The Hindu Business Line : `PFI status to NDDB strikes at co-op credo' — Diversion of co-op funds to MNCs imminent, says Kurien

THE National Dairy Development Board (NDDB) in its new avatar as a public finance institution (PFI) is all set to jettison the cause of co-operatives, fears Dr Verghese Kurien, Chairman of National Co-operative Dairy Federation of India (NCDFI).

Dr Kurien told Business Line that the recent move granting PFI status to NDDB would lead to its openly funding various joint venture companies at the exclusion of the co-operative sector, something which it had hitherto done only indirectly.

"The NDDB, leveraging its PFI status, will be free to openly divert funds meant exclusively for the co-operative sector to the existing four granddaughter companies and new companies that it may float in the coming days.

"The Indian co-operative sector is bracing for the day when the NDDB will make its corpus available to MNCs, just as Rabo Bank India has done with a $100-million corpus. There could be no worse fate than that to befall the Indian dairy co-operatives."

Till now, the funds routed by the NDDB through its subsidiary, Mother Dairy Fruits and Vegetables Ltd (MDFVL), would now be directly accessible to companies such as Mother Dairy Foods Ltd, Mother Dairy India Ltd, Mother Dairy Delhi Ltd and Mother Dairy Food Processing Ltd.

This is a distinct possibility as the NDDB has transferred the entire corpus under the Oilseeds and Vegetable Oil Project Funds worth Rs 925 crore to general reserve (Rs 689.46 crore) and contingencies (Rs 235.73 crore) as per its annual report of 2002-03, Dr Kurien said.

The NDDB's general funds now stand at Rs 1,847.44 crore and the project funds at Rs 16.79 crore. Only last year these figures read Rs 1,039.48 crore and Rs 961.4 crore, respectively whereas in 2000-01, the project funds had a higher denominator at Rs 964.85 crore even as its general reserve stood at Rs 806.58 crore.

Its current exposure to milk dairy co-operatives and State corporations is nearly Rs 950 crore and that to such bodies in the oil sector is at Rs 241 crore.

Against this, its exposure to subsidiary companies in the milk and milk products as also edible oil business by way of loan and equity stands at well over Rs 500 crore.

However, the NCDFI fears that the NDDB general reserve and contingency fund would soon become inaccessible to the Indian co-operatives both in the dairy and edible oil sectors.

"There is no way that the Government of India can tinker with the basic framework of NDDB without going back to Parliament. The case is similar to the norms cited by the Supreme Court when it ruled against the divestment of Government stake in HPCL and BPCL last year," he said.

"The funds that are currently at the disposal of the NDDB were given to it under various aid programmes including the World Bank's Operation Flood where the beneficiaries were to be specifically the dairy co-operatives of India.

"Now, this money earmarked for co-operatives is likely to be diverted to other bodies with exposure in agriculture and livestock with no co-operative background."

The reported plan of NDDB to take recourse to the Debt Recovery Tribunal (DRT) to recover its outstanding from co-operatives will be met with stiff resistance, he said.

Dr Kurien also questioned the basis of the NDDB's application to the Department of Company Affairs (DCA) as it was not a company but a statutory body set up by Parliament with the status of `Institution of National Importance'.

Clearly, it is not only the Indian dairy co-operatives that are a worried lot as the NDDB has served legal notice to take management control of Anand Regional Co-operative Oil Growers Union Ltd, a Rs 100-crore body, with effect from February 28.

If such drastic measures are resorted to for a loan amount of Rs 14 crore, then the future can only be bleak for the Indian dairy co-operatives in the coming days, he added.

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`PFI status to NDDB strikes at co-op credo' — Diversion of co-op funds to MNCs imminent, says Kurien