National Tea out of production as workers demand arrears before joining work

Production at the state-run National Tea Company (NTC) has remained suspended for nearly three months as workers have abstained from work for non-payment of wages.

Wages of around four months are due as the company suffers an acute shortage of working capital. About 12,000 permanent workers now seek the intervention of the government, with their demand for the arrears.

As per the auditors' report, workers' gratuity fund had zero balance as of June 30 last year, falling short by at least Tk 306 million. That means apart from unpaid wages NTC's workers are being deprived of guaranteed retirement benefits.

"Workers are not getting retirement benefits as pension and gratuity funds have no money," said Md. Abul Hossain, a director at the NTC board, nominated by the Investment Corporation of Bangladesh (ICB).

Meanwhile, work abstention and suspension of production threaten further losses in FY25.

Already, NTC's liabilities have exceeded assets by Tk 318 million, according to the company's latest financial statements for FY23.

With persistent losses since FY20, the company's negative earnings ballooned to Tk 2.12 billion until March this year.

To help the NTC overcome the working capital shortfall, the Bangladesh Securities and Exchange Commission (BSEC) approved its proposal in April 2023 to raise Tk 2.80 billion by issuing placement shares to existing shareholders.

As per the regulatory approval, the commerce ministry was supposed to subscribe to 31 per cent of the placement shares while the ICB and Sadharan Bima Corporation would each make 10 per cent of the equity investment.

But the ratio set for the distribution of placement shares to state-run enterprises led to the filing of a writ petition challenging the regulatory decision.

What do workers say?

Talking to the FE, Bijoy Chotri, whose parents are among the workers of the NTC, said tea workers had no other option of earning money in the tea states.

"It's tough to imagine the situation of 12,000 workers who are yet to get wages for more than three months."

The meager daily wage of Tk 170 that a worker is entitled to is far less than what is necessary given the rise in the prices of essentials.

Apart from the daily wage, permanent workers get up to 5 kilograms of rice or flour each week under a ration scheme. But those, who are not permanent, and the workers, who have been given a piece of land, are not within the purview of the scheme. In many cases, the lands given are not cultivable.

Nripen Paul, secretary of the Bangladesh Teach Workers Association, said around 70 per cent of the population in the tea states were fully dependent on tea gardens for their livelihoods.

The association sent letters to the chief adviser, ministries concerned and deputy commissioners of the Sylhet division, urging them to solve the problems surrounding the NTC.

"A solution is urgent for the sake of workers, shareholders' interests and the governments' revenue," Mr Paul said, adding that workers were willing to join work for their own existence.

High cost of operations

NTC's Director Abul Hossain said the company's cost of operations was higher than income as it was unable to process tea leaves properly and timely.

For the lack of capital, the company could not ensure tree plantation within the right time. On top of that, tea leaves could not be processed, maintaining quality due to rundown machines.

The NTC sells processed tea leaves at Tk 180 per kilogram at the auctions whereas the cost of the produce is Tk 250 per Kg.

Mr Hossain said the company started experiencing losses in 2020 following the outbreak of the Covid pandemic when the demand fell drastically.

Later, the company continued operations taking loans from Krishi Banka. The NTC now owes more than Tk 3 billion to banks.

To tackle the recent crisis of funds, the NTC sought a fresh loan of Tk 460 million from Krishi Bank to pay workers. But the bank has disbursed a very small amount.

Against this backdrop, those in the management are also not receiving salaries.

Mr Hossain said division and disagreements among employees were other major reasons behind the mismanagement at the NTC.

NTC to experience further revenue loss

The company's revenue had been on a persistent decline in the four years to FY24. The NTC is likely to see another steep fall in the ongoing FY25 as the production is still halted.

The peak season in the tea states is April to November. The NTC completely stayed out of production for almost half of the duration. The peak season is about to end a week from now.

The impacts of the production loss will be reflected in the financial statements for the ongoing fiscal year.

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