A SUMMER INTERNSHIP PROJECT REPORT ON

FINANCIAL STATEMENT ANALYSIS OF

FOOD CORPORATION OF INDIA

An internship project report submitted to the Utkal University in partial
fulfilment of requirement for the degree of
MASTER IN COMMERCE

P.G DEPARTMENT OF COMMERCE

UTKAL UNIVERSITY, BHUBANESWAR, ODISHA

Under the joint guidance of-

Internal Guide External Guide
Mrs. Mercy Mousumi Takri Mr. B. Ramarao
Faculty, P.G Dept. Of commerce Deputy General manager
Utkal University, Vanivihar R.O, Bhubaneswar
Food Corporation of India

SUBMITTED BY
PABITRA MOHAN DAS
ROLL NO. 10619V212027
 DECLARATION

I do here by declare that the project entitled “FINANCIAL STATEMENT

ANALYSIS OF FOOD CORPORATION OF INDIA”, submitted for the partial
fulfilment of the requirement of the Degree of Master in Commerce, Utkal
University in the course of curriculum of second semester is an original piece of
work done by me under the guidance of Mr. B. Ramarao, Deputy General
Manager, Finance and Accounts division, regional office, Bhubaneswar, Food
Corporation of India, Bhubaneswar and Mrs. Mercy Mousumi Takri, Faculty,
M.COM., Utkal University, Bhubaneswar.

This report has not been submitted for the award of any other degree elsewhere
in part or full.

Date:
Place: Bhubaneswar (PABITRA MOHAN DAS)
Roll No.- Roll No- 10619V212027
 CERTIFICATE
This is to certify that the project entitled “FINANCIAL STATEMENT ANALYSIS OF
FOOD CORPORATION OF INDIA” submitted by Mr. PABITRA MOHAN DAS
bearing the Roll No. 10619V212027 for the partial fulfillment of the degree of
M.COM session 2021-23, embodies the bonafide work done by him under my
supervision and guidance.

Date : Mrs. Mercy Mousumi Takri,

Place Faculty, Utkal University
 ACKNOLEDGEMENT

The satisfaction that accompanies the successful completion of this task would
be incomplete without mentioning people who made it possible, whose
encouragement and consistent guidance crowned my effort with success.
First of all, I would like to express my sincere gratitude to my external guide, Mr.
B. Ramarao for his immense support. I express my deep gratitude to my faculty
guide Mrs. Mercy Mousumi Takri, P.G. Dept. of commerce, Utkal University,
Bhubaneswar for his constant inspiration and prompt guidance to carry out and
complete the study.
Finally, I thank all those who have directly or indirectly helped me in my project.
I express my profound thanks to my teachers, as well as my friends for their
constant encouragement.

Lastly, I would like to thank Food Corporation of India for providing me this
opportunity to work on this project.

Place: Bhubaneswar Pabitra Mohan Das

Date: Roll No- 10619V212027
 CONTENT
SL.NO
PARTICULARS PAGE

NO.

1 INTRODUCTION

OBJECTIVE

LITERATURE REVIEW

RESEARCH METHODOLOGY

3 FINANCIAL ANALYSIS:
A THEORITICAL FRAMEWORK

4 COMPANY PROFILE

5 FINANCIAL DATA

6 ANALYSIS

INTERPRETATION

7 SUMMARY

FINDINGS

SUGGESTIONS

CONCLUSION

8 BIBLIOGRAPHY
 CHAPTER 1
INTRODUCTION

1
 Introduction
The significance of the Food Corporation of India in channelizing the food subsidies to the
people of India is immense. Hence, it becomes important to know, whether the Food
Corporation is maintaining a heathy liquidity and solvency position or not.
In this project, I have tried my best to do a detailed study on the liquidity position and the
solvency position of the Food Corporation of India.

But, before starting my study, it was important for me to know the ins and outs of the
organization thoroughly.

So, during my rather engaging period of internship, I discussed about the operations of the
organization with my external guide in great detail.
I, after the advice of my guide, not only studied the accounts manual of the FCI Lekha
completely, but also took an extensive look at the trial balance of last three financial years
and cash book of one year of the regional office of Bhubaneswar, and trial balance of last
three financial years of the Odisha region.

These discussions and analysis of statements gave me a lot of insights about the workings of
the organization.

Still, I was left wanting more. Hence, during my study, I went through the organization’s
annual reports of at least four financial years in detail, to not only collect all the information
required for the project, but also to get myself even more enlightened about the
organization.

By giving this project a chance, you will be able to understand not only about the liquidity
and solvency position of the Food Corporation, but also about the uniqueness of its
equation with the Government of India.

2
3
4
 CHAPTER 2
RESEARCH METHODOLOGY

5
 Research objective
 To study the liquidity position of the Food Corporation of India
 To study the solvency position of the Food Corporation of India
 To study the efficiency of the organization.
 To study the profitability of the organization.

Scope
This project takes financial statements of four financial years into consideration to fulfil its
research objectives. These financial statements are of FY 2017-18, FY 2018-19, FY 2019-20,
FY 2020-21.

Data from these financial years have been taken to study the liquidity and the solvency
position of the Food Corporation of India.

Data Source
All the data for the purpose of this project have been collected from secondary sources.

The financial statements from which the required data has been derived is collected from
the official website of the Food Corporation of India.

Tools and techniques

To analyze the financial statement, various liquidity ratios, solvency ratios etc. are taken into
consideration and for that all information are taken from official site of Food Corporation of
India.
The data and the derived results have been presented by using tables and charts fit for the
purpose.

6
 The liquidity ratios are mentioned below.
1. Current ratio
The current ratio is one of the most helpful liquidity ratios in financial analysis as it helps to
gauge the liquidity position of the business. The current ratio measures a company’s ability
to pay short-term obligations or those due within one year. The current ratio helps investors
understand more about a company’s ability to cover its short-term debt with its current
assets and make apples-to- apples comparisons with its competitors and peers.
Formula and Calculation for the Current Ratio

To calculate the ratio, analysts compare a company’s current assets to its

current liabilities.

Current Ratio=Current liabilities/Current assets

Current assets listed on a company’s balance sheet include cash, accounts receivable,
inventory, and other current assets (OCA) that are expected to be liquidated or turned into
cash in less than one year.

Current liabilities include accounts payable, wages, taxes payable, short-term debts, and the
current portion of long-term debt.

2. Quick Ratio
The Quick Ratio, also known as the Acid-test or Liquidity ratio, measures the ability of a
business to pay its short-term liabilities by having assets that are readily convertible into
cash. These assets are, namely, cash, marketable securities, and accounts receivable. These
assets are known as “quick” assets since they can quickly be converted into cash.
The Quick Ratio Formula

Quick Ratio = [Cash & equivalents + marketable securities + accounts receivable]

/ Current liabilities

7
 Or, alternatively,

Quick Ratio = [Current Assets – Inventory – Prepaid expenses] / Current Liabilities

What’s Included and Excluded?

Generally speaking, the ratio includes all current assets, except:

 Prepaid expenses – because they cannot be used to pay other liabilities

 Inventory – because it may take too long to convert inventory to cash to cover pressing
liabilities

3. Cash Ratio
The term “Cash Ratio” refers to the liquidity ratio that assesses whether a company has the
ability to pay off its current liabilities with only cash and cash equivalents. It is a stricter and
more conservative liquidity ratio as compared to the current ratio and quick ratio because it
restricts the ability to repay the short-term liabilities with cash or near-cash resources only.
Formula:

The Cash Ratio formula can be derived by dividing the sum of cash and other cash
equivalents by the total current liabilities.
Cash Ratio = (Cash + Cash Equivalents) / Total Current Liabilities

Cash & Cash Equivalent: Under Cash, the firms include coins & paper money, undeposited
receipts, checking accounts, and money orders. And under cash equivalent, the
organizations take into account money market mutual funds, treasury securities, preferred
stocks which have a maturity of 90 days or less, bank certificates of deposits, and
commercial paper.
Current liabilities: Under current liabilities, the firms would include accounts payable, sales
taxes payable, income taxes payable, interest payable, bank overdrafts, payroll taxes
payable, customer deposits in advance, accrued expenses, short-term loans, current
maturities of long-term debt, etc.

8
 The solvency ratios are mentioned below.
1. Debt to Equity Ratio
The debt-to-equity (D/E) ratio is used to evaluate a company's financial leverage and is
calculated by dividing a company’s total liabilities by its shareholder equity.

It is a measure of the degree to which a company is financing its operations through debt
versus wholly owned funds.
Formula

Short formula:

Debt to Equity Ratio = Total Debt / Shareholders’ Equity

Long formula:

Debt to Equity Ratio = (short term debt + long term debt + fixed payment
obligations) / Shareholders’ Equity

2.Debt to Asset Ratio

A company's balance sheet will show its total assets as well as its total debt at the present
moment. These metrics can be pitted against each other in a debt- to-assets ratio.

A debt-to-assets ratio is a type of leverage ratio that compares a company's debt obligations
(both short-term debt and long-term debt) to the company's total assets.

It is an indicator of financial leverage or a measure of solvency. It also gives financial

managers critical insight into a firm's financial health or distress.
It is calculated using the following formula: Debt-to-Assets Ratio = Total Debt / Total Assets.

9
 3. Equity Ratio
The equity ratio is a financial metric that measures the amount of leverage used by a
company. It uses investments in assets and the amount of equity to determine how well a
company manages its debts and funds its asset requirements.

A low equity ratio means that the company primarily used debt to acquire assets, which is
widely viewed as an indication of greater financial risk. Equity ratios with higher value
generally indicate that a company’s effectively funded its asset requirements with a
minimal amount of debt.
The formula

Equity Ratio= Total Equity / Total Assets

4. Debt-to-capital ratio
The debt-to-capital ratio (D/C ratio) measures the financial leverage of a company by
comparing its total debt to total capital. In other words, the debt- to-capital ratio formula
measures the proportion of debt that a business uses to fund its ongoing operations as
compared with capital.
Formula

There’s a simple debt-to-capital ratio formula you can use to work out this financial ratio:
Debt-to-Capital Ratio = Debt / Debt + Shareholder’s Equity

As you can see, it’s a relatively simple calculation – all you need to do is divide
your firm’s total debt by its total capital (total debt + shareholder’s equity).

It’s important to make note of a couple of points when it comes to the debt-to- capital ratio
formula. “Debt” includes all short and long-term liabilities, while
the “shareholder’s equity” figure should be a sum of all company equity, from
common and preferred stock to minority interest.

10
 The effi ciency ratios are mentioned below.

Inventoery turnover ratio:

This is one of the most important turnover ratios which highlights the relationship between
the inventory or stock in the business and cost of the goods sold. It shows how fast the
inventory gets cleared in an accounting period or in other words, the number of times the
inventory or the stock gets sold or consumed. For this reason, it is also known as
the inventory turnover ratio.

It is calculated by the following formula

Stock Turnover Ratio = Cost of Goods Sold / Average Inventory

A high stock turnover ratio is indicative of fast-moving goods in a company while a low
stock turnover ratio indicates that goods are not getting sold and are being stored at
warehouses for an extended period of time.

Debtor turnover ratio:

This ratio is an important indicator of a company which shows how well a company is able
to provide credit facilities to its customers and at the same time is also able to recover the
due amount within the payment period.
It is also known as accounts receivable turnover ratio as the payments for credit sales that
will be received in the future are known as accounts receivables.
The formula for calculating Debtor Turnover ratio is
Debtor Turnover Ratio = Credit Sales / Average Debtors
A higher ratio indicates that the credit policy of the company is sound, while a lower ratio
shows a weak credit policy.

Creditors Turnover Ratio

Creditors turnover ratio is a measure of the capability of the company to pay off the
amount for credit purchases successfully in an accounting period.
It shows the number of times the account payables are cleared by the company in an
accounting period. For this reason, it is also known as the Accounts payable turnover ratio.

The formula for calculating creditors turnover ratio is

11
 Creditors Turnover ratio = Net Credit Purchases / Average Creditors
Where average creditors are also known as average accounts payable.
A high ratio is indicative that a company is able to finance all the credit purchases and vice
versa.

Working Capital Turnover Ratio

This ratio is helpful in determining the effectiveness with which a company is able to utilize
its working capital for generating sales of its goods.
The formula for calculating working capital turnover ratio is
Working capital turnover ratio = Sale or Costs of Goods Sold / Working Capital
If a company has a higher level of working capital it shows that the working capital of the
business is utilized properly and on the other hand, a low working capital suggests that
business has too many debtors and the inventory is unused.

Investment Turnover Ratio or Net Asset Turnover Ratio

Investment Turnover Ratio is related to the sales taking place in the business and the net
assets or the capital employed. It determines the ability of the business to generate sales
revenue by the use of net assets of the business. The ratio is calculated using the following
formula
Investment Turnover Ratio = Net Sales/ Capital Employed

Importance of Activity Ratios/Efficiency Ratios

Activity ratios are very important indicators of the operating efficiency of the business. It
also shows the way in which revenue is generated in a company and the way in which the
elements of the balance sheet are utilized for managing the business

12
 The profi tability ratios are mentioned below.

Gross Profit Ratio

Gross Profit Ratio is a profitability ratio that measures the relationship between the gross
profit and net sales revenue. When it is expressed as a percentage, it is also known as the
Gross Profit Margin.
Formula for Gross Profit ratio is
Gross Profit Ratio = Gross Profit/Net Revenue of Operations × 100
A fluctuating gross profit ratio is indicative of inferior product or management practices.

Operating Ratio
Operating ratio is calculated to determine the cost of operation in relation to the revenue
earned from the operations.
The formula for operating ratio is as follows
Operating Ratio      = (Cost of Revenue from Operations + Operating Expenses)/
Net Revenue from Operations ×100

Operating Profit Ratio

Operating profit ratio is a type of profitability ratio that is used for determining the
operating profit and net revenue generated from the operations. It is expressed as a
percentage.
The formula for calculating operating profit ratio is:
Operating Profit Ratio = Operating Profit/ Revenue from Operations × 100
Or Operating Profit Ratio = 100 – Operating ratio

Net Profit Ratio

Net profit ratio is an important profitability ratio that shows the relationship between net
sales and net profit after tax. When expressed as percentage, it is known as net profit
margin.
Formula for net profit ratio is
Net Profit Ratio = Net Profit after tax ÷ Net sales
Or
Net Profit Ratio = Net profit/Revenue from Operations × 100

13
It helps investors in determining whether the company’s management is able to generate
profit from the sales and how well the operating costs and costs related to overhead are
contained.

Return on Capital Employed (ROCE) or Return on Investment (ROI)

Return on capital employed (ROCE) or Return on Investment is a profitability ratio that
measures how well a company is able to generate profits from its capital. It is an important
ratio that is mostly used by investors while screening for companies to invest.
The formula for calculating Return on Capital Employed is :
ROCE or ROI = EBIT ÷ Capital Employed × 100
Where EBIT = Earnings before interest and taxes or Profit before interest and taxes
Capital Employed = Total Assets – Current Liabilities

Return on Net Worth

This is also known as Return on Shareholders funds and is used for determining whether
the investment done by the shareholders are able to generate profitable returns or not.
It should always be higher than the return on investment which otherwise would indicate
that the company funds are not utilised properly.
The formula for Return on Net Worth is calculated as :
Return on Shareholders’ Fund =  Profit after Tax / Shareholders’ Funds × 100
Or Return on Net Worth = Profit after Tax / Shareholders’ Funds × 100

Earnings Per Share (EPS)

Earnings per share or EPS is a profitability ratio that measures the extent to which a
company earns profit. It is calculated by dividing the net profit earned by outstanding
shares.
The formula for calculating EPS is:
Earnings per share = Net Profit ÷ Total no. of shares outstanding
Having higher EPS translates into more profitability for the company.

Book Value Per Share

Book value per share is referred to as the equity that is available to the the common
shareholders divided by the number of outstanding shares
Equity can be calculated by:
Equity funds = Shareholders funds – Preference share capital
14
 The formula for calculating book value per share is:
Book Value per Share = (Shareholders’ Equity – Preferred Equity) / Total Outstanding
Common Shares.

Dividend Payout Ratio

Dividend payout ratio calculates the amount paid to shareholders as dividends in relation to
the amount of net income generated by the business.
It can be calculated as follows:
Dividend Payout Ratio (DPR) : Dividends per share / Earnings per share

Price Earnings Ratio

This is also known as P/E Ratio. It establishes a relationship between the stock (share) price
of a company and the earnings per share. It is very helpful for investors as they will be more
interested in knowing the profitability of the shares of the company and how much
profitable it will be in future.
P/E ratio is calculated as follows:
P/E Ratio = Market value per share ÷ Earnings per share
It shows if the company’s stock is overvalued or undervalued.

15
 Chapter- 3
COMPANY PROFILE

16
 Introduction
The Food Corporation of India (FCI) is a statutory body created and run by the
Government of India. It is under the ownership of Ministry of Consumer Affairs, Food and
Public Distribution, Government of India formed by the enactment of Food Corporation Act,
1964 by the Parliament of India. Its top official is designated as Chairman and Managing
Director who is a central government civil servant of the IAS cadre. It was set up in 1965
with its initial headquarters at Chennai. Later this was moved to New Delhi. It also has
regional centers in the capitals of the states. Important regions of the state also serve as
district centers.

Mandate
The Food Corporation of India or the FCI was set up on 14 January 1965 having its first
District Office at Thanjavur – rice bowl of Tamil Nadu – and headquarters at Chennai (later
shifted to Delhi) under the Food Corporations Act 1964 to implement the following
objectives of the National Food Policy:

1. Effective price support operations for safeguarding the interests of the poor farmers
2. Distribution of food grains throughout the country for Public Distribution System (PDS)
3. Maintaining a satisfactory level of operational and buffer stocks of food grains to ensure
National Food Security
4. Regulate market price to provide food grains to consumers at a reliable price

Since its inception, FCI has played a significant role in India's success in transforming the
crisis management-oriented food security into a stable security system.

Statistics
It is one of the largest Corporations in India started by the government and probably the
largest supply chain management in Asia. It operates through five Zonal offices and 26
Regional offices. Each year, the Food Corporation of India purchases roughly 15 to 20
percent of India's wheat output and 12 to 15 percent

17
 of its rice output. The purchases are made from the farmers at the rates declared by the
Government of India. This rate is called MSP (Minimum Support Price). There is no limit
for procurement in terms of volume, any quantity can be procured by FCI provided the stock
satisfies FAQ (Fair Average Quality) specifications with respect to FCI.

Objectives
Food Corporation of India is established under the Food Corporations Act, 1964 for the
purpose of trading in food grains and other foodstuffs and for matters connected therewith
and incidental thereto. In its 50 years of service to the nation, FCI has played a significant
role in India's success in transforming the crisis management-oriented food security into a
stable security system.

Under Section 13 of the said Act the primary duty of the Corporation is to undertake the
Purchase, Storage, Movement, Transport, Distribution & Sale of Food grains & Other
Foodstuffs.

Subject as aforesaid, the Corporation may also with the previous approval of the Central
Government,

i) promote by such means, as it thinks fit, the production of food grains and other
foodstuffs.

ii) set up, or assist in the setting up of, rice mills, flour mills and other
undertakings for the processing of food grains and other foodstuff; and

iii) discharge such other functions as may be prescribed or as are supplemental,

incidental or consequential to any of the functions conferred on it.

FCI's Objectives are:

 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

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 Vision, Mission and Values
MISSION
• Ensuring food security of nation by maintaining satisfactory level of
operational and buffer stocks of food grains.

• Distribution of food grains throughout the country for Public Distribution

System.

• Effective Price Support Operations for safeguarding the interest of

farmers.

VISION
To play a significant role in India`s success in transforming the crisis management-oriented
food security to a stable security system to ensure availability, accessibility and affordability
of food grains to all people at all time so that no one, nowhere and at no time go hungry.

VALUES
Sincerity Team work Speed
Integrity & fairness in all matter Transparency and without any fear or favour
Respect for dignity and potential of individuals
Loyalty and pride in the Corporation

Organizational structure
Food Corporation of India operates through its Depot headed by Manager (Depot). Every
district has few depots to cater to the requirement of the district's
population(beneficiaries). The depot reports to Divisional Office, headed by an Assistant
General Manager, designated earlier as an Area Manager and now as Divisional Manager.
Assistant General Manager (Quality Control) is also posted who is looking after the QC work
that includes ensuring the food grains are pest free and subjected to regular pest control
measures.
Under Divisional Manager's control, there are Managers to deal with sections viz., Depot,
Sales, Contracts, Procurement, SL-TL, Movement, Establishment, Quality Control (QC),
Operational accounts, Civil Engineering and Electrical & Mechanical Engineering etc., who
consolidate the field level operations and through the Divisional Managers' authorization,
they transmit the necessary information and periodical statements to Regional Offices of
19
their respective regions. Under the Managers are Assistant Grades -1, 2 and 3 and Junior
Engineer (Both Civil and Electrical & Mechanical), who help the managers in day- to-day
operations of the organization. There are 21,847 employees working in FCI as of 201

20
 .

The Divisional Office reports to the Regional Office which is headed by a General Manager,
who is in some cases from Indian Administrative Service, Indian Police Service /All India
Services under deputation. Under his control Deputy General Managers (DGM) coordinate
with the daily operations through the Assistant General Managers who actually oversee the
functions of particular sections. All these officers apprise the General Manager periodically
on various issues pertaining to the sections in that region.

FCI has been divided into 5 zones viz. North, South, East, West & North-East with a Zonal
Office in each zone.
Locations of FCI, Zonal Offices:

1. Zonal Office, North: Noida

2. Zonal Office, East: Kolkata
3. Zonal Office, West: Mumbai
4. Zonal Office, North-East: Guwahati
5. Zonal Office, South: Chennai
Each zone is further divided into regions with a regional office in one region. All the Regional
Offices are under the control of Zonal Offices which are headed by an Executive Director,
who in most of the cases is from Indian Administrative Service or Indian Revenue Service
under deputation. Under his control three or more than three General Managers coordinate
with all Regional Offices of their zone through subordinate officers like Deputy General
Managers and Assistant

21
General Managers dealing with their allotted operational sections in their respective zone.
All the Zonal Offices are under the control of Headquarters, located at New Delhi, which is
headed by Chairman and Managing Director, who is an Indian Administrative Service of
Secretary rank on Central Deputation. Headquarters instruct, communicate, consolidate and
refine the voluminous information required for the streamlined execution of day-to-day
operations and coordinates with Ministry of Consumer Affairs, Food and Public Distribution
and Food Secretary and various sister corporations like Central Warehousing Corporation,
Indian Railways in formulating food policy or amending the existing policy to suit the
emerging challenges in managing Food Security scenario of the nation.
The CMD is a member of the Board of Directors along with Director Finance, Director HR,
Director Operations and Director Sales.

22
Operations
The Food Corporation of India procures rice and wheat from farmers through many routes
like paddy purchase centers/mill levy/custom milling and stores them in depots. FCI
maintains many types of depots like food storage depots and buffer storage complexes and
private equity go-downs and also implemented latest storage methods of silo storage
facilities which are located at Hapur in Uttar Pradesh, Malur in Karnataka and Elavur in Tamil
Nadu. The stocks are transported throughout India by means of railways, roadways and
waterways and issued to the state government nominees at the rates declared by the
Government of India for further distribution under the Public Distribution System (PDS) for
the consumption of the ration card holders. (FCI itself does not directly distribute any stock
under PDS, and its operations end at the exit of the stock from its depots).

The difference between the purchase price and sale price, along with internal costs, are
reimbursed by the Union Government in the form of food subsidy. At present the annual
subsidy is around $10 billion. FCI by itself is not a decision- making authority; it does not
decide anything about the MSP, imports or exports. It just implements the decisions made
by the Ministry of Consumer Affairs, Food and Public Distribution and Ministry of
Agriculture.

Food Corporation of India recently ventured into procurement of pulses in various regions
from the crop year 2015–16, and pulses are procured at market rate, which is a sharp
deviation from its traditional minimum support price- based procurement system.

In 2014, Government of India set up a high-level committee under the chairmanship of

Hon'ble Member of Parliament and former Minister of Food and Consumer Affairs and
Public Distribution Shri Shantha kumar to recommend viable solutions regarding
restructuring and reorienting the role of Food Corporation of India, and the committee
submitted its report to the government. Many of the committee recommendations are
under various stages of implementation.

On 27 November 2019, Cabinet Committee on Economic Affairs (CCEA) approved to increase

the authorized capital of Food Corporation of India (FCI) from existing Rs. 3,500crore to Rs.
10,000crore.

23
Growth
Operations and Growth The activities of the Corporation were initially limited to four
Southern States, in 1966, the Corporation extended its operations to Orissa, Punjab,
Rajasthan, Gujarat and Pondichery. By the end of 1967, the FCI was functioning in 15 states
including Delhi and Pondicherry. The Govt. of India had also transferred to it the
procurement, storage and distribution functions so far performed by its Dept. of Food in
several states. With the completion of the transfer to it, the entire executive functions of
the Food Department.
From April, 1969, the FCI became the sole agency of the Central govt. for state trading in
food grains. In short span of five years, it had extended its activities, both in terms of area of
operations and volume of its purchase and sale. By this time, it had also made remarkable
progress in building up and holding a buffer stock which had already exceeded the target of
five million tonnes prescribed for the end of the Fourth Five Year Plan. By the end of 1970-
71, the FCI had achieved its commanding role in the food grains trade and was able to
secure incentive prices to the farmer for his produce as well as made easy availability of
food grains to the consumers at reasonable prices throughout the year.
In 1970-71, the FCI played a major role in organizing the countrywide support price and
procurement operations, both in rabi and Kharif seasons. In 1975-76, the year, of bumper
harvest, apart from handling more than 6 million tons of procured grain from a single year's
operations. Faced with the acute shortage of storage space due to sudden increase in the
procurement, it also arranged CAP storage on a massive scale (6 million tons in the CAP
storage). Thus, the Corporation has increased its activities manifold. Its turn-over in money
terms increased from Rs.289.61 crores in 1965-66 to Rs.75,000 crores in 2003-04, i.e. by
approx 258 times during the 40 years of its existence. Its work is now being coordinated
through the Head Quarters, 5 Zonal Offices, 26 Regional Offices.

Diversification of Activities
To play a vital role in the country's food economy the FCI has been progressively diversifying
its activities in the field of agro-processing. It had set up 24 Modern Rice Mills and then
acted as the pace-setter in the modernization of paddy milling industry. It also started
manufacture of nutritious food, i.e. balahar to generate nutrition, consciousness among the
masses. It had also set up a Maize

24
 Mill at Faridabad, Solvent Extraction Plant (which was handed over to Modern Food
Industries and Dal Mill) now stopped. It acted as a price support agent of the Govt. of India
in potato purchases in 1976, mainly in the state of UP. In the same year, it entered into the
market to give support price to barley in Punjab, Haryana and Rajasthan. It added another
significant dimension to its function by offering to the public, Consultancy Services in the
field of agro-processing, modernization of rice mills, rice bran oil extraction, dal milling and
modem food grains storage construction. This service, inter-alia, undertook project planning
and evaluation feasibility and techno-economic studies, management systems and
optimization studies. It rightly and proudly claims to possess technical personal of a high
caliber on its rolls to do these delicate jobs.

Constraints and Difficulties

1. Corporation has to operate under the overall policy of the Govt. of India. It has no power to
decide matters of policy, like the affixation of procurement and issue prices. The prices of
food grains are determined by the Central Govt. in consultation with the Agricultural Prices
Commission and the State Govts. The FCI has to procure on the prices so fixed. Sales and
allocations of food grains and the issue prices are also determined by the Govt. of India. A
situation may arise where the stock might be deteriorating fast for lack of an allocation or
sale and get the decision of the Govt. may take some time for its disposal. In the meantime,
the fair name of the FCI may get sullied by its critics.
2. The real venues of the FCI's functioning are the states which follow independent policies in
the matter of procurement etc. There is no uniformity in the outlook of the states in this
regard. The decision about the role of various procurement agencies available to them also
rests with the State Govt. If the State Govts so desire, they may not permit the FCI at all to
operate a continuous inter-action of the officers of the FCI with the officers of the State
Govts in order to seek and ensure their cooperation.
3. Though initially, the State Govt. may welcome to start state trading in food grains, it may,
however, cause them some imitation and conflict when they themselves gain experience to
do the job and make some profit in the bargain.

4. The activities of the FCI are spread all over the country (at more than 2000 places), as such,
the geographical distances coupled with gigantic operations put spatial and organizational
constraints on the smooth working of the FCI.

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 Achievements
the FCI can rightly claim several achievements to its credit, for example:

1. It has attained the capacity for nationwide operations in food grains and thus become a
force to reckon within the food grains grading circles. It has already reached commanding
heights in the trade as envisaged for it’s by the Govt. of India some years back.
2. It has been able to create uniformity in the national food outlook as its trading activities
encompass state and regional barriers. It has helped in creating inter-actions among the
food grains markets all over the country by its procurement, movement, storage and sale
operations. It has therefore, not only helped in improving marketing facilities, but also
helped in removing imperfections in the operations of the grain markets.
3. It protects the producers through the price support operations, particularly in the years of
bumper harvests when the prices tend to go down.
4. It has tried to protect the vulnerable sections of consumers by making supplies available to
the fair price shops regularly.
5. It has helped in minimizing inter-seasonal and inter-regional price variations, thereby
injecting some stability in food grains prices in the country.
6. The FCI has encouraged regulation of food processing activities. It has been the initiator and
pace-setter in the modernization of the rice milling industry. It has also acted as a catalyst in
other agro-processing areas, vis. Dal milling and rice bran oil extraction. It has been able to
improve the quality of such processed food items by its quality control measures.
7. Above all, it is no mean feet to mop up the surplus grains from producing areas, to store
them effectively and make them available to deficit pockets of the country in time and at
the least possible cost.
FCI- A recognized success
Today FCI is recognized as a successful organization where professional management of
food is concerned. The efficiency with which FCI tackled one of the worst droughts of the
century not only cemented its role as the premier organization in charge of food security in
India but also brought it accolades from the United Nations. During the devastating drought
of 1987. FCI supplied more than 30 lakh tonnes of food grains to affected parts of the
country 48 through special schemes. And FCI is justifiably proud of the fact that, due to
better anticipation and management of the drought, there was no recurrence of the
devastation caused by the Bengal famine of 1943. As a result, international organizations
today recognize FCI's significant role in effectively managing the food security of the nation.
And the FCI is indeed proud of serving the nation.

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 CHAPTER 4

DATA COLLECTION

29
 Introduction
In this chapter, all the data collected for the purpose of preparing this project have been
attached. These data have been collected from the annual reports of the Food Corporation
of India.
The collected data includes financial statements of the organization, concerning FY 2017-18,
FY2018-19, FY 2019-20, FY 2020-21.

Financial statements of financial year 2017-2018

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31
Financial statements of financial year 2018-2019

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33
Financial statements of financial year 2019-2020

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35
Financial statements of financial year 2020-2021

36
37
.

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