IFFCO : A SUCCESSFUL BUSINESS MODEL IN COOPERATIVES

1. IFFCO : A SUCCESSFUL BUSINESS MODEL IN COOPERATIVES GOPAL N. SAXENA Director (Cooperative Development ) Indian Farmers Fertiliser Cooperative Ltd. New Delhi (India)

2. 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

3. 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

4. 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

5. 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

6. 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

7. 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..

8. 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%

9. 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)

10. 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..

11. 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..

12. 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 Yojna Continued..

13. 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..

14. 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

15. 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

16. 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)

17. 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

18. 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.

19. 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.

20. 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

21. 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

22. Growth of IFFCO

23. 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

24. 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

25. 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)

26. 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

27. THANKS !