COOPERATIVE ADVANTAGE IN THE TOUGHER COMPETITION

1. COOPERATIVE ADVANTAGE IN THE TOUGHER COMPETITION G. N. SAXENA DIRECTOR (COOP. DEVELOPMENT) IFFCO, INDIA

2. 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.

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

4. CONTINUED……………. • 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.

5. 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.

6. 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.

7. GLOBAL MELT DOWN • 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.

8. 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.

9. 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.

10. WHAT CO-OPERATIVES CAN DO • MEMBER DRIVEN • Identify Needs • Member involvement & • Member responsibility. • Inculcate Mature Leadership

11. CONTINUED……………. • PROFESSIONAL MANAGEMENT • Latest market information. • Decision on merit. • Transparency in decision making • Avoid duplication of work • (Competition with Cooperatives).

12. 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

13. 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

14. INDIAN FARMERS FERTILISER COOPERATIVE LIMITED (IFFCO) • 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.

15. IFFCO IS A SUCCESS STORY OF • Cooperative Initiative • Visionary Leadership • Democratic Governance • Professional Management

16. GROWTH OF IFFCO

17. IFFCO FOR MEMBERS • IFFCO 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

18. CONTINUED……………. • 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.

19. 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.

20. 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.

21. CONTINUED……………. • 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.

22. 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.

23. 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.

24. 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.

25. CONTINUED……………. • 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.

26. 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.

27. SOCIAL & ENVIRONMENTAL COMMITMENT • INITIATIVE TOWARDS CLIMATE CHANGE • 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

28. INSTITUTIONS/ TRUSTS PROMOTED • 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 in • agricultural production, dairy, poultry, fisheries and professional • leadership at village level. • organizes training programs for the benefit of farmers.

29. CONTINUED……………. • INDIAN FARM FORESTRY DEVELOPMENT COOPERATIVE • LTD. (IFFDC) • Focuses on development of wasteland. • Undertakes activities like promoting primary farm forestry • cooperatives (PFFCS) to enhance the socio economic status of rural • poor . • 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

30. THANK YOU