Alleging harassment, the Kerala-based group is shifting investments to Telangana
Kitex Group, a Kerala-based business group with a market capitalisation of around ₹930 crore that makes a range of products from garments to curry powder, has run into a stand-off with the State government in recent weeks over raids at one of its factories.
Kitex, which also founded a political organisation that won several seats in the 2015 and 2020 local body elections, has alleged harassment by government agencies.
On Friday, Telangana Industries Minister K.T. Rama Rao, after meeting a delegation from the company headed by managing director Sabu M. Jacob, announced that Kitex Group will invest ₹1,000 crore in Kakatiya Mega Textile Park in Warangal.
On June 29, Mr. Jacob said the group was withdrawing from a proposal to invest ₹3,500 crore to build an apparels park and three industrial parks (Thiruvananthapuram, Kochi and Palakkad) with a total job potential of 35,000. The proposal was submitted by the group at Ascent Kerala (investors’ conference) in January 2020 organised by the State government.
Kitex Garments is the the second largest infantwear-maker in the world with an export turnover of around ₹1,000 crore. The group, based in Kizhakkambalam, about 25 km east of Kochi, has a string of enterprises with a total sales of around ₹1,700 crore fromboth domestic and export businesses. Kitex Group employs around 15,000 people, drawn from across India. The company shares, which plunged about 10% on the announcement that it was withdrawing from further investments in Kerala, surged nearly 20% on Friday to touch ₹140.85 as Mr. Jacob visited Telangana. The Telangana government sent a private jet to take the Kitex Group. Mr. Jacob said Kitex had invitations from other States as well as Bangladesh.
Raids at factory
He said he was “disappointed” with Kerala where it is hard to run businesses. In June, State agencies raided Kitex Garments factory premises 11 times. The inspection teams, comprising 40 to 50 people, rushed into factory floors, questioned employees and obstructed operations. Most of the raids lasted three to four hours. The 26-year-old company was “being treated like a band of thieves and scoundrels”, he said, and pointed out that Kerala was almost at the bottom in the “ease of doing business” rankings in the country.
Kitex Group was founded 53 years ago by M.C. Jacob, who passed away in June 2011, aged 78. His son Bobby M. Jacob heads the Anna Kitex group with domestic operations as well as exports to West Asia and Europe. The group manufactures aluminium products, including pressure cookers, curry powders and school bags. Kitex Garments, headed by Mr. Sabu, looks after exports to the U.S.
The garments company is about a quarter century old. The company had complained of harassment from the government in the past as well. One notable incident in 2012 involved the Kizhakkambalam panchayat, which served a stop memo notice on the garments unit following complaints from residents in the neighbourhood about effluent from the dyeing and bleaching units flowing into waterbodies. The then State government under the Congress-led United Democratic Front (UDF) negotiated a truce to allow operations to continue. Then in 2013, Kitex Group formed Kizhakkambalam Twenty20, a voluntary body using CSR funds with the declared aim of turning Kizhakkambalam panchayat into “the best in India” by 2020. The Twenty20 group organised an Onam fair in 2014 with essentials and other items being sold to panchayat residents at massive discounts. However, the panchayat said the fair did not have a licence and it was shut down.
In the 2015 local bodies elections, Twenty20 fielded candidates in all the 19 wards of the panchayat. It won 17 of the 19 council seats, stunning both the Left Democratic Front, led by the CPI(M), and the UDF. Since then, the group has increased its political presence in the State.
Benny Behanan, an MP from the Congress party, had raised several issues against the company. Twenty20, with power in the panchayat, has built quality roads, tidied up the panchayat, cleaned water bodies and rain water passages, put up security cameras, improved street lighting and worked to end alcohol abuse. The group also established a “food security supermarket”, which sells essentials and other items at discounts. Panchayat residents are eligible to buy provisions at rates about 70% lower than the prevailing market rates.
Rivals allege that the popularity of Twenty20 is tied solely to the supermarket and it was doing no other good for the people.
In the 2020 local bodies elections, Twenty20 won 18 of the 19 seats in the Kizhakkambalam panchayat. It also spread its influence to neighbouring panchayats — Mazhuvannoor, Aikaranad and Kunnathunad, where it won a comfortable majority. Twenty20 also tested its popularity in the May 2021 Assembly election, though none of its candidates made it to the Assembly.
While Twenty20 appeared to be gaining political mileage, P.T. Thomas, of the Congress party, accused the company of being mainly responsible for polluting the Kadambrayar, a river that is a drinking water source for thousands of people in Kizhakkambalam and neighbouring areas. The MLA also alleged that the Kitex Group was drawing a substantial quantity of ground water without licence and it had not achieved zero liquid discharge status from its dyeing plant. A resolution was also passed in the District Development Committee, backed by two other MLAs, to have a special session on pollution caused by the company.
With Twenty20 securing political space, many have described the present developments as a political rivalry between Kitex and mainstream parties. Others have said corporations taking up political space would be detrimental to the democratic values of society.
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