COOPERATIVE ADVANTAGE IN THE TOUGHER

COMPETITION

G. N. SAXENADIRECTOR

(COOP. DEVELOPMENT)IFFCO, INDIA

CORPORATE CULTURE VERSUS

COOPERATIVE CULTURE & VALUES

In the globalised economy, the “Consumerism” is getting increased focus giving rise to fierce competition in the market place.

Multinationals have strong brand identity, financial muscles and professionalized management whereas Cooperatives with interest weakness perceive the same as threat.

Pursuit for supremacy and large profits will generate power struggle at the cost of morality social equity and honesty. The Cooperative principles in this climate are also considered to be stumbling blocks.

For their profit, multinationals tend to exploit natural resources indiscriminately whereas cooperatives for their inherent values are sensitive to such imbalances, if any.

CONTINUED…………….

Multinationals business cause the outflow of precious local money to other countries Whereas Cooperatives are self sustaining societies dependent on local resources, local employment and sharing of surplus within members for their betterment

In corporate pursuit for power and profit leads to fierce competition for ‘dominance’ leading to acquisitions & mergers, whereas Cooperatives stand for co-existence and cooperation among cooperatives.

In Corporate, values regress towards self centeredness, whereas in Cooperatives members interest and their welfare is protected.

With the advent of Multinational culture only the rich have been benefitted which has increased further disparities between classes of people, whereas Cooperatives are classless societies & stand for equality without any distinction for class, creed, religion & gender.

The existence of private houses in big cities attract rural masses which creates habitat imbalances, migration to big cities leading to problem like housing, health, law and order Whereas Cooperatives are self sustaining societies inter-dependant on local resources, local product till generation of employment.

CONTINUED…………….

The Multinationals bring their own brands & goods; and impose them without caring for the needs of local masses. Brands fighting for dominance at the cost of consumers, Whereas the operations of Cooperatives are need- drive of members; as the members are the consumers of goods.

The Corporate cause the invasion of local culture & values, whereas the Cooperatives take care of the social & cultural needs of the members and thus preserve the local culture and values.

CONTINUED…………….

CONTINUED…………….

In the era of globalization, the women though have more job opportunities but they have lost their earlier nucleus place enjoyed in the society based economy Whereas the Cooperatives emphasis on the application of traditional knowledge with the blend of modern knowledge with scientific approach and empowerment of women.

• Global financial structures have dissolved ; Investment Banking industry have collapsed and disappeared.

• Mostly in G8 countries vast amount of money is exhausted to stabilize Banks & Stock markets.

• It is mainly due to Investor led model of business ,Corporate greed & Profit mismanagement.

• Cooperative model of business could have avoided the global recession as it is

Not linked to stock markets Relies on member funds for its value Controlled by local people for local people Know individual need & repayment capacity

• Cooperative business keeps the wealth generated by local Business in the local community for the good of local Environment & families.

GLOBAL MELT DOWN

CO- OPERATIVE CONSTRAINTS Lack of Professional Management .

Political interference, with government using Cooperatives as its own agency.

National cooperative policies not defined in most countries.

Over- lapping role of Government and Cooperatives.

PRESENT SCENARIO

But the Change is Inevitable………………….

Mergers & Acquisitions in the garb of “cost cutting” on the other hand tend to give rise to ‘monopolistic tendencies’; which in longer run may tend to exploit consumer.

Inherent intention to maximize the profit, and cut costs even by non - standard means.

WHAT CO-OPERATIVES CAN DO

MEMBER DRIVEN

• Identify Needs

• Member involvement & Member responsibility.

• Inculcate Mature Leadership

PROFESSIONAL MANAGEMENT

• Latest market information.

• Decision on merit.

• Transparency in decision making

• Avoid duplication of work (Competition with Cooperatives).

CONTINUED…………….

• Federate with other Cooperatives - Regional

- National- International

• Be Aware & Respectful for Environmental & Social issues.• Standard Business Practices

- Standard accounting norms- Timely audit- Timely elections

CONTINUED…………….

CONTINUED…………….

• Keep vigil on Business / Market Environment

- New development in technology - New development in market

- Future trends- Flexibility

• Better office environment & moral values of Employees

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”.

Wholly owned by Member Cooperatives.

INDIAN FARMERS FERTILISER COOPERATIVE LIMITED (IFFCO)

Cooperative Initiative

Visionary Leadership

Democratic Governance

Professional Management

IFFCO IS A SUCCESS STORY OF

INITIAL AT PRESENT

MEMBERSHIP 57

(Year 1967-68)

39,797

SHARE CAPITAL 0.05 million USD

(Year 1967-68)

106.06 million

USD

PRODUCTION 0.18 (million MT)

(Year 1975-76)

6.85 (million MT)

TURNOVER 588 million USD

(Year 1989-90)

3019.57 million

USD

GROWTH OF IFFCO

IFFCO FOR MEMBERSIFFCO is wholly owned & controlled by Cooperative members.

MEMBER PARTICIPATION Participation in the governance

• All the member societies are given due representation.

• Regular meetings of Representative General Body.

• State/zonal advisory committee meetings.

• Regular field visit/ program is conducted.

• Employees & cooperative member’s participation in decision making

ECONOMIC PARTICIPATION• Every member shall subscribe to at least one share.

• Regular dividend on their investment. IFFCO pays maximum permissible dividend to its member societies.

• Marketing is done through cooperative network only.

DECISION MAKING • Board meetings/ meetings of sub committees of the board at regular interval.

• Annual general meeting is organized each year to get the members aware about the financial positions, achievements & ongoing projects.

DEMOCRATIC GOVERNANCE •Timely election of the representative general body.• Timely election of the board members.

CONTINUED…………….

DIVERSIFICATION & JOINT VENTURES

In order to leverage on its core competency nurtured over the years, IFFCO has been stepping up its investments in related businesses through various Joint Ventures & Associate Companies.

JOINT VENTURES

To enhance the fertilizer availability to the farmers & sustained growth of the society IFFCO forms following joint venture companies:-

OMAN INDIA FERTILISER COMPANY (OMIFCO)• A Joint Venture Company, in which IFFCO holds 25 per cent equity out of equity base of US $ 278 million, with installed capacity of16.52 lakh tonne Urea and 2.5 lakh tonne surplus Ammonia.

INDUSTRIES CHIMIQUES DU SENEGAL (ICS)• IFFCO holds around 19 per cent equity in ICS, which manufactures Phosphoric Acid for exports and Phosphatic Fertilisers for domestic consumption. ICS has capacity to produce 660,000 MT of Phosphoric Acid per year.

JORDAN INDIA FERTILIZER COMPANY (JIFCO)

• IFFCO and Jordan Phosphates Mines Company Ltd (JPMC), Jordan have formed a limited liability Joint Venture Company, namely Jordan India Fertilizer Company (JIFCO). In this IFFCO holds 52 per cent equity, while JPMC holds 48 per cent equity.

INDIAN POTASH LIMITED (IPL)• IFFCO holds an investment of Rs.2.68 crore in Indian Potash Limited (IPL) with equity shareholding of 34 per cent in the paid up equity share capital of IPL.

• IPL is the Indian canalizing agency for domestic potash requirements. It is engaged in the business of marketing of potash and imported fertilisers in India.

CONTINUED…………….

INDO EGYPTIAN FERTILIZERS COMPANY, SAE

• IFFCO promoted a joint venture in Egypt namely ‘Indo Egyptian Fertilizer Company SAE’ (IEFC) along with El Nasr Mining Company of Egypt to set up a Phosphoric Acid plant with a capacity of 1500 tonne P2O5 per day.

JOINT VENTURE IN AUSTRALIA• Has entered into a joint-venture with long-term offtake and supply agreement with Australia’s Legend International Holdings, Inc. for assured supply of Rock Phosphate to enhance the Phosphatic fertiliser availability to member farmers.

IFFCO KISAN SEZ LIMITED • IFFCO has embarked upon to set-up a multi-product ‘IFFCO Kisan SEZ’ at Nellore (AP) with primary focus on Food Processing and Agri Based Industries.

CONTINUED…………….

DIVERSIFICATION

IFFCO is exploring avenues for diversification into other profitable business areas (farmers oriented), apart from fertiliser sector, for the benefit of farmers, sustained growth and adequate return to member shareholders.

IFFCO KISAN SANCHAR LIMITED

• IFFCO launched IFFCO Kisan Sanchar Limited to use Information Communication Technology to empower farmers in rural India and to strengthen the cooperative network in the country.

• Support Farmers with value added information through mobile telephony.

CONTINUED…………….

IFFCO CHHATTISGARH POWER LIMITED (ICPL)

• IFFCO has diversified into Power Sector by incorporating a Joint Venture Company, namely IFFCO Chhattisgarh Power Limited (ICPL) so as to provide another important input- Electricity to the farmers, apart from fertilizer & seeds

IFFCO-TOKIO GENERAL INSURANCE COMPANY LIMITED (ITGI)

• To cater the insurance requirement of the farmers IFFCO TOKIO General Insurance Company Limited (ITGI) was formed as a Joint Venture Company by IFFCO & Tokio Marine & Fire Insurance Company.

• Weather insurance policy is one of its unique product providing insurance to farmers against weather.

NATIONAL COMMODITY & DERIVATIVES EXCHANGE LTD. (NCDEX)• IFFCO has acquired 12% equity in the Company. • It is a National level Commodity Exchange focussing primarily on agricultural commodities and provides a trading platform for Forward Commodity Derivative instruments.

• Provides a national level market for the farmers goods and an opportunity to them for hedging risk by way of forward trading.

NATIONAL COLLATERAL MANAGEMENT SERVICES LTD. (NCMSL)• IFFCO holds 13.33% equity in the Company.

• This is the First national level collateral management company to be set up in India.

• It provide services to farmers like Storage & Preservation, Quality Testing and Certification facilities, Collateral Management and Information Services

• It accredits warehouses which meet the parameters for scientific storage.

CONTINUED…………….

INFORMATION & COMMUNICATION TECHNOLOGY

HRMS, an in-house developed ERP, being implemented for better Governance, internal workflow & transparency in the work & information.

Multilingual Agri Information Portal to extend benefit of ICT to Cooperatives and farmers. More than 100 touch screen based Kiosks installed in 16 states.

Helps in making members more information efficient & strengthening the cooperative network.

SOCIAL & ENVIRONMENTAL COMMITMENT

INITIATIVE TOWARDS CLIMATE CHANGE

1.Following Scheme have been implemented to reduce Green House Emission

• Energy Saving Scheme • Switch over from Naphtha to LNG as Feed and Fuel • Installation of Carbon Dioxide recovery Plant

2. Trading of Carbon Credit under Climate Development Mechanism of Kyoto Protocol

IFFCO KISAN SEVA TRUST• A Charitable trust to provide relief and rehabilitation to victims in

rural India in the event of natural calamities

• For undertaking programs for welfare & critical medical attention of needy farmers.

Cooperative RURAL DEVELOPMENT TRUST (CORDET)

• To provide training to the farmers to improve their skills inagricultural production, dairy, poultry, fisheries and professionalleadership at village level.

• organizes training programs for the benefit of farmers.

INSTITUTIONS/ TRUSTS PROMOTED

INDIAN FARM FORESTRY DEVELOPMENT COOPERATIVE LTD. (IFFDC)

• Focuses on development of wasteland.

• Undertakes activities like promoting primary farm forestrycooperatives (PFFCS) to enhance the socio economic status of ruralpoor .

• Micro Enterprise Development Activities undertaken.

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

CONTINUED…………….