Milco employees file petition against privatisation 

• Employees and trade unions seek intervention of courts concerning divestiture of entity to an entirely private joint venture
• Claims management agreement between Govt. and joint venture, for immediate handover of management is inconsistent with restructuring guidelines
• Asks Court to secure company’s future, job security for employees and protection of ‘Highland’ as a brand name

Employees and trade unions of Milco Ltd. have filed a petition before the Court of Appeal against the privatisation of the state-owned enterprise. They are seeking the intervention of the courts concerning the divestiture of the company to an entirely private joint venture comprising Cargills Ceylon PLC, National Dairy Development Board India (NDDB) and Amul - Gujarat Milk Marketing Federation.

The petitioners emphasised that the management agreement between the Government of Sri Lanka and the joint venture, for the immediate handover of the management of Milco Ltd. and NLDB, is inconsistent with the Government’s restructuring guidelines that are supposed to be adhered to.

The employees are also making several requests of the court including securing the future of the company, assurance of their job security and the protection of the brand name. 

The employees noted that on 10 July 2023, the Cabinet decided to lease out all 32 NLDB farms and Milco factories to the joint venture company to be formed. “The properties earmarked for sale/lease include all Milco and NLDB sales centres and 97 milk chilling centres owned by Milco. Additionally, under the plans outlined in the Cabinet paper, the operational Colombo milk factory located in Narahenpita will be demolished, and the land repurposed for an upcoming ‘Government project,’ the details of which remain undisclosed.” they added. 

The employees stressed that MILCO is self-sufficient and does not impose a financial burden on the Government or its treasury, operating without incurring losses. They highlighted in the petition that dairy farmers have derived benefits from the organisation, along with approximately 1300 employees and their 3500 direct dependents.

“However, approximately 800 of them are over 40 years old, and they would encounter significant challenges and difficulties in securing alternative employment if they lose their jobs at Milco Ltd. Furthermore, the livelihoods of around 16,000 dairy farmers and their families will be adversely impacted, along with their social security fund, which possesses assets exceeding Rs. 113.7 million,” they added.

The employees in the petition claimed that asset valuation is underway and they will be immediately handed over on a lease basis at a nominal value to the private entities until the formal valuation is completed. 

They emphasised that the management agreement between the Government of Sri Lanka and the joint venture, for the immediate handover of the management of Milco Ltd. and NLDB, is inconsistent with the Government’s restructuring guidelines that are supposed to be adhered to.

In the petition, the employees expressed concerns about the absence of assurances from any of the parties that no dairy product or raw/processed milk will be imported into the country from India through the newly formed company. They highlighted that this situation poses a threat to the future of local dairy farmers and jeopardises the employment prospects of all the workers associated with Milco and NLDB.

They added that neither trade unions nor any of the employees of the company are being provided any sort of true information or assurances regarding their job security, if lost which directly make a huge impact on their livelihoods. They are also questioning future plans about the management structure of the company, their job security, salary and benefits, VRS if applicable, functioning and continuation of farmer-managed societies and security fund, continuation of the brand name as well as the assurance of the quality of the products that the new company is planning to carry out. 

Therefore, the employees and trade unions of Milco have sought Court intervention to ensure that the divestiture of Milco follows the due and proper procedure adheres to the Government restructuring guidelines and goes ahead with the privatisation by following the proper procedure and a competitive bidding process to ensure that the best outcome could be obtained by the said restructuring.