Ten farmers and a producer company: the Sahyadri Farms story, and how a farmer producer company works

In March 2004 a container of grapes from Nashik arrived in the Netherlands and was rejected by the buyer. The farmers who had grown them were owed money. Vilas Shinde, the agricultural engineer who had organised the shipment, sold his own land to pay them. Six years later, during the 2009-10 export season, European buyers rejected Indian grape consignments over residues of a banned chemical. Other exporters defaulted on their growers. Shinde paid his in full, again by selling his own property, at a cost reported at between ₹6 crore and ₹7 crore.

On 27 December 2010, with a group of ten farmers, he registered Sahyadri Farmers Producer Company Ltd at the Registrar of Companies in Mumbai. Its registered office was in Adgaon, the village outside Nashik where he had grown up as the son of a struggling grape farmer. In its first full year it sold ₹14.80 crore of produce. In FY26, by CRISIL's provisional figures, the group's revenue passed ₹2,500 crore. It is owned by more than 21,000 shareholder farmers, more than 95 percent of whom farm less than a hectare, and it has raised about ₹700 crore from European and Indian impact investors. In April 2026 it said it intends to list within three years, which would make its processing arm the first listed company in India controlled by farmers.

The legal form behind the story is the producer company under Chapter XXIA of the Companies Act 2013. It has existed since 2002 and in its current form since 2021, it is used by more than 10,000 government-supported farmer producer organisations, and it is still one of the least understood entities we are asked to register.

What is a producer company?

A producer company is a company registered under Chapter XXIA of the Companies Act 2013 whose members must be "producers" (people engaged in farming, fishing, forestry, animal husbandry, handicrafts or related activities) and whose purpose is to produce, process, market or sell its members' output, or supply them with inputs and services. It is treated as a private limited company, has no cap on the number of members, can never become a public company, gives each member one vote regardless of shares held, and distributes its surplus mainly as a patronage bonus in proportion to each member's business with the company.

The form was first created in 2002 as Part IXA of the Companies Act 1956, on the recommendation of a committee chaired by the economist Y.K. Alagh, to give farmer collectives the discipline of company law without the political supervision that cooperatives attract. The Companies (Amendment) Act 2020 moved the provisions into the 2013 Act as Chapter XXIA, Sections 378A to 378ZU, in force from 11 February 2021.

How did Sahyadri grow from ten farmers to ₹2,500 crore?

Sahyadri grew by finding its members a reliable export buyer, then a reliable price, then processing that absorbed whatever the export market would not take.

Sahyadri shipped 156 containers of grapes in 2011 and 1,150 in 2017, when it accounted for about 14 percent of India's grape exports. A 2021 profile put the average price a Nashik grower received at a wholesale mandi at ₹35 a kilo, against ₹67 a kilo through Sahyadri.

Processing changed the shape of the company. Sahyadri built a 120-acre campus at Mohadi in Dindori taluka with aseptic, frozen and individually quick-frozen lines, cold storage and packaging, and later a 50-acre citrus plant at Krushnoor in Nanded. The processing capacity across the two sites is reported at 3,500 tonnes a day. In FY25 the company processed about 156,000 tonnes of tomatoes, 103,000 tonnes of citrus, 37,000 tonnes of grapes, 23,000 tonnes of bananas and smaller volumes of sweetcorn, pomegranate and mango. By FY26 grapes were a minority business: 80 percent of revenue came from other crops, up from 60 percent in FY22. The company now makes aseptic pulps, frozen fruit, juice concentrates, and ketchup and jams under contract for Hindustan Unilever, and it runs a franchised juice bar chain, The Juice Farm, with 68 outlets in Maharashtra and Gujarat.

The membership grew with the revenue. The investors who backed the company in 2022 described 18,000 farmers on 31,000 acres across nine crops. By January 2026, Proparco counted 21,500 shareholder farmers, and Incofin reported 22,500 members and more than 30,000 registered farmers growing grapes, pomegranates, bananas, mangoes, citrus, cashew, tomatoes and sweetcorn, with ginger, turmeric, chilli and pineapple being added. The Mohadi campus employs more than 6,000 people; its cashew sorting workshop alone has over 300 workers, all women.

Shinde's description of the purpose has not changed since the 2022 fundraise: "The idea of Sahyadri Farms is to unite farmers and make them think like professional entrepreneurs." He has also been blunt about why: "As a small farmer, farming is a loss-making activity." The company has since helped promote at least 48 other farmer producer companies.

How did a farmer-owned company raise ₹700 crore from private equity?

It raised the money into a subsidiary, because a producer company's own shares cannot be sold to anyone who is not a producer.

Section 378ZD of the Companies Act says the shares of a producer company are not transferable except to an active member, at par, with the board's approval, and Section 378C says the company can never become a public company. So in 2020 Sahyadri formed Sahyadri Farms Post Harvest Care Ltd, an ordinary company, and in a scheme of arrangement effective 31 March 2022 moved the capital-intensive processing business into it. The producer company kept the farming side and a controlling stake.

In September 2022 the subsidiary raised ₹310 crore (about €40 million) from Incofin, Korys, FMO and Proparco, the first private equity investment into a farmer-led Indian company. In December 2024 it raised a further ₹390 crore (about $47.8 million) from responsAbility and GEF Capital Partners alongside the existing investors. After the second round the producer company holds 68 percent of the processing subsidiary and the investors about 29 percent. Other subsidiaries hold the supply chain business, retail, nurseries and a farm-technology venture. In May 2026 CRISIL upgraded the processing company's rating to A/Stable, noting a net worth above ₹950 crore and gearing of about 0.5 times.

When a legal form restricts who may own it, the part of the business that needs outside capital goes into a subsidiary that can take it, with the restricted entity as the parent; cooperatives and Section 8 companies use the same device.

How is a producer company governed?

The governance rules are written into Chapter XXIA and are closer to a cooperative than to a private company in every respect except enforcement, which sits with the Registrar of Companies rather than a cooperative registrar.

Formation needs ten or more individual producers, or two or more producer institutions, or a combination, and the Registrar must register the company within 30 days of a complete application (Section 378C). The memorandum must end the name with the words "Producer Company Limited" (Section 378F). There is no statutory minimum share capital.

Voting is one member, one vote, irrespective of shareholding; where the members are producer institutions, votes are weighted by their participation in the company's business. The articles may restrict voting to active members (Sections 378D and 378Z).

The board must have at least five and not more than fifteen directors (Section 378O). The first annual general meeting must be held within 90 days of incorporation and subsequent ones not more than fifteen months apart, with the audited accounts filed with the Registrar within 60 days of the meeting (Section 378ZA). The articles must provide for an internal audit by a chartered accountant at stated intervals (Section 378ZF), in addition to the statutory audit that every company must have.

Money flows differently from an ordinary company. Members are paid a price for their produce as decided by the board, with any "withheld price" paid later in cash, kind or shares. Only a limited return may be paid on share capital, and the surplus after that is distributed as a patronage bonus in proportion to each member's business with the company (Section 378E). Shares are equity only (Section 378ZB), are held as far as possible in proportion to patronage, pass to a nominee on death and must be surrendered when a member stops being a producer. Donations are capped at three percent of the previous year's net profit and political contributions are prohibited (Section 378ZH). Investment in other companies is capped at 30 percent of paid-up capital and free reserves without Central Government approval, though subsidiaries and joint ventures can be formed by special resolution (Section 378ZL), which is the provision Sahyadri used.

How is a producer company taxed?

A producer company pays corporate income tax like any other company on its own profits. The agricultural income exemption belongs to the farmers, not to the company.

For six years there was a specific relief. Section 80PA of the Income-tax Act 1961, introduced by the Finance Act 2018, gave a 100 percent deduction on the eligible business of a producer company with turnover up to ₹100 crore: marketing members' produce, supplying them with inputs, and processing their produce. The deduction applied to assessment years 2019-20 to 2024-25 and was not extended. The Income-tax Act 2025, in force from 1 April 2026, reproduces the provision as Section 150 with the same closed window, so there is no current producer company deduction. The cooperative deduction (old Section 80P, now Section 149) does not extend to producer companies.

On GST, fresh fruit and vegetables are exempt, but the exemption from registration for an "agriculturist" applies only to individuals and Hindu undivided families supplying their own produce. A producer company that processes, packs or trades must register once it makes taxable supplies, and its processed products are taxed at the rates in force after the September 2025 rate changes.

How does the government support farmer producer organisations?

The central sector scheme for the formation and promotion of 10,000 farmer producer organisations was launched on 29 February 2020 with an outlay of ₹6,865 crore. Each FPO gets a matching equity grant of ₹2,000 per member up to ₹15 lakh, a credit guarantee on project loans of up to ₹2 crore, and ₹18 lakh of management cost over three years. The 10,000th FPO, in Khagaria in Bihar, was marked in February 2025. Almost 5,000 of the first 8,000 registered FPOs had been onboarded to the ONDC network by that point, and around 40,000 to 50,000 other FPOs exist outside the scheme.

In December 2025 the Agriculture Secretary said the scheme would be extended for five years to 2031, and put the cumulative FY25 turnover of the scheme's FPOs at about ₹9,000 crore. A Lok Sabha reply in August 2026 reportedly broke that down: of the FPOs with audited FY25 accounts, 6,964 had turnover up to ₹50 lakh, 862 were between ₹50 lakh and ₹1 crore, and 1,135 were above ₹1 crore.

That distribution describes the sector better than the ₹9,000 crore total does. Most FPOs are small, many are undercapitalised, and a good number are dormant.

How do you register a producer company?

The process runs through the same SPICe+ system as a private limited company, with Chapter XXIA's membership and naming rules layered on top.

Reserve the name through Part A of SPICe+, ending in "Producer Company Limited". Prepare the memorandum and articles with the Chapter XXIA provisions on membership, voting, patronage bonus, withheld price and internal audit. Collect digital signature certificates and director identification numbers for the proposed directors (at least five), and identity, address and producer-status evidence for at least ten subscribing members. File Part B of SPICe+ with the attachments; the Registrar is required to register the company within 30 days of a complete application. The Ministry of Corporate Affairs charges no incorporation fee for authorised capital up to ₹15 lakh, and state stamp duty on the memorandum and articles applies as it does for any company. After incorporation, the company files its declaration of commencement of business within 180 days, appoints its first auditor within 30 days, and holds its first annual general meeting within 90 days.

The hard part is assembling ten genuine producers who understand that they are becoming owners, agreeing an articles clause on active membership, and setting the patronage and withheld-price rules so that farmers trust the company with their crop before it has a track record. Sahyadri's founders had earned that trust twice over, in 2004 and 2010, before they filed anything.

What the Sahyadri story says to founders outside agriculture

The company's founding members had seen Shinde sell his land to pay farmers in 2004 and again in 2010, so the 2010 incorporation formalised a relationship that already existed. Sahyadri then spent its first decade as a pure producer company, built processing inside it, and only in 2020 to 2022 carved the processing business into a subsidiary that outside investors could buy into. The holding structure followed the business.

The rule that only farmers can own a producer company is what makes farmers trust it, and it is also why Sahyadri needed a subsidiary to raise money. A founder who finds a legal constraint in the way should ask what the constraint is protecting before engineering around it.

Frequently asked questions

What is Sahyadri Farms and who owns it?

Sahyadri Farmers Producer Company Ltd is a farmer-owned company in Nashik, Maharashtra, incorporated on 27 December 2010 by Vilas Shinde and a group of ten farmers. It is owned by more than 21,000 shareholder farmers, most of them cultivating less than a hectare, and its group revenue passed ₹2,500 crore in FY26. Its processing business sits in a subsidiary that is 68 percent owned by the producer company and 29 percent by impact investors.

How many members are needed to form a producer company in India?

At least ten individual producers, or two or more producer institutions, or a combination of the two, under Section 378C of the Companies Act 2013. The board must have between five and fifteen directors.

What is the difference between a producer company and a cooperative society?

Both give each member one vote and share surplus by patronage. A producer company is registered with the Registrar of Companies under the Companies Act 2013 and follows company law on accounts, audit and filings; a cooperative is registered under a state cooperative act or the Multi-State Co-operative Societies Act 2002 and is supervised by a cooperative registrar. Producer company shares can be held only by producers; a cooperative's membership rules depend on its bylaws and the relevant act.

Can a producer company raise money from investors?

Not directly, because its shares can only be transferred to active members at par. The usual route is the one Sahyadri used: form an ordinary subsidiary for the capital-intensive business and sell shares in that subsidiary, with the producer company keeping a controlling stake.

Is a producer company exempt from income tax?

No. The 100 percent deduction under Section 80PA for producer companies with turnover up to ₹100 crore applied only to assessment years 2019-20 to 2024-25 and has not been extended. The Income-tax Act 2025 carries the provision as Section 150 with the same closed window. The company pays corporate tax on its profits; the farmers' own agricultural income remains exempt in their hands.

What support does the 10,000 FPO scheme give?

An equity grant of ₹2,000 per member up to ₹15 lakh per FPO, a credit guarantee on project loans up to ₹2 crore, and management cost support of ₹18 lakh over three years. The scheme reached its 10,000th FPO in February 2025 and the government announced in December 2025 that it would be extended to 2031.

Sources

MANAGE (National Institute of Agricultural Extension Management) case study on Sahyadri Farms, 2017-18; FMO press release of 14 September 2022 on the ₹310 crore investment; Proparco reports of February 2024 and January 2026; Incofin, "When farmers own the company: the Sahyadri Farms story", April 2026; ICRA rating rationales of March 2024 and March 2025; CRISIL rating rationale for Sahyadri Farms Post Harvest Care Ltd, 20 May 2026; Agrowon report of 1 October 2026 on FY26 turnover; FreshPlaza and Devdiscourse on the December 2024 fundraise; The Weekend Leader profile of Vilas Shinde (2021); MCA company master data; Companies Act 2013, Chapter XXIA (Sections 378A to 378ZU); PRS Legislative Research on the Companies (Amendment) Act 2020; PIB release of 28 February 2025 on the 10,000 FPO scheme; Business Standard, 12 December 2025, on the scheme's extension; Lok Sabha reply of August 2026 on the FPO scheme, as reported by Krishi Code; Income-tax Act 1961, Section 80PA; Income-tax Act 2025, Sections 149 and 150.