1 INDIAN FARMERS FERTILISER COOPERATIVE LTD. Preserving Cooperative Identity in an Era of Competition - IFFCO’s Case U.S. Awasthi Managing Director IFFCO

2 IFFCO is the largest producer and marketer of fertilizers in India with a membership of 37,276 Cooperative Societies and in turn 50 million farmers.

3 Presence of Cooperatives in India First legislation for Cooperatives in India i.e. Cooperative Societies Act, 1904, was enacted to cater to the requirement of credit Societies. The National Cooperative Union of India (NCUI) was established in 1929 as an apex promotional organization for strengthening of cooperatives. National Cooperative Development and Warehousing Board was set up in 1956.

4 Growth of Cooperatives in India National Cooperative Development Corporation (NCDC) was established in 1963 under NCDC Act 1962 to promote production, marketing and export of agricultural produce. Number of Cooperatives Societies increased from 35 thousand in to 545 thousand in Today, Cooperatives cover each & every village of India.

5 Role of Cooperatives in Indian Economy During the year , Cooperatives accounted for: –46% of Agriculture Credit disbursement. –36% of fertilizer distribution. –59% of Sugar production. –32% of Wheat procurement. –65% of Storage facility.

6 Latest Policy of Government The Union Cabinet first time approved the National Cooperative Policy, aiming at: Minimizing the say of the Government in Cooperatives. Redefining the role of Registrar of Coop. Societies as a facilitator for Coop. Societies. Repatriation of the Government’s equity in the Cooperatives by infusion of equivalent cooperative shares.

7 Latest Policy of Government Contd... Cooperative Law Multi-State Cooperative Societies Act ensures functioning of Cooperatives as autonomous Institutions on sound Cooperative Principles. The new legislation reduces the role of Government and provides professionalism in Cooperatives to withstand competition. Government participation in the equity is allowed only when requested by the Society.

8 Formation of IFFCO Till mid sixties Cooperatives were distributing 70% of the fertilizer without having their own production capacity. To reduce their dependence on Private and Public Sector fertilizer companies, Indian Farmers Fertiliser Cooperative Limited (IFFCO) was incorporated as a Multi-state Cooperative Society on 3 rd November, 1967.

9 IFFCO Today Started with only 57 Cooperative society as members and share capital of just Rs. 0.6 million IFFCO has now became a large family of 37,276 Cooperative society as members and Rs billion (US$ 97.6 million) as equity. Markets it’s products through Cooperatives In accordance with the National Cooperative Policy, the Govt.’s equity in IFFCO reduced from 70% to 20%, by increasing the share of Cooperative Societies.

10 IFFCO Plants

11 Performance of IFFCO ( ) Production - 6 million tonne fertilizer. Sales - 6 million tonne fertilizer. Turnover of Rs billion (US$ 1.34 billion). Profit before tax of Rs. 8.1 billion (US$ 0.18 billion). Networth as on Rs billion (US$ 0.72 billion). Contributed about 20% of the total ‘N’ & 24% of total “P2O5 produced in India.

12 Growth of IFFCO

13 Service to Society IFFCO promoted following institutions with social objectives

14 Service to Farmers IFFCO has taken up following programme to support farmers by providing financial assistance, infrastructure facilities, information on latest developments in agriculture etc. Integrated Rural Development Programme. Village Adoption Programme. Sankat Haran Bima Yojana. Farmers Service Center. Draught Relief Measure in Rajasthan. Information Kiosks for Farmers.

15 Corporate Governance IFFCO’s VISION is to retain dominant position in Indian fertilizer sector, improving its position further by achieving sustainable and viable growth through excellence in all its activities and gearing itself to fulfil the diverse expectations of stakeholders, customers, employees and Society. By virtue of transparent Governance practices, democratic Control and professional management since its inception IFFCO has carved out a strong “Cooperative Identity” and is making sincere efforts to uphold the “Cooperative values” and function on “Cooperative Principles”.

16 Democratic Decision Making The member Cooperative Societies select Representative of General Body (RGB) members to participate in Annual General Body Meeting (AGM) There are 19 members on the Board of Directors, at present, excluding three functional Directors » 8 Directors are elected by the RGB members »10 Directors are nominated by State Marketing Federation. » One Director is nominated by Government of India.

17 Steps taken by IFFCO to remain Competitive Adoption of latest technologies to ensure availability of better quality products at reasonable prices. Largest energy saving Project started in its Plants costing Rs. 4.6 billion (US$ 0.1 billion). Conversion of Naphtha based Urea Plant to LNG base. Adoption of Innovative marketing strategy with benefit to farmers. Human Resources are trained and Developed to face new challenges. This has resulted into increase of productivity from 519 tonne per employee in to 987 tonne per employee in

18 Steps taken by IFFCO to remain Competitive Contd... Latest information technology to disseminate relevant information, through information KIOSK, on agriculture production, marketing, price trend, crop diversification, etc. are being used. Financial management, plant inventories, dispatch of material, sales, agriculture services and MIS reporting have been fully computerized and integrated.

19 Investment in Joint Ventures of IFFCO. –Rs. 9.7 billion equivalent to US$ 0.2 billion (20.46% equity) in KRIBHCO. –Rs. 0.8 billion equivalent to US$ 17.6 million (23.3% equity) in Godavary Fertilizer & Chemical Ltd. –Rs. 0.3 billion equivalent to US$ 6.6 million (34% equity) in Indian Potash Ltd. –US$ million (25% equity) in Oman India Fertilizer Company. –Rs. 9.3 billion equivalent to US$ 0.2 billion (14.32% equity) in Industries Chemique-Du Senegal (ICS), –Rs. 5.1 billion equivalent to US$ 0.1 billion (51% equity) in IFFCO-TOKIO General Insurance Co. Ltd.

20 Conclusion The leadership with vision, dedication, commitment and above all innovative approach helped IFFCO in preserving its Cooperative Identity in an Era of Competition. Thank you