Sodhi's exit from Amul shows chronic problem between management and board

The abrupt dismissal of the managing director points to a chronic problem between the milk marketing behemoth's management and its board

One of the primary reasons for setting up the Ministry of Cooperation in July 2021 was to attract “professionals” into the cooperative sector to develop the latter.
 

Though it is not a cooperative body in itself, the Gujarat Co-operative Milk Marketing Federation (GCMMF), popularly known by its signature brand name Amul, does raise questions on future of professionals entering the sector following its managing director R S Sodhi’s recent “unceremonious” exit.
 

The January 9 letter from the board’s chairman and vice-chairman to Sodhi that read “Your services as MD are being terminated with immediate effect…it is ordered that you relinquish charge immediately and hand over the same to the COO”, is not something that a future co-operative sector professional would want to read.
 

More so, when Sodhi is not the only GCMMF managing director to have had an unceremonious exit.
 

Historically, Amul has been known for its organisational model managed by an elected board of directors through a managing director and an executive team comprising industry professionals across roles and departments.
 

Set up in 1973 as an umbrella federation to safeguard the interests of dairy-farmer owners of the associated milk unions in Gujarat, the GCMMF saw its iconic chairman and managing director Verghese Kurien, known as the Father of India’s White Revolution, usher in the envisaged professionalism in the dairy cooperative sector.
 

According to sources in the dairy cooperative sector, the seeds of Sodhi’s questionable exit were sown in 2006 amid  Kurien’s resignation as GCMMF chairman following disagreements between him and the board of directors.
 

Later in 2010, Sodhi’s predecessor B M Vyas too had resigned after internal conflicts in the board with certain members over extending his term after he had reached retirement age.
 

“The federation was founded as a marketing organisation that would brand and market dairy farmers’ milk and milk products and protect their interests from politics. Even Kurien, who brought in J J Bakshi as a managing director, followed by B M Vyas and then Sodhi, tried to keep politics at bay but eventually failed. The Ministry of Cooperation was created to strengthen cooperatives and attract professionals in the field but now this latest development may discourage the latter,” said a source associated with GCMMF.
 

Even sector stalwarts such as state cooperative leader Ghans­hy­am Amin admit that politicalisation “should not happen in any sector, let alone in the co-operative sector”.
 

Others such as dairy and agri-business expert Vijay Sardana have argued that by their very nature cooperatives are political organisations because the management is elected by member owners.
 

“It is an organisational set-up that is administratively political. Unceremonious exits could be due to non-performance or due to time for a change. Dr Kurien or Sodhi were all on extensions. It depends on the existing leadership, whether they want a new management at a certain moment or not,” Sardana added.
 

Seconding Sardana is former GCMMF and Sabar Dairy chairman Jethabhai Patel who attributes these exits at the federation to a difference between cooperative milk unions’ board of directors and the executive leadership.
 

“Executives wanted to stay but developed differences with the board of directors. Past controversies have also arisen when either the chairman or MDs, as in the case of Vyas and Sodhi, were on extensions. Vyas had received a five-year extension under my chairmanship itself,” said Patel.
 

Patel argued that what is being labelled as political manoeuvring could be a mere difference of opinion, with the board of directors being well within their rights to ask someone to step down, a fact reiterated by the current GCMMF Chairman Shamalbhai Patel.
 

“The decision [to ask Sodhi to step down] was taken by the board as he was on an ext­­e­nsion and it was time to look for a new managing director. It was not a political decision,” Patel told Business Standard  though he declined to respond to any further questions.
 

Sodhi’s official term ended in 2020, but the brusque tone of his dismissal letter certainly raises questions, as does the fact that a successor had not been appointed when his services were terminated.
  

Meanwhile, sources in GCMMF have argued that the trend of politicisation has, in fact, grown over the years and will continue to do so given the rising scale of operations of Amul. GCMMF business has grown from mere Rs 1,114 crore of standalone turnover in 1994-95 to a whopping Rs 46,481 crore in 2021-22. The combined turnover of GCMMF (Amul) and the member milk unions stands at over Rs 60,000 crore.
 

The federation’s scale is not only measured in terms of its 3.64 million milk producer members but also average daily milk collection capacity of 26.3 million litres per day and total milk handling capacity of 41 million litres per day.
 

Roughly 75-80 per cent of revenue goes to farmers with the rest being used for product development, branding and marketing purposes. With new Chief Operating Officer  Jayenbhai Mehta taking over as MD, GCMMF is already taking strides to grow its product baskets from mere milk and milk-based products to becoming a food and beverages giant.
 

Only time will tell whether the scale and velocity of Amul’s growth is sustained or whether executive and board differences will make a reappearance in the near future.