Boardroom Battle: Amul to Consider No-confidence Motion Against Chairman Vipul Chaudhary

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NEW DELHI/AHMEDABAD: The country’s largest dairy brand, Amul, is embroiled in a bitter boardroom battle as many directors have hurled allegations of financial irregularities and misconduct at the politically powerful Chairman Vipul Chaudhary and demanded his removal.

The board of the Gujarat Cooperative Milk Marketing Federation (GCMMF), which owns the Amul brand, will consider a resolution of no-confidence against Chaudhary on Saturday. This follows a strongly worded note from Managing Director RS Sodhi to the chairman, alleging that he taken damaging decisions without taking the board into confidence.

This is the third time such a situation has erupted in the fabled cooperative since 2006 when the legendary founder chairman Verghese Kurien was ousted.

In 2010, the chairman, Parthi Bhatol, faced the same situation but managed to get the board to call off the meeting to consider the vote for no-confidence. The top position in the board brings enormous power as about 1 crore out of Gujarat’s 3.4 crore voters are directly or indirectly associated with dairies and their mood can be influenced by changes in milk prices. This has attracted some MLAs and ministers to the board while others use the position as a political launching pad.

Allegations Against Chaudhary

Chaudhary himself is a former home minister of Gujarat. Kurien had the stature to quell protests, at least till he was ousted. Since his departure, Amul has seen more high-profile conflicts.

Ironically, Chaudhary was among those who sought Kurien’s exit. Now, he too faces criticism.

“Chaudhary is not capable of chairing GCMMF and he has lost our confidence. The board members will soon meet to discuss the issues troubling Amul,” said Jethabhai Patel, who represents Sabarkantha district union on the cooperative’s board and which contributed close to Rs 2,000 crore of Amul’s annual sales of Rs 13,750 crore.

Sodhi’s letter, reviewed by ET, makes several allegations against Chaudhary, who is also the head of the Mehsana dairy.

“Mehsana union expanded its capacities and increased milk procurement from other states arbitrarily without discussing the same with (the board). Such moves have resulted in unnecessarily huge investments and burden of interest and depreciation for the union,” Sodhi said in the letter. He declined to comment while Chaudhary and his aides did not respond to calls.

According to one of Amul directors, at least a dozen board members have already signed a resolution against Chaudhary. The managing director’s office has issued a one-line agenda on this.   Patel and former chairman Bhatol have joined hands and are gathering support from other board members, some members of the cooperative said.

The chairman of Amul is elected by board members who head various cooperative unions. But given the political significance of the position, the blessings of the state chief minister, Narendra Modi in this case, are considered necessary for anyone aspiring to the post.

According to the October 21 letter, Mehsana union procured 16.35 lakh litres of milk in 2012-13 and has a debt burden of Rs 1,357.46 crore, which is much more than other comparable unions. It also alleged that Chaudhary sold nearly 7,000 tonnes of milk powder directly to private parties from Mehsana union instead of routing transactions through GCMMF, the apex marketing body.

The BJP gained influence over Amul after Kurien quit in 2006. BJP-affiliated board members voted for Chaudhary in the August 2012 election for chairman. Chaudhary shifted his loyalty to Modi in 2007 after having supported Shankarsinh Vaghela in dethroning then chief minister Keshubhai Patel in the mid-1990s.

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(Economic Times, 25 October 2013)

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