Calcutta, Nov. 27: The cabinet today approved the restructuring of Mother Dairy, but under government ownership.

A study by consultant PricewaterhouseCoopers (PWC) earlier had recommended a joint venture.

The cabinet today decided to form a new company to steer the revamp plan, but it will be a government entity.

“We disagreed with the PwC’s suggestion to form a joint venture. We thought it (the dairy) would do well under government ownership,” milk commissioner Sundar Majumdar said after the meeting at Writers’ Buildings.

Mother Dairy was started in 1978 under Operation Flood, launched by the National Dairy Development Board to make the country milk sufficient and to shield farmers from price swings. The board handed it over to the state 20 years later.

“It started with only 56 employees and had 550 in 1996. After the government stepped in, the strength was doubled. Between 1998 and 2002, over 450 people were recruited,” a senior dairy official said.

With Amul’s arrival, sales have dipped from 400,000 litres daily to 350,000 litres.