A SUMMER TRAINING PROJECT REPORT

ON
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:
RBIM
Miss Anshu Goaba
.
(LECTURER)

SUBMITTED BY:
TANISHA DADHWAL
MBA(2ND SEM.)

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
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

INTRODUCTION TO COOPERATIVES

MARKFED A SUCCESS STORY

CHAPTER 2

CORPORATE PROFILE

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 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

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.
-

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

9

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

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.

10

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
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 Markfeds success story are
Its cooperative structure,

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)

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.
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)

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.

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.

SETTING SUCCESS
TRENDS WITH
FARMER FRIENDS
ACHIEVEMENTS OF MARKFED
(MARKFED- PUNJAB FARMERS BENEFECTOR IN THE
TRUE SENSE)

ANNUAL TURNOVER

26

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

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 200304.

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.

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.

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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 200304.

AGRO-CHEMICALS

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.

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

Honey project.

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.

30

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 Punjabs Agricultural industry.

COMPARATIVE ANALYSIS OF PROFITS

31

YEAR

PROFITS
( IN CRORES)

1997-1998
1998-1999
1999-2000
2000-2001
2001-2002
2002-2003
2003-2004
2004-2005

40.25
00.17
17.50
04.64
23.71
12.52
13.65
22.62

45
35
30
25
20

PROFITS ( IN
CRORES)

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

PERSENTAGE

40

PROFITS ( IN CRORES)

YEARS

32

YEAR

BUSINESS TURNOVER
( IN CRORES)
4132.6
4849.59
6024.93
7040.89
8523.44
10743.53
10,567.00
10055.00
9527.52

1997-1998
1998-1999
1999-2000
2000-2001
2001-2002
2002-2003
2003-2004
2004-2005
2005-2006

COMPARITIVE ANALYSIS OF BUSINESS TURNOVER

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
TRAINING
REPORT

WEEKLY SCHEDULE
WEEKS

WORK DONE

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.

35

2nd WEEK
(26 May-30 MAY)-

1. Learned how to make vouchers.

3rd WEEK
(2 June-6 June)-

1. Learned how to prepare and maintain dispatch

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.

1st 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

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.

2nd 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:-

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:

Counter foils of bank pay-in-slip.

Counter foils of challans for payment of taxes to

government.
Accounting vouchers

II.

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.

3rd WEEK (2ndJune-6 June)

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

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.

4th 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.

5th WEEK (16 June-20 June)

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.

6th 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.

40

OBJECTIVES
OF STUDY
&
RESEARCH
METHODOLOG
Y

41

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.

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

tabulTOOLS & TECHNIQUES USED

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

ORGANISATIO
NAL
STRUCTURE
&
RABI PLAN

46

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 FOOD

GRAIN 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
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.

ORGANISATIONAL STRUCTURE OF FOOD AND

GRAIN DEPARTMENT

MANAGING DIRECTOR

ADDITIONAL
MANAGING
DIRECTOR

ADDITIONAL
MANAGING
DIRECTOR

CHIEF MANAGER
(INPUTS - FOOD AND GRAIN)

SUPERINTENDENT

SENIOR ACCOUNTS OFFICER

EXECUTIVE STAFF

ACCOUNTS STAFF

48

RABI PLAN FOR THE YEAR 2006-07

PROCUREMENT:
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:
S.L
NO.

NAME OF
AGENCY

SHARE
(%AGE)

TARGET
(IN LAC. MT)

1
2
3
4
5
6

FCI
PUNGRAIN
MARKFED
PUNSUP
PSWC
PAFC
TOTAL

20%
20%
20%
20%
12%
8%
100%

20.00
20.00
20.00
20.00
12.00
8.00
100.00

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.

ARRANGEMENTS OF LABOUR& TRANSPORTATION

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:

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.

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.

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

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
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.

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

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.

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.
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.

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

weighment.

CARE OF STOCK DURING RAINS

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.

District
1
2
3
4
5
6
7

Amritsar
Bathinda
Faridkot
F.G.Sahib
Ferozepur
Gurdaspur
Hoshiarpur

Qty.(In MTs)
2651212
1157689
639766
564280
2684911
612722
284940

59

8
9
10
11
12
13
14
15
16
17

Jalandhar
Kapurthala
Ludhiana
Mansa
Moga
Muktsar
Nawanshahar
Patiala
Ropar
Sangrur

900322
437350
810075
731358
909525
1111735
246437
1805674
212104
2206958

G,Total

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 keeping full system of accounting or independent branch

system.

IN MARKFED ACCOUNTING OF WHEAT ACTIVITIES

Markfeds 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 Markfeds 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.

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.

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
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

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.

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
years 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

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

65

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

66

PROCUREMEN
T
&
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
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.

TABLE SHOWING WHEAT PROCUREMENT

2003-04 2004-05 2005-06 2006-07
1.Procurement
Quality (in lac MTs)
Amount (in crores)

21.04
1573.48

21.84
1658.00

24.36
1821

18.16
1392.26

29.15
2538.51

30.68
2471.95

25.37
2028.23

15.93
1273.72

10.27
752.74

1.97
105.00

4.20
308.79

92.88

89.57

62.33

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

Graph showing wheat procurement

(Amount in crores)

68

2000
1821

1800
1573.48

1600

1658
1392.26

1400
1200
1000
800
600
400
200
0
2003

2004

2005

2006

Graph showing wheat procurement

(Quantity in 000 MTs)
2500
2000

2436
2104

2184
1816

1500
1000
500
0

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

STATEMENT GIVING COUNTRY-WISE FIGURE OF

EXPORTS OF WHEAT EXPORTED/ SHIPPED
70

Name of Organization Punjab Markfed countrywise position as on

30.9.2004

S.No.

COUNTRY

WHEAT (Qty. in MTs.)

1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.

PHILIPPINES
SUDAN
UAE
VIETNAM
YEMEN
BANGLADESH
INDONESIA
KOREA
OMAN
SRI LANKA
ETHOPIA
TAIWAN
SINGAPORE
MALAYSIA
ERITREA
AFRICAN PORT
TANZANIA
MYANMAR

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

TOTAL

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

9, 89,611

7, 97,572

2002-03

11,77,820 12, 56,656

2003-04

5, 35,326

5, 54,018

2004-05

11,478

47,329

72

Value
(in Rs.)

Value
USD

360,42,36,97
9
571,10,46,81
3
295,55,37,64
3
23,18,90,314

7,46,30,694
11,81,91,620
6, 49, 31,555
53,92,798

SWOT
ANALYSIS

73

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.
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:

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. 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

banks and with other financial institutions.

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

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.
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
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.
WEBSITE-

WWW.MARKFEDPUNJAB.COM,

LINKS

USED

ABOUT

MARKFED, CORPORATE PROFILE, PRODUCTS, ACTIVITIES,

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