A SUMMER TRAINING PROJECT REPORTON

APPRAISAL OF FOOD GRAIN ACTIVITY IN

IN PARTIAL FULFILLMENT OF THE REQUIREMENT

FOR THE DEGREE OF MBA

2007-2009

(SUBMITTED TO PANJAB TECHNICAL UNIVERSITY)

SUBMITTED TO: SUBMITTED BY: RBIM TANISHA DADHWALMiss Anshu Goaba MBA(2ND SEM.)

. (LECTURER)

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.

Miss Anshu Goaba (PROJECT GUIDE)

PREFACE

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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 – Asia’s 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.

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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.

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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 –Asia’s 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

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CONTENTS

CHAPTER 1- INTRODUCTION

INTRODUCTION TO COOPERATIVES

MARKFED A SUCCESS STORY

CHAPTER 2 – CORPORATE PROFILE

MARKFED ASIA’S 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 4- OBJECTIVES OF STUDY & RESEARCH

METHODOLOGY

OBJECTIVES OF STUDY

RESEARCH METHODOLOGY

SOURCES OF INFORMATION

TOOLS AND TECHNIQUES USED

PERIOD OF STUDY

LIMITATIONS OF STUDY

CHAPTER 5- ORGANISATIONAL STRUCTURE & RABI PLAN

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ACTIVITIES CARRIED IN THE DEPARTMENT

ORGANISATION STRUCTURE

RABI PLAN ( IN DETAIL)

CHAPTER 6 – FINANCIAL APPRAISAL

BRANCH ACCOUNTING

DIVISIONAL ACCOUNTING

PLANT ACCOUNTING

CHAPTER 7- SWOT ANALYSIS

ANALYSIS OF WHEAT ACTIVITIES

CHAPTER 8 - SUGGESTIONS

BIBLIOGRAPHY

ANNEXURES

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INTRODUCTION

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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”.

- The Indian cooperative societies Act, 1912 (Section 14)

To sum up we can describe a co-operative society as : Cooperative

societies are voluntary associations started with the aim of service to

members.

Cooperative Societies Act, 1912

As per section 6 of the Co-operative Societies Act, 1912,

any ten persons who are competent to enter into contract and who

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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 the

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.

Cooperative societies Act 2 of 1912: A new Act was passed to

make an improvement over the Act of 1907; the purpose of this Act was

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to facilitate the formation of cooperative societies for the promotion of

thrift and self help amongst agriculturists, artisans and persons of limited

means. All types of societies could be registered under this Act. The

societies were to transfer one fourth of its annual profits towards a

reserve fund. It could spend 10% of the profits for the welfare of the

members.

MARKFED A SUCCESS STORY

The Punjab farmer, under the banner of the cooperative movement

organized himself to form federal credit structure with primary societies at

village level, control cooperative bank at district level and an apex bank at

the state level to coordinate their functions. The village credit societies were

reorganized to become service cooperatives. A cooperative marketing

society was set up in each regulated market in the state with distinct market

society at each district head quarters. In the chain of this set up the apex

institution, The Punjab State Cooperative Supply and Marketing Federation

came into being in the September of 1954 with 13 members, a share capital

Rs.54000 and three employees, popularly known as Markfed. It is an

important milestone in the history of the Indian cooperatives; which is

serving millions and is partner in their progress and prosperity.

The ingredients of Markfed’s success story are

Its cooperative structure,

Govt. support,

Progressive policies,

Innovative plans and

Dedicated personnel at managerial and field level.

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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 Punjab’s farmers. Employing

this principle of brotherhood, Markfed has emerged as a significant

contributor to various socio economic development programs.

Markfed’s success is the true reflection of the spirit and dynamism of the

people it represents: the people of Punjab.

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CORPORATE PROFILE

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GENESIS OF A GIANT

MARKFED’S 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 Asia’s 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 Markfed’s

success is the true reflection of the spirit and dynamism of the people it

represents: the people of Punjab.

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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, Co-operative Societies, Punjab.

(iii) To raise funds for its own business.

(iv) 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.

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(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 it’s 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 Bank of India or

any other agency within such limits and such terms as may be fixed and

charge commission thereon.

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(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) Three nominee of the Government;

(b) A nominee of the Apex Co-operative bank;

(c) Twelve representatives of members societies to be elected on zonal basis

by dividing the area of operation of the federation into 12 zones as under:

(1) Nine representatives from primary societies

(2) Three representatives from marketing/Distt. Wholesale societies and

other central societies.

(d) Managing Director

(e) 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.

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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 country’s agricultural area, Punjab grows

25% of India’s wheat and accounts for 10% and 30% of India’s 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

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

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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 world’s 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

Markfed’s cottonseed processing plant at Gidderbaha produces cottonseed

oil for the cooperative federation’s own Vanaspati plant and by products like

lint, De-oiled cake and hulls for paper manufactures and its own cattle feed

plant.

B. MANUFACTURING OPERATIO N

The varied natures of Markfed’s 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.

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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

Markfed’s eight well equipped soil testing laboratories at Amritsar,

Bathinda, Ropar, Hoshiarpur, Kapurthala, Sangrur, Malout and a mobile lab

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

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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

requirement of the chemical fertilizers of the cooperative sector. Its share of

the total sale of fertilizer in Punjab is around 40% through it’s own plant at

Mohali, Markfed supplies highly effective insecticides, weedicides and

fungicides to help farmers protect their crops.

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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

Punjab’s 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.

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

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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

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

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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 Punjab’s expertise to shores far and wide, so that Punjab’s

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:

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.

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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

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

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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.

SETTING SUCCESS

TRENDS WITH

FARMER FRIENDS

ACHIEVEMENTS OF MARKFED

(MARKFED- PUNJAB FARMER’S BENEFECTOR IN THE TRUE SENSE)

ANNUAL TURNOVER

Markfed generated an annual business turnover of 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

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Stock points at various port towns in India i.e. Kandla, 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 Rabi

2003-04.

Declared as the Canalizing agency for Wheat Exports in March

2001.

2.15 million tons wheat already exported upto 31.07.03 out of

the contract signed 2.7 million tons.

Wheat worth Rs.571crores shipped out in 2002-03 earning a

foreign exchange of USD 20 million (INR967crores).

Paddy and Rice:-

Highest paddy procurement agency in Punjab with 19.07 lac

MTs of paddy worth over RS.1380crores procured in 2003-04.

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.

Markfed’s Basmati plant is now ISO 9001 certified & also has

HACCP certification.

Agri- exports Zones for Crop Diversification

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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.

Under AEZ for Basmati rice, farmers will be provided

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

Cotton bales worth Rs.37 crores procured & sold at net profit of

Rs.12733.78 lacs in 2006-07.

CATTLEFEED

Markfed Cattlefeed plant, Gidderbaha has Manufactured &

markfed 21370 MTs of cattlefeed in 2002-03 & 14533.75 MTs

of Cattlefeed during 2003-04.

Markfed cattle feed plant; Kapurthala has manufactured &

markfed 20193 MTs of cattlefeed during 2003-04.

AGRO-CHEMICALS

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Agro-chemicals worth Rs.12495 lacs sold in 2003-04 with a

profit of Rs.52.37 lacs.

Contracts signed with MNCs like Mosanto etc. for adding new

molecules of Agro-chemicals.

It has been granted Registration by Central Insecticides Board,

Govt. of India, Faridabad for production of 45 products.

FERTILIZERS

5.03 lac MTs of fertilizers worth Rs. 29123.43 crores

distributed in 2005-06.

UPLIFTMENT OF INDUSTRIAL UNITS

Modernization of Refinery, De-waxing unit & Bakery unit at

Khanna.

All food processing units to be ISO/HACCP certified.

Korean Rice mills being modified by changes in Key-

equipment.

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 Honey

project.

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The Joint Venture Company to be set up according to the MOU

signed with Province of Inhambane, Mozambique shall also

arrange for the transfer of farmer/peasant skill both in India and

Inhambane.

NEW PROJECTS

Modification/Technical upgradation of rice processing

complexes at Batala, N/Pannuan, Chuslewar, Goniana and

Gidderbaha.

Modification/Technical upgradation of Markfed rice mils at

Rajpura, Machhiwara, Nawanshahar, Baghapurana.

Matter taken up with M/s. CMC Engineering Canada to set up a

bulk grain wheat storage handling project, as per MOU.

Matter taken up with M/s CMC Engineering Canada to 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 Punjab’s Agricultural industry.

30

COMPARATIVE ANALYSIS OF PROFITS

YEAR PROFITS( IN CRORES)

1997-1998 40.251998-1999 00.171999-2000 17.502000-2001 04.642001-2002 23.712002-2003 12.522003-2004 13.652004-2005 22.62

31

PROFITS ( IN CRORES)

0

5

10

15

20

25

30

35

40

45

1997

-199

8

1998

-199

9

1999

-200

0

2000

-200

1

2001

-200

2

2002

-200

3

2003

-200

4

2004

-200

5

2005

-200

6

YEARS

PE

RS

EN

TA

GE

PROFITS ( INCRORES)

COMPARITIVE ANALYSIS OF BUSINESS TURNOVER

32

YEAR BUSINESS TURNOVER( IN CRORES)

1997-1998 4132.61998-1999 4849.591999-2000 6024.932000-2001 7040.892001-2002 8523.442002-2003 10743.532003-2004 10,567.002004-2005 10055.002005-2006 9527.52

33

WEEKLY

TRAINING

REPORT

34

WEEKLY SCHEDULE

WEEKS WORK DONE

1 st 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.

2 nd WEEK

(26 May-30 MAY)- 1. Learned how to make vouchers.

3 rd WEEK

(2 June-6 June)- 1. Learned how to prepare and maintain dispatch

register.

4 th WEEK

(9 June-13 June)- 1. Learned how to prepare and make entries in

Railway receipt register.

5 th 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.

6 th WEEK

(23 June-1 July)- 1. Collected the information and data relating to

the report and started preparing the report.

35

1 st WEEK (19 May-23 May)

On the first day the head of Food Grain Department Mr. Kanti Suri

introduced me to the staff members of the department.

I studied the Bye Laws of Markfed so as to get an understanding

about the history of Markfed, the basic objectives with which it was formed,

its organization structure, how its board of directors are elected, the

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.

2 nd WEEK (26 May-30 MAY)

In the second week I learned how to make vouchers.

VOUCHERS

Vouchers are documentary evidence in support of business transaction. They

can be broadly classified into two categories:-

I. Supporting Vouchers

These vouchers are the documentary evidence of the fact that business

transaction has taken place. These are of following types:-

36

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

These vouchers are prepared by the organization but are verified by the third

parties. These include:-

Counter foils of bank pay-in-slip.

Counter foils of challans for payment of taxes to government.

II. 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 cash payments are

made to third parties.

Credit vouchers- These vouchers are documentary 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.

37

3 rd WEEK (2ndJune-6 June)

In the third week I learned how to prepare and maintain a dispatch register.

DISPATCH REGISTER

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.

4 th WEEK (9 June-13 June)

In the fourth week I learned how to prepare and maintain railway receipt

register.

RAILWAY RECEIPT REGISTER

Railway receipt register is a register which is prepared to keep the record of

bardana delivered to various districts through railway.

In this register basically the details of the railway receipt received

from the railway authority of the bardana supplied/delivered by it to the

districts is recorded.

Railway receipt register is divided into various district heads. Under a

particular head/district the details of railway receipt relating to that particular

district is recorded which includes the letter number & the date, the S.O.

number & the date, the railway receipt number & the date, wagon number,

number of bales delivered etc.

38

5 th WEEK (16 June-20 June)

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.

6 th WEEK (23 June-1 July)

In the last week of my training I started collecting data and information

relating to the project allotted to me. I collected the required information and

data from the office staff, the office records, the annual report, the bye laws,

and from the website of Markfed.

I started preparing the project by taking in consideration the valuable

suggestions and criticism given by the staff members as well as the head of

Food Grain Department.

39

OBJECTIVES OF STUDY

& RESEARCH

METHODOLOGY

40

OBJECTIVES OF THE STUDY

The objectives of the study in the organization:-

1. To study the important accounts and documents of the department so

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

the working of the department.

41

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.

42

The data collected is segregated under suitable headings and then

tabulTOOLS & TECHNIQUES USED

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.

43

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.

44

ORGANISATIONAL

STRUCTURE &

RABI PLAN

45

DEPARTMENT OF FOOD AND GRAIN

The main function of food grain department is to procure and store

food grains and other cash crop on behalf of F.C.I in Punjab through

cooperative societies/farmers at MSP rates. The main food grains and other

crops in which it deals are:

1. Wheat

2. Paddy

3. Cotton

THE ACTIVITIES BEING CARRIED IN FOODGRAIN DEPARTMENT

Markfed is divided into 17 administrative districts having 109 branches. Its

registered office is at Ropar and head office is at Chandigarh. It was set up

in 1954 to assist the farmers of Punjab by distributing agricultural inputs and

marketing their produce in raw and processed forms. It is a federation of

3027 cooperative societies.

ORGANISATIONAL STRUCTURE

46

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

(Districts) and Superintendent under whom the executive and accounts staff

operates.

ORGANISATIONAL STRUCTURE OF FOOD AND GRAIN DEPARTMENT

47

RABI PLAN FOR THE YEAR 2006-07

PROCUREMENT:

MANAGING DIRECTOR

ADDITIONAL MANAGING DIRECTOR

ADDITIONAL MANAGING DIRECTOR

CHIEF MANAGER(INPUTS - FOOD AND GRAIN)

SUPERINTENDENT SENIOR ACCOUNTS OFFICER

EXECUTIVE STAFF ACCOUNTS STAFF

48

Markfed has a long experience of procurement and storage of food

grains through cooperative societies as per Punjab government/prescribed

policy from time to time. The total food grain requirement of the State as

assessed by the State Govt. is further distributed by the Director Food, Civil

Supplies and Consumer Affairs Punjab, amongst the various procurement

agencies, like during Rabi 2007-08 agency wise shares are as under:

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.

ARRANGEMENTS OF LABOUR& TRANSPORTATION

S.LNO.

NAME OFAGENCY

SHARE(%AGE)

TARGET(IN LAC. MT)

1 FCI 20% 20.00

2 PUNGRAIN 20% 20.00

3 MARKFED 20% 20.00

4 PUNSUP 20% 20.00

5 PSWC 12% 12.00

6 PAFC 8% 8.00

TOTAL 100% 100.00

49

For arrangement of labour, instructions have been issued, according to

which labour & transport contracts are to be finalized after floating joint

tender notice by all the procuring agencies. FCI makes the payment of

labour & transportation charges on the basis of block incidentals approved

by the Government of India. District Managers should ensure that

procurement operations are undertaken at most economic rates.

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:

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.

50

STORAGE PLANNING AND DEPLOYMENT OF STAFF

Markfed is having a total space of 6.91 lac MTs constructed under ARDC

scheme & 8.10 lac MTs constructed under NCDC scheme. Besides, plinths

of the capacity of 20.47 lac MTs have been got constructed from the private

parties under 5 years guarantee scheme upto 2002. An extensive exercise has

already been undertaken at the district level for storage planning. Storage

may, therefore, be done strictly as per plan finalized. Efforts should be made

that no wheat is stored on unscientific Katcha floor. Whereas excessive

space is available, district should ensure optimization of storage utilization

and surplus complexes should be de-hired. It has been decided that no wheat

should be stored on katcha space.

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:

51

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

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.

52

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.

GUIDELINES FOR SCIENTIFIC STORAGE OF

WHEAT

The various factors responsible for foodgrains losses can be reduced to

the minimum by maintaining Godown hygiene & sanitation. If the stocks are

kept in neat storage in scientific manner, good %age of foodgrains

infestation can be reduced. To attain this, foodgrains should be kept in ideal

godowns /open plinths in scientific manner. The ideal storage space is one

where grain can be kept cool, dry, and free from any pest attack. The storage

space should, therefore, be cleaned thoroughly & disinfected before arrival

of foodgrains.

HIDDEN INFESTATION

53

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.

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.

54

GUIDELINES FOR SCIENTIFIC STORAGE OF WHEAT STOCKS

The maintenance of foodgrains while in storage in good condition needs

efficient & affective management. Any laxity results in deterioration of

the stocks.

PREPRATION OF GODOWNS/ PLINTHS FOR

STORAGE

The godowns should be thoroughly got cleaned by removing

cob-webs/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.

PREPRATION OF STOCK ARTICLES FOR

STORAGE

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.

55

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

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.

56

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.

2. Weight should also be checked either on weight bridges or on 10%

weighment.

CARE OF STOCK DURING RAINS

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-in-

time.

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.

57

58

STATEMENT SHOWING DISTRICT – WISE

PROCUREMENT OF WHEAT BY MARKFED

DURING MARKETING SEASON :- 2006-2007

S.No. District Qty.(In MTs) 1 Amritsar 2651212

2 Bathinda 11576893 Faridkot 6397664 F.G.Sahib 564280 5 Ferozepur 26849116 Gurdaspur 6127227 Hoshiarpur 2849408 Jalandhar 9003229 Kapurthala 437350

10 Ludhiana 81007511 Mansa 73135812 Moga 90952513 Muktsar 111173514 Nawanshahar 24643715 Patiala 180567416 Ropar 21210417 Sangrur 2206958

G,Total 17967059

59

FINANCIAL

APPRAISAL

60

FINANCIAL APPARAISAL

1. MARFED’S 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.

Branch keeping full system of accounting or independent branch

system.

IN MARKFED ACCOUNTING OF WHEAT ACTIVITIES

Markfed’s branch accounting system is such that it closely resembles to the

system in which branches are dependent on the Head Office & they do not

maintain complete set of accounts. The difference with the theoretical

branch accounting system & that of Markfed’s is that theoretically Head

Office wants to ascertain the profit or loss of separate branches but in case of

Markfed separate profit or loss of each branch is not calculated.

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.

61

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

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.

62

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

employee information systems and records for all employees & assures

compliance with merit system standards & other applicable rules, polices,

and development programs for all employees.

Internal audit division

Internal auditing consists of a continuous, critical review of financial &

operating activities by a staff of auditors functioning as full-time salaried

employees. It has, therefore, become necessary for the managements of

these organizations to have a team of experts to review their procedures &

operations and to report cased of non- compliance, inefficiency, and lack of

control, so that necessary action can be taken. Internal audit division

provides a review of various operations & records of the company by the

staff specially appointed for this purpose. It is a specialized service requiring

not only expertise in accounting but in organizational behaviour & in

functional areas of management.

Internal audit division examines the financial statements & sees that

adequate disclosures regarding accounting policies have been made as per

63

the statutory requirements or not. It examines if the fundamental accounting

assumptions have been followed in preparing the financial statements or not.

General accounts division

This division takes care of all the accounts for which there are no separate

departments. This division makes the consolidated trial balance & balance

sheet of the organization.

Marketing division

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.

Food grain division:

This division takes care of purchase, sale & various expenses related to food

grains. The profit for the year 2003-04 is Rs. 49.55 crores against the last

year’s profit of Rs. 64.78 crores. The movement of wheat during the year

2003-04 is 20.04 lacs MTs against the previous year figure of 6.30 lacs MTs.

Thus there is excess movement of 13.74 lacs MTs. The closing stock of

wheat during 2003-04 is Rs. 2119.56 crores whereas it was Rs. 1887.58

crores during 2002-03.

3. PLANT ACCOUNTING SYSTEM

64

Plants act as independent profit centers working under Markfed. These

plants maintain separate accounts from the Head Office. The plants pay for

their expenses from the cash realized & deposit cash in their own account.

All expenses of plant such as rent, salary of staff, advertisement etc., are

paid by the plant itself. Even if the head office sends some money to the

plants, the interest is charged on that money by the head office.

In other words, these plants operate as an independent unit for all practical

purposes but their only link with the head office is that they are owned by

the head office & whatever their profit or loss will be, that belongs to the

head office.

65

PROCUREMENT &

EXPORTS

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

66

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

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.

TABLE SHOWING WHEAT PROCUREMENT

2003-04 2004-05 2005-06 2006-07

1.ProcurementQuality (in lac MTs) 21.04 21.84 24.36 18.16Amount (in crores) 1573.48 1658.00 1821 1392.262.MovementQuality (in lac MTs) 29.15 30.68 25.37 15.93Amount (in crores) 2538.51 2471.95 2028.23 1273.723.Stock in handQuantity (in lac MTs) 22.15 10.27 1.97 4.20Amount (in crores) 1585.65 752.74 105.00 308.794.ProfitAmount (in crores) 79.86 92.88 89.57 62.33

67

Graph showing wheat procurement(Amount in crores)

Graph showing wheat procurement(Quantity in 000’ MTs)

68

EXPORTS OF WHEAT

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 2002-

03, Markfed shipped out 12,56,656MTs worth Rs.571 crores thus

earning a foreign exchange worth USD 193 million, and during 2004-

05 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.

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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

STATEMENT GIVING COUNTRY-WISE FIGURE OF EXPORTS OF WHEAT EXPORTED/ SHIPPED

Name of Organization Punjab Markfed countrywise position as on 30.9.2004

S.No. COUNTRY WHEAT (Qty. in MTs.)

1. PHILIPPINES 8,80,4992. SUDAN 90,8663. UAE 3,24,4504. VIETNAM 2,23,4575. YEMEN 2,20,4316. BANGLADESH 24,1707. INDONESIA 1,64,6648. KOREA 4,53,5059. OMAN 8,36310. SRI LANKA 72,16011. ETHOPIA 63,95112. TAIWAN 24,44513. SINGAPORE 201514. MALAYSIA 37,12315. ERITREA 8,749

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16. AFRICAN PORT 11,56717. TANZANIA 43,07318. MYANMAR 2,087

TOTAL 26,55,575

THE QUANTITY OF WHEAT PAID FOR, LIFTED &

SHIPPED BY THE PUNJAB MARKFED (upto 31.03.2004)

Financial Year

Qty.lifted (MTs)

Qty.shipped (MTs)

Value (in Rs.)

Value USD

2001-02 9, 89,611 7, 97,572 360,42,36,979 7,46,30,694 2002-03 11,77,820 12, 56,656 571,10,46,813 11,81,91,6202003-04 5, 35,326 5, 54,018 295,55,37,643 6, 49, 31,5552004-05 11,478 47,329 23,18,90,314 53,92,798

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SWOT

ANALYSIS72

ANALYSIS OF WHEAT ACTIVITIES

SWOT ANALYSIS

STRENGHTS:

Trading of wheat

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.

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Research and development

Markfed contributes towards research and development work carried out

by the Punjab agricultural University, Ludhiana (Punjab).

Outstanding performance

In recognition of its vital contribution towards development of agro-

industry 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:

The 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.

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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.

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.

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It has high financial flexibility as a result of good relations with the

banks and with other financial institutions.

THREATS:

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.

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77

SUGGESTIONS

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

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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’.

3. Markfed does not use computerized accounting. With computers the

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.

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8. Various contemporary issues in accounting like human resource

accounting, social accounting, inflation accounting should also be

introduced in Markfed.

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

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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.

Due to policies of Markfed only screened information is

provided by the accounting department.

BIBLIOGRAPHY

ANNUAL REPORT OF MARKFED (PUNJAB) OF YEAR 2003-04,

PUBLISHED BY PRINT LINKERS.

BYE LAWS OF

MARKFED

RABI PLAN OF FOOD

GRAIN BRANCH, YEAR 2006-07, PUBLISHED AT PUNCOFED

CHANDIGARH.

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WEBSITE- WWW.MARKFEDPUNJAB.COM, LINKS USED

ABOUT MARKFED, CORPORATE PROFILE, PRODUCTS,

ACTIVITIES, NETWORK.

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.

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