The Producer Company is a unique business model. The term "Producer Company" denotes that only certain individuals, known as "primary producers," are eligible to become shareholders in the Producer Company.
Primary Producers are individuals who engage in primary agricultural activities such as:
1. Animal Husbandry is the breeding or care of farm animals.
2. Horticulture is the production and cultivation of plants, fruits, and vegetables.
3. Floriculture: The cultivation of flowers.
4. Pisciculture refers to fish farming.
5. Viticulture: The cultivation of grapes.
6. Forestry: the preservation of forests.
7. Re-vegetation is the process of rebuilding or replanting disturbed land.
8. Beekeeping is the practice of keeping bees to collect honey.
9. Other activities of the producer company may include handloom, handicraft, and so on.
Producer companies are the preferred business model among farmers because their areas of operation are not limited to a single state, as is the case with cooperative societies.
Furthermore, it has less government intervention in a running company and can access financial institutions to raise funds for day-to-day expenses.
A Producer Company's Goal
The following are some of the various reasons for establishing a Producer Company in India:
1. Members' primary produce production, harvesting, procurement, grading, pooling, handling, marketing, selling, and export.
2. For the preservation, drying, distilling, brewing, venting, canning, and packaging of its members' produce.
3. Produce, sell, or supply primarily machinery, equipment, or consumables to its members.
4. Provide mutual assistance and education to its members and others.
5. Provide technical services, consulting, training, research and development, and all other activities to advance the interests of its members.
6. Power generation, transmission, and distribution, land and water resource revitalisation, use, conservation, and primary produce communications
7. Producer insurance or primary produce insurance
8. Promoting mutuality and mutual assistance techniques.
9. The Board decides on welfare measures or facilities to benefit members.
10. Any other activity, ancillary or incidental to any of the abovementioned activities, may promote the members' mutuality and mutual assistance.
11. Extending credit facilities or other financial services to its members is one way of financing procurement, processing, marketing, or other activities.
12. Every Producer Company must deal primarily with the production of its active members to achieve any of the abovementioned goals.
What Are the Advantages of a Producer Company?
1. Legal Entity Separate
The advantages of the Producer Company stem from the fact that it is an organisation, i.e. a legal and legitimate entity created under the Act.
As a result, a producer association has a broad legally recognised limit and can declare a property as well as obtain obligations.
As a separate legal entity, individuals or directors of a producer entity have no obligation to the producer organisation's lenders.
2. Tax Advantages
If the companies are registered as farmer-producer companies, a 100% deduction is available for those with an annual turnover of Rs. 100 crore, and companies that make a profit will not have to pay any tax.
The Government of India has extended the benefits of Producer Company incorporation to farmers, who are the most important pillars of our economy and the driving force behind its growth.
3. Simple Administration
They can effectively change the producer organisation's Board of Management by documenting the company's basic structures with the Registrar of Companies.
A producer organisation's Board of Management controls and manages the producer company's functions.
4. Investment and loans
The government must provide financial support to these members of the producer companies because they are the initial producers and will require funding from time to time.
As a result, the government established NABARD bank to benefit Producer Companies.
The bank's goal is to provide loans to farmers for up to six months to meet the needs of producer companies.
5. Existence indefinitely
A producer entity has an 'unending succession' that can be carried out indefinitely until it is legally broken down.
As a separate legal entity, a producer organisation is unaffected by any part takeoffs or demise.
6. Excellent Governance
It is the government's responsibility to consider and maintain the interests of the producer organisation's members for the organisation's success.
7. Procedure Company Support
SFAC, NABARD, Departments of Government, and Corporate, Domestic, and International Aid Offices provide money and dedicated assistance to the Producer Organisation Promoting Establishment (POPI) for Producer Organisation advancement.
8. Assist the Members
A Producer Organisation will help individuals earn more money by attempting the majority of the exercises listed.
The Producer Organisation can purchase the products in bulk at a lower cost.
Furthermore, by transporting in bulk, transportation costs are reduced.
The Organization can also provide data to producers to allow them to keep their produce until market prices skyrocket.
All of these intercessions will result in wage increases for essential producers.
9. Improved Facilities
A producer organisation provides a large platform for primary farmers to obtain better facilities.
As a result, these Producer Company members can easily access government services such as MNREGA, Pension, Loans, PDS, and Scholarships.
Producer Company Characteristics
The following characteristics distinguish the Producer Companies:
1. Private limited companies are what producer companies are.
2. Even though it is a private limited company, it can have more than 50 members.
3. A Producer Company must be formed by 10 or more individuals, producers, or any two or more producer companies.
4. The Producer Company must have at least 5 directors but at most 15 directors.
5. Conversion is not possible in any other business structure, such as a private limited company, a public limited company, a limited liability partnership, or an LLP.
6. The producer Company's name must include the words "Producer Company Limited."
7. Vanilla India Producer Company Limited, for example.
8. A minimum paid-up capital of Rs. 5 lakh is required.
9. Regardless of the producer company's shareholding, voting rights in the producer company incorporation are aligned with the principle of "one man-one vote.
Why choose a Producer Company?
Producer firms can benefit from various central and state government schemes such as "Rashtriya Krishi Vikas Yojana funds," the "National Food Security Mission," and so on.
Equity Grant Program:
Each Producer Company receives a grant of up to Rs. 10 lakh to help them increase their capital base.
Credit Guarantee Fund (CGF): This fund will cover 85% of bank loans made to Producer Companies.
Every Member of a Producer Company receives value for the products or services pooled and supplied, as determined by the Producer Company's Board of Directors.
The withheld price will be paid out later in cash or equity shares in proportion to the number of products supplied to the Producer Company.
Every member receives a limited return if bonus shares are distributed to all members.
The excess, if any, remaining after payment will be distributed as a patronage bonus among the members in ratio to their participation in the Producer Company's business.
Eligibility Criteria to become a Producer Company Registration in India
Membership and capital requirements:
1. The applicant must meet the following membership requirements to register as a Producer Company incorporation under the Companies Act of 2013:
2. There must be a minimum of five directors in a Producer Company.
3. A Producer company must have a minimum of ten members.
4. A minimum of two institutions can form a Producer Company.
5. A minimum capital of five lakh rupees is required for the incorporation of a Producer Company.
6. It cannot be converted into a public limited company.
7. Directors are appointed.
8. Every Producer Company must have at least five and no more than fifteen directors.
9. Except for an Inter-State Cooperative Society, which is incorporated as a corporation. Except for an Inter-State cooperative society incorporated as a Producer Company, it has more than fifteen directors for the first year of its existence.
10. The Board of Directors is made up of at least five members who sign the Memorandum and Articles of Association.
11. The directors' election will occur within ninety days of the Producer Company's registration.
12. Every appointed director may serve for no less than one year and no more than five years.
13. Every retired director is eligible to be re-appointed to the board.
14. The directors of the Board are elected or appointed at the Annual General Meeting by the existing members (AGM).
15. The Board may co-opt one or more expert directors, not to exceed one-fifth of the total number of directors, or appoint any other person as an additional director for such period as the Board deems appropriate, provided that the expert directors do not vote in the election of the Chairman.
Documents Required for the Registration of a Producer Company in India
The following documents must be submitted to the Ministry of Corporate Affairs with the application for registration of a Producer Company:
1. PAN card copy with self-attestation
2. One photograph (in colour)
3. Copy of any of the Identity Proofs, such as a driver's license, passport, or voter ID.
4. A self-attested copy of any of the following address proofs: a bank passbook/bank statement, a telephone landline bill/mobile bill, or an electricity bill.
5. For the Company Address proof, an electricity bill, telephone bill, mobile bill, or gas bill is required.
6. A Rent Agreement and a NOC (No-Objection Certificate) for doing Business & Taking the Registration Process for Producer Company Registration in India are required in the case of the rented property.
Registration of Producer Company
The following is a step-by-step procedure for registering a Producer Company in India, also known as the registration process of a farmer producer organisation in common parlance:
1. Choose a distinct name for your company.
2. Using the RUN application on the MCA web portal, reserve the name of the Producer Company.
3. Obtaining the DSC and DIN of the company's directors
4. Creating the company's MOA and AOA
5. Submitting an online application for the formation of a Producer Company
6. The Ministry of Corporate Affairs evaluates the application for Investment from General Reserves
A Producer Company incorporation may invest its general reserves in one or more of the following or a combination of the following:
1. Securities, fixed deposits, units, but instead bonds issued by the Central Government, State, And local governments, cooperative societies, or scheduled banks that have been approved.
2. Co-operative banks, state collaborating banks, cooperative land development banks, and central cooperative banks are all examples of cooperative banks.
3. A scheduled financial institution
4. The Indian Trusts Act of 1882 specifies securities.
5. Anyone else inter-state cooperative society's or cooperative society's shares and securities
6. Public financial institution shares, securities, or assets
A Producer Company's Audit
Compliances of Producer Companies
Every Number Of products must have an internal review of its accounts performed by a chartered accountant at regular intervals.
The ordained auditor for the internal audit must report on the following items concerning the Producer Company:
1. Amount of debt owed, as well as details on bad debts
2. Securities and cash balance
3. Asset and liability information
4. Contradictory transactions
5. Loans made to the Producer Company's directors
6. The Producer Company's donations and subscriptions
7. Any other information which is necessary by the auditor.