The Tamil Nadu Cooperative Milk Producers Federation, whose popular brand is Aavin, plans to float fully owned company that will implement projects in a professional manner, mobilise funds for its projects and assist farmers to set up dairies or farms.  

Official sources explained that the company would be incorporated under Section 8 of the Companies Act, 2013 and function in a project implementation mode. “We can take consultants on short term contracts for specific projects. It cannot be done in Aavin. There are certain schemes that cooperatives cannot apply for. For instance, the Animal Husbandry Infrastructure Development Fund. A Section 8 Company can apply for this fund. From time to time such schemes are introduced and when cooperatives cannot avail the funds, the company can step in,” the official explained.  

The Federation is presently framing the scope, structure including who will be its directors, its stakeholders and beneficiaries; and functionalities of the company. Another advantage with this mode is that the company can take loans for projects like setting up a dairy plant from commercial banks. The Central government will bear 3% of the interest in such cases. 

It can tie up with NGOs or corporates that want to work with Aavin. It can even undertake construction projects for the milk major or other agencies. “Nabard and the National Dairy Development Board have similar corporations,” another official explained. Apart from working for Aavin, the company can also undertake projects for government departments or universities. The profit, if any, from such ventures should be ploughed back into the Section 8 company and cannot go to any other entity.  

Source : The Hindu May 03rd 2023