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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 !