Malabar Milma faces action over financial irregularities

The Department of Dairy Development has directed further action against the Malabar Regional Cooperative Milk Producers Union (MRCMPU), popularly known as Malabar Milma, after an inspection pointed to financial and administrative irregularities in its operations. An order issued by Director of Dairy Development on September 18 called for detailed scrutiny and further proceedings under various provisions of the Kerala Cooperative Societies Act, 1969. The inspection reportedly found lapses including failure to submit the union’s annual reports and audited accounts on time, besides irregularities in financial transactions and records relating to its various establishments.

The order specifically points to an alleged ₹27.45 lakh loss at the Kasaragod Milma Dairy following the procurement of substandard milk. According to the report, 33,062 litres of milk was purchased on March 19, 2025 from Sampathrao Deshmukh Cooperative Milk Union after making advance payment. The milk was reportedly suspected to contain chemical substances and had a kerosene-like smell.

The milk was locally stored and mixed with 55,000 litres procured from the Karnataka Milk Federation, resulting in a total of 88,000 litres being prepared for distribution, the report said. The purchased milk was allegedly processed without completing the required quality tests or ensuring its quality before mixing it with the existing stock.

The incident reportedly caused a ₹27.45 lakh loss to the regional union. The order criticised the management for reducing the amount from the union’s account without recovering the loss from those responsible or taking action against them. The report also specifically questioned the decision to make an advance payment for the milk without carrying out the usual physical quality checks immediately upon its arrival at the dairy. Normally milk procured from other dairies is subject to quality testing before the payment is made.

The Director’s order describes the failure to properly inspect the milk and the advance payment as lapses reflecting management and negligence in the transaction involving the Kasaragod Mavungal Dairy.

Questions over Malappuram dairy stock

The inspection also raised questions over stock worth ₹84.45 lakh at the Malappuram dairy. The department has directed that the stock records and accounts be examined and that the utilisation of the amount be verified. The order also seeks clarification regarding a ₹50 lakh grant sanctioned for the development of the Malappuram dairy. Only ₹25 lakh was reportedly spent, and the department has sought details on the utilisation of the remaining amount and whether the grant was used for the purpose for which it was sanctioned.

Records relating to various construction and development works at the dairy, including expenditure incurred, completed works and pending works, have also been sought.

₹27.45 lakh utilisation under scrutiny

The utilisation of another ₹27.45 lakh recorded in the union’s account has also come under scrutiny. The department has directed officials to verify its utilisation, balance amount and supporting records and take appropriate action based on the findings. The order stresses that the union’s managing committee is responsible for ensuring that funds are properly utilised, documented and submitted for audit. The managing committee faces possible action.

The order also points to provisions under the Kerala Cooperative Societies Act that permit action against managing committee members for failing to prepare and submit statutory accounts and records for audit. Citing Section 64(4A) of the Act, the Director said the managing committee is responsible for properly preparing financial and statutory records and submitting them for audit. Failure to comply with these requirements could, under the relevant provisions, leads to disqualification of committee members.

The department has directed officials to intensify scrutiny of the financial transactions and records of various establishments under Malabar Milma, collect the required documents and initiate further proceedings based on the irregularities identified during the inspection.