What is Producer Company?

What is Producer Company?

Producer Company is another classification of Private and Public Company. These types of companies have the features of co-operative societies. Only ‘primary producers’ or ‘producer institution’ can form a producer company and participate in the ownership of such companies.

‘Primary Producers’ means people engaged in the process of Primary Produce. Primary produce means produce of farmers arising from agriculture including animal husbandry, horticulture, floriculture, pisciculture, viticulture, forestry, forest products, re-vegetation, bee keeping and farming plantation products. It can also include produce of persons engaged in handloom, handicraft and other cottage industries, by-products of such products, and products arising out of ancillary industries.

A Producer Company will primarily deal with the produce of its members for carrying out any of the following objects:

  1. Production, harvesting, procurement, grading, pooling, handling, marketing, selling, exporting of primary produce of the members or importing of goods or services for their benefit. They may carry on any of the activities specified in this clause either by itself or through other institutions
  2. Processing including preserving, drying, distilling, brewing, venting, canning and packaging of produce of its members
  3. Manufacture, sale or supply of machinery, equipment or consumables mainly to its members
  4. Providing education on the mutual assistance principles to its members and others
  5. Rendering technical services, consultancy services, training, research and development and all other activities for the promotion of the interests of its members
  6. Generation, transmission and distribution of power, revitalisation of land and water resources, their use, conservation and communications relatable to primary produce
  7. Insurance of producers or their primary produce
  8. Promoting techniques of mutuality and mutual assistance
  9. Welfare measures or facilities for the benefit of members as may be decided by the Board
  10. Any other activity, ancillary or incidental to any of the activities referred to in clauses (a) to (i) or other activities which may promote the principles of mutuality and mutual assistance amongst the members in any other manner.
  11. Financing of procurement, processing, marketing or other activities specified in clauses (a) to (j) which include extending of credit facilities or any other financial services to its members.

The main features of a Producer Company are:

  • The registered producer company will be treated as a private limited company
  • Ten or more ‘Primary Producers’ are required to form a producer company. As in the case of private company, a minimum of two persons cannot get them registered.
  • The maximum number of members can exceed 50.
  • Maximum number of Directors shall be 5.
  • Minimum authorized and paid-up capital should of Rs.5 lakh.
  • It shall never become a public limited company.
  • The liability of the members is limited to the unpaid amount of the shares held by them.
  • Profit share will be in the ratio of business contribution and investment