TABLE OF CONTENTS

S No Topic Page No
1 Chapter-1: Profile of the Company.
2 Chapter-2: SWOT Analysis of the Company.
3 Chapter-3: Analysis of Financial Reports.
4 Chapter-4: Lessons Learnt

LIST OF TABLES

S No Topic Page No
1 Details of district offices of North Zone.
2 Employee Table.
3 Balance Sheet.
4 Profit & Loss Account.
5 Cash Flow Statement.
6 Financial Highlights.
7 Cost Analysis.
8 Financial Review.
9 Comparative Summary of Profit & Loss Account
10 Ratio Analysis.

LIST OF FIGURES

Figure No Title Page No

1 Product Range of the company.
2 Sales figure of the company.
3 Organizational Chart.
4 Organizational set up of headquarters.
 CHAPTER

PROFILE OF THE COMPANY

ENSURING FOOD SECURITY OF NATION
 2. PROFILE OF THE COMPANY

Name FOOD CORPORATION OF INDIA (FCI)

Level National

Address Khadya Sada, 16-20,

Barakhamba Lane

New Delhi 110001, India.

Phone number 91-11-2341-3871

E Mail Address accts.fci@nic.in

accts@fci.delhi.nic.in

Website name www.fciweb.nic.in

Geographical areas of operation North Zone-

Uttranchal, U.P, Rajasthan, Punjab, J&K, H.P,

Haryana.

South Zone-

A.P, Kerela, Karnataka, Tamil Nadu

West Zone-

Chattisgarh, Gujrat, Maharashtra, Madhya Pradesh

East Zone-

Jharkhand, Bihar, Orissa, West Bengal.

 3. NATURE OF THE ORGANISATION

It operates through 5 zonal offices and a regional office in Delhi. Each year, the Food

Corporation purchases roughly 15-20 per cent of India's wheat output and 12-15 per cent of its

rice output. The losses suffered by FCI are reimbursed by the Union government, to avoid capital

erosion, and thus declared as a subsidy in the annual budget. In 2007, such food subsidies were

met by government bonds worth almost $8 billion.

FCI North Zone

North Zone comprises 8 Regions i.e. Punjab, Haryana, UP, Rajasthan, J&K, HP, Delhi and

Uttaranchal. It is the largest Zone in FCI having a workforce of 24447 staff & officers and 31634

labourers against 58104 staff & officers and 64173 laborers in FCI as a whole in the country.

Punjab & Haryana Regions are the major surplus States as far as production/procurement of food

grains is concerned and more than 90% stocks have to be moved to other parts of the country.

During recent years even Rajasthan was self-sufficient as far as its own requirement was

concerned but because of severe drought during last year, stocks were moved from Haryana &

Punjab to Rajasthan Region.

Details of Region / District Offices in North Zone:

S Name of the No. of District Offices

No. Region Districts

1 Delhi 2 Mayapuri and Shakti Nagar.
2 Haryana 5 Gurgaon, Hissar, kurukshetra,

Karnal and Rohtak.

3 Himachal Pradesh 2 Dharamshala and Mandi.
4 Jammu & Kashmir 2 Jammu and Srinagar
5 Punjab 12 Amritsar, Bhatinda, Chandigarh,

Faridkot, Ferozpur, Gurdaspur,

Hoshiarpur, Jallandhar, Kapurthala,

Ludhiana, Patiala and Sangrur.

6 Rajasthan 8 Ajmer, Alwar, Bikaner,Jaipur,

Jodhpur, Kota, Sriganganagar and

Udaipur
7 Uttar Pradesh 20 Allahabad, Aligarh, Agra, Azamgarh,

Banda, Barielly, Bullandshahar,

Faizabadm, Gorakhpur, Gonda, Ghazipur,

Hapur,

Jhansi and Kanpur.

4. COMPANY’S VISION AND MISSION

Vision

• To aggressively promote Decentralized Procurement by State Governments with special

emphasis in non-traditional areas and commodities.

 • To initiate procurement of non-MSP governed commodities on commercial principles.

• To ensure adequate buffer for meeting requirements under TPDS & Other Welfare

Schemes.

• To dispose off surplus and un-storage worthy go downs and introduce concepts of

mechanized handling in the conventional go downs.

• To undertake R&D for conversion of some of the existing capacity to bulk and cost

effective utilization of existing bulk capacity.

Mission

• To provide farmers remunerative prices

• To make food grains available at reasonable prices, particularly to vulnerable section of

the society

• To maintain buffer stocks as measure of Food Security

• To intervene in market for price stabilization

5. PRODUCT RANGE OF THE COMPANY

Product Range

Wheat Rice Maize Barley Paddy

Sugar Ragi Bajra Jowar

 6. SIZE OF THE COMPANY

(IN TERMS OF MANPOWER AND TURNOVER)

Turnover
The sales during the year 2005 was Rs.24,339.75 crore as against Rs31,149.18 crore for the

previous year. The purchases made by the corporation also came down to Rs36,932.40 crore as

compared to Rs38,374.52 crore in previous year. The corporation handled 75.02 Million tones of

food grains and sugar during the year 2005 as against 87.61 million tones during the previous

year. In its endeavor to reduce the operational costs, the corporation for the first time made the

Sales (in lakhs of rupees):

Foodgrains - 2416023.84
Sugar - 17377.19
Gunnies - 554.11
Stores n Spares - 19.38
2433974.52

Purchases (in lakhs of rupees):

Foodgrains - 3585829.19
Sugar - 18906.53
Gunnies - 86953.02
Stores n Spares - 1550.65
3693239.39

recourse to alternative source of finance working capital by raising Rs4023.50 crore through

issue of Government of India guaranteed non-convertible bonds.

Manpower

The corporation values the contribution of its human resources as a crucial input in realizing

corporation’s goals and objectives. It has a manpower of 39,361 officers and staff /employees

as on 31.03.2008 and about 60,109 regular food handling workers besides approximately one
lakh food handling laborers being engaged by the Handling & Transport Contractors, as on

31.03.2005

The general superintendence, direction and management of the affairs and business of the

Corporation shall vest in a board of directors which exercise all such powers as may be exercised

or done by the Corporation under this Act.

The percentage of SC&ST employees

employed by the corporation 42% in respect

of category-IV employees, 27% in respect of

category-III employees, 25% in respect of

category-II employees and 19% in respect of

category-I employees. Similarly the

percentage of physically challenged

employees employed by the organization is 1%.

7. ORGANISATIONAL STRUCTURE

Corporate Office
Organizational Chart

Zonal Offices [5]

Regional Offices [23]

District Offices [166]

Depots (incl. CAP) [1451]

Corporate Set Up

Board of Directors as per section 7(1) of the Food Corporation Act shall be:

1. CHAIRMAN

2. MANAGING DIRECTOR

3. MD, CENTRAL WAREHOUSING CORPORATION (EX-OFFICIO)

4. GOVT. REPRESENTATIVES
THREE DIRECTORS TO REPRESENT RESPECTIVELY THE MINISTRIES

OF THE CENTRAL GOVT. DEALING WITH:

(i) FOOD
(ii) FINANCE
(iii) CO-OPERATION; and
SIX OTHER DIRECTORS (out of which four (4) are non-official Directors)

TOP COMPETITORS OF FOOD CORPORATION OF INDIA

While homemakers are busy making chapattis, rotis, and pooris, Food Corporation of India (FCI)

stays busy managing India's wheat supply. FCI buys and markets wheat and rice for the Indian

government, purchasing both domestically grown and imported grains. It keeps the stockpiles in

its own warehouses. Through periodic sales, FCI controls and manages the domestic grain
supply, regulating the market prices for those commodities. It also provides some of its stores of

grain to government-subsidized food programs, and it builds up buffer stocks to meet any food

crisis.

Food Corporation of India competitors are primarily in the Agricultural Support Activities &

Products industry.

Food Corporation of India competitive landscape includes:

Company Location
Cargill Wayzata, MN
ITC Kolkata, India
Louis Dreyfus Paris, France

8. PRESENT LEADERSHIP
Name - Shri Alok Sinha, IAS

Designation - Chairman and Managing Director

Postal Address - Food Corporation India

16-20, Barakhamba Lane

New Delhi 110001.

Email Address - chairman.fci@nic.in

Telephone Numbers - 23414074,

23411189,

23413214.

CHAPTER

SWOT ANALYSIS OF THE COMPANY

 ENSURING FOOD SECURITY OF NATION

@ Scroll

1. SWOT ANALYSIS

Conducting a SWOT Analysis will help the entrepreneur to clearly identify his own strengths

and weaknesses as well as opportunities and threats in the environment. Threats in the

environment can arise from competition, technical breakthroughs, change in government policies

etc. He might posses certain unique skills or abilities, which along with his knowledge and

experience can provide him a cutting edge.

1.1 STRENGTHS AND WEAKNESS

1.1.1 Strengths of FCI

1. Facilitator for food security

 • Provider of price & market assurance to the farmer

• Ensuring steady food grain supplies to 5 Lakhs Fair Price Shops for PDS to cover 141

million APL / 67 million card holders.

• Ensuring food for all other Welfare Schemes.

2. Management Capabilities and Experience

• Large pool of talent managing world's largest food grain operation on behalf of Govt. of

India

3. Enormity of Scale

• Countrywide network of offices & strategically located Food Storage Depots.

• Operates in mandis/purchase centers located within 10 kms. proximity of farmers.

• Undertakes purchases of 30 to 40 million tones annually making it the largest buyer in

the world.

4. Effective market intervention to stabilize prices

5. State of the art experience on food grain preservation / Warehousing / Transportation

Management

• Maintains the health of millions of tones of food grain in storage. Quality acknowledge

by International buyers.

• Excellent Storage Management.

• Timely movement of food grains from procuring States to consuming States.

1.2.1 Weaknesses

• The FCI said in the northern region -- UP, Uttarakhand, Haryana, Jammu and Kashmir,

Punjab, Rajasthan, Himachal Pradesh and Delhi -- the damage incurred was seven lakh

tones and the PSU spent Rs 87.15 crore to prevent the loss besides spending over Rs 60

lakh to dispose off the damaged food grain.

• Estimated losses of food grain, according to the Ministry of Food and Civil Supplies, are

about 10 per cent of the total production, or 20 million tones a year, about as much as

what Australia produces. Most of these losses take place in storage, in the vast go downs

of the Food Corporation of India, while farmers have not done badly at producing food;

the bureaucracy of the FCI seems clearly to be failing in its storage.

• Since FCI is a government-owned company, all the issues are discussed and all the

decisions are taken in the parliament.

Thus, due to this obligation most of the matters and decisions take a lot of time to be

implemented and the decisions that require urgent attention are delayed.

• The major function of Food Corporation of India is to stabilize the prices of food grains

and sugar in the country and sell them at reasonable prices. Many new small-scale

companies are emerging that purchase the stock privately and sell them at their own

prices.

This makes it difficult for FCI to fix and stabilize prices of food grains

and sugar in the country.

1.2OPPORTUNITIES AND THREATS

1.1.2 Opportunities of FCI

• After nearly four decades of varied experience in food management, FCI can now play a

wider role in being a food advisor to the Central/State Governments.

• The Corporation can also play a more proactive role in the sphere of commercial

ventures.

• To diversify into non-traditional commodities/activities.

1.1.3 New Initiatives

Having been acknowledged a major player in food grain management within the Country

and abroad, FCI is now endeavoring for

• Resource mobilization to reduce burden on food subsidy.

• Better financial & Treasury Management.

• Improved stock inventory management real time on-line system through a recently

launched IISFM (Integrated Information System for Food grains Management) in

collaboration with NIC.

• Creation of Profit Centers.

• Up gradation of technology through interface with Agriculture Universities/Management

Institutes.

• Use of 'A' Twill texture gunny bags as against 'B' Twill bags as a project to reduce losses

in storage and transit.

• Multimodal transportation system through riverine / container.

• Micro level Inventory Management through focused weekly movement plans.

• Sustained corporate communication for improving image perceptions.

1.2.2 Threats

• The greatest inequalities, however, are geographical. In the poorest States, such as

Bihar, Uttar Pradesh and Orissa, only 5.0, 5.2 and 5.2 per cent households use the

PDS. The greatest coverage of the system is in the southern States; where up to 78 per

cent of rural households in Kerala and 82 per cent in Tamil Nadu use the PDS. It is

somewhat questionable whether the overall effect really helps consumption: Tamil

Nadu and Kerala both have lower than average per capita consumption of food grain.

• It is clearly time to consider restructuring the PDS. Its costs keep rising year by

year; the amount of food grains stored goes beyond all rational limits, and waste is

increasing. optimum level of food stocks held by the Government would be about 4

million tones for rice and half a million for wheat; instead, the FCI is now holding

19.8 million tones of wheat and 11.7 million tones of rice. The cost of this immense

storage in outdated go downs comes to about Rs. 16,000 crores a year; such funds,

invested, would yield about twice the Government's entire food bill.

• This does not mean there is no role for the Government in the shortage and

distribution of food grains. It does not mean that the poor should simply be left to the

mercy of the market. But the system needs to be drastically modernized

• Just as agriculture needs technological modernization, food distribution and

storage need to be updated. Here, a combination of public and private has to be

considered. Private traders are not necessarily more efficient than the Government -

there is also an estimate of heavy losses of about 30 per cent of the total of fruits and

vegetables produced. (These are, of course, difficult to compare with food grains
because vegetables and fruits are much more perishable - crops like the notorious

onions, for example, will not keep in any conditions of moisture). But letting private

trading companies hold at least some of the stores would provide an element of

competition that would spur the functioning of the FCI, and help in promoting

efficiency and innovation. Estimates are that the cost of storing food grains is 50 per

cent lower in the private sector.

 2. PRACTICES FOLLOWED BY THE COMPANY IN DIFFERENT FUNCTIONAL

AREAS

2.1 Marketing and Distribution:

Distribution through Fair Price shop.

The national objective of growth with social justice and progressive improvements in the living

standards of the population make it imperative to ensure that foodgrain is made available at

reasonable prices.

• Public Distribution of food grains has always been an integral part of India’s overall food

policy. It has been evolved to reach the urban as well as the rural population in order to

protect the consumers from the fluctuating and escalating price syndrome.

• Continuous availability of foodgrain is ensured through about 4.5 lakhs fair price shops

spread throughout the country.

 • A steady availability of food grains at fixed prices is assured which is lower than actual

costs due to Govt. policy of providing subsidy that absorbs a part of the economic cost

(about 45%).

2.2 Human Resource Development:

Institute of Food Security

Training

The Food corporation of India has two - tier training activities involving: -

• Training of officers at the Institute of Food Security, Gurgaon

• Nomination of officers in reputed technical / management institutes in India and abroad

• In addition the FCI is also organizing need based training programs in collaboration with

reputed institutes of concerned disciplines.

 2.3 Quality Control & Scientific Preservation

The Food Corporation of India has an extensive and scientific stock preservation system. An

on-going programme sees that both prophylactic and curative treatment is done timely and

adequately. Grain in storage is continuously scientifically graded, fumigated and aerated by

qualified trained and experienced personnel.

Food Corporation of India's testing laboratories spread across the country for effective

monitoring of quality of food grains providing quality assurance as per PFA leading improved

satisfaction level in producers (farmers) and customers (consumers).

2.4 Stock Management:

FCI and State Governments and their agencies maintain the Central Pool stocks.

• Another facet of the Corporation's manifold activities is the provision of scientific storage for

the millions of tones of food grains procured by it. In order to provide easy physical access in deficit,

remote and inaccessible areas, the FCI has a network of storage depots strategically located all over

India. These depots include silos, go downs and an indigenous method developed by FCI, called

Cover and Plinth (CAP).

 • CAP storage is a term given to storage of food grains in the open with adequate precautions

such as rat and damp proof plinths, use of Dunn age and covering of stacks with specially

fabricated polythene covers etc.

• FCI has 24.18 million tones (owned & hired) of storage capacity in over 1451 go downs all

over India.
2.5 Transport Management:

• Ensuring accessibility to food in a country of India's size is a Herculean task. The food

grains are transported from the surplus States to the deficit States.

• The foodgrain surplus is mainly confined to the Northern States; transportation involves

long distance throughout the country. Stocks procured in the markets and purchase

centers is first collected in the nearest depot and from there dispatched to the recipient

States within a limited time.

• FCI moves about 270 Lakh tones of food grains over an average distance of 1500 Kms.

CHAPTER

3
 ANALYSIS OF FINANCIAL STATEMENTS

ENSURING FOOD SECURITY OF NATION

@ Scroll
ANNUAL ACCOUNTS

2003-2004

&

2004-2005
 ANALYSIS

OF

ACCOUNTS

1.FINANCIAL HIGHLIGHTS

(Rs in crores)

AMOUNT
PARTICULARS
2005 2004
Subscribed Capital by Government of India. 2437.47 2392.46
Reserves less losses. -21.77 -21.77
Net Worth. 2415.70 2370.69
Borrowings from Banks & financial Institutions. 30626.06 25275.32
Long term borrowing through issue of bonds. 4023.50 -
Capital Employed 37065.26 27646.01
Current Assets 40622.30 32908.09
Current Liabilities 3927.49 5631.60
Working Capital. 36694.81 27276.49
Deficit in sugar distribution 33.74 22.48

2.COST ANALYSIS

(Rs per quintal)

AMOUNT
PROCUREMENT COST
2005 2004
Wheat 182.74 138.20
Paddy 109.77 127.10
Rice 50.90 18.43
Distribution cost of food grains.
241.18 192.26
(On sales)
Distribution cost of levy sugar
218.53 196.18
(On sales)
 3.FINANCIAL REVIEW

31st March 31st March

DETAILS
2005 2004
What we owned
Fixed Assets 35171.15 35304.76
Investments - -
Net Current Assets
-Closing Stock 1323888.19 1262236.49
-Others 2347466.29 1467058.60

Total Assets (Net) 3706525.63 2764599.85

What we owed
Borrowings
-Secured 3458806.05 2519675.95
-Unsecured 6149.98 7855.62

Total Borrowings 3464956.03 2527531.57

Net Worth
Subscribed Capital 243747.20 239245.88
Reserves & Surplus - -

Total 243747.20 239245.88

Loss 2177.60 2177.60
Total (Net) 241569.60 237068.28
 3706525.63 2764599.85
Total Funds Employed

4.COMPARATIVE SUMMARY OF PROFIT & LOSS ACCOUNT

 AMOUNT
DETAILS
2005 2003
1. Sales 2433974.5 3114917.98
2. Consumer subsidy & others 2 2186006.71
2141600.7
Total 8

4575575.3 5300924.69
0
3. Cost of sales:
-Opening balance 1262157.4 1790463.74
-Purchases 8 3837452.39
3693240.4
2
Total 4955397.9 5627916.13
Less: closing stock 0 1262157.48
\ Cost of sales 1323752.4
9
4. Gross Income [(1+2)-3] 3631645.4 4365758.65
1
943929.89 935166.04
5.Expenses
5.RATIO -Freight 309247.47 370282.79
-Handling Expenses 135855.75 129244.26
-Employees remuneration & benefit 157509.29 132493.69
-Interest 260000.60 237758.04
-Depreciation 4531.12 3484.44
-Others 76785.66 61902.82

6. Total 943929.89 935166.04

7. Profit/Loss before taxation (4-6) - -
8. Provision for tax - -
9. Refund of tax for earlier years - -

10. Net Profit/Loss - -

ANALYSIS

RATIOS
PARTICULARS
2005 2004

Liquidity Ratios 3.37 2.24

1.Current Ratio
Current Assets (including stocks) to Current Liabilities
(Excluding bank borrowings)
3.5
3
2.5
2 Current Ratio

1.5
1
0.5
0
2006 2007

• A current ratio of 2:1 is considered to be satisfactory.

In 2005, the current ratio of the company was 3.37:1,

i.e. higher than the ideal ratio. This indicates poor

investment policies and poor inventory control. This

means that the funds of the company are lying idle.

While in 2004,the ratio was 2.24, which is very near to

the ideal ratio.

2. Quick Ratio
Quick Assets To Current Liabilities
Where:
Quick Assets=Current assets- (stock + prepaid expenses)

0.5
0.45
0.4
0.35
0.3 Quick Ratio
0.25
0.2
0.15
0.1
0.05 0.49 0.12
0
2006 2007

• Quick Ratio indicates the short-term debt paying

capacity.

In 2005 & 2004, the quick ratio was 0.49:1 & 0.12:1

respectively. This indicates overstocking i.e. the stock

was in excess.

.
Solvency Ratios

3. Total Assets to Debt Ratio

Total assets to long term debts

1.4
1.2
1
Total Assets to
0.8 Debt Ratio
0.6
0.4
0.2
0
2006 2007

• Total assets to Debt Ratio measures the extent to

which the assets cover debt.

In 2005, the ratio was 0.11:1, which represents risky 0.11 1.31

financial position i.e. business depends heavily on

outside loans. While in 2004, the ratio was 1:31, which

is satisfactory and indicates security to lenders to extend

long-term loans to the business.

4. Proprietary Ratio
Proprietor’s Funds to Total Assets

1.2

0.8 Proprietary
Ratio
0.6

0.4

0.2

0
2006 2007

• Proprietary Ratio highlights general financial position

of the firm.

Proprietary Ratio for 2005 was 1.20:1, which is

satisfactory which means that there is safety for

creditors of all types. 1.20 0.14

In 2004, the ratio was 0.14:1, which may be an alarming

situation for creditors, since they may have to lose

heavily in case of losses.

5. Debt Equity Ratio
Long Term Loans to Equity

8
7
6
5 Debt Equity
Ratio
4
3
2
1
0
2006 2007

• Debt Equity Ratio indicates the soundness of the long-

term financial position. Debt equity ratio of 2:1 is

acceptable.
7.15 5.15
In 2005 & 2004, the debt equity ratio of the company

was 7.15:1 & 5.15:1,which is too high. This indicates a

risky financial position of the company.

Turnover Ratios

6. Inventory Turnover Ratio

Cost of Goods sold to Average Inventory
Where:
COGS=Opening Stock + Purchases + Direct Expenses-
Closing Stock

2.86
2.85
2.84
2.83 Inventory
2.82 Turnover Ratio
2.81
2.8
2.79
2.78
2.77
2006 2007

• Inventory Turnover Ratio indicates whether the

investment in the stock has been efficiently used or not.

Inventory Turnover Ratio in 2005 & 2004 was 2.80 &

2.80 times 2.86 times
2.86 times respectively which is nor high and nor too

low. High ratio indicates more sales’ being produced by

a unit of investment in stocks and low ratio indicates

low sales.
7. Debtors Turnover Ratio
Total Sales to Accounts Receivable
Where:
Accounts Receivable= Debtors + Bills Receivable

40
35
30
25 Debtors
Turnover Ratio
20
15
10
5
0
2006 2007

• Debtors Turnover Ratio indicates the number of times

the receivables are turned over in a year in relation to

sales.

The ratio in 2005 & 2004 was 29.13 & 36.43 29.13 times 36.43 times

respectively, which indicates that debts are being

collected more promptly. It will release funds, which

may then be put to some other use.

8. Working Capital Turnover Ratio
Sales to Working Capital
Where:
Working Capital=Current Assets – Current Liabilities

4.5
4
3.5
3 Working
Capital
2.5
Turnover Ratio
2
1.5
1
0.5
0
2006 2007

• Working Capital Turnover Ratio indicates whether

the working capital has been effectively utilized or not

2.61 times 4.45 times
in making sales. The ratio in 2005& 2004 was 2.61 &

4.45 times which is not so high but satisfactory.

9. Fixed Assets Turnover Ratio
Net Sales to Net fixed Assets
Where:
Net Fixed Assets=Fixed Assets – Depreciation

100
90
80
70
60 Fixed Assets
Turnover Ratio
50
40
30
20
10
0
2006 2007

• Fixed Assets Turnover Ratio indicates whether the

investment in fixed assets is justified in relation to the

79.43 times 97.89 times
sales achieved.

In 2005 and 2004, the ratio was 79.43 times and 97.89

times respectively this indicates efficient utilization of

fixed assets.
10. Turnover to Capital Employed
Net Sales to Capital Employed
Where:
Capital Employed=Net Fixed Assets-Working Capital

4.5
4
3.5
3 Turnover to
Capital
2.5
Employed
2
1.5
1
0.5
0
2006 2007

• Current Assets turnover Ratio indicates whether the

current assets have been effectively utilized to produce

2.51 times 4.24 times
sales.

In 2004 & 2005 the ratio was 2.46 times which is very

low.
COMMENTS

Cash Flow Statement shows the inflows and outflows of cash and cash equivalents. Its

objective is to ascertain the sources and uses of cash and cash equivalents generated by an

enterprise.

• Operating Activities are the principal revenue producing activities of an enterprise i.e.

the main activity carried on by it to earn profits.

Net cash generated from operating activities in 2005 & 2004 was –596360.85 &

339669.83 lakhs of rupees respectively.

• Investing activities are the acquisition & disposal of long-term assets and other

investments, not included in cash equivalents.

Net cash used in financing activities in 2005 & 2004 was –3943.06 & -5996.07 lakhs of

rupees respectively

.
4.2 LESSONS LEARNT

Being a student of a professional course, training program in an inevitable part of learning. It

equips the student with the experience of handling the real world business situations thus

ensuring a development of a proper concept about what’s being out in the market & facing

problems. I too have learnt various things facing a fraction of such situations. Learnings are as

follow:

4.1.1 Professional Knowledge: The exposure that a novice gets by incurring a training

program is helpful as it is the steps forward to a real world business situation. Thus the

experience I got by joining Food Corporation Of India for training made me understand

and realize various things that the books wouldn’t have made me learn.

4.1.2 The Deviations: What actually should have been done & what really goes on..

The gap between the two things is so vast, and also depends upon the character of the

person approaching a particular situation. On training I found many such things,

wavering far from the conscientious. What I came across is the financial advisors

showing the wrong image to the customer and making the sale. Thus teaching me the art

of survival of the fittest at the cost of others.

4.1.3 The Flexibility: Any real time situation will always demand a much more flexible

personality to deal with it and what I learn during the 8 weeks is that a business is all

about matching the resources available with the need/demand of the situation. The staff

switching roles, the managers themselves joining the operations whenever required, & a

lot more.
 Annexure

BALANCE SHEET

Balance Sheet as on 31 March 2005 and 31 March 2004

(Figures in Lakhs of Rupees)

AMOUNT AMOUNT
LIABILITIES ASSETS
2005 2004 2005 2004
Capital: Fixed Assets:
-Capital 250000.00 250000.00 At written down 35171.15 35304.76
contributed by value
govt of India 243747.20 239245.88

Secured Loans: Loans and

-Loans from 3052998.5 2516262.0 Advances: 46.27 46.27
Scheduled banks 2 4 For purchases of
and State Bank of food grains, sugar
India 402350.00 - and other
commodities
Unsecured Loans Other Loans and
-Loan from 524.98 730.62 Advances: 7962.19 30560.87
Housing Other advances
Development 5625.00 7125.00 including
Finance advances to staff
Corporation
Current liabilities Claim
75520.50 5488413
& provisions. Receivables
-Sundry Creditors 274849.2 391059.83 Deposits and
(Goods & finance) Other 33076.96 13446.42
Receivables
-Sugar Price Interest
Equalization Fund 35699.21 4184088 16313.36 14175.36
Receivables
-Deposits 82200.43 130281.94 Current Assets
Repayable -Food grains 1230565.6
392748.84 563159.65 -Sugar 1282991.8 5
Interest Payable 3457.53 3413.91 -By Products 3103.4 2231.63
-Gunnies 1.01 1.01
- Stores & Spares 34897.20 25942.23
-Stocks of 2759.42 3417.53
building material. 135.71 79.01

1323888.1 1262236.4
 Unregularised
45336.12 53288.32
Transit & Storage
Balance Carried Balance Carried
410452.07 3329937.1 1537314.7 1463942.6
Forward Forward
AMOUNT AMOUNT
LIABILITIES ASSETS
2005 2004 2005 2004
Balance Brought Balance Brought
410452.07 3329937.1 1537314.7 1463942.6
Forward Forward
Book Debts:
-Outstanding for 1949084.2 1616032.6
more than 6 5 6
months
-Other debts 492337.88 244865.69
2441422.1 1860898.3
Cash & Bank
Balances:
-Cash in hand 5.37 5.13
-Cheques,
Demand Draft & 85837.41 2913.40
Fixed Deposits

85842.78 2918.53
Miscellaneous
Expenditure & 1.07 1.07
Losses
Deferred Revenue _
34694.82
Expenses
Profit &Loss
2176.53 2176.53
Account
Total 410452.07 3329937.1 Total 410452.07 3329937.1
 1. PROFIT AND LOSS ACCOUNT
For the year ended 31 March 2005 & 31 March 2004
(Figures in Lakhs of Rupees)

AMOUNT
PARTICULARS
2005 2004
Opening Stock:
-Food grains 1230565.08 1755049.19
-Sugar 2231.63 4983.60
-By Products & other commodities 1.01 3.06
-Gunnies 25942.23 25749.29
-Stores & Spares 3417.53 4678.60

1262157.48 1790463.74
Purchases:
-Food grains 3585829.19 3714336.82
-Sugar 18906.53 11987.40
-Gunnies 86953.02 109727.15
-Stores &Spares 1550.65 1382.82
3693239.39 3837434.19
Purchases (imported):
Food grains (including freight) 1.04 18.20

Milling charges paid to other

2826.04 2838.23
agencies (Net)
Handling Expenses (Include
135855.75 129244.26
wages to departmental labour)
Freight:
-Railway Freight 257957.71 280014.46
-Lorry Freight 36196.28 45778.92
-Steamer Freight 730.70 613.93
-Transport Subsidy 14362.78 43875.48
309247.47 370282.79
Salaries, Wages and Allowances;
-Officers 30843.11 22252.48
-Staff 103447.27 88304.09
-Less: capitalized 114.60 193.83
134175.78 110362.74
Medical reimbursement:
-Officers 876.43 626.36
-Staff 3174.27 2524.16
4050.70 3150.52
Medicines & Medical Equipments
4.38 4.28
Balance Carried Over
5541558.03 6243798.95
AMOUNT
PARTICULARS
2005 2004
Balance Brought Forward
5541558.03 6243798.95
Contribution to Provident Fund &
17530.26 17211.23
others
Staff Welfare Expenses
1748.16 1764.92
Rates & Taxes
799.16 1153.36
Insurance
34.64 34.64
Power, Fuel & Electricity
1295.94 1284.23
Rent:
-Go downs 47787.91 32233.58
-Offices & others 1137.70 1222.50
48925.61 33456.08
Travelling Expenses
2639.58 2630.66
Audit Fee & Travelling Expenses
333.20 909.58
Fees & Traveling Expenses of
2.96 1.97
Directors
Repairs & Maintenance
-Go downs 2509.13 2113.93
-Others 2752.88 2188.39
5262.01 4302.32
Maintenance of Vehicles 199.10 192.59

Interest 260000.60 237758.04

Public Relations & Publicity 36.33 205.50

Miscellaneous Expenses 13940.15 14481.79

Debts/Claims Written Off

490.94 412.15
Depreciation
4531.12 3484.44
Total
5899327.79 6563082.17

AMOUNT
2005 2004

PARTICULARS
Sales:
-Food grains 2416023.84 3099903.66
-Sugar 17377.19 14367.64
-By Products & other - 1.03
commodities 554.11 641.61
-Gunnies 19.38 4.04
-Stores & Spares
2433974.52 3114917.98
Closing Stocks:
-Food grains 1282991.82 1230565.08
-Sugar 3103.04 2231.63
-By Products & Other 1.01 1.01
commodities 34897.20 25942.23
-Gunnies 2759.42 3417.53
-Stores & Spares 1323752.49 1262157.48

Claims:
-Railways 1540.20 2171.62
-Shipping - 12.13
1540.20 2183.75
Consumer Subsidy on food grains 1971087.86 1891429.44
Add: carrying charges of buffer
stocks of food grains 126149.39 257460.17
Less: adjustment relating to
previous years 23357.78 -832.89
2073879.47 2148056.72
Unregularised Transit and storage
shortages
3480.40 10671.19
(Reimbursable by department of
food and public distribution)
Short realization on sugar
3374.02 2248.29
operations.
Miscellaneous income
32523.21 19956.70
Adjustments relating to previous
23358.54 583.38
years.
Interest received
3440.98 2290.28
Foreign Exchange variance
3.96 16.40
Total
5899327.79 6563082.17
 2.CASH FLOW STATEMENT

For the year ended 31 March 2005 & 31 March 2004.

(Figures in Lakhs of Rupees)

AMOUNT
PARTICULARS
2005 2004
Cash flow from Operating Activities:
Net Profit during the year 0.00 0.00
Adjustments for:
Depreciation 4531.12 3484.44
Interest Expense 260000.60 237758.04
Interest Income -3440.98 -2290.28
Debts written off 490.94 412.15
Foreign exchange Variance -3.96 -16.40
Operating Profit before working
261577.72 239347.95
capital changes
Decrease in working capital:
Decrease in unregularised shortages 7952.20 3153.10
Increase in working capital:
Decrease in Sugar Price Equalization -6141.67 -2960.63
Fund -116638.12 -53367.79
Decrease in sundry creditors -17668.23 -18806.59
Increase in Loans & Advances, deposits -48081.51 -30427.77
& other claim receivables -61651.70 528380.59
Decrease in Deposits Repayable -581014.72 -325649.03
Increase in Stocks
Increase in Book Debts
Increase in Miscellaneous Expenditure -34694 0.09
& Losses
Net cash generated from Operating
-596360.85 339669.83
Activities

Cash flow from Investing Activities:

Sale of fixed assets 139.12 29.19
Purchase of fixed assets -4082.18 -6025.46
Net cash used in Investing Activities -3943.06 -5996.27

Cash flow from Financing Activities:

Increase in capital subscribed by 4501.32 3946.00
Government of India 536736.48 -357265.52
Increase in Loans & Advances from -258654.00 -247976.28
Banks -205.64 -162.99
Net outflow on Interest
Repayment of loans to HDFC
 AMOUNT
PARTICULARS
2005 2004
Loans taken from Bank of India -1500.00 7125.00
Funds raised through issue of Bonds 402350.00 0.00
Net cash used in Financing Activities 683228.16 -594333.79

Net increase in cash & cash

82924.25 -260660.23
equivalents
Cash & cash equivalents at the
2918.53 263578.67
beginning of the year
Cash & cash equivalents at the end of
85842.78 2918.53
the year
 BIBLIOGRAPHY

(Sources of Data)

• Company Brochures

• Annual Report of the Company (2006-2007)

• http://www.google.co.in/

• http://www.marketresearch.com/

• http://www.indiainfoline.com/

• accts.fci@nic.in

• accts@fci.delhi.nic.in