2007-2009
(SUBMITTED TO PANJAB TECHNICAL UNIVERSITY)
CERTIFICATE OF ORIGINALITY
This is to certify that the summer training report titled APPRAISAL OF FOOD GRAIN ACTIVITY OF MARKFED being submitted to RAYAT AND BAHRA INSTITUTE OF MANAGEMENT by TANISHA DADHWAL of. 2nd Semester in partial fulfillment of the award MBA. is a bonafide study work carried out by her under my supervision and guidance.
PREFACE
A project work is a mandatory requirement in the MBA in Punjab Technical University, Jalandhar. The industrial internship aims at exposing the young prospective executive to the actual business world, especially at the early stages of their development in the organizations. This training not only broadens horizons but also helps them to grasp the various intricacies of the business so that it builds in them the confidence when they are to occupy the executive positions. To fulfill these aspirations of mine I entitled Markfed Asias largest marketing cooperative for my training. The cooperation I got from thepeople at Markfed is unique which I cannot forget. For that I am indebted to them.
ACKNOWLEDGEMENTS
It has been a subject of great honour for me to have involved with the pioneer and versatile organization of Markfed for the period of six weeks as a summer vacation trainee. I would also like to express my gratitude to Mr. Raghubir Singh and Mr. Kanti Suri for their direction and assistance in completing the project. It is my privilege to express my profound sense of gratitude and indebtedness to Mr. Inderjeet Singh, Mr. Chauhan , Mr. S.S.Saini , Mrs. Navdeep Kaur and Mr. Pritam Kakkar of Food Grain Accounts Department, for their enlightened guidance, ever willing help, constructive criticism and consistent encouragement in the preparation of this project report. Finally it is an opportunity of immense pleasure to study under the guidance of highly qualified, dedicated and experienced faculty members of RBIM (KHARAR), the prestigious institution that has emerged as a premier centre for excellence in MBA. Indeed special thanks are owed to Mr. the Principal and members of faculty for their untiring efforts and encouragement in execution of the study.
EXECUTIVE SUMMARY
A project work is a mandatory requirement for the MBA Punjab Technical University, Jalandhar. Writing of this research paper is an integral part of MBA which envisages exposure to the students to the ground realities through carrying out on the spot studies and thus sharpens their analytical faculties. The industrial internship aims at exposing the young prospective to the actual business world. This training practice provides a platform to the young trainees, where they can set forth the foundation of an illustrious career. It broadens their horizons and also helps them to grasp the various intricacies of the business, which will enhance their ability to adjust the dynamic business world, when they occupy the executive positions. To fulfill these aspirations of mine I entitled Markfed Asias largest marketing co-operative as my research project. The co-operation I got from the people at Markfed is unique which is unforgettable. For that I am indebted to them.
TANISHA
CONTENTS
CHAPTER 1
INTRODUCTION
CHAPTER 2
MARKFED ASIAS LARGEST MARKETING COOPERATIVE GENESIS OF THE GIANT OBJECTIVES MANAGEMENT FUNCTIONS OF MARKFED ACHIVEMENTS OF MARKFED ANALYSIS OF BUSINESS TURNOVER & PROFITS CHAPTER 3 WEEKLY TRAINING REPORT
WEEKLY WORK SCHEDULE CHAPTER 4OBJECTIVES OF STUDY & RESEARCH METHODOLOGY OBJECTIVES OF STUDY RESEARCH METHODOLOGY
SOURCES OF INFORMATION
CHAPTER 5-
ACTIVITIES CARRIED IN THE DEPARTMENT ORGANISATION STRUCTURE RABI PLAN ( IN DETAIL) CHAPTER 6 FINANCIAL APPRAISAL
BRANCH ACCOUNTING DIVISIONAL ACCOUNTING PLANT ACCOUNTING CHAPTER 7 CHAPTER 8 SWOT ANALYSIS ANALYSIS OF WHEAT ACTIVITIES SUGGESTIONS BIBLIOGRAPHY ANNEXURES
INTRODUCTIO N
INTRODUCTION TO COOPERATIVES
The cooperative movement has been necessitated to protect the interests of the weaker sections of the society. The primary objective of this movement is how to protect the economically weaker sections of society. In all forms of organizations be it a sole trade, partnership or joint stock Company, the primary motive is to increase profits. The businessmen try to promote his interest through all possible means including exploitation of consumers. The cooperative form of organization is a democratic set up run by its members for serving the interest of them. It is self help through mutual help. The philosophy behind cooperative movement is All For One and One For All. Cooperative is a form of the organization wherein persons voluntarily associate together as human being on the basis of equality for the promotion of the economic interests of themselves. - According to Hubert Calvert A society which has its objective: the promotion of economic interests of its members in accordance with cooperative principle.
-
To sum up we can describe a co-operative society as : Cooperative societies are voluntary associations started with the aim of service to members.
As per section 6 of the Co-operative Societies Act, 1912, any ten persons who are competent to enter into contract and who wish to form a cooperative society which make an application to the Registrar of cooperative societies of the state, wherein they propose to establish the cooperative society. The society is managed by the managing committee. The members of which are elected annually at the general meeting of the society.
Each registered society is required to frame its own by-laws, which have got to be registered with the Registrar of cooperative societies. Any change in the bye-laws, which have got to be registered with the registrar of co-operative societies. Any change in the by-laws will be effective only if it has been approved by the registrar of cooperative societies. From the liability point of view, the cooperative societies may be of two types : Limited liability societies: The liability of the members of a limited liability society is limited. In the event of loss the members cannot be made liable to pay more than the nominal values of shares held by them. No member other than the registered society can owe more than 20% of the shares of the society or the values of shares should not increase more than Rs. 1000. Unlimited liability societies: The liabilities of the members will be unlimited if the object of the society is to raise funds in order to lend money to its members or where the majority of the members are creditors of the society. the
10
Govt. support,
Progressive policies, Innovative plans and Dedicated personnel at managerial and field level.
11
The usage of state of the art technology/methodology and cooperative philosophy has further helped in its progress. Markfed continuously motivates the farmers to adopt innovative strategies in production and marketing, which in turn, has resulted in creating a substantial base for production and marketing of value added agro food products, both for domestic and foreign markets while meeting the highest standards of quality and safety. Markfed is not a totally commercial organization. It considers its social responsibilities also. Free service rendered to the farmers to help them obtain optimum from chemical fertilizers and quantity/quality of water used. Markfed has suffered losses in the past, but with proper financial management, inventory control, project planning and with improved system of management and modernization of marketing of manufactured items, Markfed started generating profits since 1985-86 that has amply improved its dwelling financial position. Markfed cooperative philosophy which involves development based on mutual help, justice and equality, service above profit, democratic set up and shared prosperity makes it a true friend of Punjabs farmers. Employing this principle of brotherhood, Markfed has emerged as a significant contributor to various socio economic development programs. Markfeds success is the true reflection of the spirit and dynamism of the people it represents: the people of Punjab.
12
CORPORATE PROFILE
13
GENESIS OF A GIANT
MARKFEDS success is the true reflection of the spirit and dynamism of the people it represents: the people of Punjab. Markfed began its operations in September 1954 with 13 members and a share capital of Rs. 54000. Initially, the major functions of Markfed included production and procurement of agricultural inputs and market agricultural commodities for Punjabi farmers. And what began with 13 members, a share capital of Rs. 54,000/-, three employees and one bicycle has today become Asias Largest Marketing Cooperative, Markfed with an annual business turnover of over 2 billion USD. Now, Markfed is a federation of 3021 member cooperative societies, directly representing the interests of over one million farmers. Today, this organization, with more than 20 industrial units, employs more than 3286 employees, has a network of manufacturing units, service centers and office crisscrossing Punjab and its operations spread around the world. The factors that have made this Rs. 8700 crores giant a magnificent success is its cooperative structure, enlightened management, progressive plans & policies, path-breaking innovations, a highly dedicated workforce and supreme commitment to the objectives of the cooperative Markfeds
14
success is the true reflection of the spirit and dynamism of the people it represents: the people of Punjab.
OBJECTIVES
The objectives of Markfed are as follows:(i) To make arrangements for procuring, marketing/trading, processing/manufacturing of agricultural products as well as byproducts of its affiliated members and their members to their best advantage within the country and outside the country. (ii) To find out and adopt latest technology and supply of goods on co-operative basis and to act as agent to its constituents and other persons and institutions approved by the Registrar, Cooperative Societies, Punjab. (iii) (iv) To raise funds for its own business. To provide financial assistance to its members in the shape of advances, loans and grants. (v) To make arrangements for procurement in bulk the
requirements of its members in respect of both procedures and consumers goods. (vi) To make arrangements for distribution of agricultural inputs in retail to members and non-members. (vii) To undertake processing, manufacturing, grading and packing activities and establish industrial units.
15
(viii) To arrange for construction of buildings necessary for business of the federation and its members and also to take up the construction work of other governmental/institutional agencies. (ix) To guide, assist and supervise the working of its member societies. (x) To carry publicity and propaganda in respect of co-operative marketing and supply by publication of suitable literature, arrangements of demonstration by organizing marketing, processing and supply societies, conferences, participation in exhibitions and otherwise. (xi) To collect commercial information particularly relating to conditions in principle markets, general trends of the prices and circulate those amongst its members. (xii) To run warehouses. (xiii) To undertake industrial trade, import and export of agricultural produce, farm equipments and consumer goods. (xiv) To enter its collaboration with the co-operative and others in India or in foreign countries in fulfillment of any of its objects, subject to the approval of the govt. under section 7.7 of the act wherever required. (xv) To act as an insurance agent and to guide and assist its member societies and other etc. regarding all insurance matters. (xvi) To guarantee the loans advanced or credit granted to any member society of the federation by the Government, state
16
Bank of India or any other agency within such limits and such terms as may be fixed and charge commission thereon. (xvii) To do all the things that may be identical or conducive to the attainment of any or all the aforesaid objects of for the advancement of the cooperative movement in general.
MANAGEMENT
The management of the affairs of the Federation shall vest in Board of Directors which shall be constituted as under; (a) (b) (c) (1)
(2)
Three nominee of the Government; A nominee of the Apex Co-operative bank; Twelve representatives of members societies to be elected on zonal basis Nine representatives from primary societies Three representatives from marketing/Distt. Wholesale societies and Managing Director Registrar co-operative societies Punjab or his nominee. The Chairman and Vice-Chairman of the Board shall be elected from amongst elected members of the Board.
17
FUNCTIONS OF MARKFED
I. DOMESTIC OPERATIONS Punjab produces over 20 million tones of food grain with surplus both in wheat and rice. It has 4.2 million hectares of well irrigated and fertile land. Despite having only 1.5% of the countrys agricultural area, Punjab grows 25% of Indias wheat and accounts for 10% and 30% of Indias total rice and cotton production respectively. This means that plenty of raw materials in shape of cotton, sugarcane, fruit and vegetables etc., are available for processing in industries. Markfed procures and processes these raw materials into finished goods and sells them in the Indian market through a large network of its own offices, retail outlets, dealers, distributors and marketing agents.
A. PROCURING AND PROCESSING OPERATIONS
Procurement of food grains, seeds, pulses etc., The majority of buffer stocks of wheat and rice in India are held are Punjab. Markfed alone stores around 4.4 million tones of wheat. As one of the major
18
procurement agencies, it also plays an important role in providing remunerative price to farmers. The food grains procured for the PDS are distributed through a network of retail outlets. The food grain policy revolves around the surpluses available for procurement, building a buffer stock, distribution, trade regulations and price control. Markfed procures mustard seed and sunflower to process them in its oil complexes at Khanna, Kapurthala and Gidderbaha.
Cotton processing Markfed processes and trades in cotton, the worlds leading fiber and an important cash crop in Punjab. Within India, Markfed sells cotton to the processing mills in Orissa, Tamilnadu, UP, Gujrat and Maharashtra. It also exports cotton bales to far eastern countries as a joint venture with NAFED. Markfed owns and manages four cotton ginning and processing factories, which are located at Rampuraphul, Sardulgarh, Raman and Abohar centers in Punjab. Cottonseed processing Markfeds cottonseed processing plant at Gidderbaha produces cottonseed oil for the cooperative federations own Vanaspati plant and by products like lint, De-oiled cake and hulls for paper manufactures and its own cattle feed plant.
B. MANUFACTURING OPERATION
19
The varied natures of Markfeds operations depend a great deal on its infrastructure. Today it takes pride in its own oil plants, sugar mill, rice mills, ginning and processing plants, research and development labs etc. at these state o the art manufacturing facilities, Markfed produces world class products which have carved a niche for themselves in several markets. Sugar mill Markfed has up a new sugar mill at Malout at a total cost of Rs.300 million. With a production capacity of 1750 TCD and spread over 50.4 acres of land, it provides direct employment to about 300 persons. Markfed has also tied up with the Punjab Agricultural University, Ludhiana, for the development of better varieties of sugarcane. Cattle feed manufacturing Markfed manufactures cattle feed at its plant at Gidderbaha and Kapurthala, which have a combined annual production capacity of 63000 tonnes. The animal feed manufactured here is popular in Punjab, Haryana, HP, Jammu and Kashmir, Rajasthan and Delhi and is sold through dealers and cooperative societies. HDPE sacks plant The HDPE sacks plant of Markfed makes bags for cattle feed, tarpaulins, polythene covers and HKPE bags for clients like IFFCO, KRIBHCO and nfl for the packing of urea fertilizer. In order to ensure the use of high quality packaging material, Markfed setup packaging test laboratory at Mohali in 1973. Soil testing laboratories Markfeds eight well equipped soil testing laboratories at Amritsar, Bathinda, Ropar, Hoshiarpur, Kapurthala, Sangrur, Malout and a mobile lab
20
manned by specialists with an annual soil and water, have been rendering free service to farmers in obtaining best results from the use of chemical fertilizers since 1960. Vanaspati and refined oils The oil mill Khanna produces Vanaspati, bakery shortening and refined oils such as cottonseed oil, soya oil, mustard oil and vegetable oil with a total production capacity of 33000 MT per annum. The Kapurthala unit produced 33000 MT of cattle feed, whereas Gidderbaha unit produced 15000 MT of oil and rice bran and 33000 MT of cattle feed. Our Kachi ghani brand mustard oil has already reached the markets of the Middle East and Canada and is a highly sought after brand in the domestic market as well.
Canneries Markfed has set up canneries to produce heat and eat food products (especially curries), recipies of which have been prepared by Mr. Jigs Kalra, a chief of international repute. The products include delicacies like Sarson ka saag, Daal makhni, Kadhi pakora, Mutter paneer and much more. Besides this it also produces jams, ketchups, honey etc. these products are being sold all over India and are being exported to many countries around the world. C. DISTRIBUTION
Besides procuring agro produce at remunerative prices as well as adding through processing and marketing them locally and abroad. Markfed also plays a laudable role in supplying quality farm inputs viz. high quality fertilizers, insecticides, pesticides and fungicides thus earning the epithet: a true friend of farmers. Through its network, Markfed distributes around 8,00,000 tones of fertilizer to farmers annually, thereby meeting the entire
21
requirement of the chemical fertilizers of the cooperative sector. Its share of the total sale of fertilizer in Punjab is around 40% through its own plant at Mohali, Markfed supplies highly effective insecticides, weedicides and fungicides to help farmers protect their crops. Markfed is the nodal distribution agency for agro-chemicals manufactured by renowned national and multi-national companies which are being supplied to farmers through cooperatives. Mandi yards Markfed operates its rice mill complexes at Rajpura, Nawanshahar, Machiwara, Baghapurana, Batala, Nausherapannuan, Jaitu, Goniana, Gidderbaha and Chuslewal as purchase centers. The procurement at these centers is done directly from the farmers without routing the grains commission agents for which farmers are paid extra MSP of 1.5%. For all practical purposes, these complexes also operate like mandi yards. This step of the govt. is an experiment safeguard the interest of the farmers from unscrupulous elements and offers them an additional 1.5% in realizations on account of savings affected due to the elimination of middlemen. II. EXPORTS AND INTERNATIONAL OPERATIONS A successful trading house and a source of inspiration to numerous cooperatives involved in similar pursuits, Markfed has been declared as Punjabs nodal agency for the export of fruits, vegetables and food grains by the govt. of India. Markfed has carved a distinct identity for itself by setting up a number of export oriented units to process agricultural produce like basmati rice, cotton, oilseeds, vegetable, fruits etc.
22
A vast range of products from Markfed have found markets in the UAE, UK, US, Canada, Germany, Poland, Hungry, Czechoslovakia, Afghanistan etc. annually, Markfed exports 2.5 million MTs of food grains which includes exports to UAE, Sudan, Yemen, Philippines, Vietnam, Bangladesh, Indonesia, Korea, Oman, Sri Lanka, and Ethiopia through the major food players of the world like Cargill, toepfer, allansons, noblegrain, louis dreyfus and kotak agro. Agriexport zone for potatoes Potato is considered as the third major cash crop and plays a pivotal role in crop diversification; India is the fourth largest producer of potatoes in the world. Markfed helps farmers by procuring potatoes and organising their exports. The govt. of India has sanctioned an agri-export zone for potatoes in Punjab. Being set up in collaboration with APEDA, the zone will be established in Patiala with satellite centers in Jalandhar, Ludhiana, Batala and Muktsar. The objective of the project is to provide remunerative returns to the farmers and also to help farmers in producing quality which is at par with international market. Markfed has been declared the nodal agency for setting up this AEZ (agri-export zone) to facilitate potato export from Punjab. The zone entails partnership of farmers, processors, exporters, the state and the central govt. agencies to coordinate for end to end development of potatoes and its processed output from farm to consumers. The project will be implemented in two phases costing Rs.10.41crores and Rs.102crores respectively. Markfed, the nodal agency for the project would coordinate the efforts of various organizations like NHS, NFPI, APEDA, ICAR, MOA, revenue department and the various state govt. agencies like the department of agriculture and industries and will also act as the main link between central
23
and state agencies and the stake holders who are farmers, exporters and processors. Markfed has already started exports of potatoes to Middle East and Canada since July 2002 under the agro export zone for potatoes. Major customers include duly hyper market which owns the biggest chain of super markets in Dubai and other gulf countries. Potato processing unit Punjab Markfed has signed an MOU with Canadian manufacturing company ltd. Vancouver, Canada for setting up of a joint venture to manufacture potatoes, French fries/potato flakes/granules/vodka. The cost of the project is approximately Rs.10crores. The project will be put up in Patiala. The company will provide the technical know how to process potatoes grown in Punjab and will assist in marketing the product both in domestic and international markets. Potato cultivation in Sri Lanka In a Novel move, Markfed has taken on lease a 1000 acre farm in Sri Lanka, offered by the Sri Lankan government, for the cultivation of seed/tableware potatoes. The federation has agreed to undertake this project to spread awareness about Punjabs expertise to shores far and wide, so that Punjabs agro products gain in reputation and establish a market presence. Agri export zone for basmati rice This AEZ will facilitate increased production of basmati rice accounting for almost 60% of the world export. The AEZ will be set up in Punjab covering Gurdaspur, Amritsar, Kapurthala, Jalandhar, Hoshiarpur and Nawanshahar areas. The main objectives of this AEZ will be:
24
1. Providing remunerative returns to farmers on a sustained basis by improved access to exports. 2. Interlinking the various constituents of the chain from farmers to consumer. 3. Establishing backward linkage with rice millers. 4. Standardization of agronomical practices. 5. Making quality seeds available. 6. Setting up of DNA based laboratory. The total project cost is estimated at Rs.42.32crores. Food grain storage and handling An MOU was signed by Markfed with CMC Canada for providing various options/models to handle food grains produced in the state of Punjab and to work the logistics of post harvest handling of food grains. International standard silo storage complexes are envisaged to safeguard quality of food grains especially wheat and to dispatch the food grains in bulk to the consuming areas.
CMC would be a partner in this joint venture pilot project to be set up in the state. CMC would also transfer the technology for grains collection, storage, preservation and transportation in bulk. The silo project with a capacity of 1 lakh MTs would cost around Rs.50crores. The joint ventures partners from Canada would invest in the equity of the project and will also help to market the food grains in the world market. The project is assisted by Canada international development agency (CIDA).
Stock points Markfed has been allowed to create stock points at the port towns of Vishakhapatnam, Kakinanda, Jamnagar, Mundra and Kandla by govt. of
25
India. Markfed is the only procurement agency of the state to have been allowed to create infrastructure for the storage of good grains at these port towns. With the creation of these stock points the state is going to benefit on account of timely movement of stocks which would increase the exports of wheat. It will give assured delivery to the exporters without delays Markfed would maintain the central pool stock up to 50000 MTs at each port on national basis and would thus be able to offer the same to the exporters without any lead time.
Sarson ka saag A delicacy on foreign shores: about 1.5 million cans containing ready to eat sarson ka saag a Punjab delicacy and other Indian vegetable curries are exported to many regions which include the USA, Canada, Europe, Middle East and the South Pacific.
ANNUAL TURNOVER
26
Rs.10,744 Crores in 2002-03, and which has now reached Rs.10,567 Crores in the year 2003-04. It has earned a profit of Rs.13.64 Crores during this year which is nearly 1 Crore more than previous year. EXPORT ACTIVITIES
Mundra, Kakinada, Jamnagar and Vizag obtained for storage of 50,000 MT of foodgrains. MOU signed with Canadian Multinational Company for setting up Bulk Storage & Bulk Handling of foodgrains. Wheat:
Wheat to the tune of Rs.18.74 lac MT procured during Declared as the Canalizing agency for Wheat Exports in 2.15 million tons wheat already exported upto 31.07.03 Wheat worth Rs.571crores shipped out in 2002-03
Rabi 2003-04. March 2001. out of the contract signed 2.7 million tons. earning a foreign exchange of USD 20 million (INR967crores). Paddy and Rice:
27
100% milling of paddy crop 2002-03 achieved. Export of 1.31 lac MTs of Non Basmati rice in
September 2002 earned a foreign exchange of USD 17.90 million(INR86crores). 1.32 lac ton exported under GOI scheme. Markfeds Basmati plant is now ISO 9001 certified &
also has HACCP certification. Agri- exports Zones for Crop Diversification AEZ for potato and Basmati rice in progress. Proposals presented before APEDA for setting of Agri
Export Zone for Honey. FARMERS ENLIGHTENED Under AEZ for potatoes, the farmers will be helped in
the introduction of new concepts of potato handling, packaging, storage and processing for efficient marketing.
remunerative returns on a sustained basis by improved access to exports. Transport subsidy on potatoes has been announced @Rs.250/-per MT for interstate movement within India and @Rs.1000/-per MT for export of potatoes. COTTON
28
Manufactured & markfed 21370 MTs of cattlefeed in 2002-03 & 14533.75 MTs of Cattlefeed during 2003-04. 04. AGRO-CHEMICALS Agro-chemicals worth Markfed cattle feed plant; Kapurthala has manufactured & markfed 20193 MTs of cattlefeed during 2003-
Rs.12495 lacs sold in 2003-04 with a profit of Rs.52.37 lacs. Contracts signed with MNCs It has been granted Registration like Mosanto etc. for adding new molecules of Agro-chemicals. production of 45 products. by Central Insecticides Board, Govt. of India, Faridabad for
fertilizers worth Rs. 29123.43 crores distributed in 2005-06. UPLIFTMENT OF INDUSTRIAL UNITS
29
All food processing units to be ISO/HACCP certified. Korean Rice mills being modified by changes in Keyequipment. Units like Canneries & Vanaspati are also under the process of obtaining ISO & HACCP certification. JOINT VENTURES MOU signed for exports of 50,000 MTs of potatoes,
30,000 MTs of Onions & 2,000 MTs of turmeric with reputed importers of Sri Lanka, Dubai and Germany. MOU signed with Dabur India Ltd. For investment in The Joint Venture Company to be set up according to the Honey project. MOU signed with Province of Inhambane, Mozambique shall also arrange for the transfer of farmer/peasant skill both in India and Inhambane.
NEW PROJECTS
complexes at Batala, N/Pannuan, Chuslewar, Goniana and Gidderbaha. Modification/Technical upgradation of Markfed rice mils at Rajpura, Machhiwara, Nawanshahar, Baghapurana.
30
Matter taken up with M/s. CMC Engineering Canada to Matter taken up with M/s CMC Engineering Canada to
set up a bulk grain wheat storage handling project, as per MOU. set up a potato processing plant as per MOU. This will help the farmer society immensely by enhancing their technical know-how, upgrading their farming skills and increasing the commercial value of Punjabs Agricultural industry.
31
PROFITS ( IN CRORES) 40.25 00.17 17.50 04.64 23.71 12.52 13.65 22.62
45 40 PERSENTAGE 35 30 25 20 15 10 5 0
19 97 19 -19 98 98 19 -19 99 99 20 -20 00 00 20 -20 01 01 20 -20 02 02 20 -20 03 03 20 -20 04 04 20 -20 05 05 -2 00 6
PROFITS ( IN CRORES)
YEARS
PROFITS ( IN CRORES)
32
YEAR 1997-1998 1998-1999 1999-2000 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006
BUSINESS TURNOVER ( IN CRORES) 4132.6 4849.59 6024.93 7040.89 8523.44 10743.53 10,567.00 10055.00 9527.52
33
12000 10000 8000 6000 4000 2000 0 1997-1998 2000-2001 2003-2004 1998-1999 2001-2002 2004-2005 1999-2000 2002-2003 2005-2006
34
WEEKLY SCHEDULE
WEEKS 1st WEEK (19 May-23 May) 1. Introduction with Food Grain staff. 2. Studied the Bye Laws of Markfed. 3. Studied the Annual Report of Markfed. WORK DONE
35
3rd WEEK (2 June-6 June)register. 4th WEEK (9 June-13 June)1. Learned how to prepare and make entries in Railway receipt register. 5th WEEK (16 June-20 June)1. Did filling and sorting of various documents. 2. I was allotted to do a project on Food Grain activity by the Head of Food Grain Department Mr. Raghubir Singh. 6th WEEK (23 June-1 July)1. Collected the information and data relating to the report and started preparing the report. 1. Learned how to prepare and maintain dispatch
36
conditions to be fulfilled for attaining the membership of Markfed and conditions under which it can be terminated. I also studied the annual report of Markfed so as to know its profits, its financial position, the performance of the products that it manufacture and sell, the total procurement of wheat, paddy, cotton by Markfed and its total sales, the new factories and mills that it has started, the total exports done by Markfed and the products/goods that it mainly export and the collaborations or joint ventures into which it has entered with foreign parties.
Supporting Vouchers
These vouchers are the documentary evidence of the fact that business transaction has taken place. These are of following types:-
A. External supporting vouchers These are the vouchers which are prepared by third parties like:Cash Memo Inward Invoice Receipt for payment B. Internal supporting vouchers
37
These vouchers are prepared by the organization but are verified by the third parties. These include: government.
II.
Counter foils of bank pay-in-slip. Counter foils of challans for payment of taxes to
Accounting vouchers These vouchers are prepared on the basis of supporting vouchers by the accountant and are counter signed by an authorized person of the organization. These are of following types:A. Cash vouchers
These vouchers are documentary proof of cash receipts and payments. They can be further classified as: Debit vouchers- These vouchers are prepared when Credit vouchers- These vouchers are documentary cash payments are made to third parties. evidence of cash received by business.
B. Non cash vouchers (transfer vouchers)
These vouchers are the documentary evidence of all non cash transactions of the business.
38
Dispatch register is a register which is prepared to keep/maintain the written record of all letters sent by the department to the district offices and plants. In this register the details of all letters issued by the department are attached such as the month in which the letter is issued i.e. the issuing date which is written on letter, name of the authority or person to whom it is issued i.e. to whom it is addressed. And than the serial number of the letter entered in the dispatch register is put on the letter.
39
In the fifth week I was allotted to do the project on Food Grain activity by the head of Food Grain Department Mr. Kanti Suri. I discussed the topic of project assigned to me with Mr. Kanti Suri so as to know what exactly I have to do, what information I have to collect and the sources from where I will get the required information and details. I also did some work of filling and sorting of various documents.
40
41
as to know how they are prepared, how they are maintained and for what purpose they are prepared.
2. To conduct a swot analysis so as to know the strengths of food grain
department and markfed as a whole, the weaknesses of the food grain trading procedure, the opportunities available, and the threats confronting food grain department & markfed in general.
3. To conduct financial appraisal so as to know the various types of
accounting systems followed in markfed and how accounts are prepared in the food grain department and by studying them to get an overview about the performance of the department.
4. To study the structure and performance of the department so as to get
a better understanding of the food grain trading/procedure and the work carried in the food grain department.
5. To give suggestions on the basis of findings in the view to improve
42
RESEARCH METHODOLOGY
There are certain steps which are to be followed for making an effective research it depends upon organization to organization and person to person to adopt a certain strategy in research which is termed as research methodology. Research methodology followed by me in the organization is: Visiting different departments. Conversation with highly skilled and qualified employees. Data collection from different sources. Guidance from project guide. Preparation of project report.
SOURCES OF INFORMATION
Primary data The primary sources of data used in the making of this project report are information from the employees of the organization. Secondary data Annual reports
Websites(www.markfedpunjab.com)
Publications Data from various departments Relevant diagrams and charts like bar charts to give pictorial presentation of data collected for better understanding.
The data collected is segregated under suitable headings and then
43
The tools and techniques used in the process of the making the report were the observations made during the training period and thorough interactions with the people operating in Food Grain Department of Markfed.
44
Observations
The observations carried out while the training period was to observe and study the whole procedure of how the food grains are procured, how it is stored, how it is sold (explained further under chapter 4).
Interviews
Thorough interaction with the head of Food Grain Department helped a lot in knowing about the food grain trading in Markfed, their constructive criticism and valuable information that they shared were quiet helpful for knowing about the procedures / techniques followed in the organization.
PERIOD OF STUDY
The period for which the training research was carried out was from 19 May to 2 July (for 6 weeks ) which proved to be of great help as it gave an exposure to the corporate world.
45
46
ORGANISATIONAL STRUCTURE
It consists of Managing Director (A secretary Level IAS officer). Under the MD there are two Additional Managing Directors (Plants and General), then there are number of Chief Managers each responsible for a particular activity. In Food grain department the Chief Manager (Food grain) is Sh. M.B.S. Sandhu who is being supported by one Senior Accounts Officer
47
(Districts) and Superintendent under whom the executive and accounts staff operates.
MANAGING DIRECTOR
SUPERINTENDENT
EXECUTIVE STAFF
ACCOUNTS STAFF
48
49
Further markfed will allocate its total procurement share amongst its various districts. During Rabi 2005-06, Markfed had purchased 24.37 lac MTs wheat at 508 centers out of total 1475 centers opened by the State Government. The procurement of wheat by Markfed will be undertaken with the assistance of the Cooperative Marketing Societies scattered in the State of Punjab. The Govt. of India has announced the minimum Support Price of wheat at Rs.650/- per quintal for Rabi 2007-08 against Rs.640/- per quintal during Rabi, 2006-07.
GUNNY BAGS:
For the purchase of wheat during marketing season 2004-05, Markfed placed an order for 78,000 bales with the DGS&D, Kolkata trough the Director, Food, Civil Supplies & Consumer Affairs, Punjab.
STOCK ARTICLES
WOODEN CRATES:
50
Markfed has sufficient wooden crates to meet with the requirement during Rabi, 2005-06. POLYTHENE COVERS: Markfed has already purchased 2450 polythene covers for rabi, 2005-06. Now Markfed is going to place an indent for 7200 polythene covers for 2006-07. COVER NETS: Markfed has sufficient cover nets i.e. 12,000 which were received in Kharif, 2005-06 and Rabi, 2006-07. FUMIGATION COVERS: Markfed already has 1550 fumigation covers in hand and is going to place an indent for 672 fumigation covers for Rabi, 2006-07.
51
Staff deployment and storage has been made during procurement planning meeting held in the district. District Managers must ensure that no changes are made in the deployment of staff without prior approval from head office.
SPECIFICATIONS OF WHEAT:
Government of India has fixed the procurement price of wheat of Fair Average Quality for the year 2006-07 at Rs.650/- per Quintal. The stocks of wheat have to be purchased as per the specifications laid down by the Government of India.
ARRANGEMENT OF FUMIGANTS:
In order to ensure that there is no quality-cut, the stocks are to be fumigated as per the prescribed schedule. Necessary steps have already been taken to arrange adequate supply of Malathion, AP tablets and DDVP. The District Managers should ensure that the prescribed dose of fumigants is applied as per guidelines.
PAYMENTS:
The District Managers should ensure that the payment to the arhtias is made within the prescribed time limit so as to avoid any complaint from the farmers. In case there is any dispute relating to old shortages/payments, the same should be sorted out immediately so that the procurement operations may not suffer on this account. At some centers, the Punjab Mandi Board has installed Mechanical Handling Units in the Mandis. District Managers
52
should ensure maximum use of these mechanical handling units as per installation/allocation.
GENERAL:
At each purchase centre, the District Managers should ensure the presence of the staff at the allocated mandis/centers as per the instructions already issued irrespective whether the procurement has stared or not. There should be no complaint regarding the non presence of staff at the purchase centers. Before storage of wheat, immediate steps should be taken for cleaning of godowns, disinfestations etc. District Managers should also ensure that proper record/account of stock articles is maintained so as to avoid any audit objection at a later stage. Proper liaison should be kept with the district authorities i.e. Deputy Commissioner, Food & Supplies Deptt., FCI and Market Committees for smooth wheat procurement operations during Rabi, 2006-07.
CONTROL ROOM:
Control room has been set up at head office w.e.f 1.4.2006 in the office cabin of Sh. Ran Mohinder Singh, Sr. Manager (Procurement). Similar control room should be opened at District Head Quarters. District Managers should ensure that wheat procurement figures are conveyed to the Control Room set up at head office the same evening. District Managers shall further ensure the presence of the staff on Control Room duty so that important/urgent messages are received by them from head office.
53
HIDDEN INFESTATION
The presence of insect larva & pupa & their fragments inside the grin which can be detected normally by visual inspection methods is called hidden infestation. The following methods have been used for the detection of hidden infestation;
1. Emergence hold count
Insect emerged holes in a grain sample are counted & for every emerged hole there are at least 5 grains infested the sample. 2. Detection of insect fragments The grain is grinded & fragments of insect are detected.
54
3. Rearing of breeding method The grain is put in muslin covered jars at suitable temperatures & R.H. the emerging insect will give an indication of hidden infestation.
55
The godowns should be thoroughly got cleaned by removing cobwebs/weeds from the trusses, plinths level, alleyways, roads and walls. The godowns/open plinths should be infested by spraying the same with Malathion/DDVP. In case major infestation persists, even empty godowns should be fumigated by making the same thoroughly air-tight. The fumigation of godowns should only be done under the advice of the Technical Officers. The treatment with Malathion/DDVP be repeated if infestation persists in open. The plinths must be got leveled in case of any depression. The slope must be checked to ensure natural outflow of rain water.
1. WOODEN CRATES The wooden crates to be used as dunnage should be cleaned thoroughly & sprayed with malathion, so that the same do not carry any living insects. 2. POLYTHENE COVERS The once used polythene covers which are again to be used for the storage of wheat should be thoroughly got cleaned before putting the same on the stacks for storage of stocks in open for fumigation. 3. NYLON NETS Nylon nets should be kept ready & every cover put on the stack must be properly with nylon nets. After use, the same should be kept in a proper way to avoid any damage from rats. 4. MOISTURE METRERS
56
The moisture meters which are available with you, should be thoroughly checked & any of them is out of order then same should be repaired. PROPHYLCIC TREATMENT OF THE STOCKS 4. SPRAY WITH DDVP/MALATHION Every stack/Godown should be sprayed fortnight with malathion. 2. CLEANING Each & every stack/Godown must be brushed/cleaned every fortnightly. 3. PESERVATION MEASURES The stock of wheat should be given one round of fumigation before the onset of monsoon & in addition to this another two rounds i.e. one during he month of Sept/Oct & other during the months of Feb/March should be given for proper preservation of wheat stocks.
INSPECTION OF WHEAT STOCKS AT THE TIME OF RECEIPT IN THE GODOWNS 1. The stocks of wheat received in the godowns must be inspected for
quality cuts.
57
Each & every Godown must be checked before rainy season & in case any defect is found in the roofs, the same must be got repaired well-intime. CAP STORAGE Extra care must be taken for the proper preservation of the stocks lying in open during the rains. DISPOSAL OF WHEAT STOCKS The stock must be got identified from the FCI well-in-time. Only identified stocks must be delivered to avoid any complaint from the destination & resultant deductions by the FCI from our bills. INSPECTION OF WHEAT STOCKS The stocks must be inspected at lest every week by the custodians, every fortnightly by the Br.Incharge & monthly by the Technical Officer.
58
STATEMENT SHOWING DISTRICT WISE PROCUREMENT OF WHEAT BY MARKFED DURING MARKETING SEASON :- 2006-2007
S.No.
1 2 3 4 5 6 7
District
Amritsar Bathinda Faridkot F.G.Sahib Ferozepur Gurdaspur Hoshiarpur
59
Qty.(In MTs)
2651212 1157689 639766 564280 2684911 612722 284940
8 9 10 11 12 13 14 15 16 17
Jalandhar Kapurthala Ludhiana Mansa Moga Muktsar Nawanshahar Patiala Ropar Sangrur G,Total
900322 437350 810075 731358 909525 1111735 246437 1805674 212104 2206958 17967059
60
FINANCIAL APPRAISAL
FINANCIAL APPARAISAL
1. MARFEDS BRANCH ACCOUNTING SYSTEM
INTRODUCTION The main object of keeping branch accounts is dependent on the nature of the business & specific need of a particular branch. From accounting point of view there are two system of branch accounting: Branch not keeping full system of accounting or dependent branch system.
61
Branch Structure
There are total 17 district offices of Markfed, one in each district of Punjab. There are around 5 to 10 branches working under each of the district office. There are a total 120 branches under all district offices.
Expenses
The district office pays for all the expenses of the branch office. Drafts are sent to the branch office by the district office as per their need.
Accounts
All the monthly balances of accounts are transferred from the branch office to the district offices. The district office maintains all the balances of the branch offices. At the end of the month all the district offices send the accounts to the Head Office at Chandigarh. The head office has different departments for different accounts. The head office has departments like
62
fertilizer department, food grains department, salary department, budget department, plants department etc. The different Branches set up sell the Markfed products in different areas. The monthly accounts are made by the branches showing the sale & other expenses from these products. All the branches send the accounts relating to different products to the district office. The district offices then send these accounts to the Head Office at Chandigarh. Various divisions are made at the head office for different products like, separate divisions are made for cotton, food grains, cattle feed, paddy & rice, fertilizers etc. The accounts not relating to any of these divisions are sent to the general accounts division. All the divisions make accounts of their products & declare the results at the end of the year whether they are earning profits or going in losses.
Purchases
Purchase is centralized in Markfed. All the purchases is made by the central authority & then disbursed to different branches.
2. DIVISIONAL ACCOUNTING
INTRODUCTION Business are not confined to one line activity these days. In order to grow, business diversity into many product lines whether in the same industry or in different industries. A separate division is usually created for every line of activity organization meets its social & legal responsibilities towards its employees with regard to terms & conditions of employment, quality of working life, the promotion of a healthy & safe working environment, systems of work and equal opportunities for all. It establishes and maintains
63
employee information systems and records for all employees & assures compliance with merit system standards & other applicable rules, polices, and development programs for all employees.
Marketing division
64
In order to improve the image of Markfed products & to get better realization, following improvements have been initiated in the food grain products: Appropriate marketing strategies have been adopted for slashing wasteful expenditure. Product mix various ingredients in the manufacturing was maintained to ensure economy.
65
the head office & whatever their profit or loss will be, that belongs to the head office.
66
WHEAT PROCUREMENT
During the year 2004-05 Markfed has earned a profit of Rs.106.25 crores, which includes Rs.92.88 crores on wheat activity, against the last year profit of Rs.79.86, which includes Rs.5.97 crores on wheat activity. The movement of wheat during the year 2004-05 is 30.68 lac tonne against the last year of 29.15 lac tonne. The closing stocks of wheat during the year as on 31.13.2004 is 10.25 lac tonne valuing Rs.752.74 crores against the last year stocks of 22.15 lac tonne valuing Rs.1585.65 crores. 5.54 lac tonne of wheat has been exported during this year against the last year of 12.56 lac tonne. The procurement of wheat during the year is 18.74 lac tonne against the last year of 21.04 lac tonne. In addition to COC, provision for establishment
67
expenses accounted for during this year of Rs.57.98 crores against the last year of Rs.44.03 crores. Incidentals have been shown recoverable from FCI amounting to Rs.67.17 crores during this year. The interest had shown recoverable on account of COC on compounding basis amounting to Rs.49.33 crores.
2.Movement
Quality (in lac MTs) Amount (in crores)
3.Stock in hand
Quantity (in lac MTs) 22.15 Amount (in crores) 1585.65
4.Profit
Amount (in crores)
79.86
68
2000 1800 1600 1400 1200 1000 800 600 400 200 0 2003 2004 2005 2006 1573.48 1821 1658 1392.26
2003
2004
2005
2006
EXPORTS OF WHEAT
69
Markfed was declared canalizing agency for export of wheat in the month of March 2001 at par with STC, MMTC & PEC. Markfed started export of wheat in the month of April 2001 & has emerged as one of the largest exporter of wheat from India. Ministry of Commerce has conferred the status of trading house to Markfed on the basis of export turnover. During the first year of the export of foodgrains (2001-02), Markfed exported 7,97,572 MTs of wheat worth Rs.360 crores. During 200203, Markfed shipped out 12,56,656MTs worth Rs.571 crores thus earning a foreign exchange worth USD 193 million, and during 200405 Markfed exported 26,55,575MTs of wheat. Markfed has the credit to bring in its fold the world's largest players in foodgrains like Cargill International etc. exports are being organized from Vizag, Jamnagar, Kandla etc. Markfed has been allowed to create stock points at Kandla, Mundra, Vizag, Kakinada & Jamnagar ports. This will help in boosting the exports. Besides movement of foodgrains, which is the need of the hour, Markfed
S.No.
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18.
COUNTRY PHILIPPINES SUDAN UAE VIETNAM YEMEN BANGLADESH INDONESIA KOREA OMAN SRI LANKA ETHOPIA TAIWAN SINGAPORE MALAYSIA ERITREA AFRICAN PORT TANZANIA MYANMAR TOTAL
WHEAT (Qty. in MTs.) 8,80,499 90,866 3,24,450 2,23,457 2,20,431 24,170 1,64,664 4,53,505 8,363 72,160 63,951 24,445 2015 37,123 8,749 11,567 43,073 2,087 26,55,575
71
THE QUANTITY OF WHEAT PAID FOR, LIFTED & SHIPPED BY THE PUNJAB MARKFED (upto 31.03.2004) Financial Qty.lifted Qty.shipped Year (MTs) (MTs) 2001-02 2002-03 2003-04 2004-05 9, 89,611 7, 97,572 Value (in Rs.) 360,42,36,97 9 571,10,46,81 3 295,55,37,64 3 23,18,90,314 Value USD 7,46,30,694 11,81,91,620 6, 49, 31,555 53,92,798
72
SWOT ANALYSIS
73
Markfed had purchased 18.74 lac MTs wheat at 389 centers out of the total 1519 centers opened by the State Govt. the Director Food, Civil Supplies & Consumer Affairs, Punjab has allocated 20% share to markfed. It has achieved the status of an Export House from the Govt. of India. Markfed has also been declared as a nodal agency for export of fruits, vegetables and food grains by the Govt. of Punjab. Research and development Markfed contributes towards research and development work carried out by the Punjab agricultural University, Ludhiana (Punjab). Outstanding performance
74
In recognition of its vital contribution towards development of agroindustry over the period, Markfed has received National Productivity Council Awards. Latest techniques In keeping with the fast moving scenario, Markfed has adopted state of the art methodologies like vast communication system, electronic data processing, analysis and dissemination of information.
Strong network Markfed has a wide spread network of 17 district offices, 107 branches and 19 agro service centers. This has helped Markfed to come close to the farmers. Arrangements for storage of wheat Markfed has made sufficient arrangements for the storage of wheat. Like sufficient quantity of gunny bales, wooden crates, polythene covers, cover nets & fumigation covers have been purchased.
WEAKNESSESS:
organization are quite high. As it is known that food grain get spoiled or perish with passage of time, so the stock level maintained should be adequate. Also, the cost involved in maintaining and holding the stock of food grains and their preservation is quite high, so proper measures should be taken in this regard. Markfed does not use computerized accounting. Thus a lot of time is consumed in performing accounting procedures manually.
75
No accounting standards are there for cooperative societies like in case of companies.
Covered warehouses are very less in number for the storage of food
grains. Therefore due to storage of large quantities of food grains in the open warehouses/godowns leads to wastage of huge quantities of food grains every year. Food grains procured of a particular grade but of different qualities in the same grade are procured at the same prices i.e. at minimum support price (MSP fixed by govt.) which is not correct. There is a lack of an aggressive marketing programme to enhance the sale of the products, which are sold in the open market. Decision making process is very slow as the channel of decision making process is very lengthy.
OPPORTUNITIES:
Punjab Markfed is a marketing federation of over 3000 societies. Hence it has been a big opportunity to utilize the quantum in the right direction.
Markfed has won recognition and many awards from the govt. of
India in various fields of excellence; it can enhance its export market. Markfed caters to the needs of one state only, it can serve other parts of the country as well.
It has high financial flexibility as a result of good relations with the
THREATS:
76
The existence of Markfed entails a proper equilibrium between its existence as a cooperative society with the aim of providing farmers the right deal and as a business concern, the main aim of which is to earn profit.
The performance in the area of Food Grain trading depends wholly on
the quality and quantity of production, which cannot totally be improved by the use of fertilizers only as it is also dependent on natural factors like monsoons etc. Thus it poses a greater threat of reduced production and deteriorating quality of food grains in years to come.
77
SUGGESTIONS
78
SUGGESTIONS
1. The inventory stock levels of food grains maintained in the
organization are quite high. As it is known that food grain get spoiled or perish with passage of time, so the stock level maintained should be adequate. Also, the cost involved in maintaining and holding the stock of food grains and their preservation is quite high, so proper measures should be taken in this regard.
2. At Markfed, the branch accounting system is such that the branches
are dependent on the head office and separate profit of each branch cannot be calculated. Hence total picture showing overall profits may hide the inefficiencies of weak branches. This may really affect the decisions of business regarding which branch to continue or shut down or expand etc. hence, to get the best results, every branch should be viewed as a profit centre.
79
routine accounting functions can be done at much faster pace than what is possible under manual accounting. The accuracy can also be increased because the scope of errors is negligible. But it is slowly moving in this direction. 4. No accounting standards are there for cooperative societies like in case of companies. Accounting standards can be very useful for harmonization of accounts and for comparison purposes. 5. More and more covered warehouses must be constructed so as to reduce or say totally eliminate the wastage of food grain while in storage. 6. The wheat procured of a particular grade but of different quality standards should be procured at different prices i.e. in proportion to the variations in there quality standards. 7. Since markfed is facing competition both in domestic and foreign market, therefore to stand the competition it should concentrate on providing quality products and more contribution should be made towards advertisement and sales promotion. 8. Various contemporary issues in accounting like human resource accounting, social accounting, inflation accounting should also be introduced in Markfed.
80
LIMITATIONS OF STUDY
This is an in-depth study of Markfed. Though attempts have been made to gather as much information as possible to do full justice to the subject, yet the study suffers from certain limitations. These are described below so that the findings of the study may be seen in their right perspective:
In short span of time, I was not able to go personally to the
plant or the actual mandis where the transactions are made; hence I was not able to follow carefully accounting procedure of the various districts in the procurement operations.
For collection of data and other related information I had to
rely totally on the secondary sources i.e. the annual report, the website and various other accounts of the Markfed. Therefore I had made full and sincere efforts to provide correct information, but inspite of all these efforts if there are any mistakes than they are due to the source from which I had gathered information from.
81
Due to policies of Markfed only screened information is provided by the accounting department.
BIBLIOGRAPHY
PRINT LINKERS. BYE LAWS OF ANNUAL REPORT OF
MARKFED
CHANDIGARH.
WWW.MARKFEDPUNJAB.COM, NETWORK.
82
BOOKS
OF
ACCOUNTS OF MARKFED, OF THE YEAR 2004-05, 2005-06, PROFIT AND LOSS ACCOUNT AND BALANCE SHEET. GENERAL LAWS BY
N.D.KAPOOR AND RAJNI ABBI, CHAPTER COOPERATIVE SOCIETIES ACT 1912, PAGE NUMBER 436, 3rd EDITION, YEAR 1999, SULTAN CHAND AND SONS PUBLICATION. RESEARCH
METHODOLOGY (METHODS AND TECHNIQUES) - BY C.R. KOTHARI, 2ND EDITION, YEAR 1996, PUBLISHED AT VISHWA PRAKASHAN HOUSE.
83
84
85