Business Case Studies, HRM / Organizational behaviour Case Study, Tata Tea and the Employee Buy Out Model

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Case Title:

Tata Tea and the Employee Buy Out Model

Publication Year : 2008

Authors: Dr. Deepika, Bharathi S. Gopal

Industry: Beverages

Region:India

Case Code: HRM0041B

Teaching Note: Available

Structured Assignment: Available

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Abstract:
The case discusses about the employee buy out business model adopted by Tatas on their exit from plantation business in their southern plantations operations in Munnar district of Kerala in India. Tata Tea had sold off 17 tea estates in the south to the company formed by its employees named Kanan Devan Hills Plantation Company Pvt. Ltd. (KDHPCL). In sharp contrast to the situation in the tea industry experiencing closures affecting thousands of employees, KDHPCL with 13,000 employees could not only recover within a year the loss of $ 24 million run up by Tata Tea, but could also register a post tax surplus of $ 50,000 as on March 31st 2006. However, when Tata Tea went onto implement a similar model in the North India Plantation Operations, it met with considerable resistance. The case discusses about the crisis that was facing the tea industry in India, the role played by Tatas in the formation of the KDHPCL and the challenges faced by the employees of South Indian Plantations Operations in accomplishing this unique business model.

Pedagogical Objectives:

  • To understand the crisis facing the Indian tea industry and to debate on measures required to regain its lost leadership position in world markets
  • To analyse the case and find out the reasons behind the success of KDHPCL
  • To identify the causes behind a similar model facing resistance while being implemented in the North
  • To debate and identify whether the same model can go forth in the North or an alternative scheme needs to be developed there.

Keywords : Employee buyout, plantation agriculture, Tata Tea, Tea Industry, Employee motivation, private incentive, HRM Case Study, agribusiness model

Contents:

  • Tea in India
  • Crisis in Tea plantations in India
  • The Tata Group
  • History of Tata Tea
  • Tea Plantations of Tatas

  • Formation of KDHPCL: A Win-Win Situation?
  • Management of KDHPCL: Bottom up as against Top down
  • EBO: A Suitable Model for NIPO?

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