Darjeeling tea gardens brace against losses as pressure to pay bonus mounts

Industry said to have incurred a loss of Rs 220 cr due to a shutdown over Gorkhaland state

The problems of the 87-odd gardens in Darjeeling, closed for over 70 days now, is set to worsen after they reopen. On the one hand, every garden's cash flow is hit by the crop loss of the second flush, and on the other, as the gardens resume operations, labourers are going to press for an annual bonus.

Industry sources are sceptical that since the plantation workers have not been able to earn for over 70 days now, they are going to press for a higher bonus to compensate for their interim loss.

As per legal provisions, around 100,000 permanent workers are paid daily wages in the tea gardens of Darjeeling and these are disbursed on a weekly basis. However, the rules state that in case a labourer doesn't attend to his or her duties, the person doesn't get any wage.

The Payment of Bonus Act, 1965 stipulates that irrespective of the surplus cash that the company can allocate, a minimum 8.33 per cent bonus has to be paid to the workers on every accounting year. The maximum permissible limit, under the Act, stands at 20 per cent.

According to S S Bagaria, chairman and managing director of the Bagaria Group, who is also the former chairman of Darjeeling Tea Association (DTA), a minimum 8.33 per cent bonus will result in an outgo anywhere between Rs. 20-25 crore.

"As the gardens' cash flow and top line have been severely hit owing to the prime crop loss, I doubt how many gardens will be in a position to even pay the minimum bonus", he told Business Standard.

It is estimated that the Darjeeling tea industry has already taken a hit of Rs 220 crore or 45 per cent of the annual earnings on account of the ongoing shutdown.

Another tea estate owner suggested that although the bigger companies may pay the bonus by channelling funds from other gardens they own in Assam or the Doars region in West Bengal. However, single estate owners and firms, being entirely dependent on the Darjeeling-Kurseong region, will be hit hard.

"Even if we are able to reopen the plantations in late September or mid-October, at least some preparation for the next year's second flush production can be made. But for this year, nearly the entire crop is lost", he said, while adding that the rain flush or the third flush, cannot be harvested, which leaves the gardens at the mercy of the fourth or the autumn flush. Prices of Darjeeling tea from the autumn flush are the lowest as compared to other flushes.

Nevertheless, legal provision mandates that the plantations will have to pay the bonus.

The DTA has already approached the West Bengal government's labour ministry, apprising the Mamata Banerjee-led TMC government about the bonus issue and seeking a speedier resolution of the shutdown problem.

"We have told the labour minister about the financial health of the companies as well as the industry. But till the gardens reopen, the percentage of bonus to be paid will not be clear", Kaushik Basu, secretary general of the DTA said.

In West Bengal, apart from the industry representatives and the workers' trade unions, the state government is also a party to fixing the wages as well as the bonus.

Last year, a 20 per cent bonus over the gross annual wages was paid.

After the Gorkhaland movement spiralled in mid-June with the Gorkha political parties calling for an indefinite shutdown, nearly all tea workers from the gardens joined the movement, resulting in an abrupt garden closure. Garden owners claimed that no notice of strike was served to the management by the trade unions except the initial two-day strike in early June.

"The situation is political and one just can't blame the workers for not attending to their duties. After all, a total shutdown prevails there", a Left Front affiliated trade union leader said.

Overview 

• Total gardens - 87

• Total workforce - 100,000

• Total monetary loss so far - Rs 220 crore

• Estimated outgo for minimum bonus - Rs 20-25 crore