Nishant R. NairNishant R. Nair

Class - 9-2Roll No. - 28

‘‘Co-operation’Co-operation’

Derived from the Latin word ‘Derived from the Latin word ‘co-co-operarioperari’’

‘‘coco’ means ‘with’ and ‘’ means ‘with’ and ‘operarioperari’ ’ means means ‘to work’‘to work’

‘‘Co-operationCo-operation’ means working together’ means working together

‘‘Co-operative SocietyCo-operative Society’’ A A voluntaryvoluntary association association of persons;of persons; working together with working together with common economic common economic

objectiveobjective;; providing providing supportsupport to the members; to the members; self-helpself-help and and mutual helpmutual help;; non-profitnon-profit motive; motive; pooling pooling individual resourcesindividual resources for for group group

welfare;welfare; for for common benefitcommon benefit. .

OBJECTIVES

Render service, not for profit;

Mutual help, not competition;

Self help, not dependence;

Open membership

Membership open to all with common interest;

Minimum of ten members; No restriction on the maximum number; Members may specify the maximum

number for their Society

Voluntary Association

• Members coming together voluntarily;

• by choice, not by force;

• Continues for as long as he likes;

• May leave at his will.

State controlState control Registration compulsory;

Statutes, Rules and Bye Laws to protect the

interest of members;

Has to maintain books and records;

Subject to statutory audit of books by qualified

Chartered Accountants;

Functions under the regulatory supervision of

Registrar of Co-operative Societies

Sources of FinanceSources of Finance

Capital contributed by all the members;Capital contributed by all the members; May raise loans and secure grants from May raise loans and secure grants from

government;government; after its registration.after its registration.

Democratic ManagementDemocratic Management

Governed by a ‘Managing Committee’ or

‘Board of Directors’ elected by the members

of the society;

Managed on democratic lines;

One member one vote, irrespective of no. of

shares held;

Service motive

Co-operatives not to maximize profit but to provide service to its members;

A Consumer Co-operative Store sells quality goods to members at a reasonable price retaining a small margin of profit;

In a Housing Co-Operative, members reside by sharing expenses on maintenance and repairs.

Separate Legal Entity Separate legal entity; Limited liability of its members; Continuity of existence;

Death, insolvency or lunacy of a member not to affect the existence of a society

Can enter into agreements; Can purchase or sell properties in its own

name; Can sue and be sued.

Distribution of SurplusDistribution of Surplus

Distributes Profits earned among Members Distributes Profits earned among Members on the basis of members’ participation in on the basis of members’ participation in the business of the society; the business of the society;

Profits generated are not at the cost of its Profits generated are not at the cost of its members;members;

Example:– in a Consumer Society, profit generated by sale

of goods to general public is paid as purchase bonus to members on the basis of goods purchased by them from the society.

Self-help through mutual Self-help through mutual cooperationcooperation

• Co-operative Societies thrive on the principle of mutual help;

• They are the organizations of financially weaker sections of society;

• converts Weakness to strength by ‘self-help through mutual co-operation’;

• Fights exploitation and secure a place in society through “Each for all and all for each”.

Governed by the Co-operative Societies Act, 1912;

Minimum of 10 persons having the capacity to enter into a contract with common economic objectives;

A joint application along with the bye-laws of the society containing the details about the society and its members to the Registrar of Co-operative Societies of the concerned state;

After scrutiny, the registrar issues a Certificate of Registration

Formation of a Society

Requirements for Registration

Application with the signature of all members

Bye-laws of the society containing: Name, address and aims and objectives of the

society Names, addresses and occupations of

members Mode of admitting new members Share capital and its division

Easy Formation Open Membership Democratic Control Limited Liability Elimination of Middlemen’s . Profit

State Assistance Stable Life

Easy FormationEasy Formation

Formation easy compared to a joint Formation easy compared to a joint stock company;stock company;

Any ten adults with common intent;Any ten adults with common intent;

voluntarily forming an association;voluntarily forming an association;

Registered with the Registrar of Co-Registered with the Registrar of Co-operative Societies.operative Societies.

Open MembershipOpen Membership

Persons with common interestPersons with common interest

voluntarily coming togethervoluntarily coming together

may become a member of the may become a member of the society at his willsociety at his will

And leave the Society at will.And leave the Society at will.

Democratic ControlDemocratic Control

controlled in a democratic manner;controlled in a democratic manner;

Elects representatives to govern the Elects representatives to govern the affairs of the Society;affairs of the Society;

One member, one vote;One member, one vote;

Governing Council/ Committee Governing Council/ Committee accountable to members and the accountable to members and the Regulators.Regulators.

Limited LiabilityLimited Liability

liability of members limited to the extent of the capital contributed by them to the Society;

No personal liability to members for the liability of the Society

Elimination of Middlemen’s Profit

Combined strength of members; to derive economies of scale; for direct access to –

manufactures and producers; goods and services; to markets and distribution

channels; Eliminates middlemen’s profit

State AssistanceState AssistanceCentral and State assistance;Central and State assistance;– in the form of capital contribution;– loans at low rates of interest;– exemption in tax;– subsidies in repayment of loans, etc.

*

*Graph showing Government assistance to TDCC – Tribal Development cooperation corporation

Stable Life

fairly stable life;

continuous existence;

existence not affected by death, insolvency, lunacy or resignation of members.

Limited CapitalLimited Capital

Source of capital limited, by limiting Source of capital limited, by limiting membership to a particular section of the membership to a particular section of the society;society;

No incentive to members to contribute more No incentive to members to contribute more to the capital due to low rate of return;to the capital due to low rate of return;

Government’s assistance often inadequate Government’s assistance often inadequate for most Co-operativesfor most Co-operatives

Problems in Management

• lack of managerial talent due to –

• elected representatives lacking in managerial

experience and expertise;

• limited resources hampering outsourcing of

professional managerial talent;

Lack of Motivation

Lack of motivation owing to –Societies being service oriented not

profit oriented;

Extra efforts by any particular member not getting extra reward;

Being aloof and not involved does not result in denial of rewards.

Lack of Co-operation

Societies often suffer from –Personality differences;

Ego clashes;

Selfish attitudes;

Lack motivation;

Ignorance of or irreverence to principles of

co-operation

Dependence on Government

Societies ften tend to be dependent on government patronage and support in terms of grants, loans subsidies, etc., owing to – inadequacy of capital;Limited access to raw materials;Lack of market and distribution of channels for

products;Vagaries of nature leading to financial burden on

members, etc.

Consumers’ Co-operative SocietyConsumers’ Co-operative Society For protecting interest of general consumers;For protecting interest of general consumers; by making consumer goods available at a by making consumer goods available at a

reasonable price;reasonable price; Source goods directly from the producers or Source goods directly from the producers or

manufacturers;manufacturers; eliminates middlemen in the distribution eliminates middlemen in the distribution

process. process.

Some examplesSome examples::- Kendriya Bhandar, Kendriya Bhandar, - Apna BazarApna Bazar- Sahkari BhandarSahkari Bhandar- Employees consumer co-Employees consumer co-

operative societies; Etc.operative societies; Etc.

Producers’ Co-operative Society • to protect interest of small producers;• By making available raw materials, tools

and equipments, machinery, etc.;• Arranging Marketing & Distribution

channels, etc.

• Examples:• Amul• APPCO, • Bayanika, • Haryana Handloom,• Co-optex

Co-operative Marketing Society

Society of small producers and manufacturers;

collects the products from members

makes available better marketing & distribution

channels economically;

sells in the market.

Examples: Anand Milk Union Ltd., (Amul);

Co-optex

UP Handloom

Co-operative Credit SocietyCo-operative Credit Society

formed to provide financial support to members

accepts deposits from members;

grants loans to members at reasonable rates of interest

Examples: Village Service Co-operative Credit Societies, Employees co-operative credit societies, etc.

Co-operative BanksCo-operative Banks

formed to provide banking facilities to members;

accepts deposits;

grants loans at reasonable rates of interest Examples:

Co-operative Farming Society

formed by small farmers;to pool small holdings and work to benefits of large-scale farming;Examples:

Lift-irrigation Cooperative Societies;pani-panchayats

Housing Co-operative Society

provide residential accommodation to members

Constructs houses or apartments for members;

Provides amenities;

Takes care of maintenance and repairs.

IFFCO –IFFCO –Giant of a Co-operativeGiant of a Co-operative

Co-operatives’ Share in Fertilizer Co-operatives’ Share in Fertilizer ProductionProduction

BibliographyBibliography

Various Internet sitesVarious Internet sitesAcknowledgement: www.google.com

- Nishant R. Nair- Nishant R. Nair