:

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1. People welfare:
Letekujan T.E has about 870 permanent employees and during the peak season, it
employs an additional about 1500 temporary or casual workers. It is the home to
almost 5000 members, and the welfare of all is of utmost concern to the estate. There
are 611quarters to accommodate the workers, 27 for the staff and 8 quarters to
accommodate the management team.

2. Health care:
The estate has 44 bedded state of the art hospital which is well equipped to handle any
emergency at a primary level. Also there are an dispensary and two ambulances to
cater to the medical needs of the workers.

3. Community Development:
The estate has three crèches where modern audio visual technology is implemented to
increase the mental growth of the garden children. Letekujan T.E continuously
endeavours to provide better standards of living for its workers. The estate is credited
for being the first to distribute ration to the workers in poly packs. There is a primary
school for the children’s of the workers and a school bus for those students who are
studied so far from the Tea estate. The tea estate gave the pure water supply facilities
ant out of 9,10 labour lines have electricity supply. The tea estate provides apparels to
the labourers on some occasions. The tea estate believes in fostering the spirit of
equality among its workers. There is a playground located in the tea estate where
various competitions are organised. A new recreational campus is under construction
which will include a house of club and a library also.
An EEC committee has been formed for holding various meetings to upgrade
the community development programmes and also various plans and policies are
discussed in these meetings.

4. Environmental Commitments:
Letekujan Tea Estate has endeavoured to keep its commitments towards
protecting the environment and contributing in its own way to sustain nature:
a) Electricity: to conserve electricity, the estate uses some solar powered lights.

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 b) Wastage policy: all chemical and hospital waste materials are disposed on a yearly
basis to government certified agencies.
c) Soil control: soil analysis is done by the concerned authority on yearly basis.
Manures applied in the plantation are as per their recommendation given by the
experts. Application of bio-fertilizers has been implemented to reduce the application
of inorganic fertilizers which causes environmental hazards.

2.3 An Overview of ‘Tea Board in India’:

Tea Board was established in1949 through different Acts. In the year 1903, the
Government of India, at the request of the tea interests, imposed a levy on tea exported from
India for propaganda purposes in India and abroad under the Indian Tea Cess Act, 1903.
Under this Act, a Tea Cess committee was constituted to administer the funds collected from
the above levy. The committee was composed of representatives of the Tea Industry
including Chambers of Commerce. In 1937, the name of Tea Cess Committee was changed to
the Indian Tea Market Expansion Board.

In view of the importance of the tea industry to the national economy, the
Government of India after independence enacted the Central Tea Board Act, 1949 and setup a
body under Central Government Control, for the development of the tea industry. According
to the new board, called Central Tea Board replaced the Indian Tea Market Expansion Board.
Generally, the new Board was responsible for:-

 Promoting the sale and increasing the consumption in India and abroad the Indian tea
or tea in general.
 Carrying out propaganda for this purpose.
 Increasing the production of tea in India.
 Undertaking assisting or encouraging scientific and technological research.
 Collections of statistics.
 Improving the marketing of tea in India and abroad.
 Promoting cooperative efforts among growers and manufacturers.
 Giving term loans for extension rehabilitation, replantation under its financial scheme
and for machinery under its Hire Purchase Scheme.

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 To regulate the planting of tea in India and its export, a separate body known as the
Indian Tea Licensing Committee was also set up by the Government of India under Tea
Control Act, 1933. In 1953, both the Central Tea Board Act, 1949 and the Indian Tea Control
Act, 1938 were replaced by the Tea Act, 1953 which was brought into force on the 1 st April,
1954. The Tea Board constituted under the Tea Act, 1953 was formally inaugurated on the
30th April, 1954.

Objectives of Tea Board:

The following are the important objectives of the Tea Board:-

a. Promote and encourage cooperation, education, research and development in relation

to the production and marketing of tea.
b. Regulate and control the activities of the tea industry with special regard to:-
 The production of green leaf, manufacture, marketing, import and export of
tea.
 The price to be paid for tea or green leaf, and
 The conditions of contracts entered into by planters, meteors and
manufactures.
c. Arbitrate disputes between persons engaged in or connected with the tea industry.
d. Assist a planter to diversify to other agricultural activities.

Composition of the Tea Board:

Tea Board of India has contained (constituted) varies committees Tea Board of India
was reconstituted its committee as on 1st April, 1964. The following are the combination of
the Tea Board.

The committees are broadly classified into two:

I. Standing Committee.
II. Ad Hoc committees.

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 Composition of the Tea Board

Tea Board of India

Standing Committee Ad Hoc Committees

Executive Committee Ad Hoc Tea Research

Liasion Committee

Export Promotion Ad Hoc Committee

Committee for small Growers of
Tea

Labour Welfare
Committee

Licensing Committee
for North India

Licensing Committee
for South India

Tea Board includes standing committees and Ad Hoc Committees. Standing

Committees includes Executive Committee, export promotion committee, labour welfare
committee, licensing committee for north and south India. An ad Hoc committee includes
Tea Research Committee and Small Growers of tea committee.

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Functions of Tea Board:

The principle function of Tea Board, as prescribed in section 10 of the Tea Act, 1953,
is to promote the development of the tea industry. The specific measures, referred to in the
Act for the purpose are:

a) Regulating the production and extension of cultivation of Tea.

b) Improving the quality of Tea.
c) Promoting cooperative efforts among growers and manufacturers of tea.
d) Undertaking, assisting or encouraging scientific, technological and economic research
and maintaining or assisting in the maintenance of demonstration farms and
manufacturing stations.
e) Assisting in the control of insects and other pests and diseases affecting Tea.
f) Regulating the sale and export of tea.
g) Training in Tea testing and fixing grades standards of tea.
h) Increasing the consumption in India and elsewhere of tea and carrying on propaganda
for that purpose.
i) Registering and licensing of manufactures, brokers, tea waste dealers and persons
engaged in the blending of tea.
j) Improving the marketing of tea in India and elsewhere.
k) Collecting statistics from growers, manufacturers, dealers and such other persons as
may be prescribed on any matter relating to the tea industry, the publications of
statistics so collected or portions thereof or extracts there form.
l) Securing better service conditions and the provisions and improvement of amenities
and incentives for workers.

Activities of Tea Board:

The Tea Board is the organization in the public sector that oversees the Tea Industry
in the Republic of Mauritius. The current activities of the Board are summarized below:-

ISSUE OF TEA PROPERTY LICENCES:

From the 1st of June to the 15th July in any year, the Tea Board issues or renews
licences for the establishment and cultivation of tea plantations, and for operating tea
factories, tea blending plants and/or tea packing plants on a yearly basis. Tea may be shipped

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out of the country only by companies or individuals who are licensed by the board to that
effect. A nominal fee of Rs. 10% is charged for tea plantation. As for the licensing of other
tea properties a fee of Rs. 2,000 operating unit is charged. If the license is renewed after 15th
July, a surcharge of 20% is applicable.

REGISTRATION OF CONTRACTS:

Every tea planter is required to enter into a green leaf contract with any manufacturer
of his choice for a given contractual year that extends from 1st July to 30th June. All green
leaf contracts should be submitted to the Board for registration before 31st August in the
contractual year. The contract is valid up to the end of the contractual year in which it is
registered.

TEA IMPORT LICENCE:

At present the policy of government as implemented by the Tea Board is not to allow
the importation of black tea except for small quantities of high quality tea either for blending
purposes or for use in top class hotels. The import of green tea is also allowed. The following
charges have to be paid to the Tea Board for each consignment imported:-

i. An import licence fee of Rs. 5,000 for any type of tea.

ii. Import levy amounting to 17% of CIF value.

TEA EXPORT LICENCE:

Tea export licences are issued only in favour of licensed tea manufacturers, tea
blenders and tea packers. Generally the services of a licensed tea shipper are retained by the
exporter to attend to custom formalities. No fees are claimed for the issue of tea export
permits.

GREEN LEAF PRICES :

The Board determines the green leaf prices to be paid to the different categories of
green leaf producers for leaf supplied to manufactures during any contractual year. A
minimum price is determined in June for the following contractual year, a first partial
payment of the final price in August following the end of the contractual year and a second
partial payment of the final price in December in the event that the final price has not been
determined by the Board by 30th November of that year. Green leaf prices determined by the

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Board are published in the Government gazette and two dailies almost immediately after each
determination.

General Characteristics of Plantation Industry:

Plantation is a unique sector, where most of the establishments are known to be

century old. In plantation industry, majority of the workers employed are unskilled and many
of them are not aware of the provisions of Minimum Wage Act, 1948, Equal Remuneration
Act, 1976 and the various other labour acts enacted for their welfare. The high rate of
illiteracy and low level of awareness make them more vulnerable to exploitation by the
employer. Workers working beyond the normal hours have to be paid at double rate for
overtime work, as is mandatory under the act. Majority of the workers are leaf pluckers in the
tea garden and they are mostly female.

The working conditions of workers employed in plantations are governed by the

Plantation Labour Act, 1951 and the rules promulgated by the State Governments. The
Plantation Labour Act inter-alia requires the employer to provide to the workers and their
family members medical, housing, sickness and education facility and various other social
security benefits. Provisions of welfare amenities in plantations were commented upon by the
Royal Commission on Labour, the Rege Committee and Dr. Llyed Jones in their reports. A
legislation known as the Plantations Labour Act, 1951 was passed in October, 1951 which
came into force with effect from 01.04.1954.

Section 15 of the Plantation Labour Act requires every employer to provide and
maintain necessary housing accommodation:

1) For every worker (including his family) residing in the plantation.

2) For every worker (including his family) residing outside the plantation, who has
put six months of continuous service in such plantation and who has expressed a desire in
writing to reside in the plantation.

Section 10 of the Plantation Labour Act requires that every employer shall provide
medical facilities for workers and their families. The Plantations Labour Act makes
obligatory on the part of employers to provide and maintain such free and easily available
medical facilities for the workers and their families as may be prescribed by the State
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Government. The Plantation Labour Act, 1951 prescribes that for every adult worker, one day
earned leave for every twenty days of work performed by him should be allowed and for a
young person, one day for every fifteen days of work.

The Plantations Labour Act, 1951 make it obligatory on the part of employers to
maintain primary schools in the plantations where the number of children between the age
group of 6 and 12, exceed 25. However, an employer can be exempted from this obligation, if
there already exists a school run either by the State Government or a local body providing
free education to enough number of children.

Characteristics of the Indian Tea Industry:

There are some important features of Indian Tea Industry, these are as follows:-

1) Labour intensity:
Tea industry is very labour intensive. Labour cost is generally fixed
and therefore lower production would result in higher cost of production. The
labour cost depends on various variable elements on labour legislation and
extent of casual and temporary workers employed in the Tea Estate. If the
production suffers on account of bad weather, the cost of production goes up
frequently.

2) Commodity nature:
The prices of tea and demand supply are frequently fluctuating widely.
The commodity is perishable and demand is relatively inelastic to price. While
demand has a secular growth rate, supply can vary depending on climatic
conditions in the tea growing countries. Unlike, other commodities, tea price
cycles have no linkage with the general economic cycles, but with agro-
climatic conditions.

3) Organised Industry:
Tea Industry is an organized agro industry. This implies that the labour
laws exist and since the dominant mode of tea trade is through auctions, a
large number of small tea producers get fair prices.

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4) Inconvenient but Healthy drink:
Tea is an inconvenient but very healthy drink. The tendency to form a
creamy layer of caffeine-tannin adds to the inconvenience. Besides, tea has the
properties of fatigue amelioration chemicals, which help in maintaining
cholesterol levels in preventing cancer. However research work on the subject
is not conclusive.

5) Long gestation:
Tea bushes mature for commercial exploitation in 5-7 years and remain
productive for an average 50 to 60 years. Major part of the capital expenditure
is to be incurred in first five years, which then yields return over the next 100
years.

6) Productivity and quality:

The productivity of tea can be measured as per units of labour (man
year) and per unit of land (hectare). Mechanized plucking (when labour is in
short supply or expensive) enhances productivity, but with compromise on
quality, as coarse leaves also gets plucked. When tea is in short supply, some
producers increase productivity by allowing plucking of coarse leaves with
fresh ones. When premium for quality rises, producers improve the quality by
compromising in productivity. The productivity also depends on the age of tea
bushes, genetic material, irrigation, fertilizer, cultivation techniques etc.
Replantation to replace old bushes is done to improve productivity.

7) Domestic competition:
The major share of tea market is dominated by unorganized players.
These are about 1000 of tea brands in India, of which 90% of the brands are
represented by regional players while the balance of the 10% is dominated by
Tata Tea, Hindustan Uniliver Limited, Wag Bakri Chai, Godrej, spat
International, most popularly now Patanjali Tea and Others. With the growing
shift from loose to branded tea, regional players are now expanding their reach
and also getting premium with their offerings.

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There are some special points regarding Indian Tea Industry are:

 The total turnover of the tea industry is around Rs 10,000 crores.

 Since independence tea production has grown over 250%, while land area has
just grown by 40%
 There has been a considerable increase in export too in the past few years.
Total net foreign exchange earned per annum is around Rs. 1847 crores.

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