Loss of Interest due to belated raising of claims. Absence of mechanism to monitor raising of bills results in loss of interest of Rs.

9.86 crore to the company Punjab State Grain Procurement Corporation Limited (the company) growing food grains procuring agencies of the State Government procure paddy for the central pool on behalf of Food Corporation of India (FCI) by availing cash credit limit from the banks and stores paddy at the millers premises in joint custody of the Company and the miller. After getting the paddy milled, the resultant rice is delivered to FCI by the miller/company as per the movement plan conveyed by the FCI and the FCI in turn reimburses to the procuring agencies the cost of rice, which includes the minimum support price bonus and other elements of incidentals as per the provisional/final rates conveyed by the Government of India (GOI) for each Kharif Marketing Season (KMS). The provisional rates of custom milled rice issued by the GOI IN October 2008 and November 2009 for the KMS 2008-09 and 2009-10 respectively included incentive bonus. To regulate the payments for rice delivered by the Company, the Regional Office of FCI in Punjab prepared the cost sheet and circulated It is correct that all the procurement agencies after taking cash credit from banks; procure the paddy for central pool. After procuring the paddy the entire rice delivered to the central pool, in which all the MSP, Bonus & other incidental charges are included for Kharif Marketing Season (KMS). which are fixed by the government of India. During KMS 2008-09 & 2009-10 the bonus included in the rates of the custom milling rice. During this period the F.C.I while giving inspection to the procurement agencies, along with relative things it was informed. But in KMS 2008-09 the rates of Bonus were Rs. 74.63 & Rs. 1.44/quintal as interest on bonus. Similarly in the KMS 2009-10 the bonus was Rs. 74.63 and interest was Rs. 1.40/quintal. State agencies also have to certify that the amount of bonus has actually been paid to the farmers. As per this certificate the F.C.I has to make payment of bonus and interest. The rice which was delivered to the Central pool the bills thereof was to be

(November 2008) to the field office with copy to the company inter alia indicating that the provisional rates of rice were inclusive of bonus of RS. 74.63 And interest on bonus of Rs. 1.44 per quintal for both KMS 2008-09 and 2009-10. Reimbursement of bonus and interest thereon was to be made on delivery of rice to the FCI and on production of documentary evidence of payment of bonus to the farmers. It was observed that the company had no system to ensure timely raising of supplementary bills. Though the company had made payments of bonus up to march 2009 for KMS 2008-09 and along with purchase of paddy for KMS 2009-10, the amount on account of bonus was not claimed immediately on delivery of rice to FCI in any of the five district offices of the company selected for audit. There was no uniformity in raising claim bills to FCI. The first bills for claims of bonus were raised as per detail below: PUNGRAIN June 2009 June 2009 November 2009 March 2010 May 2009 February 2011 May 2010 August 2010 Not Prepared July 2010

submitted to the F.C.I but the F.C.I told orally that the payment of bonus will be made only after delivery of entire rice.

2008-09

2009-10

Ferozepur Sangrur Moga Ludhiana Patiala Ferozepur Sangrur Moga Ludhiana Patiala

For CY 2008-09 first bills were raised between May 2009 and March 2010. District Office Ludhiana of the Company raises single bill for whole of CY year 2008-09 after completion of delivery. And for CY 2009-10 Ferozpur raised first bill in February 2011 where as district office Ludhiana did not prepare bonus bills for CY 200910 at all so far i.e. March 2011. The Company raised the bonus bills amounting to Rs. 97.66 crore for CY 2008-09 with a delay ranging between 7 and 516 days. Similarly the bonus bills for CY 2009-10 amounting to Rs. 98.03 crore were raised with delay ranging between 3 and 455 days. Thus, due to weak internal control mechanism the Company failed to monitor the timely raising of bills for bonus and interest thereon by the district offices. The delayed raising of bills resulted in loss of interest of Rs. 9.86 crore to the company as detailed in Annexure A-3 to the para In this regard following audit observations may please be attended to the earliest: 1. When the cost sheet was for 2008-09 and 2009-10 received and when it was circulated to the field offices? Copies of the cost sheets may also be supplied to audit. 2. How the payment of bonus was made to the farmers i.e whether by separate

As it has been stated above that the F.C.I had refused to pay the bonus on the ground that it will be paid only after full delivery of rice. Due to this reason the bill regarding bonus were submitted late by 3 to 455 days, due to this late submission thereof the F.C.I is responsible instead of Pungrain. The Head Office of Pungrain has not issued specific instruction to field office to raise claim of bonus in time nor it has given any instruction as to whether the amount of bonus was included in other costs of rice.

cheques or in cash during KMS 2008-09 and 200910? 3. Were any instructionsever issued to the field offices to raise bonus bill along with regular bills or immediately after delivery of rice to FCI so as to minimize the loss of interest at CC rates? If Yes, the copy of such directions be supplied to audit. If not, the reason for not issuing the instruction be intimated. 4. The manner in which the timely raising of bonus bills was ensured at HO be intimated? 5. Up to which months the payment of bonus to farmers was completed in both the crop years be intimated.