Amid rising losses, Mother Dairy comes out with VRS scheme
At a time when the country is facing its worst health crisis and governments and organisations are looking to provide support to citizens and employees respectively, Mother Dairy Fruit & Vegetable Pvt Limited — a wholly-owned subsidiary of National Dairy Development Board — has announced a voluntary retirement scheme for its employees, offering a maximum of Rs 20 lakh to eligible employees.
The VRS scheme brought for MDFVPL’s Patparganj, New Delhi unit, is available for eligible employees till May 31. It has been brought in by the new management that has recently taken charge of the company. While Manish Bandlish took charge as the managing director of MDFVPL in March 2021, Varsha Joshi, joint secretary, Department of Animal Husbandry and Dairying, Ministry of Fisheries, Animal Husbandry & Dairying, Government of India, took over as the chairperson of the NDDB on December 1, 2020.
Responding to the queries, MDFVPL spokesperson said, “We have initiated a voluntary separation scheme, wherein we are offering a voluntary option to our employees. The scheme entails benefits that are best amongst the industry. As of now, interested employees can opt for the same till May 31, 2021. This initiative is similar to the schemes usually undertaken by various public sector and private sector institutions, which is aimed at bringing in organisational and operational efficiencies to further serve the strategic business growth objective of MDFVPL.
Many within the company are raising concerns over the VRS scheme and its timing. A senior official with MDFVPL who did not wish to be named said, “The timing of the scheme is not right and while it is a voluntary scheme, the management has set a target to reduce the headcount by around 200 employees. In the current environment, the uncertainty created by Covid will greatly hamper the employees’ efforts to secure alternative employment.”
The VRS scheme also comes in the backdrop of losses reported by the company over the last two years. While MDFVPL reported a loss of Rs 142 crore in the year-ended March 31, 2019, it reported loss of Rs 249 crore in the year-ended March 31, 2020.
Sources close to the development say the losses have been on various accounts, including investments in IL&FS in 2018-19 that were not honoured by IL&FS. MDFVPL had invested Rs 190.84 crore in inter-corporate deposits of IL&FS in August 2018 and IL&FS had defaulted on those investments.
In the notes to accounts for financial year 2018-19, it is mentioned, inter-alia, that “as a result of increased credit risk in relation to outstanding balances from IL&FS and the uncertainty prevailing due to the proceedings pending with the NCLT, management has provided for full amount of
Rs 190.85 crore year ended 31st March, 2019. The same has been disclosed as an exceptional item in the results. The company, however continues to monitor the developments in this matter closely as more information/outcome to the resolution plan of IL&FS becomes available and is committed to take appropriate legal action that may be necessary to ensure full recoverability”.