FPOs-Top 10 Differences Between FPOs (Farmer Producer Organisation) & Co-operative Societies. किसान कंपनी क्यों' स्पेशल' है ? 'कृषि- सहकारिता' से

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FPOs-Top 10 Differences Between FPOs (Farmer Producer Organisation) & Co-operative Societies.
 Key differences between Cooperative Societies and Producer Companies

 PARAMETER - 1.COOPERATIVE SOCIETY 2. PRODUCER COMPANY
Registration- 1.Cooperative Societies Act      2. Indian Companies Act
Objectives- 1.Single object  2.Multi-object
Area of Operation- 1.Restricted  2.discretionary Entire Union of India
Membership- 1. Individuals and cooperatives  2.Any individual, group, association, producer of goods or services
Shares-1. Non tradable  2.Not tradable but transferable; limited to members at par value.
 Profit sharing 1.Limited dividends on shares Commensurate with volume of business Voting rights One member, one vote, but Government and Registrar of Cooperatives hold veto power One member, one vote. 2.Members not having transactions with the company cannot vote.
 Government control- 1.Highly patronized to the extent of interference 2.Minimal, limited to statutory requirements
Extent of Autonomy -1.Limited in “real world scenario” 2. Fully autonomous, self-ruled within the provisions of Act
 Reserves -1.Created if there are profits Mandatory to create every year Borrowing power Restricted as per bye-law. Any amendment to bye-law needs to be approved by the Registrar and time consuming.  2.Borrowing limit fixed by Special Resolution in general meeting. Companies have more freedom to raise borrowing power. Relationship with other corporate / business houses / NGOs Transaction based Producers and corporate entity can together float a producer company.



              What are the advantages of a Producer Company?
 a. A Producer Company is a hybrid between a Private Limited Company and a Cooperative Society, thus enjoying the benefits of professional management of a Private Limited Company as well as mutual benefits derived from a Cooperative Society.
 b. Ownership and membership of a Producer Company is held only by “primary producers” or “Producer Institution/s” and member’s equity cannot be traded. Hence, nobody can take over the company or deprive the primary producers of their organisation.
c. The clauses of Private Limited Company shall be applicable to the producer companies except the clauses specified in Producer Company Act from 581-A to 581-ZL which make it different from a normal private or limited company (refer the Producer Company Act for details). This enables a professional framework for a Producer Company.
d. The liability of the members is limited to the unpaid amount of the shares held by them. Hence, the private assets of the members are safe from company losses.
e. The minimum paid-up Capital being Rs. 1 Lakh and minimum authorized capital being Rs.5 lakh for a PC, it easy to mobilise the small amount.
 f. Minimum number of producers required to form a PC is 10 while there is no limit for maximum number of members and the membership can be increased as per feasibility and need. This helps even 10 individuals start a Producer Company which is easy.
 g. There cannot be any government or private equity stake in the Producer Companies, which implies that PC cannot become a public or deemed public limited company. Hence, any Government or other corporate threat is non-existent in professional functioning of the company.
 h. The area of operation for a PC is the entire country giving flexibility to expand and do business in a free and professional manner.Why should a PO prepare a business plan? Every business irrespective of size needs planning. Business planning is essential for growth and sustainability. It provides broad ideas to meet the expected and unexpected opportunities and obstacles the future holds. In case of a PO, it is all the more essential since most of the members will be acting as businessmen for the first time.

                           A business plan helps the PO in the following ways:
a. It helps in examining viability of the venture in a particular market.
b. It provides guidance to the PO for organising and planning activities.
 c. It serves as an important tool in accessing finance/funding.
 If the financier is comfortable with the business plan, the PO will be asked to prepare a Detailed Project Report (DPR).
What are the elements of a business plan? The business plan provides broad parameters for achieving the goals of the PO. A typical business plan will contain the following: a. Executive summary  b. Business Description c. Industry/Sector analysis d. Marketing plan e. Operations plan f. Financial plan.

 Manmath Biradar
manmathbiradar@gmail.com

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