The Cabinet has given in- principle nod for corporatisation of the loss-making Delhi Milk Scheme (DMS) with freedom to make strategic decisions to ensure that it is financially viable, Parliaments was informed today.

"The Cabinet has given 'in-principle' approval for corporatisation of DMS to provide it autonomy to make strategic decisions on commercial lines and to make it financially viable," Minister of State for Agriculture Charan Das Mahant said in a written reply to the Lok Sabha.

DMS has been incurring losses for many years now. The company's cumulative losses stood at Rs 838.66 crore in 2011-12, Rs 814.43 crore in 2010-11 and Rs 782.32 crore in 2009-10, he said.

To improve efficiency and reduce losses, the government has proposed modernisation of the DMS by replacement of old and obsolete plant machinery with latest equipments in a phased manner, Mahant said.

The DMS has milk production and packaging capacity of 5 lakh litres per day, besides a network of 1,298 outlets in the NCR. The government-owned dairy unit has 800 employees, but the milk production is only about 2.75 lakh litres per day.

Delhi Milk Scheme (DMS) comes under the Agriculture Ministry. The Ministry has been toying with the idea of corporatisation of DMS for some time. In 2004, the Centre had even offered to transfer DMS to the Delhi government, but the latter refused to accept the proposal.

Meanwhile the Gujarat Cooperative Milk Marketing Federation (GCMMF), which owns Amul brand, has evinced interest in running the DMS plant as it would help increase Amul's presence in the national capital region. It has already submitted a proposal in this regard to the government.

Last year, the Agriculture Minister Sharad Pawar had said that the decision on Amul's proposal to takover the DMS would be taken after the Cabinet nod for corporatisation of DMS.

Delhi is the largest market for Amul with daily sales of 24 lakh litres. Amul has processing capacity of 40 lakh litres per day in Delhi-NCR.