Utpola Das
As we sip our morning tea, little do we know that the future of thousands of laborers producing this very beverage is at stake. This amber, aromatic liquid, which received a GI tag, has been of immense socio-cultural and economic importance to Assam. Yet, its producers’ fate lies at the mercy of the government, whose eyes are fixated on systematically cutting funds, outsourcing, and eventually leasing out the leafy fields to private players.
From Colonial Company to CPSU: The Journey of AYCL
The only tea-producing CPSE in India, Andrew Yule and Company, a part of the parent Andrew Yule Group, happens to be the sole CPSE producing tea alongside electrical and machinery. The company stands as a living testament to a colonial past, becoming a CPSU. Established in 1863 by two Scottish brothers, the company was a large conglomerate holding several other business interests. The Company’s fate was shaken after the managing agency system was abolished during Indira Gandhi’s reign. The nationalization tide swept it along, making it a Schedule B company subsequently after the government acquired 49% in 1974 and 2% in 1979 of its foreign shareholding. As of the fourth quarter of 2024, the government currently holds 89.25%. It currently has 15 tea estates, of which 10 are in Assam and 5 in West Bengal; an Engineering division in Kalyani, West Bengal; and an Electrical Division in Perungudi, Chennai. The Tea Division currently sells 13 varieties of tea products under the brand name of Yule Tea.
AYCL’s Financial Success Amidst Adversity
The same company saw its highest profit in its existence in the financial year 2022-23. In its 2022-23 Annual Report, the chairperson and managing director mentioned, “…despite several hurdles, your Company achieved a growth of 431% in export value of tea from Rs. 5.11 crore in FY 22 to Rs. 27.16 crore in FY 23.” According to data provided by the Ministry of Heavy Industries, the Engineering division achieved an 8% increase in turnover, a 340% growth in PBT, and a 9% growth in Capacity Utilization compared to the previous year. The Electrical Division achieved a record turnover of INR 103.42 Crore, marking a 77% growth on a year-over-year basis in FY 2022-23. The unit’s capacity utilization also significantly improved, reaching 81% compared to the previous year’s 62%.
However, the same Annual Report mentions a loss incurred in “income from operations of the Tea Division” of Rs. 17.53 Crores in a year due to “inclement weather.” Nonetheless, anticipating further losses, it laid down several suggestive measures that could potentially double the tea business by FY32 with a growth of 7% CAGR compared to industry growth of 2.1% CAGR and export growth from the present 12% to 20% by FY27. The Electrical and Engineering Division also shows a promising growth trajectory with new projects at hand. In the Public Enterprises Survey, 2022-23 report, AYCL happens to be one of the few companies that made a comeback after incurring losses.
A Dark Cloud Looming Over AYCL
Assam is yet to recover from the cataclysmic flood that occurred in the past two months. The ASDMA reported that 1,342 villages are under water and 25,367.61 hectares of crop areas have been damaged across Assam. Deluge and heavy floods followed by infestations pose a serious threat to production growth in the AYCL tea estates as well. The same company that has been exporting tea to countries like the UK, UAE, and Poland, which saw its highest growth a year back, now seeks central government assistance to mitigate its losses. Assam’s Chief Secretary wrote to the Ministry of Heavy Industries on August 24, “Given the severity of the situation and its potential impact on Assam, I urge your intervention. Possible measures could include a soft refundable loan, asset monetization, or liquidating government holdings.”
The government’s active pursuit of disinvestment, even after the company’s promising growth, remains a curiosity. The government made only meager attempts to support the CPSE during the last 10 years. In a report on the Review of Loss-Making CPSUs, 2020-21, by the Ministry of Heavy Industries, the cash and non-cash assistance provided to AYCL since 2007 amounts to only Rs. 545.20 Crore. A sincere intention to revitalize the company would have indicated a sincere effort.
Red Carpet For Private Players:
The Repeal and Amending (Second) Act, 2017 and the Repealing and Amending Act, 2019 paved the way for disinvestment by repealing The Brentford Electric (India) Limited (Acquisition and Transfer of Undertakings) Act, 1987 and The Transformers and Switchgear Limited (Acquisition and Transfer of Undertakings) Act, 1983, under which AYCL was formed. Even though the proposal from the Disinvestment Commission came long back in FY 1991-92 post-neoliberalization, the Acts of 1987 and 1983 acted as a gatekeeper from mindless disinvestment, along with strong backlash from stakeholders, unions, and others. The Finance Minister, in her budget speech on February 1, 2021, listed the Company for disinvestment along with several others as per suggestions from DIPAM reports. In a media byte to the Assam Tribune dated August 28, 2024, Former BJP MLA and Vice Chairman of TEPFO, Terash Gowala, also mentioned, “If the government cannot manage these gardens effectively, it would be better to sell them to someone who values Assam and its tea industry.”
The entire trajectory suggests an intention to divest and gradually consign AYCL to private players, rather than making genuine attempts to revive it.
The Human Cost of Disinvestment: AYCL’s Workers in Peril
The tea industry of Assam has a long-standing heritage and has earned international demand and recognition. India contributes 23% of global tea output, with half produced in Assam. The livelihoods of millions of workers depend on tea production. The workers from AYCL are already experiencing a deep crisis due to unpaid wages.
AYCL has around 14,225 employees, of which 12,835 are Group D (Unskilled Workers). In this Group D, 1148 are from Scheduled Caste, 3926 from Scheduled Tribe, and 7631 from Other Backward Castes. There are no workers from reserved categories in Group A (Managerial/Executive Level), Group B (Supervisory Level), and Group C (Skilled Workers). This is another clear indicator of the lives that are going to be affected post-divestment, not that they are already going through a good phase. More than 8,000 workers from the 10 tea estates of AYCL in Assam are not receiving wages since a couple of months. Protests over the past three months have increased under the banners of different tea workers associations.
The Future of AYCL: A Question of Govt’s Intent
The rapidly growing trend of divesting CPSUs without genuine attempts to revitalize and further showing its losses has increased manifold. Not even small cap companies like AYCL are spared. Two crucial questions arise at this juncture: Firstly, who would actually profit and who were supposed to profit from adhering to such pre-set notions of development? And secondly, will we ever learn from the crises faced by nations post-economic shock?
Utpola Das can be reached at: [email protected].