It is Rahul Vs Modi at Amul too: Why politics can kill a business

Amul is readying for another boardroom battle. The revolt this time is against Chairman Vipul Chaudhary.

According to various news reports, the board of the Gujarat Milk Marketing Federation (GCMMF), which owns the Rs 13,735 crore brand Amul, will take up a no-confidence motion against Chaudhary, who has been charged with financial irregularities.

“Chaudhary is not capable of chairing GCMMF and he has lost our confidence,” Jethabhai Patel of Sabarkantha district union has been quoted as saying in a report in The Economic Times.

Sabarkantha union contributed Rs 2,000 crore to the federation’s turnover last year. Chaudahry heads the bigger Mehsana union.

[caption id=“attachment_1142473” align=“alignright” width=“380”] Rahul Gandhi and Narendra Modi. Agencies.[/caption]

A report in the Business Standard says 14 of the 17 board members are pitching for a no-confidence motion against the chairman.

It has been alleged that the Mehsana union has the highest level of debt at about Rs 1,300 crore and its milk production, which stood at about 16 lakh litres last year, is also declining steadily.

According to the ET report, Chaudhary is alleged to have sold about 7,000 tonnes of milk powder to private parties without even informing the GCMMF.

Apart from alleged financial irregularities there are other reasons also for the boardroom battle. According to the BS report, GCMMF chief RS Sodhi has also questioned the rationale behind the Mehsana union’s decision to supply free of cost Rs 22.5 crore worth of cattle feed to Maharashtra farmers.

But the report also says the Mehsana union had made some allegations against the federation. It is in retaliation to this that the GCMMF has made these charges against Chaudhary.

Boardroom battles are nothing new for Amul. Earlier in 2006, then chairman Varghese Kurien, who was the founder of the hugely successful co-operative, had to quit due to opposition against him holding the position. Again in 2010, Parthi Bhatol was also toppled. And herein lies the sad story of political interference killing a successful business which has been seen as a model of farmer empowerment.

Amul has about 31 lakh farmers as members. Including their family members, this translates into about 1 crore votes, almost one-third of Gujarat’s total voters. The boardroom battles are also a reflection of getting to influence these voters through adjusting the milk prices, says the _ET_report.

Chaudhary himself has shifted his allegiance a couple of times between the Congress and BJP. According to the BS report, he was part of Shankar Singh Vaghela’s coup on then BJP government in Gujarat in 1996-97. He was the state home minister in Vaghela’s government, when the Congress supported his Rahstriya Janata Party (RJP). Later, along with the RJP, he joined the Congress.

Then in 2007, he came back to the BJP and was seen as a favourite of Gujarat Chief Minister Narendra Modi, says the BS report. Now, he may be again shifting to the Congress camp. According to the report, Chaudhary was seen accompanying Rahul Gandhi during his recent visit to Ahmedabad. This is the real reason behind the revolt against Chaudhary, says the report.

Chaudhary is eyeing chairman’s post of the National Dairy Development Board, which is why he cosying up with the Congress now, says the BS report.

Interestingly, Chaudhary was a hardcore Modi man and was also engaged in his election campaigns.

In India,political interference in co-operatives is nothing new. Most of the co-operatives in the country are controlled by political parties who use these bodies to meet their political ends.

But Amul was different, at least until 2004, when Kurien fell out with Modi.

At a public function Kurien, who was known for his outspokenness, criticised rampant corruption in the government which did not go down well with Modi, says an earlier ET report.

The Gujarat government then started interfering in the affairs of GCMMF and even resulted in Kurien’s ouster. Also, the constitution of the federation, which had a unique model that insulated it from political interference, was challenged by BJP-affiliated members of the federation. The party’s controversial leader Amit Shah has been in the forefront of this move, says the ET report.

The BJP set up more co-operative unions and influenced the smaller members to gain access to the decision making process of the federation.This was also aimed at wresting the control of the GCMMF board from mostly Congress-dominated unions of Central and North Gujarat.

Matters took a turn for the worse when Shah and then agriculture minister Dilip Sanghani attended the meeting to elect GCMMF chairman in 2009. Bhatol, Chaudhary’s predecessor, had managed to retain his position with the help from the BJP.

For the BJP, the federation became a vote-generating machine. Eyeing farmers’ votes, it pulled the strings to raise milk prices several times, says the ET report.

With the BJP gaining control, the GCMMF is now more of a political body rather than a company doing business. Interestingly, this is happening under the chief ministership of Modi, who projects himself as the most business friendly politician in the country.

With Rahul also coming into the picture now, political interference in the federation is complete.

If Modi and Rahul are indeed business friendly, they should keep off Amul and let it do business in its own way. Otherwise, one the most respected Indian brands and business models may not survive long.