1 IFFCO : A SUCCESSFUL BUSINESS MODEL IN COOPERATIVES GOPAL N. SAXENA Director (Cooperative Development ) Indian Farmers Fertiliser Cooperative Ltd.
Jan 01, 2016
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IFFCO : A SUCCESSFUL BUSINESS MODEL IN
COOPERATIVES
GOPAL N. SAXENA
Director (Cooperative Development )
Indian Farmers Fertiliser Cooperative Ltd.
New Delhi (India)
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IFFCO is a Unique Model Cooperatives are the Owners
Cooperatives are the Marketeers
Cooperatives are the Consumers
Through a well-knit network of more than 38000 cooperative societies, IFFCO caters to more than 50 million farmers
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Cooperatives / Farmers As• OWNERS
– Need more profits/Expansions and compliance to their felt needs
• MARKETEERS– Need Quality products, Competitive Distribution
terms and better margins
• CONSUMERS– Need Assured quality, cost effective prices, timely
delivery, support services for better crop yields
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IFFCO FOR OWNERS– Regular Dividend on their investment IFFCO pays
maximum permissible dividend to its member societies
– Joint Ventures and Expansion of existing Fertilizer Units
– Diversified Business activities to achieve sustained growth and Better Economic Returns to Members
Participation in the Governance• All the member societies given due representation• Regular meetings of Representative General Body• State/ Zonal Advisory Committee Meetings
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IFFCO FOR MARKETEERS– Produces quality fertilizers
– Marketing through the cooperative network only
– Provides Transportation Support to carry fertilizers in interior area
– Network of warehouses including Cooperatives are preferred
– Financial Support to Weak Member Cooperatives
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IFFCO FOR CONSUMERS • Educates Farmers on innovative farming techniques
• Undertake “balanced fertilization programme” through extension, education based on various field programmes
• Ensuring timely availability of fertilizers to the farmers at the doorsteps in the remotest area
• Direct sale also through own outlets – Farmers Service Centers
• Education & Training
• Community Development Support
• Environment Protection & Energy Conservation
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IFFCO : An Introduction
• IFFCO was formed at the initiative of Cooperative league of USA (CLUSA) now known as NCBA; and efforts of Government of India
• Registered on 3rd November, 1967 under Multi Unit Cooperative Societies Act, 1942; Now Multi State Cooperative Societies Act, 2002
• Has Status of A “National Cooperative Society”.
Continued..
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IFFCO presently has three Ammonia - Urea Plants having installed Capacity of :
• 2.1 MT of Ammonia• 3.8 MT of Urea
IFFCO has two complex Fertiliser Plants having installed capacity to produce 4.3 MT Complex Fertilisers (NPK, NP and DAP)
IFFCO alone contributes to Fertiliser availability (Nutrient basis)• Nitrogen 19%• P2O5 25%
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PERFORMANCE DURING -2006-07
Production 7.2 Million MT
Sales 7.8 Million MT
Turnover 2264 Million USD
Estimated profit before tax 56 million USD (Payment of 617 million USD in pipeline)
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Joint Ventures• IFFCO has Set Up Joint Venture Projects Such As :
Oman India Fertiliser Company (OMIFCO):
• Annual capacity of 1.6 Million MT Urea and 0.25 Million MT Ammonia
• The Actual project cost USD 892 million (saving of USD 77 million on estimates)
Industries Chimiques du Senegal (ICS)
• IFFCO holds about 20% of the paid-up share capital.
• Under long term buy back agreement , 0.5 Million MT phosphoric acid is lifted by IFFCO
Continued..
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Indo Egyptian Fertiliser Company SAE, Egypt
To set up a Phosphoric Acid Plant of 0.5 Million MTPA capacity
IFFCO holds 76% equity
The estimated Project cost is USD 325 Million
Pre-project activities have been started. The plant is expected to start commercial production in 2009
Phosphoric Acid Plant at Jordan
Signed an MOU with Jordan Phosphates Mines Company (JPMC) to set up a 1500 tonne per day phosphoric acid plant to be
located in Southern Jordan
IFFCO and its associates to have 52 percent equity participation
The estimated project cost is USD 350 million
Continued..
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IFFCO Tokio General Insurance Company Ltd ( ITGI) – IFFCO holds 72.6% equity share
– Balance equity subscribed by Indian Potash Limited and Millea Asia, Singapore ; a group company of Tokio Marine & Fire Insurance Company
• Sankat Haran
• Barish Bima YojnaContinued..
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IFFCO Chhattisgarh Power Ltd.
Joint Venture Company with Chhattisgarh State Electricity Board (CSEB) to set up a 1000 MW coal based mega power plant; Scheduled to be commissioned in 2010
The total estimated project cost is USD 1 billion
Equity participation by IFFCO 74%
The Company to supply electricity to farmers at a cheaper rate
Contined..
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KISAN INTERNATIONALTRADING FZE
• Special purpose Vehicle (SPV) for shipping, logistics and investments in New Overseas Joint Ventures
• Canalising, Routing and Logistics Monitoring of the Raw Materials
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IFFCO Kisan Sanchar Ltd.
– To Strengthen Rural Telephony
– Support Farmers through value added information through mobile telephony
– Enhancing the capacity of its member cooperative societies by providing them an additional means of generating income
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Initiatives Focusing Agriculture & Rural Development
• Promotion of “Commodity Trading” For Better Prices to Farmers
– National Commodity and Derivative Exchange Ltd (NCDEX)
– National Collateral Management Services Ltd. (NCMSL)
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Socio-Economic Development Work
IFFCO Kisan Sewa Trust
– A Charitable trust with contribution by IFFCO and Also IFFCO Employees
– To provide relief and rehabilitation to victims in rural India in the event of natural calamities
– The fund is also meant for undertaking programs for the welfare and critical medical attention to needy farmers
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Indian Farm Forestry Development Cooperative Ltd. (IFFDC)
• Focuses on development of wastelands.
• Undertakes activities like Promoting Primary Farm Forestry Cooperatives (PFFCS) to enhance the socio economic status of rural poor
• Micro Enterprise Development Activities undertaken:
Fisheries Livestock development Bee-keeping - as a business opportunity for SHGs/ Associations / Coops.
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IFFCO Foundation• Registered as a charitable trust in January,
2003.
• To promote cooperative development, social, human resources and cultural development by providing various services
• Main focus on Primary Agricultural Cooperatives
• Set up ‘Cooperative Development Resource Centres (CDRCs)’ to strengthen cooperatives
• Undertakes training programmes for Capacity Building of the Cooperatives Personnel.
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Community Building• Financial Assistance to poor and needy rural community for their
up-liftment
– Education – Support to Research to Agricultural Related field – For their livelihood
• Cooperative Welfare Fund
– For the support of weak and smaller cooperatives
• IT support to strengthen the cooperative system
Effective Communication & Data Base Information Kiosks (In Ten Indian Language) Networking
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Cooperative Rural Development Trust (CORDET)• Practical “Training Centres” to provide training
to the farmers to improve their skills in agricultural production, dairy, poultry, fisheries and professional leadership at village level.
• Extends soil-testing facilities to member farmers
• Vocational Trainings to Rural Women
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Growth of IFFCOInitial At Present
Membership 57(Year 1967-68)
38,155
Share Capital 0.05million USD
(Year 1967-68)
95 million USD
Production 0.18
(million MT)(Year 1975-76)
7.2
(million MT)
Turnover
588million USD
(Year 1989-90)
2264million USD
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CRUICIAL DECISIONS WHICH LAID THE FOUNDATION
NO FREE SAMPLE OF FERTILISERS
NO POSTING IN HOME STATE / DISTRICT
NECESSARY INVOLEMENT OF COOPERTIVE SOCIETY / COOPERATIVE PERSONNEL IN FIELD / PROMOTIONAL ACTIVITIES
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IFFCO’S CORE CONCERNS
• MEMBER DRIVEN (WHOLLY OWNED & CONTROLLED BY COOPERATIVE MEMBERS)
• DEMOCRATIC GOVERNANCE
• REGULAR BOARD MEETINGS/MEETINGS OF THE COMMITTEES OF BOARD MEMBERS
• CONCEN FOR QUALITY; ENERGY SAVINGS & ENVIRONMENT PROTECTION
• TIMELY ELECTIONS / TIMELY AUDIT
• CODE OF CONDUCT FOR MEMBERS
• EMPLOYEES PARTICIPATION IN DECISION MAKING
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IT MAY ITSELF BE A RECORD IFFCO came into commercial production in 1975;
And since then it is continuously Making Profits & disbursing dividend to its members every year for the last 32 consecutive years
(20% Dividend for the last Six Years)
Decision in Board are taken by consensus
(There has Never been Division & Voting in the Board on any issue, even including The Election of the Chairman / Vice-Chairman)
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OUR REWARD• Members have Claimed their Ownership” in the
organization and have purchased entire equity-holding held by Government in IFFCO
• Up-holds ‘Cooperative Values’ & ‘Principles’; to which “Fair Pricing” is inherent
• Today IFFCO is wholly owned by Cooperative Members & The entire Board of 21 members consists of Representatives from Cooperatives only
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THANKS !