NDDB Gets Retired Executives in NDS at Top Pay, as it Couldn't Get Better Professionals!
The National Dairy Development Board (NDDB) has admitted to employing its retired employees at its subsidiary NDDB Dairy Services (NDS) with the same benefits that they were receiving before retiring from the Board or its subsidiaries.
 
Ironically, NDS is a not-for-profit company, where retired executives of NDDB are hired at huge salaries. 
 
This is exactly what Moneylife wrote in an article titled NDDB's Golden Scheme for Retired Executives 27 May 2019. “…NDDB used its subsidiary NDDB Dairy Services (NDS) to finance the employment of several retired senior executives with the same benefits that they were receiving before retiring from the board or its subsidiaries,” we had written.
 
In an email response to our article, on 1 June 2019, NDDB says, "NDS was a new subsidiary and it was important that it had professionals who could build into it the NDDB core values including focus and empathy towards the producers. Such professionals are not easy to find in the open market and also the remuneration payable is rather high. Four senior officials mentioned in the list of your article, had relevant expertise and experience and were asked to serve at NDS. When they started serving NDS, the total annual remuneration paid to all four of them was around Rs95 lakh per annum."
 
With regard to the remuneration, NDDB says, NDS considered two options, adding, "First was the remuneration being paid to the retired senior bureaucrats who were appointed to statutory or regulatory authorities. The second was to retain the pay and allowances drawn on the last post held. Since in the former case the amount was much higher, Deepak Tikku's remuneration was fixed on the same salary & allowances as that of managing director (MD) of NDDB."
 
As Moneylife pointed out, instead of taking care of farmers through the cooperative movement, NDDB has been busy ensuring the welfare of its retired senior executives. 
 
Although NDDB, in its reply is trying to compare NDS, its subsidiary with a regulatory body or a cooperative movement like itself, a letter dated 12 May 2011 sent by the secretary from the department of animal husbandry, dairying and fisheries, in Government of India, clearly distinguishes between the Board and the company.
 
The letter from Rudhra Gangadharan, the then secretary, says, "NDDB may make appropriate arrangements for implementation of the project through agencies including NDDB Dairy Services. Since government will deal directly only with NDDB, references to NDDB Dairy Services in the same breath as NDDB in the PIP are not considered necessary. The clarification required in respect of the capability and exact role of NDDB Dairy Services should also be provided at the earliest."
 
 
After perusing responses from NDDB and documents shared by insiders, two top executives emerge as key decision-makers almost in all the affairs. One is Dilip Rath, chairman of NDDB since 1 August 2016. Mr Rath, from the Indian Administrative Service (IAS) cadre, was the joint secretary in the department of animal husbandry, dairying and fisheries, in Government of India between 2008 to 2010. After taking an early retirement, on 1 December 2011, he joined NDDB as its managing director (MD) and is now working as its chairman.
 
The second key executive in NDDB affairs is Deepak Tikku, who, as we had mentioned in our article, retired as MD of NDDB in 2010. Immediately after his retirement, he was appointed as chairman of NDS, and continued till March 2017 with the same salary and perks that he was getting in NDDB. 
 
NDDB, however, says, its board had approved appointing Mr Tikku as chairman of its subsidiary, and the board of NDS has finalised his appointment.
 
A letter of 29 August 2014 that had been sent by Mr Rath, the then MD of NDDB, to Mr Tikku, however, tells a different story. Mr Rath says, "...the resolution (NDS board resolution dated 26 June 2010) also states that you shall devote sufficient time and attention to the business of the company for which you shall be paid remuneration as was applicable to you when you were MD, NDDB. Moreover, your appointment as chairman of the company (NDS), as borne out by the resolution, is in accordance with Article 16 of the AOA of the company which is specifically meant for appointment of MD or whole-time director. In view of all the above, it is evident that you are the chairman and MD of the company."
 
 
During that period, Mr Tikku was also nominee director on three NDDB subsidiaries, viz., Mother Dairy Fruit and Vegetables Ltd (MDFVPL), Indian Dairy Machinery Co Ltd (IDMC), and Indian Immunologicals Ltd (IIL). Later, he resigned as nominee director from all the three companies. 
 
In its response, NDDB, however, gives a different spin to the resignation of Mr Tikku. It says, "In 2014, the central government appointed a new chairman of the NDDB. Mr Tikku was then a director on the board of three subsidiary companies (MDFVPL, IIL and IDMC) as a nominee of the NDDB. There was a proposal to appoint the new NDDB chairman as additional director and chairman of MDFVPL by the board of MDFVPL. The chairman NDDB insisted that he be directly appointed as director. Mr Tikku pointed out that the MDFVPL board can appoint him only as additional director and chairman and if he has to be appointed as a director, then the general body meeting should be called. Mr Tikku later resigned from the Board of IIL as he was of the view that IIL should not increase substantially the price of FMD vaccine, which was used for mass vaccination of cattle. Thereafter chairman NDDB wished to replace Mr Tikku as a director on the board of the remaining two subsidiary companies and action was initiated in accordance with the provisions of the Companies Act. Mr Tikku submitted his resignation as director on the Board of the two companies."
 
"After a couple of years, the chairman NDDB resigned and a new chairman was appointed. Based on the discussions the new chairman had, Mr Tikku was appointed as a director on the Board of MDFVPL, one of the three companies on which he was director earlier. It may be noted that Mr Tikku is not an advisor to MDFVPL," the response from NDDB says.
 
During 2014 and 31 July 2016, T Nanda Kumar, an IAS officer, who retired as agriculture secretary of the union government was the chairman of NDDB. Earlier, during October 2010 to February 2014, Mr Kumar was a member of national disaster management authority with the rank of minister of state in the Indian Government. He was known as stickler for rules in NDDB. Mr Kumar was replaced by Mr Rath, who continues to hold the position.
 
Talking about Dr Amrita Patel, who retired as chairman of NDDB in 2014, the email response agrees that a proposal was indeed approved in September 2009 to make her a permanent invitee on the board of NDS. NDDB also accepts that Dr Patel heads management committee of semen stations at NDS. 
 
"Meetings of this Committee takes place in Delhi or Anand. Dr Patel is on board of another organization in Delhi and has been appointed from time to time on various committees of the central government whose meetings also take place in Delhi. So she need not be on a committee of NDS to be able to come to Delhi. Dr Patel is on board of organizations in Mumbai. So would it mean that this is so because she could visit Mumbai?" NDDB asks in its reply.
 
From August 2016, Mr Rath was the chairman of Mother Dairy. His term as chairman of NDDB ended on 1 December 2018. On 3rd December, the government issued a notification (S.O. 5949(E)) extending Mr Rath's first term 'until further orders'.
 
Later on 6 March 2019, just before the model code of conduct came into force, the government decided to extend retrospectively Mr Rath's term for two more years. 
 
Responding to this, NDDB says, "A complaint making certain allegations was then received. The cabinet committee of appointments (ACC) extended Mr Rath's term as Chairman NDDB till further orders. After the allegations were found to be incorrect, the ACC approved his appointment for a period of two years. There were many appointments made just before the model code of conduct came into operation. So why single out Mr Rath's appointment?"
 
As we have pointed out, NDDB Dairy Services or NDS was set up as a private limited company in 2009 with NDDB subscribing to only Rs1 crore as share capital.
 
Thereafter, NDDB’s nominee members moved a resolution to convert NDDB Dairy Services Pvt Ltd into a not-for-profit company under Section 25 of the Companies Act 1956 (now Section 8 of the Companies Act 2013). NDS was set up to function as the delivery unit of NDDB for field operations relating to promoting producer companies and productivity enhancement services.
 
"...based on detailed discussions it was decided that since some of NDDB's current roles would be undertaken by NDS, it follows that a part of funds available with NDDB which finances its expenditure would need to be transferred to NDS. It was proposed and approved that around 15% of the funds available with NDDB be transferred as equity to NDS. This worked out to be around Rs200 crore. The authorised capital of NDS was raised to Rs200 crore and NDDB subscribed to the entire authorised capital of Rs200 crore," NDDB says in its response.
 
NDDB Dairy Services was re-incorporated as a not-for-profit company in the very year that it was first incorporated as a private limited and wholly-owned subsidiary of NDDB. Immediately thereafter, the Board transferred Rs199 crore to NDDB Dairy Services, in the form of contribution of capital for purchase of equity of an equal amount.
 
 
The permission given by the Central government to NDDB was only for forming NDDB Dairy Services as a private limited company and the contribution of Rs1 crore as NDDB’s equity in NDDB Dairy Services when it was a private limited company could be considered in line with Section 43(2)(a). The contribution of another Rs199 crore to NDDB Dairy Services as share capital from NDDB needed specific approval from the Central government as per Section 43(2)(b) of the NDDB Act. 
 
NDDB, however, says, "NDS is a wholly owned subsidiary of NDDB and therefore under 43(2)(a), no prior approval is required from Central Government. Your article also states that NDS is a private company. The NDDB Act makes no distinction between them as far as the transfer of assets or funds is concerned."
 
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COMMENTS

Ramesh Poapt

4 weeks ago

Amul gets all the milk from kamdhenu cow strictly for its own use !(till it stops
giving milk altogather?)

Sunil shenava

4 weeks ago

Are there no regulators like SEBI (for listed companies) or RBI (for banks)...?

Ramesh Nair

4 weeks ago

The facts mentioned ny NDDB raises many questions:

-The timing of the formation of NDS - was it timed when the MD was to retire after getting maximum possible extension as per the NDDB Act?

-Mentoning Rs 1 crore in the request for approval letter to GoI an then converting to not for profit and transfer Rs 199 crore, mentioning anoher clause of NDDB Act as pretext. (Any of the NDDB subsidiaries earlier formed- be it Mother Dairy (Milk procurement), IIL (Vaccines) and IDMC (Dairy Machinery) were formed only to further the objectives of NDDB - but not to carry out the functions directly of NDDB. Then why was NDS assigned certain direct objectives of NDDB (mentoned as current role). And these objectives were discussed and approved after obtaining a government approval - metioning equity requirement of Rs 1 crore- not mentioning all this. Does this not smell a conspiracy?

-Why is the very person who is claimed to be so competent, is being questioned on the R&R by the MD of NDDB - as per the letter signed by Rath himself?

-Why did for long periods did these appointments continue?.

The timing, the manner and the events over the years show the meticulous planning of powerful people to continue in power - not only without any accountability and performance - but with a purpose of making personal wealth and money.

The reasons provided by NDDB is an acceptance that the Board was not able to create a culture beyond the MD? There was no mentoring or succession planning? An outsider brought in as MD who earlier being Joint Secretary (DD) was on the Board.

Is this not collusion. Surely it is. And it is for vested interests of all the three names mentioned in th article - Rath, Amrita and Tikku.

Isn't it surprising that the allegations against Rath were investigated so fast and just in time to give him an extension just before model code of conduct? And NDDB, as usual putting the onus on the Government that there were many appointments before the model code of conduct. Is this admission of the fact that all people with allegations were cleared in one go before the model code of conduct - for a price? Needs to be given a thought...

Which agency probed the allegations on Rath? What were the allegations? Should the report not be in public domain?

Apart from the facts mentioned in the article, there are ample number of facts which indicate the evil working of the elite powerful 3 group.

Lenders to take Jet Airways to NCLT, revival hope gets bleaker
The future of the grounded Jet Airways just got a shade bleaker on Monday with the lenders, led by State Bank of India (SBI), deciding to initiate bankruptcy proceedings against the airline after all attempts to rope in a buyer failed.
 
As revival hopes faded, investors dumped the airline's shares. Jet's stock closed 16.76 per cent or Rs 13.75 lower to Rs 68.30 per share after declining nearly 20 per cent earlier in the session on Monday on the BSE.
 
It was Jet's 11th consecutive day of fall during which its shares have lost over 50 per cent of its value.
 
The lenders will now approach the National Company Law Tribunal (NCLT) under the Insolvency and Bankruptcy Code (IBC) to recover their dues of about Rs 8,500 crore.
 
"A meeting of lenders was held today (Monday) to consider the way forward in respect of Jet Airways. After due deliberations, lenders have decided to seek resolution under IBC since only a conditional bid was received and requirement of the investor for SEBI exemptions and resolution of all creditors is possible under IBC," the SBI said in an official statement.
 
Lenders, led by the SBI, have been taking efforts to find a resolution for Jet Airways outside the IBC "but in view of the above, lenders have decided to seek a resolution within the IBC process," it added.
 
An official response from SBI spokesperson is awaited on the decision to start bankruptcy proceedings against the airline.
 
The key lenders to the airline met on Monday to chart out future course of action after they found the proposals received from prospective investor Etihad Airways and Hinduja Group unimpressive. They also rejected the conditions put forward by the Gulf carrier for infusing funds into the defunct carrier.
 
Besides offering to invest just Rs 1,700 crore against the requirement of Rs 15,000 crore to revive the crisis-hit airline, Etihad had, in its proposal, put the onus of finding majority buyer on lenders. It also wanted exemption from giving an open offer.
 
"The lenders found the conditions unacceptable," said a source. 
 
Besides Rs 8,500 crore owed to PSU banks, the airline has a total liability of about Rs 25,000 crore which includes dues of operational creditors.
 
Running out of cash, Jet Airways had suspended its entire operations on April 17. Subsequently, the government re-allocated its slots and foreign traffic rights to rival carriers.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
 
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PFs from Infosys, HP, ToI, Armed forces, postal dept among others with exposure to IL&FS
Prominent private and public provident funds like Infosys Ltd PF, Hewlett-Packard Global Ltd PF, The Times of India PF, the Postal Life Insurance Fund, the NPS Trust, and the Army Group Insurance Fund are exposed to non-convertible debentures (NCDs) of IL&FS Financial Services (IFIN), the company at the centre of the IL&FS fiasco.
 
As per a SFIO investigation report, more than two dozen public and private sector pension funds have an exposure of over Rs 5,000 crore in the commercial paper and NCDs floated by IFIN. With the entity now in the midst of a severe liquidity crisis, the fate of these investments remains uncertain, putting at risk the hard-earned pension money of lakhs of employees.
 
The investments in these now toxic instruments were primarily made due to the positive and impressive ratings given to commercial papers and NCDs of IL&FS Financial Services (IFIN) on a regular basis. The ratings remained good despite the unhealthy financial condition of the company.
 
 
Among the investors of the NCDs of IFIN with investments more than Rs 50 crore were the Postal Life Insurance Fund with the exposure of Rs 315 crore, the highest amount among the 30 names who hold the NCDs.
 
It was followed by NPS Trust (Rs 229.3 crore), the Postal Life Insurance Fund (Rs 205 crore), and the General Insurance Corporation India (Rs 160 crore).
 
Other prominent names were The Times of India Provident Fund (Rs 62.7 crore), the Infosys Ltd Provident Fund (Rs 96 crore), and the Hewlett-Packard Global Ltd PF (Rs 60 crore).
 
The armed forces are also exposed to these investments with the Army Group Insurance Fund investing close to Rs 65 crore in IFIN instruments. 
 
"The investors of the NCDs were mostly the entities managing public funds like banks, insurance companies, pension/provident funds of salaried class employee etc," the report noted.
 
"As on September 30, 2018, the outstanding NCDs were to the tune of Rs 5,334.75 crore."
 
The document shows that several investors who subscribed to the IL&FS' financial arm's NCDs and commercial papers, attributed their decision to invest on the high ratings accorded by the rating agencies.
 
Anurag Jain, Chief Investment Officer at Canara HSBC OBC Life Insurance Company, which invested around Rs 30 crore in commercial papers and around Rs 10 crore in NCDs of IFIN, said their decision to invest was primarily influenced by the credit ratings provided by CARE and ICRA.
 
"The investment in the IL&FS/IFIN papers was done primarily on the basis of the rating of the companies as provided by the rating agencies CARE and ICRA, which are the highest rated in their categories," the SFIO document quoted Jain as saying.
 
During the period between 2013 and 2018, the agencies which gave ratings to the financial instruments of IFIN were CARE Ratings, ICRA Ltd, India Ratings & Research and Brickwork Rating India, according to the document.
 
With an investment of around Rs 115 crore in IFIN's NCDs, the Oriental Insurance Company was also apparently duped by the ratings accorded to IFIN.
 
"The basis of selection of debt securities are based on the financials, credit ratings and best yields available in the market. IFIN is an NBFC and based on the financial, credit ratings and better yields available, some funds have been allocated periodically based on the constant AAA ratings assigned by two rating agencies, CARE and India Ratings," said Dushyant Kumar Bagoti, DGM at Oriental Insurance Company.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
 
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