Wayanad: After the multi-crore Karuvannur Co-operative Bank scam, another large co-operative society is on the verge of collapse that threatens to put Wayanad farmers, depositors, and retail vendors across the state in dire straits.
The common link between the scams is that both are controlled by CPM.
The party-controlled agrarian co-operative entity Brahmagiri Development Society (BDS), affiliated with the state's Dairy Department, has plunged into a financial abyss sending alarm signals to more than 600 depositors, poultry farmers, raw material suppliers, franchisees, and over 200 employees.
The crisis in the co-operative firm came to light when a group of depositors, who failed to receive the monthly interest, barged into the BDS head office at Pathirippalam recently. This was followed by a stir by broiler chicken farmers who protested against the society's failure to repay their deposit amount even after BDS announced the temporary closure of its meat processing project.
Stakeholders and employees allege that the high cost of servicing loans, and the delay in disbursal of state funds due to the society and market conditions post-COVID pandemic are the reasons for the current crisis.
With a dozen projects worth several crores of rupees in various stages of progress, the collapse of the parent organisation could have a serious impact on several businesses across the state, sources said.
BDS story
Started in 1999 by former MLA and CPM leader the late P V Varghese Vaidyar, BDS focused initially on the production and supply of sanitary products, including toilet cleaners, washing powder, and other detergents.
Later Krishna Prasad took over the reins as chairman and introduced changes for fast-track business development. A novel concept of ‘Worker Self Management’ also was introduced in which workers themselves managed the unit. In tune with the concept, the former Chief Executive Officer and Chief Administrative Officer were the frontline workers of the first batch of BDS.
It also accepted deposits from its members. So far, it has 600 registered depositors.
By 2003, the farming sector was reeling under a crisis. Falling produce prices and increasing debt burden were forcing many to leave farming. Some farmers, unable to withstand the pressure killed themselves. In such a scenario, BDS, led by its former chairman P Krishna Prasad, drew up Rs 200-crore plan to set up feeder farms, hatcheries, a meat processing plant, and sales outlets.
The hope was to save farmers from the clutches of corporates and large-scale businesses and create their own source of revenue.
In 2013, the society set up a meat processing plant on 14 acres of land with the support of the National Bank for Agriculture and Rural Development (NABARD) and the state government.
In 2018, BDS launched the Kerala Chicken project for which the state government also assured support with a budgetary allocation of Rs 20 crore. It was with much fanfare then finance minister TM Thomas Isaac introduced the project during the state-level launch at Malappuram on December 10, 2018, calling it an alternative state-run initiative to tap Rs 4,000-core broiler chicken market. He also said the project would check the flow of money to other states and ensure meat at right price for customers.
BDS spent almost Rs 24.5 crore for setting up a hatchery, breeder farm, and feed production unit apart from setting up a wide farmer service network, including veterinary doctors, technicians and staff in Kannur, Kasaragod, Kozhikode, Wayanad and Palakkad districts. But the government backtracked. It did not allocate funds on time, jeopardising BDS' plans.
Then COVID struck, giving the project a body blow.
Hectic parleys
The collapse of the parent organisation may ground several projects that are in various stages of progress, including the Malabar Meat, Wayanad Coffee, and Kerala Chicken. Sources said BDS' flagship project, the Malabar Meat, is almost defunct now and the meat products in all outlets across northern districts of Kerala have been given away to private firms. Many franchisee outlets have been closed. While the handful of employees has been left jobless, machines worth crores of rupees are left to rust, sources said.
BDS chairman P K Suresh told Onmanorama that hectic parleys are on behind the curtain to salvage the entity. “As a farmer-oriented initiative, we have been facing many crises during our two-decade-long existence,” he said. “Though envisaged as a Rs 200-crore project, we received only Rs 17 crore as grant and Rs 10 crore as loan till date. Rest we mobilised from our depositors. The meat processing plant and the 14-acre land are worth more than Rs 40 crore,” he added.
He blamed the government's failure to ensure the promised financial support to BDS for the present crisis. “It was the delay of the government that resulted in the present crisis,” he pointed out. “Though the state government had promised to repay the interest for the loan taken by BDS, we received it only once,” he said. The delay in disbursing promised funds for the Kerala Chicken project also aggravated crisis, he said. “Now the state government is ready to give administrative sanction for a Rs 49.5 crore project. This should have happened four years ago.”
“The closure of the Kerala Chicken project affected the functioning of the Malabar Meat plant,” he said.
Revenue recovery procedures
Suresh acknowledged that depositors and farmers were hit hard by the collapse of the society. But he was quick to point out that not just them, but even people at the helm are staring at huge financial loss. Former chairman Krishna Prasad is facing revenue recovery procedures as he had pledged his ancestral house and his own land to take Rs 6.5 crore as loan to implement the Kerala Chicken project after the state government backed out from its promise.
“Though we have remitted a huge amount, BDS has been wading through an acute financial crisis for the past many months. The interest repayment has been hit leading to the recovery procedures,” he said. “At present, we owe Rs 4.99 crore, including the interest to our bank,” he added.
Suresh, who assumed office after the exit of Krishna Prasad in 2022, expressed hope that with the support of the state government, BDS would overcome the crisis and would pay all its debts as soon as possible.
Salary unpaid
In its heydays, BDS had deployed close to 250 employees, including daily labourers, on project sites – from the feed factory unit at Mangaluru to the broiler chicken hatchery at Pollachy. At present, there are only 102 employees on the rolls of which only a few report to duty, according to a BDS staffer, who does not want to be identified.
Apart from a handful, the majority of employees were earning less than Rs 20,000 as salary.
“With the salary pending for the past seven months, most of the workers have either left BDS to find jobs somewhere else or have entered into long leave. Only a handful of the remaining employees are reporting for duty,” the employee said.
A majority of the remaining employees are CPM loyalists and party members. They remain in the hope that the party would breathe fresh life into the ailing co-operative soon, an employee who left the co-operative said. “There is no escape for any of them as they have paid a security deposit varying from Rs 2 lakh to Rs 4 lakh for the job. Some had mobilised huge funds for the projects from the public. They too can't leave till BDS repays these investors”, said the ex-employee.
Anoop C C, a former employee, filed a complaint at the Meenangadi police station on June 1, demanding repayment of his security deposit of Rs 2 lakh and the pending salary of Rs 80,000. Anoop told Onmanorama that he was forced to file a complaint after BDS authorities refused to pay his salary when a medical emergency emerged. “I know that the police will not be able to take a remedial step under the existing regime. But it is just a beginning,” he said, adding that a group of 12 employees is planning to file a joint petition in the court seeking justice. His post on Facebook in which he put a wreath on BDS logo went viral recently.
An employee, who had collected funds from the public for the project, said he was on the verge of ending his life. “After spending decades in the institution, I am today caught between enraged depositors and a lethargic administrative body. I have not been paid for months, I can't go back home as debtors are waiting at my doorstep demanding their money back,” he said. He did not want to be identified for fear of reappraisals.
Depositors join hands
Most of the depositors in the society are CPM cadre and loyalists. As per the depositors' register under Peasants and Workers Social Development Fund, the fund mobilisation wing of BDS, there are over 600 depositors.
They find it disconcerting that the party district unit has not been taking any initiative to find a solution to the problem. “We were told by key party functionaries that the CPM is not at all responsible for the money deposited in the cooperative,” said a depositor who preferred anonymity. “Neither the BDS leadership nor the party leadership has promised us anything; they have not even uttered a soothing word, to us,” he said.
He said individuals and financial institutions, including more than 10 co-operative banks of various districts, have deposited Rs 70 crore so far. For the past many months, neither the money has been repaid, nor have they received any interest, he added.
Early this month, the depositors formed an action council called Brahmagiri Depositors’ Action Council. The panel now has more than 100 members, according
to its leaders.
Action council president Murali LR, a native of Moolamkavu near Sulthan Bathery, told Onmanorama that BDS owes Rs 15 crore to the council members.
The depositors also formed a WhatsApp group for better coordination. Major depositors, who have close links with the party leadership, and those who are unable to disclose the sources of money have not joined the forum, another member pointed out. The cash-strapped co-operative so far has received ‘fund return requests’ to the tune of Rs 15 crore, sources said.
The action council plans to meet CPM state secretary M V Govindan, who is expected to participate in a discussion session on the BDS crisis this week.
'Panic among depositors'
BDS Chief Executive Officer Sukumaran Nair told Onmanorama that a panic set among depositors after the society failed to pay the interest for the past few months. “Now the government is addressing the issue regarding the Kerala Chicken project and party state leadership has also taken it seriously. Discussions are on,” he said.
He said BDS has approached the state government for releasing the subsidy due to the co-operative and efforts are also on to ensure sufficient funds are disbursed to depositors. “With the multi-pronged interventions, I hope issues would be sorted out soon,” Sukumaran Nair said.
As per the annual report, BDS posted a turnover of Rs 36 crore in 2019. The plan was to have a turnover of Rs 300 crore within two years, aided by an elaborate fund mobilisation drive. Just when they were planning to go on an overdrive, COVID struck, which resulted in debt accumulation. Though there were attempts to sell frozen meat during the pandemic period, bottlenecks in marketing networks and recurring COVID infections to labourers put paid their plans.
A few months ago the CPM state secretariat deputed finance minister K N Balagopal and the state secretary to find a solution for the crisis. Balagopal had also visited the Malabar Meat and held discussions with the BDS leadership.
Complaints galore
The CPM state committee, which was reluctant to take over the issue initially claiming that it was the responsibility of Wayanad district unit to sort it out, is taking more interest in resolving the issue, sources say. This is because of the plethora of complaints it has been receiving.
A district committee member of CPM who had also served as the former CEO of BDS, submitted a complaint to the state committee a year ago demanding urgent intervention. A pro-left NRI organisation that had deposited Rs 1.5 crore in BDS also had met the party state secretary recently.
The chicken farmers associated with the Kerala Chicken also staged a sit-in protest at BDS head office at Pathirippalam recently, demanding repayment of their deposits. The farmers have also approached the district and state party leadership demanding urgent intervention.
Former chairman Prasad too has submitted a complaint to the state and central leadership of the party. Despite repeated attempts, Prasad refused to comment on the issue.
BDS executive director Ajayakumar told Onmanorama that moves are afoot to sort out the issue as soon as possible. “We are on a ‘no stones unturned’ mode to save BDS which has been a dream project of the farmers of Wayanad. In the past, all state governments across the political spectrum had supported BDS. With the support of people and government, we will overcome the crisis,” he added.
