A SUMMER TRAINING PROJECT REPORT

ON
COMPARATIVE ANALYSIS OF ACTUAL & BUDGETED
PERFORMANCE

SUBMITTED TO PANJAB TECHNICAL UNIVERSITY

IN PARTIAL FULFILLMENT OF THE REQUIREMENT FOR THE AWARD OF
THE DEGREE OF MASTER OF BUSINESS ADMINISTRATION

Session: 2009-11
SUBMITTED BY:
NAVNEET KAUR
ROLL NO-95142238967

ACKNOWLEDGEMENT
In preparing an acknowledgement to this project, numerous individuals come to my mind
that all rose to the challenges of making the project successful. Any person alone can never
accomplish a project of this nature. I have been able to bring this dissertation in this present
shape only because of hearty co-operation of number of heads. There are some who blessed
some who have advised, some who have wished, some who have assisted, and some who have
supplied and some who have supplemented. Thus each has contributed ones might in some form
or the other.
Thanks being a small word cannot express the immense sense of gratitude one dwells in
the heart towards anyone. So is true with this humble-self while stating so in this line. No
endeavor can successfully accomplish without any active participation, sincere assistance and
encouraging inspirations of others.
This project is no exception. I find it a matter in showing my blessing of indebtedness and
thankfulness to MR.AJEET SINGH PANNU, MANAGING DIRECTOR of MARKFED for
granting me the permission to do my training at MARKFED.
I am also very thankful to MR.RAJAN SOOD (CAO), who has allowed me to do my
training in FINANCE BRANCH. Also my humble thanks to MR. R.K.GUPTA (Sr Accounts
Officer),

Mr.PARDEEP

NAGPAL

(AAO),

MR.KULWANT

VERMA

(Accountant)

MR.CHARANJIT SINGH (Accountant). I am also very grateful to Ms.JASJIT MANN, my

college Mentor, Ms.Harish and Mr. Satinder Singh for all this help, valuable suggestions, their
valuable guidance and co-operation, thus I am able to complete this project.
I shall be failing in my duty if I dont express my heartiest thanks to my respected parents
for providing me every kind of help during the completion of this project. I also thank the entire
members of General Branch who helped me directly or indirectly in this project.

PREFACE

Budget is essential in every walk of our life whether it be inter- national level,
domestic level or in any business. A budget is prepared to have efficient utilization of funds and
for the realization of objective as efficiently as possible. Budgeting is a powerful tool to the
management for performing its functions (i.e. formulating plans, coordinating activities and
controlling operations etc.) efficiently.
Markfed budget is prepared on annual basis; it sets
physical targets for the different activities and plants. Monitoring of budget is done on monthly
basis by monitoring department, at the end of every month meeting of all district managers &
plant managers is held.
In this way Markfed budget plays very important role in coordinating activities and
controlling operations.

DECLARATION

I do hereby declare that this project work titled,

Analysis of Budgeting Activities of Markfed
Submitted in partial fulfillment of degree of
Masters of Business Administration from
SASIIT&R is my own original Work and
information contained in it is best Authentic to my
knowledge.

NAME: - NAVNEET KAUR

CONTENTS
1. CHAPTER: INTRODUCTION TO CO-OPRATIVE
A BRIEF INTRODUCTION TO CO-OPRATIVE
MAIN CO-OPRATIVE SOCITIES IN PUNJAB
2. CHAPTER: INTRODUCTION TO MARKFED
INTRODUCTION OFMARKFED
OBJECTIVES OF MARKFED
MARKFED VISION
MOTTO OF MARKFED
ENVIRONMENT OF MARKFED
ORGANISATION STRUCTURE
ORGANISATIONAL STRUCTURE IN THE HEAD OFFICE
MARKFED AS A TRUE FRIEND OF FARMERS
MARKFED AGRO BASED ACTIVITIES
MARKFED AT A GLANCE
TRADING ACTIVITIES OF MARKFED
3. CHAPTER: PROCURING AND PROCESSING OPERATIONS
PROCURING AND PROCESSING OPERATIONS
MANUFACTURING OPERATIONS
EXPORT AND INTERNATIONAL OPERATIONS
4. CHAPTER: INTRODUCTION TO BUDGET
INTRODUCTION TO BUDGET
PRELIMINARIES FOR THE ADOPTION OF A SYSTEM OF BUDGET
BUDGET PERIOD
DUTIES OF BUDGET DEPARTMENT
MARKFED BUDGET
GENERAL GUIDELINES FOR THE PREPARATION OF VARIOUS
PROJECTS ARE GIVEN HERE UNDER
DISTRICT
BUDGET DEPARTMENT OF MARKFED
BUDGETED PROFIT AND LOSS OF MARKFED ACTIVITIES
5. CHAPTER: MAIN ACTIITIES OF MARKFED
ANALYSIS OF COTTON ACTIVITY
ANALYSIS OF FERTILIZERS ACTIVITY

6. CHAPTER: RESEARCH METHODOLOGY

SOURCES OF DATA
PERIOD OF STUDY
CONCLUSION
SUGGESTIONS

TRAINING
T

To be in time on your seat.

Remain attentive all time.

Actually participate.

interact for clarity.

Note the points those are difficult to minimize.

improve listening habits.

Never neglect the programmer.

Gain as much as you can.

Chapter- 1

A BRIEF INTRODUCTION TO CO-OPERATIVE

The socialistic system as enshrined in the constitution of India is based on the ideals of
democracy and socialism. Only a movement of co-operative can fulfill the need of such an
economic and social fabric. The government of India started this movement in India in 1904 with
purpose of freeing the farmers from the group of moneylenders and this movement proved to be
a boom for the social and economic development of entire country.
The co-operative movement in Punjab contributed heavily to the agricultural
development as the first step and this resulted in the green revolution due to which Punjab was
crowned as the grain bowl of the country. The co-operative movements have enhanced every
aspect of human beings and are directed towards welfare of mankind.
During the last three years of co-operative movement Punjab has made rapid strides
towards strengthening of co-operative societies which have elected managing committees/BOD
and an elected chairman. There have been efforts to strengthen the capital base of the society
with a view ensuring that its members develop a sense of belonging and have a greater say in the
decision making process. There have been various amendments in the Punjab co-operative
Societies Act, according to which the terms of the elected office bearers has been increased from
three to five years. The maximum period for which administrator can be appointed in a society
has been reduced from four to one year to ensure that the society remains in the hands of the
elected people.
Punjab today leads the entire country in the recovery of co-operative banking loans.
After years of restlessness and turmoil all the central co-operative banks including those in
border districts, have become eligible to avail themselves of the refinance facility from the
National Bank For Agricultural and Rural Development (NABARD), under the non farm sector

scheme of NABARD all central co-operative banks and primary co-operative agricultural
development banks have floated new schemes for advancement of loans to the unemployed
youth, this has given a boost in providing employment in rural areas and has helped people raise
their standard of living.

THE MAIN CO-OPERATIVE SOCIETIES IN PUNJAB

Markfed
Milkfed
Industrial Co-operative Society
Weavco
Housefed
Puncofed

Markfed is Asias biggest cooperative venture, which helps the farmers in the marketing of their
product through primary co-operative societies. Markfed has 101 branches, 19 agro service
centres and 2500 PACs.
Through which it provides quality fertilizers, pesticides and insecticides to farmers. It also
work as government procurement agency and ensures minimum support price for the farmers
produce especially, wheat and paddy during the procurement seasons

Co-operative movement in Punjab has also played a formal role in the

white revolution. State level Punjab state co-operative Milkfed, district level milk union and
primary milk producers, co-operative societies at the village level are progressively working

towards enhancing the income of co-operative societies and their member producers. Milkfed
has pledged to procure good milk yielding animals producing fresh and germless milk for the cooperatives. At present milkfed has business resource of Rs.225 crores.

INDUSTRIAL COOPERATIVE SOCIETY

The industrial cooperative societies have also made unique contribution in the co-operative
movement and have helped to provide employment to the unemployed youth and production of
necessary goods

The co-operative society for handloom weaver exists in two levels,

Weavco at the state level and co-operative societies at the village level. There are primary
handloom weavers societies are members of it. Weavco has showrooms throughout the country.

HOUSEFED
Housefed initiated steps for meeting primary needs of housing of man and provides financial
assistance to solve the housing problems through its primary societies in urban and rural areas.
Housefed also undertakes construction of co-operative housing complexes in various cities.

PUNCOFED
Puncofed has been playing the role in promoting and popularizing co-operative culture through
training publicity and research work. This organization has held conferences and seminars in the

10

whole state and also published and distributed special booklets, and charted out business
development plans and new schemes.

CHAPTER-2

11

INTRODUCTION OF MARKFED
Markfed came into existence in the month of September 1954 with 13 members, a
share capital of Rs. 54000, 3 employees and one bicycle and has today become Asias largest
marketing co-operative society.

Today, this organization employs more than 2400 persons, has a network of
manufacturing units, service centres and offices crisscrossing Punjab and its operations spread
around the world.
Markfed is a federation of 3047 members cooperative societies directly representing
interest of over one million farmers.
The factors that have made this rupees 10000 crores giant a Magnificent success is its
cooperative structure in enlightened management, progressive plans and policies, path breaking,

12

a highly dedicated work force and supreme commitment to the objectives of the cooperative.
MARKFEDS success is true reflection of the spirit and dynamism of the people it represents:the people of Punjab.

OBJECTIVES OF MARKFED

The objectives of Marked are as follows:

To make arrangements for procuring, marketing/trading, Processing/ manufacturing of

agricultural products as well as byproducts of its affiliated members & their members to their
best advantage within the country & outside the country.

To find out & adopt latest technology & supply of goods on Cooperative basis and to act as agent
to its constituents and other persons and institutions approved by the Registrar, Co-operative
Societies, Punjab.

To raise funds for its own business.

To provide financial assistance to its members in the shape of Advances, loans and grants.

To make arrangement for procurement in bulk the requirements of its members in respect of both
procedures & consumers goods.

To make arrangement for distribution of agricultural inputs in retail to members & non-members.

To undertake processing, manufacturing, grading & packing activities and establish industrial
units.

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.

To guide, assist and supervise the working of its member societies.

13

To run warehouses.

To undertake inter state trade, import and export of agricultural produce, farm equipment &
consumer goods.

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 Section7.7of the act
wherever required.

To act as an insurance agent & to guide & assist its member societies and other etc regarding all
insurance matters.

To do all things that may be incidental or conducive to the attainment of any or all the aforesaid
objects of for the advancement of the cooperative movement in general.

MARKFED VISION

SHORT TERM

Diversification/implementation of AEZs.

Further bulk handling project & start execution.

14

State of art & lab chemical analysis.

LONG TERM

Diversification of at least 5 lakh acres of land from Wheat, Paddy rotation.

Setting up of infra structure for export of fruits & vegetables like cold chain / cold storage

with participation and support from the government.

Set up a modern processing facility with JV partners in the field of Potato processing and

honey processing.

With the reduction in the role of MSP mechanism Markfed would play major role in the open

market trading of food grains.

MOTTO OF MARKFED
Markfed is not just an agriculture products procurement agency; it walks on the live policy of
national development and provides new opportunities that lead to higher quality and
remunerative price. Markfed, which always share its knowledge, technology, resource and
services to keep in building the country, we now call it Markfed House. The cooperative
philosophy, principles of brotherhood, help to farmers, latest modern technical know-how,
research and development have given wide acclaim to Markfed.

ENVIRONMENT OF MARKFED
EXTERNAL ENVIRONMENT:Markfed is operating in dual Environment. While some operations of Markfed are
protected and supported by the government but also rigidly controlled by Government and
certain rules and regulation, others face competition from private and multinational corporations.

A)

GOVERNMENT CONTROLLED ENVIRONMENT

15

:-

For Markfed, procurement and distribution of the food grains and inputs and cost - plus
activities driven by government policies and controlled by the government rules and regulation.
Markfed neither faces any pressure on account of customer demand not any competition in these
activities.
All price support operations of the market i.e. procurement of wheat and paddy are
controlled by the government and conducted on behalf of Food Corporation of India. Within the
overall framework of government of India policy, department of food and supplies, Punjab
Government oversees the entire procurement operations and allots the mandis for procurement
and mills for milling in case of paddy.

For distribution of fertilizers and agro- chemicals, Markfed has operated as per the
policy stipulated by the Registrar of Cooperative Punjab. For import of DAP, a high level
government committee is constituted for taking purchase decisions. M.D. of Markfed is the
member of this committee; the distribution of

Fertilizers is restricted and can be only

distributed through the cooperatives.

B) COMPETITIVE ENVIRONMENT:Markfed faces a highly competitive environment in case of other products such as
(Vanaspati, Refined Oil, Basmati, Canned Products, and Agro- Chemicals) being manufactured,
processed and marketed in a market environment without any quota or the government
intervention. The profitability of these activities depends upon efficiency in their production and
competitiveness in marketing.
Markfed is also in export business where success depends solely on internal efficiencies and
competitiveness .The customers in international markets demand high quality products in a
competitive environment.

INTERNAL ENVIRONMENT:-

16

In the internal functioning of Markfed the state government plays a substantial role. Apart
from the nominees from the government on its Board, each and every policy decision that is
taken by Markfed has to be approved by the Registrar of Co-operative Societies before it can be
implemented.
Markfed has adopted many government norms and procedures for its day-to-day
functioning. For example its engineering department, which deals with civil and electrical
construction activities, functions totally as per the PWD norms and methods. The designations
adopted by Markfed for its employee officers superintending engineers, superintendent etc. the
salary structure is also based on the State Government salary structure and follows the changes
therein.

Markfed also follows the system of inter departmental deputation whereby staff from other
government departments work with Markfed for a specified period of time. Not only the
managing directors are on deputation from different departments, even lower down the
administrative hierarchy there are some positions that have the earmarked for deputation.
The methods and procedures prevalent in Markfed reflect a government style of
functioning. For example Markfed has a concept of Paper under Consideration and every file
that comes into the organization passes through 7-9 levels before a decision is taken. At Each
level, some comments are written on the file and it is passed into the next higher level. This flow
is interrupted once in a while when an officer puts a remark please discuss or please speak.
These practices have together given Markfed a government orientation and a highly bureaucratic
work culture while it ought to be following a corporate culture.

ORGANIZATION STRUCTURE
Management is the backbone of organization. Without efficient management no
organization can perform its functions smoothly. Sound organization contributes greatly to the
continuity and success of the enterprise. It is the framework of relationship of persons operations

17

at various levels with vertical and horizontal dimensions. The type of organization in a company
depends upon its size and range of production.
Markfed is divided into 17 Administrative Districts, Two new districts viz Taran Taaran
and Mohali are being added raising the number of Administrative Districts to 19.There are 17
Industrial units and 1 Cotton cell in the state of Punjab with its registered office at Roopnagar
and head office at Chandigarh. It is federation of 3033 Member Cooperative Societies,
representing directly the interests of over one million farmers.
Markfed is governed by an elected Board of directors including Government
nominees, which creates and makes the policies of undertaking business of the Federation. The
management of Markfed vests with the board of Directors which has a term of 5 years. There are
17 members in the Board of Directors which consists of the following:

Twelve representatives are the members of societies, which are elected on zonal basis by
dividing the area of operations of Federation into 12 zones.

Five including Managing Director are government nominees.

Managing Director is the Principal Executive of the organization and is assisted by
Additional Managing Directors and other various functional Heads at head offices and general
Managers and Managers in the plant or units and Districts Managers at the district level and
liaison officer at Delhi.
The Chairman and Vice - Chairman of the Board of Directors are elected, from amongst the
members of societies. The Board of Directors shall meet at least once in six months and a clear
notice of the meeting should be given to the directors. 15 days before the meeting is to be held.
There are executive
Committees and administrative committees of the Federation consisting of 6 directors which are
constituted in the following manner:

Chairman of the Board of Directors.

18

Vice Chairman of the Board of Directors.

Registrar Cooperative Societies, Punjab or his nominee.

Two Directors to be appointed by the Board of Directors out of its Remaining elected members.

Managing Director.

ORGANIZATIONAL STRUCTURE IN THE HEAD OFFICE

The MD is the Chief Executive Officer of Markfed responsible for overall performance
under the control and direction of the Board of Directors. The Board members are appointed for
5 years.
At the head office, Markfed under the MD is organized into various departments and
functions that are as follows:

Administrative Branch

Accounts
1. General
2. Banking
3. Budget & Marketing

19

4. Internal Audit
5. Legal & Taxation
6. Salary
7. Engineering
8. Recovery

Marketing

The general section headed by an Additional Managing Director, (General) & plant
section is headed by Additional Managing Director (P), which are further under the charge of
respective Functional Head.
Markfed also has manufacturing and processing plants spread all over the state. The
plant heads report to the particular functional head who is handling that product at the head
office.
Marketing section of Markfed is handling the sales of Edible and Non Edible products
manufactured in Markfed plants. Markfed has been marketing edible oils ( Sohna Sunflower,
Cotton seed, groundnut, Kachhi Ghani, Vanaspati being manufactured at Khanna, Kapurthala,
Gidderbaha Plants) Sohna Basmati Rice and various items manufactured at Markfed Canneries,
Jalandhar, such as tomato ketchup, Canned foods (Sarson Ka Saag).All the edible products are
marketed under one umbrella brand i.e. Sohna.
Markfed has a network of dealers and distributors as detailed below.

20

DEPOT

Jalandhar

DEALERS

CARRYING &

AGENTS

FORWARDING

Various Cities

Damtal

Ludhiana

Mandi

Ambala

Solan

Bhathinda

Sirsa

Delhi
Chandigarh

21

BOARD OF DIRECTORS

MANAGING DIRECTOR

AMD(GENERAL)

AMD (PLANT)

CHIEF MANAGER
PERSONNEL, MARKETING, INPUTS,
PADDY, RICE, FOOD GRAIN,

SR. MANAGER

MANAGER

SUPERITENDENT

SR.ASSISTANT

ASSISTANT

CHIEF ACCOUNT
OFFICER

DY. CHIEF ACCOUNT

OFFICER
SR. ACCOUNT
OFFICER
ASST.ACCTS.OFFICER

ACCOUNTANT

ASST.ACCOUNTANT

CLERK

22

CHIEF INTERNAL
AUDIT

DY. CHIEF ACCOUNT

OFFICER

SR. ACCOUNT
OFFICER
ASST.ACCTS.OFFICER

ACCOUNTANT

ASST.ACCOUNTANT

MARKFED A PROFILE
Markfed Punjab is Asias Largest Marketing Cooperative .As a co-operative, it exists
both because of and for the farmers of this vibrant state. They shared the purpose of Markfed and
also its future. An important landmark in the annals of Indian co-operative, which has served
millions of farmers on their way to progress, is the Punjab State Cooperative Supply and
Marketing Federation Ltd., popularly known as Markfed.
Markfed came into existence four decades ago. Registered in September 1954, it began
operation with 13 members; a share capital of Rs 54000/ three employees and one bicycle has
today become Asias Largest Marketing Cooperative, Markfed.
Today, this organization employs 2400 persons, has a network of manufacturing units,
service centers & officers crisscrossing Punjab and its operations spread around the world.
Markfed is a federation of 3047 member co-operative societies representing directly
the interests of over one million farmers Business Turnover of 15468 crores.

A Brief Profile of Markfed Industrial Units

Markfed Canneries Jalandhar

Operational area:

Manufacturers of Tomato Sauce, jams, pickles, squashes, spices, dehydrated and Canned foods.

23

Markfed Vanaspati and Allied industries, Khanna

Operational area:

Manufacturers of sohna Vanaspati, cottonseed oils, sunflower oil and Mustard oil.

Refined oil plant Kapurthala

Operational area:

Manufacturing of cattle feed

Kapurthala and Giddarbaha plan

Operational area:

Manufacturing of cattle feed.

Markfed Rice Mills Rajpura, Bagha, Purana, Macchiwara, Nawanshehar

Operational area:
Manufacturer of rice

Agro- Chemical Plant, Mohali

Operational Area:
Manufacturer of fertilizers.

Fertilizers Plant, Dhuri

Operational area:
Manufacturer of fertilizer.

H.D.P.E. Plant Anandpur Sahib

Operational Area:
Manufacturers of H.D.E. Bags.

Cement pipe Plants Singhapura,Ropar and Sarna

Operational Area:
Manufactures of pipes.

24

MARKFED AS A TRUE FRIEND OF FARMERS

Markfed plays a pivotal as a catalyst for integrated development and growth in rural areas of
Punjab.
It helps in stabilizing the market rate of farm produce.
Ensures supply of quality goods.
Helps in generating employment.
Contributes substantially towards earning foreign exchange.
Service above profit.
In keeping with the latest and fast evolving trends, Markfed has adopted the worlds latest
techniques like electronic data processing such as Enterprise Resource Planning (ERP) for online
processing, analysis and dissemination of information to the people who need it the most.
In spreading this vital information Markfed has joined hands with Punjab Marketing Board since
1984 to sponsor a farmer information programme Mera Pind Mere Khet (My land My fields)
on television.
Over the years Markfed has been specialized in the activity of procurement and distribution of
agriculture produce from Punjab directly and on behalf of other agencies for contribution to the

25

central pool. Wheat trading operation have over the years alone contributed to 48% of the total
business turnover of Markfed, wheat and paddy are being procured from different mandis under
price support scheme while cotton is being procured

on commercial basis. The member

cooperative societies have been of enormous help in the above activity of procurement and
distribution of agro products.
Markfed has been producing a number of agro-based products under the brand name Sohna
which is favored by consumer section of Punjab and other northern states of the country .some
products like Basmati and Sarson Ka Saag have experienced tremendous response in the
overseas markets.

26

MARKFED AGRO-BASED ACTIVITIESCATERS TO THE NEEDS OF FARMERS

PROCUREMENT
& TRADING

WHEAT
PADDY

CUSTOM
MILLING

FERTILIZERS
DISTRIBUTION
AGRI INPUTS

EXPORTS

EDIBLE OIL
OKLOIL I
RICE
WHEAT
PROCESSED FOOD

PROCESSING
&
MARKETING

COTTON

NON.EDIBLES
S EDIBLES
EDIBLES

PROCESSED FOOD

AGR.CHEM.

AGRI
PRODUCTS

BASMATI RICE
EDIBLE OILS

27

MARKFED AT A GLANCE
Regd. No.

812

Regd Date

2 September 1954.

Member Societies

3047

Employees

2400

Business Turnover

15468 crores

Distribution of

Fertilizers, Insecticides, Weedicides and Seeds.

Agriculture inputs

Pesticides and Herbicides, Cattle Feed.

Procurement

Wheat Paddy, Cotton & Oil seeds.

Storage Capacity

14.85lacs (MTS)

Markfed Branches

101

Exports

Wheat, Rice, Processed Cotton, Edible Oil, Potato Products.

Processing units

Markfed Vanaspati & allied Industries (Khanna)

Markfed Refined oil & allied Industry (Kapurthala)
Markfed cotton seed pressing plant (Gidderbaha)
Markfed Canneries (Jalandhar)
Markfed Agro Chemicals, (S.A.S Nagar Mohali)

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Markfed Rice processing complex (Gidderbaha)

Markfed Rice processing complex (Nawashahr)
Markfed Rice processing complex (Macchiwara)
Markfed HDPE plant, (Anandpur Sahib)
Markfed cotton Ginning & Spinning Factory, (Raman)
Agro services

Markfed Mechanized Agro Service Center (Ludhiana)

Mobile soil testing laboratory Bathinda, Ropar, Hoshiarpur,
Kapurthala, Nihal Singh Wala Sangrur & Malout;
Custom Spray Services for pest control&AntiTermite Treatment

RANGE OF MARKFED PRODUCTS

EDIBLE PRODUCTS
PROCESSED FOOD AND CANNERIES.
Markfed has set up canneries to [produce Heat & Eat products (especially curries) recipies of
which have been prepared by Mr. Jaggies Kalra a chef of international repute. The product
includes delicases like Sarson ka saag Daal makhni, Bartha. Besides this it also produces jams,
ketch ups honey etc. these products are being sold all over India and are being exported to many
countries around the world.

EDIBLE OIL GHEE

The oil mill at Khanna produces Vanaspati Bakery shortening and Refining oils such as cotton
seed oil, Soya oil mustered oil and vegetable oil with a total production capacity of 33000 MT
per annum, kachi Ghani Sohna brand Mustard oil has already reached the market of the middle
east & Canada and is a highly sought after brand in the domestic market as well.

29

RICE
Markfed operates its rice mill complex at Rajpura ,nawanshahar, machiwara,baghapurana,
Batala nausherapunnam , Jaitu , Goniana , Gidderbaha and chuselewal as purchase centers the
procurement at these centers is done directly from the farmers are paid extra MSP of 1.5 % for
all practical purpose these complexes also like mandi yards.
This step of the government is the experiment to safe guard the interest of the farmers from
unscrupulous elements and offers them an additional 1.5% in realization on account of savings
affected due to the elimination of the middlemen.

NON-EDIBLE PRODUCTS
CATTLE FEED MANUFACTURING
Markfed manufactures cattle feed at its plant at Gidderbaha & Kapurthala, which have a
combined annual production capacity of 63000 tones. The animal feed manufactured here is
popular in Punjab, Haryana, HP, Jammu & Kashmir, and Rajasthan & Delhi and sold through
dealers and co-operative societies.

SOIL TESTING LABORATORIES

Markfed well equipped 8 soil testing laboratoratories at Amritsar , Bathinda,Ropar , Hoshiarpur ,
Kapurthala ,Sangrur , Malout Lab manned by specialist with an annual capacity to analyze 1000
sample of soil & water have been rendering free service to farmers in obtaining best result from
the use of chemical fertilizers since 1969

30

Trading Activities of Markfed

The majority of buffer socks of wheat ad rice in India are held in Punjab. Markfed alone
stores around 4.4 millions tones of wheat. As one of the major procurement agencies, it also
plays an important role in providing remunerative price to farmers.
Share of stock

Markfed share at Punjab level, Punjab share at India level, India share at world
level. The food grain procured for the PDS are distributed through a network of retail outlets.
The food grain policy revolves around his surpluses available for procurement, building buffer
store, distribution, trade regulation and price control.
Punjab produced over 20 millions tones of food grain with huge surpluses both in
wheat and rice. It has 4.2 millions hectares of well irrigated and fertile land. Despite having only
1.5% of the countrys agriculture area, Punjab gross 25% Indias wheat and account for 10% rice.

31

BUSINESS TURNOVER (Tentative)

YEAR
2007-08
2008-09
2009-10

Rs. In crores
9378.68
14156.24
16732.99

32

CHAPTER-3

33

PROCUREMENT OF FOODGRAINS, SEEDS, PULSES ETC.

The majority of buffer stock of wheat and rice in India are held in 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 grain procured for the PDS are distributed through network of retail outlets. The
food grain policy revolves around the surplus available for procurement, building of buffer stock,
distribution, and trade regulation and price control.
Markfed procures mustard seeds and sunflower to process them in its oil complexes at
Khanna, Kapurthala and Gidderbaha.

TESTING LABORATORY

State of art food grains testing laboratory at ROPAR.

Analysis for protein, moisture starch, wet gluten, dry gluten, sedimentation value, hardness,
color grading, hectoliter- weight, ash content, micro nutrients, amino acids, pesticides residues,
alpha amylase activity of grains and flour, water absorption capacity.

34

COTTON PROCESSING
Markfed processes and trades in cotton, the worlds leading fiber and important cash crop in
Punjab.
Within India, markfed sells cotton to the processing mills in Orissa, Tamilnadu, U.P, and Gujarat
& Maharashtra. It also exports cotton bales to far eastern countries as 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.

COTTON SEED PROCESSING:

Markfeds cotton seed processing plant at Gidderbaha produces cotton seeds oil for the cooperative federations own Vanaspati plant and by-products like Lint, de-oiled cake and hulls for
paper manufacture and its own cattle feed

35

36

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, H.P, J&K, Rajasthan and Delhi and is sold through dealers and cooperative societies.

SOIL TESTING LABORATORIES

Markfeds eight well- equipped soil testing laboratories at Amritsar, Bathinda, Ropar,
Hoshiarpur, Kapurthala, Sangria, Malout and Mobile Lab manned by specialist with an annual
capacity to analyze 10,000 samples of soil and water, have been rendering free services to
farmers in obtaining best results from the use of chemical fertilizers since 1969.

VANASPATI AND REFINED OIL

The oil mill at Khanna produces Vanaspati Bakery- shortening and refined oils such as cotton
seed oil, Soya oil, mustard oil and vegetable oil with the total production capacity of 33000 MT
per annum. The Kapurthala unit produce 33000 MT of cattle feed, whereas Gidderbaha unit
produce 15000 Mt of oil and rice bran and 33000 MT of cattle

37

38

DOMESTIC OPERATIONS
A LIST OF ALL PRODUCTS

CANNERIES

Markfed has set up canneries to produce ready to eat food products, recipes of which have been
prepared by Mr. Jiggs Kalra, a chef of international repute. The products include delicacies like
Sarson ka Saag, Chatpata Chana, Daal Makhni, Palak Paneer, Mutter Paneer, Kari Pakora,
Rajmah, Lobia & much more under the brand name Sohna. Besides this it also produces jams,
ketchup, honey etc. These products are being sold all over India and are being exported to many
countries around the world. Punjab produces over 20 million tonnes of food grains with huge
surplus both in wheat and rice. Despite having only 11.5% of the countrys agricultural areas,
Punjab grows 25% of Indias wheat and account for 10% and 30% of Indias total rice & cotton
production respectively.

39

FARM INPUTS
Besides procuring agro produce at remunerative prices as well as adding value through
processing and marketing them locally and abroad, markfed also plays a laudable role in
supplying quality firm inputs viz. high quality fertilizers, pesticides and fungicides thus earning
the epithet: A TRUE FRIND OF FARMERS. Through its network markfed distributes around
8lakh tones of fertilizers to farmers annually, thereby meeting the entire requirement of chemical
fertilizer of the co-operative sector.

MANDI YARDS
Markfed operates its rice mill complexes at Rajpura, Nawanshahar, Macchiwara,
Baghapurana, Batala, and Naushera pannuan, Jaitu, Goniana, Gidderbaha and Chuslewala as
purchase centers. The procurement at these centers is done directly from the farmers without
routing the grains through 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 government is
an experiment to safeguard from unscrupulous elements and offers them an additional 1.5% in
realization on account of saving affected due to the elimination of middlemen.

40

41

AGRI EXPORT ZONE FOR POTATOES

Potato is considered as the third major cash crop and plays a pivotal role diversification.
India is the fourth largest producer of potatoes in the world. Markfed helps farmers by procuring
potatoes and organizing their exports. The government 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 return to the farmers and also to help farmers
in producing quality is at par with international market. Markfed has been declared the nodal
agency for setting up this AEZ to facilitate potato export from Punjab. The zone entails
partnership of farmers, processors, exporters, the state and central government agencies to
coordinate for end-to-end development of potatoes and its processed from firm to consumers.
The project will be implemented into two phases costing Rs.10.41crores and
Rs.10.2crores respectively.

POTATO PROCESSING UNIT

Punjab markfed has signed a MOU with Canadian Manufacturing Company Ltd. Vancouver,
Canada for setting up of the joint venture to manufacture potatoes, French fries, the cost of the
project is approx. is Rs.70crores.

POTATO CULTIVATION IN SRI LANKA

In a novel move, markfed has taken on lease a 1000acre farm in Sri Lanka offered by Sri Lanka
govt. for the cultivation of Seeds, table ware, potatoes. The federation has agreed to undertake to
spread awareness to Punjab. Expertise to spread far and wide, so that Punjabs agro product gain
reputation and establish a market presence.

42

AGRIEXPORT ZONE FOR BASMATI RICE

The AEZ will facilitate increased production of basmati rice accounting for almost 60% of the
world export. The AEZ will be setup in Punjab covering Gurdaspur, Amritsar, Kapurthala,
Hoshiarpur and Nawashahar areas. The main objectives of this AEZ will be
1) Providing remunerative return to farmers on a sustained basis by improved access to export.
2) Interlinking with various constituents of the chain from farmer to consumer.
3) Establishing backward linkage with rice millers.
4) Standardization of agronomical practices.
5) Making quality seeds available.

SARSON KA SAAG A DELICACY ON FOREIGN SHORES

About 1.5 million canes containing ready-to-eat Sarson ka saag a Punjabi delicacy and other
Indian vegetable curries are exported to many regions, which include U.S.A, Canada, Europe,
Middle East and the South pacific.

43

CHAPTER-4

44

INTRODUCTION TO BUDGET
Budget, forecast of expenditure and revenues for a specified period of time. As a planning
document, a budget enables businesses, governments, private organizations, and households to
set priorities and monitor progress towards selected goals. To achieve budgetary objectives, it
may be necessary to set aside savings (surplus) or to borrow from out side sources (deficit).

PLANNING A BUDGET
A budget often starts with a documented plan for weekly or monthly spending for a
definite period of time, usually a year. A person may take a budget by first estimating his or her
short and long term income, and then estimating short and long term expenses that must be
covered by that income. The second step in keeping a budget is to set up a record of money
actually spent. Together these two steps are the basis for drawing up a balance sheet. The final
step is to use the balance sheet to keep track of how the planned budget compares with actual
spending and it for inconsistencies.

BUDGET
MEANING AND NEED OF BUDGET
Every one is familiar with the idea of a budget in our life- national, domestic and business.
A budget is prepared to have an effective utilization of funds and for the realization of objectives
as efficiently as possible. Budgeting is a powerful tool to the management for performing its
functions For Formulating Plans, Coordinating Activities and Controlling Operations etc.
efficiently. In other words:-

45

A financial and/or quantitative statement prepared and approved prior to a defined period of
time, of the policy to be pursued during the period for the purpose of attaining a given
objective.

An analysis of this definition reveals the following essentials of the budget:

A budget is prepared prior to a defined period of time.

It is prepared for the definite future period

The policy to be followed to attain the given objectives must be laid before the budget is
prepared.

The budget is monetary and quantitative statement of the policy

The Chartered Institute of Management Accountants, England, defines a

budget as under.
A plan quantified in monetary terms, prepared and approved prior to a defined period of
time usually showing planned income to be generated and/or expenditure to be incurred during
that period and the capital to be employed to attain a given objective.

46

PRELIMINARIES FOR THE ADOPTION OF A SYSTEM OF BUDGET

The following are the pre-requisites or steps for the successful implementation of a sound system
of budget:

A concern must have an organization chart. This is necessary in order to have clear idea of
authority and responsibility of each executive for shirking responsibilities and blaming others for
poor performance.

The business objectives, plans and policies should be clearly defined and

Stand in unambiguous terms.

The budgeted output is stated in clear terms.

The budget or key factor, if any, must be indicated before starting the preparation of budgets.

There must be efficient system of accounting in order to record and provide necessary
accounting in order to record and provide necessary accounting information to the management
for the successful system of budget.

Budget department should be set up for the establishment and efficient execution of plans.

Budget centers should be established for cost control and all budgets should be related to cost
centres.

There should be a budget manual to indicate charter of programme. It contains all details
regarding the plan and procedure for its execution.

47

To motivate the workers, the budget must be prepared by those who are responsible for its
performance.

BUDGET PERIOD
Budget period is of one year. This may be defined as the period for which a budget is prepared
and employed. The budget period is depending upon following two factors:
The type of the business
The control aspect
From control point of view, the budget period should be a short one so that the actual result
may be compared with the budget each weekend and month end. There should be a regular time
plan for budget preparation. It may be on the following lines:
1. Long term budgets for three to five years should be prepared for expansion and modernization
of undertaking, introduction of new products or new projects and undertaking heavy
advertisement.
2. Annual budget coinciding with financial accounting year should be prepared for the
operational activities. (I.e. sales, purchase, production etc.of business.)
3. For control purposes, short term budgets monthly or even weekly budget should be prepared
for watching progress of actual performance against targets. Short term budget are prepared to
see actual performance is proceeding according to the budget and easily corrective action may be
taken if there is any pitfall.

DUTIES OF BUDGET DEPARTMENT

To receive, scrutinize, revise and approve functional budgets prepared by each
section/department.
To receive reports according to the prescribed schedule and compare actual with the budgeted
figure.
To pinpoint the responsibility by analyzing the deviations and suggest remedial action or
revision of budget, if necessary.

48

 To participate in the discussion for evaluating the different projects and add programmes
which have direct effect on the budget.

THE DUTIES OF THE CONTROLLER MAY BE SUMMARIZED AS

FOLLOWS
To create co-ordination among the various functional managers and provide hem guidance in
all matters pertaining to budget.
To revise and amend the budget manual as and when necessity arise to do so.
To prepare budget programmes and issue instruction for proper execution of each programme.
To revise and scrutinize the functional budget received from various departments and provide
necessary information that has an impact on preparation of their budgets.

MARKFED BUDGET
PURPOSE

Effective achievement of objectives.

To coordinate all the activities.

To centralize control with decentralize authority and responsibility at various levels.

To plan and control income and expenditure.

To plan and control the financing of the business, so that liquidity is maintained at all

times.

To provide a yardstick against, which result can be compared?

BUDGET PERIOD

49

Budget period is of one year. Quarterly and monthly budget estimates should be prepared
on the basis of annual budget.

GENERAL GUIDELINES FOR THE PREPARATION OF VARIOUS

PROJECTS ARE GIVEN HERE UNDER
1.

SALES BUDGET :-

Authority responsible = Marketing Department (Head Office)

BASIS OF PREPARATION OF BUDGET:The sales forecast is to be done on the basis of:a) Past performance
b) Future orders in hand
c) Market movements
d) Production capacity
e) Any other restraint
2. PRODUCTION BUDGET:Authority responsible =Production Department (plant).
BASIS OF PREPARATION OF BUDGET:Production budget shall be prepared on the basis of sales forecasts in sales budget and ending
inventory budget.
3. DIRECT MATERIAL USAGE BUDGET:Authority responsible = Commercial section in concurrence with
Production Department (Plant).
BASIS OF PREPARATION OF BUDGET:-

50

It shall be done on the basis of standard requirement of raw material. The quality of finished
product is to be derived from sales budget and inventory budget.

4. MATERIAL PURCHASE BUDGET:Authority responsible = Commercial section in concurrence with production department (plant).
BASIS OF PREPARATION OF BUDGET:It shall in to account the total usage as given in the raw material usage budget. The other
important considerations are:

EOQ

Re- order point with safety stock to cover fluctuation in demand for determination of

closing stock of raw material.

5. LABOUR COST BUDGET:Authority responsible = Personnel Department
BASIS OF PREPARATION OF BUDGET:The ending inventory budget is to be prepared on the basis of opening inventory, estimated
production and estimated sales also. Considering the inventory turn ratio to be maintained.
6. FACTORY OVERHEAD BUDGET:Authority responsible = Finance Department
BASIS OF PREPARATION OF BUDGET:All the factory overhead expenses have to be classified as variable and fixed expenses for the
estimation of factory
Overhead expenses the direct labour cost budgets are to be taken for ascertaining the variable
factory overhead expenses.
7. ENDING INVENTORY BUDGET :-

51

Authority responsible = Account Department in consensus with commercial and production

department and stores department.

BASIS OF PREPARATION OF BUDGET:The ending inventory budget is to be prepared on the basis of opening Inventory, estimated
production and estimated sales. Considering the inventory turnover ratio to be maintained.
8. SELLING AND DISTRIBUTION COST BUDGET:Authority responsible = Marketing Department (HO)
BASIS OF PREPARATION OF BUDGET:All the expenses connected with advertising, sales promotion sales office, salesman, credit
collection, market research, after sale service Etc. are to be estimated by marketing department
(Head office) on the basis of

Previous Year

Expenses

Estimated Changes

9. ADMINISTRATIVE EXPENSES BUDGET:Authority responsible = Finance/Accounts Department

BASIS OF PREPARATION OF BUDGET:This budget shall be prepared on the basis of previous years actual expenses under this category
adjusted for the expected changes.

10. CASH BUDGET:Authority responsible Finance/Accounts Department

52

BASIS OF PREPARATION OF BUDGET:This budget is to be prepared on the basis of all the budgets taken Together and other expected
cash inflows and outflows and cash Interval ratio too be maintained.

11. MASTER BUDGET:Authority responsible Finance/Accounts Department

BASIS OF PREPARATION OF BUDGET:This budget shall assimilate all the other budgets to predict a Consolidated view of the operations
at the plant.

Khanna plant

Kapurthala plant

Gidderbaha plant

Mohali plant

Canneries Jalandhar

HDPE Plant

Fertilizer Plant, Dhuri

MRM

MRM Nawashahr CPP

Cotton Cell, Bathinda

Cpp Sarna

53

DISTRICT
At the District level, the budgeting process starts with purchase targets of wheat, paddy and
fertilizers. Purchase budget is based on these targets. All other budgets are prepared thereafter on
the basis of purchase budget. The other budgets to be prepared at district level are sales budget,
ending inventory budget, selling and distribution cost budget, administrative expenses budget,
cash budget and master budget. All these budgets are to be prepared by the finance/accounts
section and then approve by district level budget committee before being sent to head office.
The Chief Manager of respective plants/districts shall reconsider the budgets prepared at
plant/district level before the same is passed on the budget section for final inclusion in the
annual budget of Markfed

BUDGET DEPARTMENT OF MARKFED

Delegation of authority in the budget department in increasing order is as given
below:

DESIGNATION

NAME

1. M.D ...Mr.Ajeet Singh Pannu

2. ADDITIONAL MANAGING DIRECTOR.. Mr.S.K.Batish

54

3. CHIEF ACCOUNTS OFFICER....Mr.Rajan Sood

4. SR.ACCOUNTS OFFICER...Mr.Rakesh Gupta
5. ASSISTANT ACCOUNTS OFFICER..... Mr.Pardeep Nagpal
6 ACCOUNTANT.....

Mr.Kulwant Verma

7. ACCOUNTANT... Mr.Charanjit Singh

DETAILS OF THE ACTIVITY WISE PROJECTIONS/FORECASTS

TRADING ACTIVITIES:-

1. WHEAT ACTIVITY :Budgeted target of procurement of wheat has been kept at 25.5 lac MTs. Movement of
wheat at 24.1 lac MTs. Against actual procurement and movement of wheat of 24.8 lac MTs.
respectively for the year 2008-09. The budgeted profit for the year 2009-10 is Rs.1189.82 lacs
against actual profit of 711.29 lacs during 2008-2009.

2. PADDY ACTIVITY :Budgeted target of procurement of paddy and movement of rice during 2009-2010 has been fixed
at 25.00 lacs MTs. against and 18.98 lacs MTs. against actual procurement of paddy and
movement of rice/sale of paddy is 27.4 lacs MTs. during 2008-09 and 14.76 lacs MTs. The
budgeted target of profit for the year 2009-2010 is Rs. 5352.91 lacs actual profit of Rs.5348.02
lacs during 2008-2009

3. FERTILIZER ACTIVITY:Budgeted target of procurement of fertilizer during 2009-2010 is fixed at 11.55 lacs MTs. against
actual procurement of 10.35 lacs 2008-09.The budgeted profit of fertilizer for the year 2009-10 is
894.50 lacs against actual profit of Rs 869.4 lacs during 2008-09.

55

4. COTTON ACTIVITY:Budgeted target of cotton domestic sale and export sale for the year 2009-10 are 45000 bales and
nil bales respectively against actual sales of 95344 bales (domestic) and nil bales (export) in year
2008-09. During 2009-10 budgeted profit is fixed at Rs 26.00 lacs against actual profit of Rs
20.10 lacs during 2008-09.

MANUFACTURING ACTIVITIES:1.

KHANNA PLANT :-

The budgeted target of production for the year 2009-10 is 25450 K.Ltrs. against revised
estimated production of 22958 K.Ltrs. during 2008-09. The budgeted profit for the year 2009-10
is Rs 13.01 lac against actual loss of Rs.60.55 lac during 2008-09.

2. KAPURTHALA PLANT:The budgeted target of production for the year 2009-10 is 46900 MTs. against actual production
of 33804 MTs. during the year 2008-2009. Likewise budgeted sale for the year 2009-2010 is Rs
3410.20 lac against actual sale for the year 2008-2009 is Rs 2538.47 lac. The budgeted profit for
the year 2009-2010 is 170.10 lac against actual profit of Rs 167.25 lac during 2008-2009.

3. GIDDERBAHA PLANT :The budgeted target of production for the year 2009-2010 is 42000 MTs against actual
production of 27205 MTs. for the year 2008-2009. Likewise budgeted sale for the year 20092010 is Rs. 3179.00 lac. Against actual sale for the year 2008-2009 is Rs. 2078.15 lac. The
budgeted profit for the year 2009-2010 is Rs. 165.00 lac. Against actual profit of Rs. 160.04 lac.
During 2008-2009.

4. AGRO MOHALI PLANT :-

56

The budgeted target of the production for the year 2009-10 is 100,000 liters against actual
production of 46218 liters in the year 2008-09.The budgeted target profit for the year 2009-10 is
581.25 lacs against actual profit of 552.89 lacs in the year 2008-09.

5. CANNERIES JALANDHAR:The budgeted target of the production for the year 2009-20010 is 1434.30.245 MTs. against
actual production during the year 2008-2009 is 1344.32 MTs. likewise budgeted sales for the
year 2009-2010 is Rs. 1272.00 lac against actual sale for the year 2008-2009 is Rs. 900.12 lac.
The budgeted profit for the year 2009-2010 is Rs.110.00 lac against actual profit of Rs 208.83 lac
during 2008-2009.

6 MRM NAWANSHAHAR:The budgeted target sale for the year 2009-10 is 987.50 lacs against actual sale of 817.88 for the
year 2008-09. The budgeted profit for the year 2009-10 is 109.90 lacs against actual profit of
107.36 for the year 2008-09.

7. ADMINISTRATIVE OVERHEADS:Budgeted net Head Office administrative overheads for 2009-2010 are Rs.8077.05 lac against
actual expenditure of Rs.6675.60 lacs during Rs. 2008-2009 and Rs.6990.28 lacs during 200708.

57

CHAPTER-5

58

MAIN ACTIVITIES OF MARKFED

There are four activities of Markfed. These are:

WHEAT

59

 PADDY
COTTON
FERTILIZERS

For the purpose of analysis of BUDGET .I have selected trading activities of them.
COTTON
FERTILIZERS

RESEARCH METHODOLOGY
There are certain steps which are followed for making an effective research. It depends
upon organization to organization and person to person who adopt a certain strategy in research
called research methodology. Research methodology followed me in the organization is

Visiting different departments.

Conversation with highly skilled and qualified employees.

Data collection from different sources.

Guidance from project guide.

60

Preparation of project.

It is known that success of any research depends on the development of an efficient plan
for gathering the required information. Data gathered may be primary or secondary in nature.
Secondary data consists of information that already exists with the institutions or from outside
sources. Secondary data provides for a starting point of the research and offer the advantage of
low cost and easy accessibility. But primary data collected is more specific reliable and relevant
for the lay-down project. Hence for this project primary as well as secondary data has been made
use of keeping in mind the sample or nature of the project.

OBJECTIVES OF THE STUDY

The objectives are:
1 To study the annual growth rate of past of cotton and fertilizers.
2 To study the compounded growth rate of last 4 years of cotton and fertilizers.

SOURCES OF DATA
Main source of collection of my data is

SECONDARY DATA:-

Secondary data has been collected from the following sources

Annual report.

Published reports of company.

Data from various department

61

Companies web site.:- www.markfedpunjab.com

Relevant diagrams and charts like bar charts to give pictorial presentation of data collected for
better understanding

PERIOD OF STUDY
The period for which the training research was carried out was from 4th June to 26th July.
This proved to be of great help as it gave an exposure to the corporate world.

ANALYSIS OF COTTON ACTIVITY

ACTUAL PROFITABILITY COMPARATIVE STATEMENT OF FOUR

YEARS

62

1. GROSS PROFIT RATIO

GROSS PROFIT 100
NET SALES

(Rs.in lacs)
YEAR

2006-07

2007-08

2008-09

2009-10
(BUDGETED)

235.75100
4162.30
= 5.66%

284.29100
4704.57
=6.04 %

210.66*100
9334.45
=2.25%

170.98*100
4711.31
=3.62%

2. NET PROFIT RATIO

YEAR

2006-07

NET PROFIT 100

NET SALES
2007-08
2008-09

2009-10
(BUDGETED)

(Rs.in lacs)

127.34 100
4162.30

103.03100
4704.57

= 3.05%

=2.18%

63

20.10*100
9334.45
=.21%

26*100
4711.31
=.55%

STATEMENT SHOWING THE AMOUNT OF SALES AND GROSS PROFIT

(Rs.in lacs)
YEAR
SALES
G.PROFIT

2006-07
4162.30
235.75

2007-08
4704.57
284.29

2008-09
9334.45
210.66

2009-10
4711.31
170.98

C.O.G.S.* = SALES - GROSS PROFIT

(Rs.in lacs)
YEAR

2006-07
3926.55

2007-08

2008-09

4420.28

9123.79

C.O.G.S. = COST OF GOOD SOLD

64

2009-10
(BUDGETED)
4540.33

3. C.O.G.S .RATIO
C.O.G.S 100
NET SALES

(Rs.in lacs)
YEAR

2006-07

2007-08

2008-09

2009-10
(BUDGETED)

3926.55*100
4162.30

4420.28*100
4704.57

9123.79*100
9334.45

=94.33%

=93.95%

=97.74%

4. STOCK TURNOVER RATIO

STOCK TURNOVER RATIO = C.O.G.S.*
65

4540.33*100
4711.31
=96.37%

A. STOCK*
A. STOCK= OPENING STOCK+ CLOSING STOCK
2
AVERAGE STOCK*

(Rs.in lacs)
YEAR

2006-07

2007-08

2008-09

2009-10
(BUDGETED)

AVERAGE 3134.56
STOCK

4632.1

3769.52

1475.93

STOCK TURNOVER RATIO

(Rs.in lacs)

YEAR

2006-07

2007-08

2008-09

2009-10
BUDGETED

3926.55
3134.56
=1.25
TIMES

4420.28
4632.1
=.95
TIMES

9123.79
3769.52
=2.42
TIMES

A. STOCK* = AVERAGE STOCK

C.O.G.S.* = COST OF GOOD SOLD

INTERPRETATION

66

4540.33
1475.93
=3.07
TIMES

GROSS PROFIT RATIO & C.O.G.S. *RATIO

YEAR

2006-07

2007-08

2008-09

2009-10
(BUDGETED)

G.P RATIO

5.66%

6.04%

2.25%

3.62%

C.O.G.S.*

94.33%

93.95%

97.74%

96.37%

In 2007-08 gross profit ratio increases from 5.66% to 6.04% because cost of good sold ratio
decreases from 94.33% to 93.95%.

In 2008-09 gross profit ratio decreases from 2.25% to 6.04% because cost of good sold ratio
increases from 93.95% to 97.74%.

The budgeted % for 2009-10 for gross profit ratio increases from 2.25% to 3.62% and for cost of
goods sold ratio decreases from 97.74% to 96.37%.

C.O.G.S.* COST OF GOOD SOLD

67

NET PROFIT RATIO

YEAR

2006-07

2007-08

2008-09

2009-10
(BUDGETED)

N.P. RATIO

3.05%

2.18%

.21%

In 2007-08 Net Profit Ratio decreases from 3.05% to 2.18%.

In 2008-09 Net Profit Ratio has decreased from 2.18 % to .21%.

In 2009-10 BUDGETED Net Profit Ratio has increased from .21% to .55%.

COTTON PROCUREMENT

68

.55%

YEAR
2006-07
2007-08
2008-09
2009-10

QTY (MTS)
41.69
90.10
34.81
55.00

COTTON MOVEMENT

69

YEAR
2006-07
2007-08
2008-09
2009-10

QTY (MTS)
53.57
55.10
95.34
45.00

Annual Growth Rate

The growth rate for the period of 2007-2008 and 2006-2007 was just 0.21 because he net profit
for 2007-2008 was Rs. 284.29cr. Whereas in 2006-2007 it was just Rs.235.75cr.

70

 But in 2008-09 the net profit was Rs. 210.66cr. Which was less from that of 2007-08 which was
Rs.284.29cr? So, the growth rate for this period was negative, as the net profit was more of then
that of the previous year. It was calculated as -0.26%
Lastly, in 2009-10 the net profit was Rs. 178cr. and in 2008-09 it was Rs.210.66cr. So the growth
was also not here which was concluded as -0.19%
So, from this trend we can conclude that the growth of cotton activity did not take place as the
growth is negative.

Compounded Growth Rate

The annual growth rate was falling because of continuous fall in net profits of the cotton industry
by which we can conclude that the compounded growth rate was negative. It was -7.72%.

Geometric mean
As geometric mean was calculated from previous net profits, it seems to be 221.6

ANALYSIS OF FERTILIZERS

71

ACTUAL PROFITABILITY COMPARATIVE STATEMENT OF FOUR

YEARS

1. GROSS PROFIT RATIO

GROSS PROFIT 100
NET SALES

YEAR

2006-07

2007-08

(Rs.in lacs)

2008-09

2009-10
(BUDGETED)

132.04*100
24479.71
=0.53%

760.02*100
48547.18
=1.56%

869.40*100
60172.08
=1.44%

2. NET PROFIT RATIO

NET PROFIT 100
NET SALES
72

869.40*100
70056.1
=1.27%

(Rs.in lacs)

YEAR

2006-07

2007-08

2008-09

2009-10
(BUDGETED)

296.69*100 416.41*100
24479.71
48547.18
=1.21%
=0.85%

73

869.40*100 894.50*100
60172.08
70056.1
=1.44%
=1.27%

STATEMENT SHOWING THE AMOUNT OF SALES AND GROSS

PROFIT
(Rs.in lacs)

YEAR

2006-07

2007-08

2008-09

2009-10
(budgeted)

SALES

24479.71

48547.18

60172.08

70056.1

G.PROFIT

132.04

760.02

869.40

869.40

C.O.G.S.* = SALES - GROSS PROFIT

(Rs.in lacs)

YEAR

2006-07

2007-08

2008-09

2009-10

C.O.G.S*

24347.67

47787.16

59302.68

69161.6

C.O.G.S.*= COST OF GOOD SOLD

74

3. C.O.G.S .RATIO

C.O.G.S 100
NET SALES

(Rs.in lacs)

YEAR

2006-07

2007-08

2008-09

2009-10
BUDGETED

24347.67*100
24479.71

47787.16*100
48547.18

59302.68*100
60172.08

69161.6*100
70056.1

=99.4%

=98.43%

=98.55%

=98.72%

4. STOCK TURNOVER RATIO

STOCK TURNOVER RATIO = C.O.G.S.*
A. STOCK*
A. STOCK= OPENING STOCK+ CLOSING STOCK
2
AVERAGE STOCK*
(Rs.in lacs)

YEAR

2006-07

2007-08

2008-09

2009-10
BUDGETED

75

AVERAGE
STOCK

7067.87

9236.87

12849.59

16099.77

STOCK TURNOVER RATIO

(Rs.in lacs)

YEAR

2006-07

2007-08

2008-09

2009-10

24347.67
7067.87
=3.44
TIMES

47787.16
9236.87
=5.17
TIMES

59302.68
12849.59
=4.62
TIMES

69161.6
16099.77
=4.30
TIMES

A. STOCK* = AVERAGE STOCK

C.O.G.S.* = COST OF GOOD SOLD

INTERPRETATION
GROSS PROFIT RATIO & C.O.G.S. *RATIO

YEAR

2006-07

2007-08

2008-09

2009-10
(BUDGETED)

G.P RATIO

0.53%

1.56%

1.44%

1.27%

C.O.G.S.*

99.4%

98.43%

98.55%

98.72%

76

In 2007-08 gross profit ratio increases from .53% to 1.56% because cost of good sold
ratio decreases from 99.4% to 98.43%.

In 2008-09 gross profit ratio decreases from 1.56% to 1.44% because cost of good sold
ratio increases from 98.43% to 98.55%

The budgeted % for 2009-10 for gross profit are 1.27% and for cost of goods sold the
target of 98.72% has been set up in the Markfed.

C.O.G.S.* COST OF GOOD SOLD

NET PROFIT RATIO

YEAR

2006-07

2007-08

2008-09

2009-10
(BUDGETED)

77

N.P. RATIO

1.21%

.85%

1.44%

In 2007-08 Net Profit Ratio decreases from 1.21% to .85%.

In 2008-09 Net Profit Ratio has increased from .85% to 1.44%.

In 2009-10 BUDGETED Net Profit Ratio has decreased from 1.44% to 1.27%.

FERTILIZERS PROCUREMENT

YEAR
2006-07
2007-08
2008-09
2009-10

QTY (MTS)
4.87
7.91
10.35
11.55
(Budgeted)

78

1.27%

FERTILIZERS MOVEMENT

YEAR
2006-07
2007-08
2008-09

QTY (MTS)
4.09
7.54
9.60

79

2009-10

11.55
(Budgeted)

Annual Growth Rate

In 2006-07, the Net Profit from fertilizers was calculated as Rs.132.04 Cr. but in 2007-08,

it increased to Rs. 759.04cr. So, the growth rate for this period was 4.74%.

In 2008-09, the Net profit was Rs. 869.40cr were as in 2007-08 it was Rs. 759.04 cr. So
,the growth rate for this period was 0.15%

Although 2009-10, the net profit increased from last year as from Rs. 869.40 cr. to
Rs.849.50cr. but at decreasing rate i.e. 0.03%
From, this trend we can conclude that annual growth rate is there from 2006 to 2010 that it at
increasing rate

80

Compounded growth rate

But if we see the compounded growth rate, it can be concluded from the data that it is 61.4%.

Geometric Mean
Whereas, the geometric mean for this period seems to be Rs. 528.3 cr. which has concluded from
the net profit of the period.

SWOT ANALYSIS

81

STRENGHTS:-

82

Markfed has experienced staff.

It has adequate infrastructure, qualified manpower, office space and computer network to
support its activities.

Its products Basmati and Sarson ka saag have been well accepted in Indian and foreign
markets.

Main motto of Markfed is quality assurance, which adds to its reputation and
performance in Asia.

It is one of the largest federations in India.

It is one of the largest Co-operatives in Asia.

It enjoys the full support of government and of the members Co-operatives Societies.

It has a wide range of products.

It has extensive distribution network.

It has an undertaking modernization program to keep the competitive prices and improve
product quality.

It has a high flexibility as a result of good relations with the banks and market reputation.

Markfed has become the first Co-operative institution in the country to successfully place
commercial paper amounting to Rs.25 crore.

WEAKNESSES:-

83

Since it is a government enterprise so change in government policies may affect the

profitability

Old plants require substantial modernization.

Weak advertisement network.

Dependence on purchased raw material.

Low returns from massive modernization.

OPPORTUNITY:

Markfed spend little for advertisement and publicity because of its confined customer, so
now authorities can think on this side.

Exports of eat products hold the key for the markfed, as now demand in abroad is
increasing.

THREATS:

Being a government undertaking its business may be effected due to change in the
government policy.

Slow down in the expected demand of some products.

Increasing competition from domestic and international market.

SUGGESTIONS

84

Markfed is a well-established Co-operative society, but still there are certain negative points,
which require attention. One of the main points is that many plants are in losses and showing
negligible profits. Hence Markfed should pay more attention towards increasing the profits. For
improving the position, attention should be given to the following points:

Old plants should be modernized; new techniques should be adopted for improving
production.

There should be flexible workplace.

The advertisement network of the Markfed should be improved. For increasing the sales
of the Markfed products more contribution should be made towards advertising and sales
promotion.

Dependence on purchase raw material should be avoided.

Since Markfed is facing competition both in domestic as well as foreign market so it

should become quality conscious.

CONCLUSION
Budget is essential in every walk of life National, Domestic and Business. A Budgeter is
prepared to have effective utilization of funds and powerful tool to the management for
performing its functions.
Markfed has been specialized in the activity of procurement and distribution of
agriculture produces e.g. Wheat, Paddy and Cotton etc. In this way it becomes true friends of
Punjabs farmers.
Markfed prepares its budget on annual basis and sets the targets for the procurement
of Wheat, Paddy, Cotton and purchase of agriculture inputs i.e. fertilizers and purchase, sale

85

target for plants. Monthly monitoring of budget is done at monitoring branch of Markfed. At the
end of every month meeting of all Districts Managers held to review their performance. All weak
and strong points are discussed and comparison of actual performance with budget is being done.

Markfed has experienced staff

It has adequate infrastructure, qualified manpower, and office space and computer
network to support its activities.

Its products Basmati and Sarson ka Saag have been well accepted in Indian and Foreign
markets.

Main motto of the Markfed is quality assurance, which adds to its reputation and
performance in Asia.

It is one of the largest marketing federations of India.

It is one of the largest Co-operatives in Asia.

It enjoys the full support of the Govt and of the member cooperative societies.

APPENDIX/ANNEXURE

Main abbreviations used in the report are as follows:

IFFCO: Indian Farmers Fertilizer Cooperative
ICA: International Cooperative Alliance
NUCI: National Cooperative Union of India
NCDC: National Cooperative Development Corporation
NABARD: National Bank of Agricultural & Rural Development
NDDB: National Dairy Development Board
PAIC: Punjab Agro Industries Corporation
SIDBI: Small Industries Development Bank of India

86

ICICI: Industrial Credit & Investment Corporation of India

OBC: Oriental Bank of Commerce
PNB: Punjab National Bank
SBI: State Bank of India
RBI: Reserve Bank of India
FCI: Food Corporation of India
NFL: National Fertilizers Limited
PSCB: Punjab State Cooperative Bank
BDP: Business Development Plans
ERP: Enterprise Resource Planning
LAN: Local Area Network
WAN: Wide Area Network
CA: Current Assets
CL: Current Liabilities
CR: Current Ratio
FA: Fixed Assets
ALR: Absolute Liquid Ratio
CC: Cash Credit
FIFO: First in First out
MT: Metric Tonnes
RCS: Registrar of Cooperative Societies
COGS: Cost of Goods Sold

87

BIBLIOGRAPHY

MARKFEDS Annual Report

MARKFEDS Budget Manual

MARKFEDS Budget 2009-10

Web Site: www.punjabmarkfed.com

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