India to lease out state-owned dairy firm, Delhi Milk Scheme for 30 years

INDIA – The government of India has invited milk cooperatives to run the state-owned dairy firm, Delhi Milk Scheme (DMS) on lease for thirty years after reporting heavy losses since 2010.

The proposal to lease DMS has been pending since the time of the previous government and with the new decision, it means it will no longer provide milk in Delhi as a subordinate office of Department of Animal Husbandry, Dairying and Fisheries.

According to the Indian Retailer, the bid document for the same was released by Union agriculture ministry released on Wednesday.

Delhi Milk Supply Scheme was commissioned on by then President of India Rajendra Prasad and Prime Minister of India Jawaharlal Nehru on 1 November 1959 with purpose of providing milk to people of Delhi.

Reports have it that DMS has piled up losses of nearly US$131.3m and just has 6% market share in the capital’s milk market, a factor that could have contributed to the lease.

“The agriculture ministry intends to hand over the operations and management of DMS to a profitable and professionally run cooperative dairy federation or other semi-government organisation with a proven track record in dairy processing and marketing for an initial period of 30 years and renewable thereafter,” said a document from the ministry.

Some quoted officials indicated that the deal could be picked up by Amul brand owner Gujarat Cooperative Milk Marketing Federation (GCMMF) or other prominent milk cooperatives that have shown interest in it in the past.

“It is expected that with the viable operation of DMS, through the appointment of a concessionaire, the financial burden on the government on account of funding losses incurred by DMS would reduce and there shall also be a net gain by way of realised lease rentals,” the government bid document said.

DSM has a capacity of 500,000 litres of milk per day, with five milk collection and chilling centres plus 566 milk booths located at various places in Delhi and NCR.

According to the document, manpower of DMS, at around 700 employees, shall be placed in the ‘surplus pool’ and can be redeployed elsewhere by the government, if they opt not to work for the cooperative or are not selected to work for it.

However, the government will retain ownership of DMS’ assets and the contract could be given by this September.