Producer Company

Definition, Registration, and Types of Producer Companies in India

calendar03 Jun, 2021
timeReading Time: 3 Minutes
Types of Producer Companies in India

Agriculture has remained the center stage of the Indian economy for years. Its impact on the nation’s GDP is beyond incredible. For years, this sector was in desperate need of ground-up rectification against the pressing issues related to technological implementation, agriculture labor, policy changes, etc. In light of this fact and to instill better governance, the government of India in 2002 came up with the concept of Producer Company. In this write-up, you will know about the definition, registration, and types of producer companies in India. 

What is the Legal Definition of a Producer Company? 

Producer Company refers to a body corporate possessing objects or undertakings cited on section 581B & registered as producer company as per the Companies Act, 1956[1].

As per the Companies Act, 1956, the goals of such companies is related to all or any of the given matters: 

  • Production
  • Harvesting
  • Procurement
  • Grading
  • Pooling
  • Handling
  • Marketing
  • Selling 
  • Import-export of primary produce

Read our article:What are the various benefits of registration of Producer Company in India?

An Overview on Formation & Producer Company Registration

A Producer Company must be established by: 

  • Ten or more individuals (each of them being Producers); or by 
  • Two or more Producer entities; or by 
  • A combination of 10 or more person & Producer institutions

The Producer Company should meet its objects as cited in the Act. After fulfilling the required norms, the registrar will issue the Incorporation certificate within thirty days of receiving the mandatory documentation. Now let’s move to the next section in which we will see different types of producer companies exist in India.

Types of Producer Companies exist in our Nation

The following section depicts the different types of producer companies that exist in India. 

Production Businesses 

Such an entity deals with the production, procurement, or manufacturing of primary produce. 

Marketing Businesses 

Marketing business technically refers to an establishment engaged with the marketing or promotion of primary produce or provision of educational services.

Technical Service Businesses

Such establishment primarily renders educational services and training to producers. It may also be engaged with activities related to research and development.

Financing Business 

As the name suggests, the financial business is the one that offers financial assistance to companies mentioned in this list. Their major stream of revenue comes from the interest imposed on the disbursed amount. 

Infrastructure Businesses 

These entities usually provide the infrastructure to producers in terms of water resources, electricity, land utilization, irrigation techniques, and so on. 

So, these are the types of producer companies in our country; the section below will talk about members’ obligation and their undertaking in the producer company. 

Duties performed by the producer company’s members as per the Act 

  • Processing, including preserving, brewing, drying, vinting, distilling, canning & packaging of produce.
  • Manufacture or trading of machinery/equipment
  • Providing education based on mutual assistance principles to the members and other relevant individuals. 
  • Offering technical services, training, consultancy services, R & R&D, & all other activities related to promoting its members’ interest. 
  • Generation and distribution of power, utilization of water & land resources, their use and conservation relatable to primary produce; 
  • Insurance of primary produce or their respective producers.
  • Advocating techniques relatable to mutuality & mutual assistance. 
  • Welfare measures or facilities for the members’ benefits as may be cited by the board. 
  • Other undertakings may advocate the principle of mutuality amongst the members. 
  • Financing procurement, marketing, manufacturing, or other undertakings mentioned in clauses (a-j) includes an extension of credit facilities or any other financial services to its members. 

Key Point to Ponder regarding Producer Company

i. The members have unavoidably to be primary producers
ii. CompanyThe company shall end with the terms “Producer Company Limited”.
iii. There is no cap on the number of members secured by these companies.
iv. After accorded with registration, these entities shall transform into a private limited company for the objective of law’s application &the company’s administration.
v. There is a cap on the minimum limit of members, which is, at present, set out at 10.
vi. The producer company’s share shall comprise of equity shares only
vii. Minimum 5 & not more than 15 directors
viii. Producer Company’sundertakings should be in line with the given bylaws and Act governing it.
ix. The board of the producer company is responsible for appointing a full-time chief executive.
  • Producer Companies should periodically audit their accounts followingtheir AOA under the supervision of the Chartered Accountant.
  • The auditor shall prepare a yearly audit report to the company’s members on the account scrutinized by him.
  • The producer companies’ auditors have to report on some items such a bad debts & debts due, verification of liquidity reserves & securities, details of assets & liabilities, loans extended to Directors, and donations’ detail and subscription.
  • A certain amount of a general reserve has to be maintained by the producer companies.
  • The non-availability or shortage of said reserve shall be compensated by the members’ contribution in proportion.


Producer Company refers to an entity that is technically formed by a group of farmers. It can operate as a corporate entity under the Ministry of Corporate Act. A Producer company possesses the characteristic of a cooperative society and a private limited company. It combines the efficiency of a company and the vibrancy of a cooperative enterprise. It possesses the unique traits of cooperative business with a regulatory framework identical to that of a private limited company. 

Read our article:Documents Required for Producer Company Registration: A Complete Overview

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