IILM Graduate School of Management

Project Report on IFFCO

SUBMITTED To
Dr.Rajul Singh

SUBMITTED By
TRISHU SHARMA (FT-10-966)

Introduction of Corporate Social Responsibility

Corporate social responsibility (CSR) is also often referred to as business responsibility and an organizations action on environmental, ethical, social and economic issues. CSR can be described as an approach by which a company does the following: y y Recognizes that its activities have a wider impact on the society in which it operates, and that developments in society in turn impact on its ability to pursue its business sustainably. Actively manages the economic, social, environmental and human rights impact of its activities both locally and across the world, basing these on principles which reflect both international values and the organizations own values (ethics), reaping benefits for both its own operations and reputation as well as the communities in which it operates. Seeks to achieve these benefits by working closely with other groups and organizations local communities, civil society groups, other businesses and home and host governments.

Introduction Indian Farmers fertilizer Cooperative Limited is market leader of the Indian fertilizer industry. It was a unique venture in which the farmers of the country through their own Co-operative Societies created this new institution to safeguard their interests.

Brief history of IFFCO The cooperative societies play a vital role in fertilizer distribution in India. In fact in mid sixties the Co-operative sector in India was responsible for distribution of 70 per cent of fertilizers consumed in the country. This system had adequate and sufficient infrastructure for fertilizer distribution but it had not any production facility. Government of India also launched multiagency approach in fertilizer distribution in 1967. Private trade also entered in fertilizer distribution. As the time passed the private sector had started dominating fertilizer distribution in India. Cooperatives were getting secondary preference against the private sector. At the time cooperative societies realized that there was need to fill this supply demand gap and own its fertilizer manufacturing facility as dependable source of supply.

National cooperative development corporation (NCDC) initiated various steps setting fertilizer manufacturing facilities in cooperatives. Then cooperative league of USA proposed to government of India to set up a fertilizer plant in cooperative sector. USAID funded a Study Team in 1966 headed by Mr. Howard Gordon to study the feasibility of setting up a fertilizer plant in cooperative sector in India. Considering the results of this research for feasibility a high level delegation consisting team of American Cooperative Fertilizer Units from the Consortium of American Cooperatives (CLUSA) and The Cooperative Fertilizer International (CFI) visited New Delhi in April 1967. This delegation met with ministries of government of India, USAID, and cooperative leaders and suggested them to set up fertilizer manufacturing facilities for cooperative sector in India. At that time the American cooperatives owned most successful fertilizer manufacturing plants. They had 30% of total American fertilizer manufacturing capacity. But the problem with Indian cooperative sector was that they had only experience of running sugar/cotton mills with an investment of 2-3 Cr. While running of fertilizer manufacturing plant requires an investment of 80-100 Cr. There was no cooperative system in a single Indian state had the capacity to invest the huge amount required. So it was envisaged to bring together major state cooperative systems to join hands to undertake the venture of establishing fertilizer production capacity in the cooperative sector. After this government of India accorded approval for establishing fertilizer production facilities in cooperative sector. Cooperative League of USA (CLUSA) offered collaboration. Cooperative Fertilizer International (CFI) provided one million dollars Aid. Thus IFFCO (Indian Farmer Fertilizer Cooperative) was conceived and registered as A Multi-unit cooperative society. On November 3, 1967. In pursuance of the provisions of Multi-unit Cooperative Societies Act, 1942 under the Bombay Cooperative Societies Act, 1925 extended to the Union Territory of Delhi. Later on, a comprehensive Central Act, Multi-state Cooperative Societies Act, 1984, was passed by the Central Government, and IFFCO was deemed to have been registered as a Multistate Cooperative Society. Subsequently, with the enactment of the Multi-state Cooperative Societies Act, 2002, IFFCO was deemed to have been registered under the MSCS Act, 2002.

Objectives of setting up the company 1. To manufacture high analysis Chemical Fertilizer as per need of the farmers.

2. To supply Fertilizer to Farmers through Cooperatives so as to strengthen cooperative in India. 3. To educate Farmers about the latest Technical Know-how for their Socio-Economic Development Vision It has embarked upon comprehensive ambitious plan Vision-2015, which will guide the societys effort in emerging as a Global Leader. The salient features of Vision 2015 areTo emerge as a global leader in fertilizer in production to cater to the food security need of the nation. y Maximizing the synergies of the core business through downstream value additions and forward/backward integrations. y Enhancing presence in international markets through strategic joint ventures and synergistic acquisitions. y Diversification into other profitable business to maximize returns to our stakeholders. y Leveraging state of the Art technologies and global best practices to retain its global competitiveness. Achieve fertilizers production/marketing target of 15 million tons per annum with an annual turnover of Rs.30,000 crore. y

THE KEY DRIVERS FOR BUSINESS Leadership and management capabilities Management at the IFFCO is done by a supreme body which is formed by a representative general body. This body includes y Members of the Board of Directors y One deligate from each of the member societies holding shares of the value of Rs. 100 thousand and above. These boards of directors elect the chairperson and wise chairperson. After this they appoint the managing director and the directors for the operations (operations like finance, marketing, HR production) for the company. The Managing Director is the Chief Executive of the organization with responsibilities for general conduct, supervision and management of the day to day business and affairs of IFFCO. Currently Dr. U.S. Awasthi is the managing director of IFFCO. This strong team gives strength and directions to IFFCO to move in forward direction. Unique Marketing and Promotional Program Since the company deals in rural market of India, they have to face various challenges in creating awareness and knowledge. So they have come with their unique promotional activities. For the example they have a promotional activity kisan Sabha. In this program they program they try to solve various farming related problem and side by side they give knowledge about their new products to the farmers.

Encouraging innovation and use of the technology IFFCO has a fully equipped R&D team. They keep on coming with their new products. For the example they have launched new range of water soluble fertilizers. These fertilizers prevent the loss of important chemical which occur when fertilizers are being applied. Similarly they have launched environment friendly rage of bio fertilizers which are required to maintain the sustainability. Side by side they keep on teaching the formers about the new technologies and trends of the farming with the help of experts and their various promotional activities. Investing in People Skills IFFCO have a training institute at Gurgaon. In this institute the new employees are being trained by the experts of various sectors. For the example the a newly recruited field officer is trained for to deal for the various operations like distribution, marketing and side by side he is also trained to interact with the farmers and to solve their farming related problem. Networking and Collaboration The Company has established strong connections with various agricultural universities and institutions. These institutions provide knowledge about the latest research, trends and technologies to the company. This knowledge helps the company in providing better product to the end consumers i.e. farmers. Thus this gives company a competitive advantage. Company has done various collaborations with some big companies for its conglomerate diversification. They have come in collaboration with Bharti Airtel to launch a unique cellular services IKSL. They have collaboration with insurance sector giant of Japan Tokyo to launch a general insurance company IFFCO TOKYO.

Products The products of the company can be categorized into three categories 1. Bio- fertilizers 2. Chemical fertilizers 1. Urea - IFFCO's Urea is not merely a source of 46% of nutrient nitrogen for crops, but it is an integral part of millions of farmers in India 2. NPK - As far as Indian farmer is concerned, IFFCO's NPK/DAP is not just a source of crucial nutrients N, P, K for the crops, but is an integral part of his/her quest for nurturing mother earth

3. DAP - It is the most popular phosphatic fertiliser because of its high analysis and good physical properties 3. Water soluble fertilizers these fertilizers are helpful in avoiding the loss of chemical which occur during applying the fertilizers.

The Target Audience In India more than 65% people involves in agriculture or related services. For IFFCO, all the people, who are involve in farming, are the target audience. To make a reach to these people all over the country, the company has established a strong distribution channel of 40000 cooperative outlets and 158 farmer service centers spread over 29 states/union territories in all over the country. This target audience covers all SECs of the rural markets. Since the IFFCO is the market leader and have built a strong positive image in the consumers mind, the farmers of every segment want to use the IFFCO fertilizers.

The Marketing Challenges The company deals in rural markets. So it has to face various marketing challenges. Some of the challenges are explained below Poor infrastructure In India the infrastructure is improving in terms of better roads and transportation medium. But still there are number of villages where there are no pucca roads. People still depends on bullock carts for the transportation. To establish distribution centers at such places are still a big challenge for the company. Communication Media there are number of villages which have no supply of electricity. And if they have electricity supply then it is not certain. In this scenario company cannot depend upon electronic media for advertisements. On the other company cannot depend upon the print media also because illiteracy in the rural areas. These two points indicate how it is challenging to create awareness in the farmers mind. Storage problem Since in most of the rural areas have electricity and infrastructure problem, storage of fertilizers is also a big challenge for the marketers of the company.

Seasonal demand of the fertilizers The demand for the fertilizers occurs season-wise. They are not demanded in all 12 months. The huge demand for the fertilizers occurs into certain seasons. So the designing warehousing and distribution channel is one of the biggest challenges for the company. Lack of knowledge and skills in the consumers The Company has to face several problems in educating farmers about new technology and new trends because of illiteracy, lack of knowledge and unwillingness of the farmers.

Strategies to cope up with these challenges Cooperative outlets At present, there are more than 40000 cooperative outlets in the country. These cooperative outlets help to intensify the distribution channel. A multilevel distribution network helps to cope up with poor infrastructure. Along with cooperative outlets the company has started opening its own retail outlets at different areas. These outlets provide number of solution for farming related problems like fertilizers, soil testing etc. Communication Media Since the print media and electronic media could not be sole source of information, so company have started its unique way of promotions. They do their promotion with the help of its promotional activities. These promotional activities include direct interaction with the farmers, education of farmers about new technologies and trends, problem solving by direct interactions. They organize various meetings, seminars and demonstrations for these promotional activities. Storage problem They have several collaborations with various warehouses like State warehousing corporation, FSC etc. These warehouses provide are spread all over in the country. They provide all solution for storage related problem. Seasonal Demand the company is scaling up its production to cope up with excess seasonal demand. And collaboration with warehouse provides solution for storage.

Lack of Knowledge and skills in the consumers They always try to educate the farmers about the new technology and new trends in the farming with the help of their promotional activities. For the example they have a promotional activity two plot demonstration. In this activity the farmers are educated about new technologies and trends by visual and practical ways.

Present Scenario And Companys Report Highest Production of Fertilizers 85.83 lakh MT

(Previous best 81.98 lakh MT in 2009-10) Highest Production of Urea (Previous best 43.24 lakh MT in 2009-10) Highest Production of NP/NPK/DAP (Previous best 38.74 lakh MT in 2009-10) Highest Sales of Fertilisers (Previous best 118.27 lakh MT in 2009-10) Highest Sale of Urea (Previous best 63.35 lakh MT in 2009-10) Highest Sales of NP/NPK/DAP (Previous best 54.92 lakh MT in 2009-10) Highest Profit before Tax (Previous best Rs. 807.09 crore in 2002-03 Highest Profit after Tax (Previous best Rs. 557.21 crore in 2002-03) Sales Turnover (Best Rs 32933 crore in 2008-09) Highest Plant Productivity (Previous best 1669 MT/Employee in 2005-06) Highest Marketing Productivity (Previous best 7885 MT/Employee in 2009-10) Lowest Composite Energy Consumption (Previous lowest 5.832 Gcal/MT of Urea in 2009-10) Highest Fertiliser Despatches (Previous best 117.66 lakh MT in 2009-10) 126.55 lakh MT 5.814 Gcal/MT of Urea 8622 MT/Employee 1710 MT/Employee Rs. 21195.16 Crore Rs. 791.49 Crore Rs 1025.78 Crore 57.65 lakh MT 68.23 lakh MT 125.88 lakh MT 41.81 lakh MT 44.02 lakh MT

Learning and suggestions Learning from the project is given below Publicity without electronic media and print media - from this project we can see that promotion can be done without print and electronic media. The company has unique promotional activities like seminars; meeting etc. addition to these promotional activities they also adopt some villages. In these villages IFFCO is responsible for education and training of formers. In this way they are able to generate goodwill among the farmers. Creation of distribution channel when infrastructure is not there With the help of cooperative societies, they have build very strong distribution channel. This distribution channel help not only the company but it helps in empowerment of the farmers.

Suggestion  Although company have very strong distribution channel, but it has to face shortage of fertilizers at the peak seasons. So it should try to increase its production capability.  The company have strong brand recognition, but to increase its visibility print media and electronic media are good options  The company should work to increase reach of promotional activities. As we can see that there are number of people who are not aware about the promotional activities of the IFFCO.  Company should also focus on publicity of the other products like bio fertilizer and water soluble fertilizers.