Profile of Worker Cooperatives

Contents Page No.

4.1. The Transport Cooperative Society 110
4.1.1. The Background 110
4.1.2. Organisational Structure 116
4.1.3. The Cooperative 118
4.1.4. Present Position 125
4.1.5. Expansion Plans 130
4.1.6. Conditions Contributing to Success 130

4.2. Indian Coffee House 131

4.2.1. The Background 131
4.2.2. Organisational Structure 132
4.2.3. The Cooperative 134

4.3. The Kerala Dinesh Beedi 142

4.3.1. The Background 142
4.3.2. Organisational Structure 145
4.3.3. Role of Kerala Dinesh Beedi 145
4.3 .4. Functions of Primary Society 146

4.4. Overview of Samples from Private Sector 153

4.4.1. Hanuman Transport Company 153
4.4.2. Janatha Deluxe Refreshments 154
4.4.3. Mangalore Ganesh Beedi 155
This chapter gives a general profile of the units selected for the study. The sample units

include (a) Transport Cooperative Society, Koppa, (b) The Indian Coffee House, and

(c) The Kerala Dinesh Beedi. The background of the sample units given here forms the

background for the analysis carried out in the subsequent chapters.

4.1. The Transport Cooperative Society

4.1.1. The Background

Transport Cooperative Society, Koppa is a cooperative started as a breakaway enterprise

from the erstwhile Shankar Transport company (Private) Limited. The Shankar Transport

Company was started in 1957 by late Sri. M S Deve Gowda. Later, it was taken over and

managed by the Aroor family, throughout the 70s and 80s4. During those years,

Assets of Aroor Family as on 1990-91

Transport (passenger)
Shankar Transport Company (Pvt) Ltd.,Koppa-CKM District.(No. of Buses 84)
Shankar Vittal Motor Transport Co., Mangalore. (No. of Buses 40.
Canara Motor Transport, Koppa and mangalore.(No. of Buses 21)
United Roadways - Shimoga and Koppa. (No. of Buses 21)
Business Firms
Aravind Motors Tata Vehicle Dealers, Mangalore.
Supreme Motors Motor Spare Parts Dealers, Mangalore.
Praveen Motors Motor Bike(Yezdi), Mangalore and Chikkamagalore.
Mandovi Motors Marathi Dealers, throughout the state.
Industries
M/s Mysore Plantation Qurdihithlu Estate
(Tea Mfg Industry and Siddarabhanu Estate
Coffee Estate) Devarakhan Estate
Koppa Bhuttanakadu Estate
 Ill

Shankar Transport Company was considered to be one of the efficient bus services in

Shimoga, Chikkamagalur and some parts of South Kanara Districts, comprising nearly

85 routes. Around 350 workers were employed by that company.

It was a well-known fact that the workers in this company were paid low. But not much

resistance was seen from the workers for almost two decades. However, the genesis and

rise of any movement is greatly influenced by the economic and social system in which it

operates. Low wages, a rising cost of living, pay hike in Gajanana Transport Company,

workers affiliation to Chikkamagalur Unit of Transport and General Mazdoor Union (R),

etc., brought about an awakening among the workers and accordingly, they resorted to

strike on July 1987.*5 *The

* management dealt the strike very harshly by removing 27

workers who were in the forefront of the agitation. It also suspended some workers and

initiated various other tactics to crush even the smallest resistance. The strike did not

produce the desired result, the reason being - lack of effective leadership. As usual, the

Shankar Transport Company continued to pay less than the Minimum Wages fixed by

the Government.6

Shankar Tyres :Retreading Factory.

Hotel Industry :Mangalore, Bangalore, Ooty.

Medical Colleges and Education Trusts.

5The management of Shanker Transport Company reported that, during that strike the workers damaged many
buses, they cut the break pipes, punctured the radiators, broke the glasses and assaulted the loyal workmen,
stones were pelted at the buses and travelling public had also been injured. Quoted on tire basis of Letter No.
819, dated 19th November, 1990 signed by Sri. A. Manohara Rao, Managing Director of Shankar Transport
Cotrqrany Limited.
6The minimum wages are normally above the poverty line and our existing wages are higher than the poverty
line, it is not only the wage earners who are put to hardships due to price-rise but also the operators as well."
Quoted from the Letter No.2708/1990-9L dated 18th September, 1990, addressed to the General Secretary,
 112

The agreement pertaining to salary and other terms and conditions entered between the

workers and management during 1987 ended on 30th June 1990. Hence, on 1st July

1990, the Workers Union submitted the Charter of Demands to the management. The

major demands included: an average increase in the salary to the extent of Rs. 225 per

month, granting of medical allowance of 8 per cent of salary, payment of shift allowance,

increase in the daily bata, dearness allowance as per cost of living index, granting of

HRA of Rs. 100 per month, leave facilities, payment of shift allowance and giving free

passes to the family members of the workers.

In spite of repeated requests and negotiations, the management of Shankar Transport

Company failed to respond positively to the workers' demand. Finally the workers led by

Sri. Chikke Gowda, supported by All India Trade Union congress (AITUC) and

contemporary trade union leaders like Sri B.K. Sunderesh and Sri. Renukaradhya, started

encroaching on the sacred territory of management prerogative. However, nothing

positive came out from the Demand Week, or Hunger Strike and many rounds of

discussions held between workers and management. Even the conciliatiory efforts

conducted by Labour Commissioner, Bangalore and Assistant Labour commissioner,

Chikkamagalore district under Section 12(1) of Industrial Disputes Act of 1947 failed to

settle the dispute between the management and workers.

Chikkamagalur Jilla Transport and General Mazdoor Sangha, Koppa, fay the chief Administrative Officer of
Shankar Transport Company. In this connection, we have observed that the minimum wages fixed by the
Government for a bus driver at that time was Rs.950. But the salary statement of Shankar Transport Company
as on 13-12-1990 shows that Rs.606 had been paid as minimum wages for drivers.
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Lastly, the majority of workers affiliated to Chikkamagalur District Transport and

General Mazdoor Sangha(R), supported by All India Trade Union Congress (AITUC)

and other Leftist organisations started total strike on 15th December 1990. This strike

paralysed the whole bus transport in and around Malnad Region affecting bus services of

nearly eighty routes of Koppa, Kalasa, Balehonnur, Sringeri and N R Pura Talukas. The

strike continued, but the Management or the Government did not show any positive

signs in resolving the issue. Sri Aroor Manohar Rao, the then Managing Director of

Shankar Transport Company rejecting the demand of workers announced in the Press

...it is extremely difficult to run buses in the present situation. The catastrophe of Gulf

war is mainly responsible for the shortage of diesel and petrol. The fuel prices are

shooting up like anything. So I cannot foresee any bright future to this industry.

(Udayavani, 1991)

The peaceful strike lasted 53 days. On 6th February 1991, the whole Malnad region

observed protest and Bundh in support of workers movement. Organisations like

AITUC, Student Federation of India (SFI), All India Youth Federation,(AIYF) -

supported the cause of Shankar Transport Employees Union. Sri Chikke Gowda, leader

of Shankar Transport Employees Union and General Secretary of Chikkamagalur

District Transport and General Mazdoor Sangha emerged as an effective leader

channelising the movement of workers.

However, the Management was very firm on its stand and did not agree to pay salary

equal to that of other transport companies. Instead, the Management declared lock out on

7-2-91 and retrenched all the workers. Within a few days the management of Shankar
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Transport Company surrendered 67 permits of 80 routes to the Government

(Kannada Prabaha, 1991). This amounted to the closure of the unit.

The announcement - whether official or unofficial - that an enterprise is going to close

provokes strong emotional reactions among the workforce - shock, disbelief, anger and

depression. A shutdown is a devastating experience for workers who have an

ineradicable conviction that companies are permanent fixtures. The security of

employment and the stability that a company gives is attacked at roots once a unit is

closed. Since the decision for a closure affects their lives so much, they rightly believe

that they should have a voice in decision making.

On hearing the shocking news of lockout the Transport Union convened its General

Body Meeting and decided to withdraw the strike. Accordingly, on 8-2-91, the Workers

Union submitted the Strike Withdrawal Notice to the Management.7 But the Management

wanted to get rid of all striking workers.

Now, it had become imperative on their part to strive hard to save their jobs.

Sri. B.K Sunderesh, local communist leader was mainly responsible for promoting the

ideals of cooperation- specifically of common ownership - among the unemployed

employees of Shankar Transport Company. He motivated them to make an attempt to

protect their jobs in the closed unit. Initially, the workers explored all possible avenues to

get the transport unit run by the management. It was only when they failed in their efforts

Letter No 482/90-91. addressed to Managing Director, Shankar Transport Company Limited, signed by the
President and Secretary ofTransport Ma/door Sangha.
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to find a solution, that the workers volunteered to ran some buses and control then-

destiny.

A fraction of employees decided to mobilise their compensation amount and sought

permission to ran buses on cooperative basis. Accordingly, in the Meeting of Regional

Transport Authority held on 11-2-91, under the chairmanship of Dr. S. Subramanya, the

Employees Union of Shankar Transport Company got six permits and permission to ran

seven buses, on cooperative basis and also sought permission to ran 35 to 40 buses

(Malanada Sangathi, 1991). All the 273 workers got their compensation amount from

Shankar Transport Company, out of which a group consisting of 130 workers agreed to

invest their compensation amount of Rs.4.85 lakhs to strengthen TCS.

On the other side the Shankar Transport Company, in a bid to escape from its problems

resorted to downsizing by splitting into four small companies viz., Ravishankar

Transport, Shambushankara Transport, Udayashankara Transport and Navashankara

Transport.8 All these four units agreed to provide employment to 100 loyal employees.

Thus, the TCS started its operations in the selected routes of Malanadu region from 8th

March 1991. The Union Leader and former Mechanic of Shankar Transport Company

Sri Chikke Gowda was the Chief Promoter along with ten other workers as

8Secdon 71(4) and (5) of Motor Vehicles Act stipulates that fresh permits to the extent of 10 bos permits could
be given to single holder In this case Shankar Transport Companys request to start buses after the strike was
treated as a fresh case because they surrendered majority of their permits to Government of Karnataka So they
have to split their operations into four units to ran 40 buses. But the Amendment Act of 1994, removed this
restriction.
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Co-promoters. Later, on May 16th 1991, the TCS got registered with Joint Registrar,

Chikkamagalur and started its efficient operations and various expansion programs.

It may be observed that the Shankar Transport Company was a very efficient company

until 1987, but its efficiency was also dependent on the exploitative nature of handling

the employees. The sense of insecurity and also a kind of deprivation were prevalent

among the employees for a very long period of time. But, they were, somehow, not able

to come together and succeed in resisting it. However, during 1987, all of them joined

together and they did go for some kind of protest. But, as a result of lack of effective

leadership among themselves, their protest met with failure.

After this failure, they went back to work and they found that they were subjected to

more exploitation. This insecurity and exploitation and also a feeling of humiliation of

the failure of their earlier attempt were there in their mind and they were waiting for

proper leadership. So, when it came, they were able to organise themselves and start their

own enterprise.

4.1.2. Organisational Structure

The organisational structure of the TCS is given in the following chart.
Transport Cooperative Soceity
Organisational Structure
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4.1.3. The Cooperative

The TCS was formed in March 1991, the name of the society being Transport

Cooperative Society Limited. The important objectives of the society as stated in its by

laws are:

1. To protect economic interest of the members by providing appropriate and

profitable employment avenues to members.

2. To establish workshop, service station and tyre retreading unit.

3. To obtain and establish agency to deal with oil, lubricants and spare parts.

4. To impart training to employees in the repairing of motor vehicles and other

machinery connected with transportation industry.

5. To involve members in the bodybuilding and automobile industry.

6. To inculcate the feeling of mutual help, economy and cooperative idea among the
members.

7. To provide more and more employment opportunities to members.

8. To purchase or otherwise acquire any properties, goodwill, assets, liability in

order to fulfil the objectives of the cooperative.

9. To raise money by the issue of shares to conduct the business of the cooperative
society after adhering to the rules and regulations of Companies Act or any
provisions of the Central Government and orders passed by the Registrar of the
Cooperative Society.

10. To provide bus service to rural areas.

The cooperative is presently made up of the following composition of members.

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1. A Category Members - Drivers and Conductors.

2. B Category Members - those who have got experience in repairing motor vehicle and
other machineries connected with transportation.

3. C Category members - those who have got experience in transport industry except
A and B as specified above.

4 jy Category Members,. Banks and other institutions who assist the cooperative
may be entitled to become the members under this category.

5. E Category Members are only nominal members, i.e. the persons who deal with
the cooperative. They cannot become any officer of the society. They are not entitled to
get share in the profit or to have voting rights.

The authorised capital of society had been fixed at Rs. 19 lakhs divided into five
categories of shares. They are shown in the Table 4.1.

__ Table 4.1. Category of Shares

_ Particulars Rupees
1. 150 A Class Shares of Rs. 5,000 each. 7,50,000

2. 75 B Class Shares of Rs 5,000 each. 3,75,000

3. 75 C Class Shares of Rs 5,000 each. 3,75,000

4. 300 D Class Shares of Rs. 1,000 each 3,00,000

5. 500 E Class Shares ofRs 200 each. 1,00,000

Total Authorised Capital 19,00,000

Source: Audited Annual Accounts of the Transport Society.

As a first step, the workers pooled their compensation amount of 4.85 lakhs and invested

it during 1991. The fund increased to Rs. 5 lakhs by 31-3-1992. During the year 1992,

there were only 126 members and they belonged to category A, B, and C only.
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In addition to the share capital, the society borrowed a sum of Rs.6.34 lakhs from Banks

and other financial institutions to run the operations during the year 1991-92.

According to the by-law, Managing Committee consists of 11 directors, representing

A, B, C and D Class members. The Managing Committee meets once in a month. Now

the managing committee is made up of 11 directors, five representing drivers and

conductors, three from repair and other maintenance staff and three belonging to

experienced persons in transportation industry. The Society is not having any

Government representation/nomination. Elections to the managing committee are held

once in every three years. Once the elections are over, the members of the managing

committee decide on the Chairman and the Vice-chairman of the society. The term of

office of the chairman and Vice-chairman shall be coterminous with the term for which

the Board is elected.

Managing Committee

In order to manage the day today affairs of the society, the society is also authorised by

its by-laws to constitute an managing committee, consisting of chairman, vice-chairman

and three other directors. Subject to the terms and conditions stated in the by-laws, the

Managing Committee can exercise powers and take decisions on the following.

1. Purchase of vehicles, machineries, spare parts and other equipments.

2. Appointment of workers, fixing their remuneration, determining the security

deposit, if any, subject to the approval of Registrar of Cooperatives.

3. Initiate any punitive action for alleged misbehaviour, impose any fine, and
suspend any worker or initiate any other disciplinary action.
The administration of the society has been decentralised by opening various sections and

running of these sections has been entrusted to efficient officials. The amendment of

bylaw by the society and subsequent permission by the cooperative department

on 27-2-2001 enabled them to appoint Managing Director to look after the day today

operations effectively. The Managing Director is vested with the responsibility of

coordinating the activities of all the departments. It is expected that while designing

these sections, due care is bestowed to ensure that work groups consisting of people with

common tasks are brought together so that they could achieve better goal orientation.

The structure is also expected to ensure division of labour, specialisation, and greater

efficiency. When an organisation grows, diversifies into different activities, adopts newer

technology or enters newer markets, the organisational structure undergoes changes to

keep phase with the pace of development. In the absence of such changes, the structure

itself could become the major hurdle for growth of the organisation. The following are

the duties and responsibilities of various sections.

1. Personnel Section

This section looks after the selection, service conditions, training and various grievances

connected with employees as per section 17(1) and 18(A) of the Cooperative Societies

Act. Maintaining of regular attendance of workers, sanctioning of increments,

allowances, leave facilities, bonus, provident fund, any other statutory facilities, etc., are

some of the responsibilities entrusted to this section.

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2. Gate Pass and Verification Section

Some of the specific tasks of this section are verification of daily bus collection of

different routes, sorting of the different bundles of tickets, comparing the duplicate tickets

with gate pass, preparation of collection slips, entering distance covered each day by

different buses in the mileage register, etc.

3. Accounts Section

This section is concerned with the verification of documents coming from gate pass

section, entering in the concerned register and reporting of any omission on the part of

commission agents or conductors.

4. Transport Section

This section is the backbone of the TCS. This section is concerned with the completion

of work as per Motor Vehicles Act 1948, payment of taxes on vehicle, obtaining Fitment

Certificate, survey of profitable routes, preparation of files and submitting proposals to

obtain new routes and taking part in the meeting organised by Regional Transport

Authority.

5. Traffic Section

Running of buses as per schedule in the fixed routes, is one of the important

responsibilities of this section. The important tasks of this section include completion of

duty allocation, running of busses according to the time fixed by Regional Transport

Authority, entering of particulars pertaining to daily running of all buses, obtaining

attendance of drivers and conductors and initiating steps to repair buses held up in the

middle of scheduled routes, etc.

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6. Checking Section
Detection and elimination of frauds, allocation of responsibility, etc., are some of the

tasks entrusted to this section. Some of the important responsibilities of this section

include, supervising the work rendered by all TTE's, registering their attendance

allocation of routes to TTE' reporting to the higher authorities about the dereliction of duty

by drivers and conductors and repeated teeming and lading of any nature.

7. Mechanical Section
This section is required to repair all the vehicles belonging to the society. The major

duties of this section are sending of mechanics to the spot on receipt of information about

breakdown of busses, monitoring mobile service/repair station, get detailed infoimation

from conductors and drivers about the condition of buses and to repair accordingly.

8. Stores Section:
This section is required to store and provide necessary spares and equipments for

different buses of the unit like required tires, diesel and oil etc. The important duties

include- preparation of indent for the procurement of different spares required by buses

after obtaining permission from secretary, entering of detailed report pertaining to tyres,

total K.M. run, particulars like tire number, manufacturer, year, model etc., in the Tire

History Card, entering of daily diesel slips. Approved brands of oil, lubricants and grease

should be procured and details as regards their purchases and consumption have to be

altered in the concerned register.

The heads of respective sections are held directly responsible for any lapses. Each

section works independently and hence there is greater accountability.

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It is observed that the drivers and conductors constitute the integral aspect of any

transport unit. The success of transport unit, to a greater extent, depends upon them.

Hence, they constitute A category members. Mechanics encompass B category

members, as they are pivotal to transport unit. In order to accommodate booking agents

and other office workers C category has been created. Banks and other institutions

extending financial support to the cooperative can become D category members.

Sympathisers and those who deal with cooperative, such as tyre dealers, vehicle dealers

etc, are not left out, but included under E category members. It also helps in the capital

growth of their cooperative, without adversely affecting their gearing ratio.

Cooperative principles impose important constraints in how cooperatives can raise

finance. The most important principles in this respect are limited return on capital, and

majority control by worker-members. The membership in Transport Cooperative is

restricted to workers only. Hence, they have to rely on loans or credit, which sometimes

makes them suffer high gearing ratio.

The TCS has adopted, more or less, the management structure of the old firm. The study

revealed that, although founder members were able to help define managerial

responsibilities and to influence key decisions in setting up the cooperative, they

remained quite heavily dependent on Sri.Chikke Gowda, the former president of

Cooperative Society. The involvement of workers in participatory forum has not been

achieved to the fullest extent due to lack of training. Though the issue of training was

often discussed, it never got off the ground so far.

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4.1.4. Present Position

More than 10 years have gone by since the workers started managing the society to keep

their employment intact. The efforts made by workers in running the society were

applauded at various levels. The present position of the Society is the result of the

hardships and dedicated efforts of the employees/members in the past years.

Recruitment

It may be recalled that TCS was started with a workforce of 126 employees for the unit.

The society had recruited a total of 284 employees by the end of the tenth year. Out of

284 employees, only 132 workers are members of cooperative society.

We have seen that membership rights are not automatically conferred on every worker.

TCS regards membership as conferring certain responsibilities as well as rights. Hence,

all those employees who joined the society at its inception were granted membership.

Before granting membership to new workers, the Society wants to make sure that they

will act responsibly within the cooperative. In this case, the length of time to become

members is not formalised. Probably, the existing members might not wish to see their

profit share diluted. So, membership can still be an important and sometimes contentious

issue.

Service Conditions
The cooperative has developed well-set service conditions, categorising various wage

scales under different grades. These wage scales are given in the following table:
 Table 4. 2. Grade and Category-wise Wages (TCS)
Total Salary Salary Difference
Number of 1991 2001
Workers Rs Rs Rs
DRIVER 42 1,991.00 4,870.00 2,879.00
CONDUCTOR 35 961.00 3,638.00 2,677,00
MECHANIC 26 1,300.00 4,703.00 3,403.00
OFFICE 19 1,256.00 4,734.00 3,478.00
CHECKING 17 1,031.00 4,180.00 3,149.00
WATCHMEN 03 700.00 2,707.00 2,007.00
Source: Office Records of the Society.

It is clear from the above table that there has been considerable increase in the salary of

workers during the period of six years. Compared to others, the founder members got

more benefit.

Bata

The Bata'9 payable to all drivers, conductors and T.T.C's are as follows:

The Bata starts from a minimum of Rs.15 for 75 kilometres or less than 75 kilometres.

Additional one rupee per eveiy additional 15 kilometres, up to a maximum of Rs.38 for

406 or more than 406 kilometres miles.

9"Bata" is a special type of allowance which is common in transport industry.

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With the relentless efforts of the employees, who built the society from scratch and are

now on the board of management too, the society's annual transactions have crossed

Rs.6.37 crores. While fleet strength has touched 60, from only five during 1991, the

number of employees has gone up to 284. The hard work and determination in

developing this organisation has started paying dividend to worker and to the community

at large.

The backward 'Malnad' regions owe a lot to TCS. But when the society was established

ten years ago, nobody imagined that it would be a success. With its impressive

performance, the society managed to get a grant of Rs. 1 lakh, from the State

Government in 1993-94. The Government of Karnataka gives this grant to the best

cooperative societies of Karnataka. This daring attempt by the workers to shape their

own destiny also enabled them to be classified as 'A' grade Cooperative Society from

1993-94 onwards by the Cooperative Audit Department.

The present position of the Society may be well understood through the data presented in

Table 4.3.
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Table 4. 3. Statistics at a Glance (TCS)

Date of Commencement : 8th March, 1991
Date of Registration : 16th May, 1991
Number of members as on 31st March, 2002 : 132
Business turnover during 1999-2000 (Rs) : 11 Crores.
Simple average annual growth in turnover since 1991-92 : 46%
Profit during 2000-2001 (Rs) : 9.89 Lakhs.
Number of employees during 2001-2002 : 284
Employee benefits during 1999-2000 (Rs) : 75.65 Lakhs.
Audit Classification since 1993-94 :A
Share Capitol (Rs)
Authorised (Rs) : 19 Lakhs
Paid-up (Rs) : 9.97 Lakhs.
Number of Buses as on March, 2002 : 62 Buses.
Value of Buses as on 31st March, 2002(Rs) : 4.50 Crores
Investments as on 31-3-2002 (Rs) : 12.23 Lakhs.
Assets as on 31-3-2002 (Rs) : 5.15 Crores.
Source: Audited Annual Accounts of the Transport Coop. Society.

The constant efforts of employees are responsible for increasing the society's annual

turnover, which increased from 50.46 lakhs in 1991-92 to 6.37 crores in 1999-2000.

Barring the year 1991-92, the society earned net profit in all the years. The net profit of

the society reached Rs.3.40 lakhs, Rs.1.12 lakhs, Rs.1.73 lakhs, 2.95 lakhs, 1.92 lakhs,

2.19 lakhs and 9.89 lakhs during the years 1993-94, 1994-95, 1995-96, 1996-97,

1998-1999, 1999-2000 and 2000-2001 respectively.

In addition to good salary, the following benefits have been given to members and

employees of the Society. The benefits are summed up in Table 4.4.

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Table 4.4. Benefits to Members and Employees (TCS)

1. Bonus Continuously paying. 14 % during 2000-
2001.
2. Dividend Based on profit. Paid 12 % during 2000-
2001.
3. Uniform Yearly two pairs, worth Rs.600.
4. Provident Fund 12 % by employees, equal amount by the
Society.
5. Special Allowance Based on work
6. Medical Facility Rs. 500=00 per year or actual expenditure,
whichever is less. Rs. 5,000 on special cases.
7. Gratuity Paid at fee time of retirement as per rules.
8. Earned Leave One day for every 20 days of work in fee
previous calendar year.
9. Casual Leave 12 days in a year.
10. National Holidays 10 days leave on important National
Holidays.
11. Free Pass Facility 2 seats per month to all the family members.
12. Personal Insurance and Accident Rs.80, 000=00 compensation on death.
Compensation Insurance.
13. Group Insurance Rs. 35,000=00 on death.
14. Financial Assistance to the Rs. 100 to Rs 500 per year, based on course
Children for study. and class.
15. Free Pass Facility to the Children. To travel to their Educational Institutions
16. Loan Facility On fee basis of their salary.
Source: Office Records of Transport Society.

As a result of the above and other statutory benefits, all the workers have got a sense of

belonging to this society. Every year 3,000 students who commute in these buses avail

50 percent concession on the daily fere. The society, according to its Managing Director,

looses nearly Rs. 10 lakhs due to social benefit. In spite of all these commitments, the

society has been making profits, developing its operations and fleet strength.
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4.1.5. Expansion Plans

After ten years of its useful existence, the society is now all set to establish many

industries to reduce the unemployment problems of Chikamagalur District to certain

extent. Initially, by using the worn out spare parts of the buses, the society intends to set

up a unit to manufacture agricultural equipments. Some other ambitious plans on the

card are establishment of tyre retreading unit, workers quarters, automobile spare parts

shop, body building unit, petrol bunk, service station etc. The construction work of office

building, a workshop and service station is already completed in the newly acquired land

measuring 2.5 acres.

4.1.6. Conditions Contributing to Success

The main feature of TCS has been that it has been its ability to democratise the

transportation business. It has proved that ordinary workers are capable of solving

complex managerial problems through collective action. The factors that stand out as

important factors for the success of TCS are as follows.

The first concerns the characteristics of the work force. The efforts of a cohesive

homogeneous group of skilled workers of TCS are responsible for reducing the number

of differences and disagreements among themselves.

A second factor contributing to the success of TCS is a leadership, which is completely

committed to both social and commercial objectives and which effectively balances short

and long term considerations.

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The third factor is the existence of effective and continuing external support. Local

support organisations, media, leftist organisations, trade unions, cooperative promotional

bodies, Government departments, students, etc, - have lent their moral and technical

support and leading to the success of TCS.

4.2. Indian Coffee House

The coffee house was established in 1957-58 in a bid to accommodate workers expelled

from Indian Coffee Board. Indian Coffee House (ICH) has branches in six states and two

union territories within India. The employees Cooperative Society of the Indian Coffee

Board runs Indian Coffee House. Nearly 4818 employees are working in the 158

branches of Indian Coffee House all over the country. Out of this, 63 of these branches

operate in Kerala. All over the country, Indian Coffee House is run in the same style and

it maintains the same standards.

4.2.1. The Background

Formerly, Indian coffee was almost entirely exported. Very little was consumed within

the country. The export market completely collapsed on account of the II World War.

The coffee planters panicked. The only way out was to popularise coffee within the

country. The British opened Coffee Houses all over the country in order to encourage the

beverage among the natives. That's how the first Coffee Houses were established in

Bombay and Hyderabad during the year 1936. The Indian Coffee Promotion Board was

established in 1940, which was reconstituted in 1944 as Indian Coffee Board. By 1948,

there were 48 coffee houses, one coffee van, three depots which together employed 1500

employees. The coffee house employees did not have any justifiable scale of pay. After
 132

working long hours, they often had to do odd jobs for the top officers of the Board, said

MR N S Parameswaran Pillai who took the initiative of rehabilitating employees who

were dismissed.

In 1956, the Plantation Enquiry Commission report recommended the closing down of

all the coffee houses and retrenching all employees. The commission said that the

objective of popularising coffee had already been achieved. AK Gopalan, MP protested

but could not prevail upon the government to revoke the decision. He suggested that the

coffee houses should be run by the employees themselves as cooperatives. In January

1958, the first Coffee Board Workers Cooperative Society was registered at Bangalore.

It was Mr NS Parameswaran Pillai who led the movement in Kerala. Two units were

registered in Trissur and Talassery in 1958. Two units were necessary because rules that

apply to cooperatives were not uniform within the state of Kerala. During the year 1972

head office of Talassery unit was shifted to Kannur.

The Kannur Unit of Indian Coffee House runs 13 coffee houses in seven districts from

Palakad to Kasaragod.

4.2.2. Organisational Structure

A cooperative society named as All India Coffee Workers Cooperative Societies

Federation Limited coordinates all the ICH across India. In the wake of the formation of

Coffee Workers Cooperative Societies in most of the Indian States by the ex-employees

of the Coffee Board, it was of common interest and a matter of necessity to organize an

All-India Body to co-ordinate the activates of the Coffee Workers Societies and also to
 133

formulate a joint committee to voice the problems faced by them. It is hoped that the

federation will tackle problems common to all societies and the it could also serve as a

common forum where representatives from all the primary societies could meet,

exchange views and learn from each others experiences. The Federation also supplies

raw coffee seeds to the member societies. It plays a vital role in the Coffee Worker

cooperatives movement at the national level. Table 4.5 shows details of Indian coffee

houses affiliated to the Federation.

Table 4.5. Indian Coffee Houses Affiliated to the All India

Coffee Worker Co-op Societies Federation Limited
s. Registered State Number of Indian Number of Staff
No Office Coffee Houses
Affiliated
1 New Delhi Delhi 12 353
2 Bangalore Karnataka 02 61
3 Calcutta West Bengal 02 25
4 Jabalpur Madhya Pradesh 55* 1600
5 Kannur Kerala 13 282
6 Lucknow Uttar Pradesh 01 10
7 Mumbai Maharastra 06 430
8 Nagpur Maharastra 09 90
9 Pondicherry Pondicherry 08 217
10 Trissur Kerala 50 1750
Total 158 4,818
Includes 5 lodges run by the Society.
Source: Office Records of the Federation, New Delhi.

The above table shows that Indian Coffee Houses affiliated to the federation are scattered

in different parts of the country. The Trissur unit is having the maximum number of

workers. The Federation is directly running one coffee house, which is situated at

Maulanal Azad Medical College, New Delhi. There are many concrete programmes and

member societies strengthen the hands of the Federation to combat the common

problems and hurdles faced by societies.

 ___!2U
To study the socio-economic contribution of Indian Coffee House, we have focussed our

attention on Kannur Unit of Indian Coffee House. The Kannur unit of Indian Coffee

House was established during the year 1958 with the following objectives (Bye law of

ICH, Kannur).

1. To impart cooperative culture so that self-sufficiency and economy can be

achieved among members.

2. To give employment opportunities to those workers who had been laid off from
the Indian Coffee Board in hotel and other allied industries.

3. To deal in the business of coffee beans.

4. To undertake business connected with hotel such as dairy, bakery and

confectionary.

5. To assist the workers of Indian Coffee House through bulk purchases of their
requirements and providing them the required quantity of such goods.

6. To run the agency of coffee board and to negotiate with the Government.

The managing committee of the society has got nine members, eight from the workers

and one from the sympathizers. Government is not having any representation in the

managing committee. Election is held once in every three years. The last election was

held on 24-01-1999.

4.2.3. The Cooperative

At present the Kannur unit of Indian Coffee WorkersCooperative Society is having 13

branches. They are located at (1) N. H. Road, Taliparamba, (2) South Bazar, Kannur, (3)

Plaza Tourist Home, Kannur, (4) Fort Road, Kannur, (5) Court Road, Talessery, (6)

Mysore Road, Manathavadi, (7) Mavoor Road, Calicut - 4, (8) Aradhana Tourist Home,
 135

Calicut, (9) Palayam Road, Calicut - 1, (10) Palayam, Calicut, (11) College Road,

Palakad, (12) T. B. Road, Palakad, and (13) M. G. Road, Kasaragod.

The administration of the society has been decentralised. Every unit is required to

submit its accounts to the head office regularly. The manager and accountant are

responsible for the smooth running of the branches. They have got various rights like

rotation of duties, procurement of raw materials, fixation of overtime and maintenance of

accounts of branches. The organisational structure of the sample unit is given in the

following chart.
IndianCoffeeWorkersCooperativeSocietyLimited

Organisational Structure
 137

4.2.4. Present Position

Indian Coffee Workers Cooperative Society Limited has been extending various socio

economic benefits to its worker members. The society has already constructed its

administrative office at Kannur at a cost of Rs 9 lakhs and started operating from the

newly constructed office. It has taken all the positive measures for the consolidation and

strengthening of its branches and at the same time new branches are also being started. It

has initiated measures to start a new branch at Malappuram, where there is no branch at

present.

Recruitment

All recruitment is at the level of general worker. Higher posts are always filled by

promotion and not by direct appointment. Fresh recruitment is made from dependents

and friends of existing permanent employees. The general worker is on training for one

and a half years. He has to work in all areas and gain experience. He is finally placed in a

job that suits his skills and aptitudes.

The minimum qualification for the post of worker is seventh standard and good

personality. If an employee completes SSLC, the society recommends and sends him for

cooperative training (Diploma in Cooperation). After successful completion of the

training, such employees will be promoted to clerical category. At the time of joining all

the employees are required to purchase at least 100 shares of the society at Rs. 10 each.

The membership is automatically conferred to every worker on recruitment. At present,

the society is having a total number of 349 employees.

 138

4.2.5. Service Conditions

The ICH workers are required to work for eight hours a day. Any extra work brings them

overtime wages of Rs. 9 per hour. The cooperative has also developed well-set service

conditions, categorising various wage scales under different grades. These wage scales

are given in the following table:

Table 4. 6. Grade and Category-wise Wage Scales (ICH)

(As on 30th October 2000)

Grade Pay Scale*

Secretary 1680-2850
Manager Grade 1 (25 Yrs) 1205-1930
Manager Grade II (20 Yrs) 1175-2220
Accountant 1115-2160
Senior Clerks 990-1930
Junior Clerks 970-1830
Worker Grade I (25 Yrs) 950-2100
Worker Grade II (20 Yrs) 890-1870
Worker Grade III (10 Yrs) 735-930
Office Records of Indian Coffee House
* Play scales exclusive of 229% Dearness Allowance and other allowances.

Dearness Allowance

All workmen get 229 per cent DA apart from other allowances. All the scales are

required to be approved by the Cooperative Department.

The present position of the society can be understood from the table given below:
 139

Table 4.7. Statistics at a Glance (ICH)

Date of Commencement 7th August, 1958
Date of Registration 2nd July, 1958
Number of members as on 31st March, 2000 373
Business turnover during 1999-2000 (Rs) 7.2 Crores.
Simple average annual growth in turnover since 1995-96 42%
Profit during 1999-2000 (Rs) 3 Lakhs.
Number of employees during 1999-2000 349
Audit Classification since 1993-94 B
Share Capital (Rs)
Authorised (Rs) 3 Lakhs
Paid-up (Rs) 2.76 Lakhs.
Source: Audited Annual Accounts of the Co-op. Society.

For the year 1999-2000, the society registered an average monthly turnover of

Rs. 60 lakhs.

The management works on the principle of instilling faith and cooperation among the

employees. The general body consisting of all permanent employees make up the

decision-making unit. An executive committee consisting of 9 members is elected by the

general body through secret ballot, once in two years. Political parties do not play a role

in election. Merit and commitment alone are the considerations.

All coffeehouses maintain a uniform standard. Some things never change. The dawn of

the day, the sequence of the seasons and perhaps the Indian Coffee House. The aroma,

the ambience and the furniture present a truly nostalgic picture. Incidentally, the old

timers say that even the photographs on the wall have remained the same. Mahatma
 140

Gandhi, a cup of fresh brewing coffee and a photograph of an old time actress from

down South, Ragini, continue to adorn the walls. One has to only enter the Coffee House

to feel the still lurking presence of its past glory. The spare walls, old but sturdy furniture

and the reeking smell of coffee compliment the historical lineage of the place, a glaring

contrast to the Coffee Shops in five-star hotels that are gaining momentum today. The

youth may have shifted their loyalties to the fast food joints but the diehard loyalists still

refuse to hear a word against their all time favourite joint. The menu consists of Dosa,

Idli, Vada, Sandwiches, Porota, Cutlets and the rest. But what stands out is that true to its

name, the Coffee House offers a wide choice where coffee is concerned. Cold coffee,

cold cream coffee, hot cream coffee, tray coffee - its all there.

Nothing is allowed to go waste. If there is wastage, there is a system where the

employees themselves offer to buy it themselves. The coffeehouses work for sixteen

hours a day form 6 in the morning to 9 in the evening. Coffeehouses are closed for only

two days in a year. On Thiru Onam day and AKGs death anniversary day.

All promotions are time bound. Time bound promotion helps to develop a sense of

security among employees.

The management believes in providing benefits to the employees rather than maximising

net profits. All permanent employees, more or less, are on the same scale of pay. There

are several allowances (such as medical, festival, uniform, tour etc,) and a handsome

bonus (2.4 months salary) besides retirement benefits. Gratuity, pensioners benefits and

leave etc. are generous. The various benefits given to the workers of Indian Coffee

House are given below:

 141

Table 4.8. Benefits at a Glance (ICH)

1. Dearness Allowance Based on Cost of Living Index. Now it is

more than 229%. Increase twice in a
year.
2. Bonus Continuously paying. 20 % from the year
1996-97.
3. Dividend : Based on profit. 20% from 1997
onwards.
4. Uniform Yearly three pairs, each pair worth of
Rs.300.
5. Provident Fund 12 % by employees, equal amount by the
Society.
6. Special Duty Allowance : Based on work, Average salary for
holiday work, Rs. 9 per hour for overtime
work.
7. Medical Facility Medical Assistance is given from
Employees Benefit Fund set up by
appropriation of profit.
8. Gratuity Paid at the time of retirement as per rules.
9. Earned Leave One day for every 11 days of work in the
previous calendar year.
10. Casual Leave 20 days in a year.
11. National Holidays 13 days leave on important National
Holidays and Festivals.
12. Personnel Insurance and : Rs.80, 000=00 compensation on death.
Accident Compensation
Insurance.
13. Group Insurance Rs. 35,000=00 on death.
Source: Office Records oft Society.

The current crisis in increased rate of cooking gas etc has burdened the coffee house

considerably but they hope to overcome this by concerted effort.

 142

The turnover of the various branches for the past three years are given below:

Table 4. 9. Turnover (ICH)

(In Lakhs)
S.No Branches 1997-98 1998-99 1999-2000
1 Taliparambu 43.14 45.57 48.59
2 Kannur - 1, Fort Road 24.53 26.77 22.37
3 Kannur Flaza 29.57 36.15 44.01
4 Kannur- 2 38.25 42.77 62.88
5 Talasheri 33.03 34.61 38.00
6 Mananthawadi 29.35 31.95 35.74
7 Calcut - 2 74.19 84.28 87.46
8 Calicut - 4 67.44 78.92 84.64
9 Calicut Palayam 38.97 35.24 20.70
10 College Road, Palghat 23.96 25.73 18.67
11 D.B.Road, Palakkad - 03.47 57.08
12 Kasaragod 24.66 70.61 71.33
13 Calcut Medical College - - 17.10
14 Calcut MM Ali Road - - 10.59
Total 427.09 516.07 619.16
Percentage of Increase 20.83 19.98
Source: Office Records of ICH

The turnover of most of the branches have been increasing, which can be seen from the

above table. It registered a percentage of increase of 20.83 during the year 1998-99 and

19.98 in the year 1999-2000.

4.3. The Kerala Dinesh Beedi

4.3.1. The Background
Kerala State is located in the far southwest comer of India. In 1969, in and around the

city of Kannur (Kannur) in Kerala, a significant experiment in industrial democracy took

place: the Kerala Dinesh Beedi Workers Cooperative. Kerala Dinesh Beedi Workers

Cooperative Society and its 22 Primary Societies sponsored by the Government of

Kerala was established in 1969 to provide employment to 12,000 or more member of

 143

beedi workers deserted by Private Beedi Industrialists. Its origin can be traced to Kerala

Governments decision to implement the Beedi and Cigar Workers (Conditions of

Employment) Act of 1968. The Act conferred many benefits like Sunday wages, annual

leave, provident fund and medical leave to the workers. During October 1968, the labour

unions demanded the implementation of provisions in the Act. This legislation stipulated

a lot of financial obligations on the part of the employers.

Accordingly, the prominent beedi manufacturers from outside in Kannur District of

Kerala such as Ganesh Beedi, Bharath Beedi, Durbar Beedi and PVS Beedi, who had

their factory units in the Kannur District for over 50 years, abruptly closed down their

factories and left the state. As a result more than 12,000 workers, who were employed in

an industry till the previous day, lost their jobs and they were thrown out to the street.

These workers know nothing except rolling of beedies. It was not practicable to

rehabilitate them in other fields. The sudden unemployment of workers created a lot of

socio economic problem in the District. Government and leaders in the public life tried

its level best to bring back the beedi management back. They even promised that the

provisions of the Act would be implemented only slowly in a phased programme. But all

the attempts failed since the management was very adamant. We could not trace in the

history of our country any other instance where 12,000 workers working in a particular

industry lost their jobs overnight.

As an alternative, the Government of Kerala thought of rehabilitating those workers

under cooperative field. The Government took all the trade unions into confidence.

A series of meetings with the trade union leaders were held at Kannur for about a
 144

fortnight. Finally, the scheme was to organize twenty primaiy societies in a very

dispersed manner throughout the district to have easy access to workers. The Minister of

Industries and the Minister of Labour of the State took personal interest in organizing the

unit. The workers were enrolled as members in the Primary Cooperative Societies and 20

Primary Societies (Now 22) constituted the central society The central society has been

entrusted with the responsibility of mobilizing the finance, making bulk purchase of raw

materials of Tendu leaves, beedi tobacco, labels etc., and advance them to the primaries.

The member workers at the primaries are required to make beedies and those primaries

should sell the beedies to the central society at the agreed price after adjusting the

advance received.

The central society and the primaries were to have nominated Board of Directors apart

from elected directors. Various trade unions like CITU, AITUC, INTUC, STUs, etc, got

due representatives based on their strength. The Government of Kerala appointed Junior

Cooperative Inspectors of Industries Department as secretaries of primary societies. An

officer of Industries Department was deputed as secretary of the central society. Initially

Sri. G. S. Panicker, IAS, was appointed as chairman of the society. He was the guiding

force of the Dinesh Beedi for 28 years and associated himself with it till his death.

As the unemployed workers had no money to contribute towards share capital, the

Government decided that each worker needs to raise only Rs. 1. 00 and the balance

amount of Rs. 19.00 per share would be advanced by the Government as the share capital

loan, to make up one share of Rs. 20.00. The Government contributed Rs. 1.35 million

towards the share capital of Kerala Dinesh Beedi Cooperative (KDBC) and sanctioned
 145

an initial loan of Rs. 0.71 million to the central society with a view to have ways and

means to purchase some raw materials and towards wages. Thus, the whole programme

of rehabilitation of beedi workers was formally inaugurated by the then Industries

Minister T. V. Thomas on 15th February 1969.

4.3.2. Organisational Structure

Workers at Kerala Dinesh beedi manufacture beedies. The basic objective of Kerala

Dinesh Beedi was to function on a commercial basis for the development, production

and marketing of the beedies produced by member societies. To accomplish this, KDBC

supplies raw materials, provides working capital, arranges for sale of finished products,

supervises the work of member societies and undertakes research in beedi production.

KDBs 30,000 workers own and manage the society themselves with a small

Government role. Twenty-two production cooperatives are united in a federated structure

with a central management cooperative. Workers directly elect one representative from

each production cooperative to the General Body, which elects five of the seven directors

of the central cooperative. Elections are held every two years and only KDB workers can

own shares and every worker must own at least one share. All five current worker elected

directors are experienced stop-floor beedi rollers and union activists. The State

Government appoints the other two directors.

4.3.3. Roie of Kerala Dinesh Beedi

The role of KDBC could be broadly classified into five functional areas.
 146

1. Purchase of Raw Materials: The raw materials required for the making of beedies
are tendu leaves. The leaves are usually purchased from Forest Corporations of
Orissa, Andhra Pradesh and Marketing Federation of Madhya Pradesh States.
Tobacco is bought from private traders of Gujarat and Karnataka States

2. Supply to Primaries: KDBC supplies a weeks requirement of raw materials to the

primary societies. It adds three per cent on the cost of the raw material to cover its
overhead expenses which include transport and delivery.

3. Price Fixation: KDBC works out the market price for beedies by taking the value of
raw materials, wages, margin given to primaries and administrative expenses of
KDBC. The selling price of beedies is decided by the KDBC Board taking into
consideration the market price. The KDBC has unofficially assumed the role of price
leader in the regional market.

4. Marketing of Finished Goods: KDBC is entrusted with the responsibility of

marketing of finished product through its commission agents appointed by the Board.
The agents get a commission of 60 paise per 1000 ordinary beedies and 55 paise for
special beedies.

4.3.4. Functions of Primary Society

The manufacturing operations are looked after by the primary societies. They also

maintain the accounts. The production is organised under the factory system in order to

ensure the quality of their product. The primary society appoints supervisors at each

centre to look after manufacturing operations and to ensure quality. Each day a worker is

issued a kilo of tendu leaves and tobacco. At the end of the day, the beedies are collected

and recorded. Drying, packing, and labelling are done in the factory premises. Each

packet will carry the registration number of the respective primary and the common trade

mark of KDBC - a rising sun penetrating through coconut trees.

 147

4.3.5. Capital out of Labour

The whole programme works on self-financing methods. At the beginning, Government

of Kerala sanctioned a working Capital loan of Rs. 7.1 lakhs and stood guarantee for a

cash credit facility of Rs. 20 lakhs with the State Cooperative Bank. The working capital

loan due to government was repaid long back. Now the society flourishes on its own

finance. Thrift collection of five paise per rupee the workers earned from the very

inception resulted in getting Rs. 200 lakhs, which is now being utilized as the life blood

of this endeavour.

The present position of the Society may be well understood through the data presented in
Table 4.10.
 148

Table 4.10. Statistics at a Glance (KDB)

Date of Commencement ^February, 1969

Date of Registration 2nd February, 1969

Number of work sheds 310

Business turnover during 1999-2000 (Rs) 80 Crores.
No. of workers employed 30,000
Number of office employees during 1998-99 1000
Audit Classification A
Employee benefits during 1998-99 (Rs) 45.17 Crores.
Profit during 1998-99 (Rs) 26.41 Lakhs.
Beedi Sales Turnover 1998-99 78.29 Crores.
Share Capitol (Rs)
Member Societies 15.65 Lakhs
Government of Kerala 20.10 Lakhs.
Central Excise duty paid 1998-99 3.3 Crores
Sales Tax remitted during 1998-99 1.13 Crores
Deposits (Rs) 14.43 Crores
Reserves (Rs) 3.65 Crores
Source: Audited Annual Accounts of the Co-op. Society.

The society has implemented various unique benefit schemes to help the social and

economic development of workers. A retirement benefit scheme was introduced.

According to this scheme Re. 1 per month was collected from the employees and from

this fund a lump sum of Rs. 4,000 was paid to those who retire from service on attaining

the age of 58 years.

The benefits are summed up in Table 4.11.

 , Table 4.11. Benefits to Employees (KDB)
1. Wage per 1000 Beedies : Rs. 61.20
2. Wages per 1000 including other incentives : Rs. 90.00
3. Bonus paid during 1999-2000 : 17.25% of Wages
4. Life long Monthly Pension cm attaining 58 : Rs. 175
years of service
5. Lump sum pension on medical ground : Rs. 4,000
6. Death benefit to the bereaved family : Rs. 5,000
7. Maternity Benefits Three months leave with one time
payment of Rs 600.
8. Sunday Wages : On the basis of average wages.
9. Casual Leave One day for each twenty days of
work
10. National Holidays 15 days leave on important National
Holidays and Festivals.
11. Group Insurance Rs. 35,000=00 on death.
12. Loan Facility On the basis of their salary.
13. Special Deposit Scheme Collected at 5 paise per rupee of
wage from the workers.
14. Total wages paid during 1999-2000 Rs. 38 Crores
15. Common Good Fund Dispersed so far Rs. 11.77 Lakhs
Source: Office Records of the Society,

Functioning of Dinesh Beedi has made tremendous impact of this industry in Kerala and

also in the neighbouring States of Tamil Nadu and Karnataka. Kannur District had been

notorious for labour unrest for beedi industry. However, ever since the establishment of

Kerala Dinesh Beedi, labour unrest in the beedi industry has become a story of the past

including in the private sector in the district.

 150

4.3.6. Working Atmosphere

Unlike workers at most other beedi establishments, KDB workers sit on bamboo benches

with cement backrests. Their work sites are clean and recently painted, fluorescent

lamps light the work area fairly well, and they have more free space to move around

without bumping neighbour workers. Just outside the work shed are sanitary, water

sealed latrines. At the end of the day, KDB workers can wash up at faucets located at the

work sites, cleaning themselves of the smell of tobacco and putting on fresh clothes to

greet their children in. The children go to school, not expected to assist beedi rollers.

Thus, KDB is one of the largest worker-owned cooperatives in the world. KDB drew on

the skills and commitment of the radical workers culture of the region to survive as a

business with its primary commitments being the welfare of its workers and the

generation of employment and income for the community (Franke, 1977). For years it

has paid the highest wages and benefits to its worker-owners. But KDB did more than

survive: it grew and prospered despite fierce competition from the private sector. KDB

did this under worker ownership and worker-elected management. There are two

interesting features of worker activity and mobilisation during this period of growth.

First, there were several unions among beedi workers with different political affiliations.

When KDB was formed, it brought together workers from different unions, and the

success of KDB showed that union differences could be overcome to achieve a concrete

developmental task: team spirit and worker solidarity were stronger than political rivalry.

Secondly, pressure from beedi workers, led by A.K. Gopalan, the leader of the

Communist Party of India (Marxist) group in the Lok Sabha, brought about the
 151

enactment of a national law for the protection of cigar and beedi workers in 1966

(Isaac.M. Thomas, 1998).

KDB has survived several Governments and economic ups and downs, and today is

embarking on an ambitious diversification programme into processed foods, spices, and

software development to respond to declining tobacco sales. The objective being creation

of fresh job avenues, KDB has adopted only intermediate technologies that are labour-

intensive, according to the society Chairman, Mr. C.V. Kunhiraman. The cooperative has

already signed an agreement with the Regional Research Laboratory (RRL) at

Thiruvananthapuram for the supply of technical know how and machinery for coconut

cream manufacture and also for initial project monitoring. The technology for pickle

making has been supplied by the Central Food Technology Research Institute (CFTRI),

Mysore.

Though Kerala Dinesh Beedi has since then remained one of the most efficient

cooperatives in the State, the beedi industry as a whole was on the decline. Not only

Dinesh Beedi, but also all the units in the beedi industry were facing a crisis, reflected in

the significant drop in sales. Between 1993- 94 and 1996-97 the sales of KDB recorded a

drop from 67 million numbers to 65.5 millions, 63.2 millions and 56.9 millions. The net

profit of KDB has gone up almost steadily in all but four years since its inception, rising

from Rs. 50,000 in 1968-69 to Rs. 3.15 lakhs in 1984-85. But of late, the situation has

changed with the sales turnover declining from Rs. 71.45 crores in 1993-94 to Rs. 71.07

crores in 1995-96 (The Hindu Business Line, 1997).

 152

Apart from the campaign against smoking as one factor that brought the industry to its

present plight, the other two causes according to its Chairman, are: first the policy of the

Central Government, that it promoted, on the one hand, mini cigarettes and, on the other,

spurious beedies manufactured by unregistered companies and individuals. Many brands

of mini cigarettes, including those from tobacco majors, have penetrated the market,

assisted by concessions in the Central Excise Duty structure since the 1994- 95 Budget.

But the mini cigarette manufacturers often used inferior quality paper and tobacco so as

to sell the products at around 20 paise per stick. Again, while the Dinesh Beedi

cooperative, which paid its members one of the highest wages in the industry, incurred a

cost of production of 14-15 paise per beedi, the unorganised, home-based manufacturers'

production cost came only to around 7-8 paise per beedi. If the coconut cream and pickle

manufacturing proved successful, the cooperative would go on to make value - added

products from cashew apple, prawns, mussels etc. that were readily available in the

northern districts. The cooperative has also thought of entering into mushroom

cultivation.

A major element in KDB's success has been the creation of both representative

democracy in the election of managers and participatory democracy on the shop floor

culminating in the social and economic development of workers. The shop floor

democracy is maintained by worker activism channelled through trade union committees.

KDB was not an official New Democratic Initiative, but its long-term success inspired

decentralisation advocates. Contrary to the Vanek self-extinction hypothesis and other

theoretical predictions that worker ownership leads to a rapid dispersal of the surplus, a
consequent lack of investment capital, and a short-term management orientation, KDBs

worker directors have kept the cooperative in profit in all but 4 of its 28 years of

existence. If ordinary workers in one of the most exploited industries of India could

create a successful cooperative mixing central and decentralised forms of organisation,

and if they could maintain their creation for more than two decades, surely local-level

democracy is possible.

4.4. Overview of Samples from Private Sector

For the sake of comparison, three units from the private sector were being selected.

These samples from the private sector were selected keeping in view of nature of

business of worker cooperatives. Brief overviews of these private sector units are made

here.

4.4.1. Hanuman Transport Company

Being a pioneer in transport service sector of South Kanara, Hanuman Transport

Company (Private) Limited (HTC) was established in the year 1930. It came into

existence when the transport service was still in infancy. The registered office of the

company is situated in Udupi. The first managing director of the company was

Sri. Upendra Nayak.

The HTC was a partnership firm to begin with and later it was converted into a private

limited company. The company used to run buses not only in Dakshina Kannada district,

but also in North Kanara, Shimoga and even in some towns in Kerala beyond Kasaragod.

It has many firsts to its credit like introduction of minibuses for short routes as well as a
 154

range of Super Express buses interconnecting towns of Dakshina Kannada District and

thus indirectly providing the much needed infrastructure to many intervening small

villages. It has four branches situated in Mangalore, Shimoga, Karkala and Kundapur

and operates 49 buses in 47 routes. It has got 290 workers.

In accordance with the provisions of Indian Companies Act of 1913, which was then

prevailing Act, this company was established with limited liability. At he beginning, the

share capital of the company was Rs. 1,00,000 divided into 1,000 shares of Rs. 100 each.

At present the authorised capital of the company is Rs, 50,00,000. The issued, subscribed

and paid up capital of the company is Rs. 41,30,000 divided into 41,300 shares of

Rs. 100 each. The company is also a partner in M/s Super Treads and

M/s H. G. Automobiles.

From the last five years, the company has been incurring losses. Managing Director felt

that the conditions in the passenger transport area have turned unfavourable due to bad

road conditions and all round increase in the operational costs without corresponding

increase in the ticket fares and on account of severe competitions caused by large-scale

issue of fresh permits on the companys routes.

4.4.2. Janatha Deluxe Refreshments

Janatha Deluxe Refreshments (JDR) is one of the best hotels of Mangalore. Within a

limited period of 12 years, it has succeeded in capturing a good business, looks after

catering requirements of all major institutions of Mangalore. It has got a staff strength of

77, including two administrative staff.

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Janatha Deluxe Refreshments was started by Sri. Pathumudi Sooryanarayana Rao during

the year 1990. Today, JDR is considered a landmark not only to the people of

Mangalore, but for others who are on the lookout for something special to take back

home. This hotel is a vegetarian restaurant serving North Indian dishes also.

The success of JDR is phenomenal for all to see. This hotel is making profits and paying

income taxes. During the financial year 1999-2000, JDR made a profit of Rs. 4,49,132.

During the year 2001, JDR constructed a marriage hall with an expenditure of

Rs. 1.25 crores. The proprietor feels that the onus goes to the hard work put in by the

management down to the staff Another important reason for their success is that it is

very reasonably priced compared to other restaurants.

4.4.3. Mangalore Ganesh Beedi

Established in 1940, the Mangalore Ganesh Beedi Works manufactures the 501

Mangalore Ganesh Beedi. 501 Ganesh beedies are hand rolled in tendu leaf and

then dried in chambers warmed by a charcoal fire. The details of this process are a

carefully guarded secret and have been perfected over three generations. Every thing

from the rolling of the beedies to packing the cartons is done by hand.

The distinct flavour and taste have led Ganesh Beedies to become one of the worlds

most popular brands of beedies. With annual sales exceeding 20 billion beedies, the

beedies are very popular in the United States of America, Germany, France, Switzerland,

the Caribbean (West Indies), Singapore, the Middle East, and Australia.
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Mangalore Ganesh Beedi Works was founded by late B. Raghurama Prabhu and late

B. Madhava Shenoi. The Firm has prospered over the years reaching an opportunity to

more than 1,50,000 people, mainly, in rural areas of South India. The main office of the

firm is situated at Vinoba Road, Mysore and having branches at many places spread over

the nation.

Mangalore Ganesh Beedies is the largest selling brand in India, accounting for around

30% of the beedies produced in the organised sector. The company emphasizes quality.

Since its inception the company has got wide appreciation from the beedi smokers for

the unique aroma of the 501 Ganesh Beedi.

A well-organised system exists for the marketing and distribution of beedies to different

parts of the Country. There are around 300 major distributors spread over the length and

breadth of the country. These distributors are supplied with beedies from the nearest

branch of the Firm on advise from the Head Office. The details of sales during the last 10

years are given below.

Approximate Sales (Beedies

Year
in billions)
1989-90 28.1
1990-91 28.5
1991-92 27.6
1992-93 27.7
1993-94 28.0
1994-95 25.6
1995-96 25.7
1996-97 25.4
1997-98 24.4
1998-99 23.6
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Mangalore Ganesh Beedi Works has a network of 30 branches spread over Karnataka

and Tamil Nadu. Out of the 30 branches, 20 are located at various places in Karnataka

and the other 10 are scattered over Tamil Nadu.