Kolkata: In the space of seven months, two business tycoons—B.M. Khaitan and G.P. Goenka—have quit the board of Jay Shree Tea and Industries Ltd after serving as non-executive directors, respectively, for 43 and 33 years, ending a unique experiment by the company’s chairman Basant Kumar Birla.
Both joined the board at the invitation of Birla, now aged 96. They quit after he distanced himself from the day-to-day operations, handing the reins of the tea plantation company to his daughter Jayashree Mohta, the company’s current vice-chairperson.
There is nothing unusual in founder shareholders inviting other businessmen to join a company’s board to expand management bandwidth, but what Birla did was unique: he invited two key industrialists from Kolkata who were invested in the same business to join his company’s board.
Back in the day, when Goenka joined the board of Jay Shree in 1984, his Duncans group was one of the leaders in the plantation business. Over time, Khaitan’s Williamson Magor Group has emerged to be the world’s largest producer of tea. For Goenka, though, the tea business has over time run into rough weather.
“Our chairman invited them to join our board out of friendship, mutual trust and admiration," said D.P. Maheswari, Jay Shree Tea’s managing director.
Such was the friendship that Birla would often hand the microphone to Khaitan and ask him to share his thoughts with Jay Shree’s shareholders at the annual general meeting, recalled Maheshwari. Though Goenka and Khaitan were also interested in tea, there was never any conflict, he said.
After Birla withdrew himself from day-to-day operations his friends offered to step down, according to Maheshwari. But they weren’t immediately allowed to quit. Khaitan resigned in early May, and Goenka last week. “They have been asking for it for a long time," Maheshwari said.
“At this age, health, too, is not always on my side," said Goenka. “I have not been able to attend any board meeting of Jay Shree in the past two years. Because he is not able to “do justice", he has decided to step down from the boards of all enterprises in which he is not invested, Goenka added.
Khaitan wasn’t immediately available for comments.
Back in the day, there wasn’t much competition among plantation owners, said Roopen Roy, former managing director of the consulting arm of professional services firm Deloitte. The tycoons would only focus on producing good tea and despatch their crops to the auctioneers to sell, said Roy, who now runs his own consulting firm Sumantrana Llp.
Tea was at one time an “indolent business of the nawabs", as Khaitan had once said in a television interview.
But the same is not true anymore: today there is intense competition not only among sellers of packet tea such as Hindustan Unilever Ltd and Tata Global Beverages Ltd, but also among plantation owners looking to expand outside India.Towards the end of 2009, Jay Shree and Williamson Magor’s McLeod Russel India Ltd were competing against each other for six tea estates in Uganda. Though Jay Shree was initially seen to be in the lead, the Khaitans eventually snapped up the estates from their British owners.
Jay Shree, which currently produces 20-21 million kgs of tea in India, expanded in Rwanda in January 2010, within a month of the setback in Uganda.