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Harish Damodaran

New Delhi , June 28

IT could well be the last link between the Gujarat Cooperative Milk Marketing Federation (GCMMF or Amul) and the National Dairy Development Board (NDDB) that is about to be snapped. In the latest episode of an almost two-year-long saga, the GCMMF has sought the withdrawal of the NDDB's nominee on its board, citing `conflict of business interests'.

This follows the federation's claim of having pre-paid all its loans taken from the NDDB directly or indirectly, i.e. as a guarantor for the borrowings incurred by its various affiliated district milk unions. ``Only a few days back, a couple of our unions cleared the remaining sum of around Rs 12 crore owed to NDDB. As on date, neither we nor any of our 12 unions have any outstanding liabilities with NDDB, which means the latter has no longer any claim to be on our board,'' a GCMMF official told Business Line.

The official said that the federation and its member-unions had pre-paid their NDDB loans either out of their own internal resources or by swapping these with cheaper loans from the UTI Bank, HDFC Bank and ICICI Bank. ``All of them were offering money at 5-6 per cent against the 8 per cent interest we were paying on the loans from the NDDB. It made perfect sense, therefore, for us to pre-pay all the costly loans taken from NDDB,'' he said.

But the more important reason for pre-payment, the official said, was that ``we don't want the NDDB to have its nominee on our board, as it is our competitor now and should not be privy to our internal business decisions.'' NDDB is currently represented on GCMMF's board through its Regional Director, Mr M.N. Buch.

The GCMMF official said that the NDDB, through its wholly owned subsidiary holding company, Mother Dairy Fruits & Vegetables Ltd, had over the past year sought to make `Mother Dairy' a national brand to compete with `Amul' across the entire dairy products spectrum.

While the Mother Dairy brand was initially confined to just milk and ice cream sold in the Delhi market, it now extends to butter, UHT milk, ghee, dairy whitener and other products competing with Amul nationally. Simultaneously, the NDDB, in February this year, had obtained the status of a public financial institution (PFI).

``None of the banks who are financing us are on our board. Even when they lend to our member-unions, they only seek a letter of comfort from us (GCMMF) and do not insist on board representation. Why should NDDB be different, more so when it has become a PFI, does not have any outstanding claims against us and is, on top of everything, a business rival?" the official quipped.

NDDB officials were not available for comment on the latest development.

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