anuj edi report
TRANSCRIPT
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INDEX
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ACKNOWLEGEMENT
It is great pleasure for me to acknowledge the kind of help and guidance received
to me during my project work. I was fortunate enough to get support from a large
number of people to whom I shall always remain grateful.
I would like to thank my institute MITSOB for giving this type of opportunity to
the students who like to build their carrier in the business world. I am very thankful
to our Professor Mr. Avinash Deshpande for giving me valuable suggestion and
encouragement to bring out good project.
I would like to express my sincere gratitude to My Family members for allowingme for this opportunity to undergo this project and also for their great guidance and
advice on this project, without which I will not be able to complete this project.
I am very thankful to the institute Entrepreneur Institute of Development (EDI)
for providing such kind of program and help the student to develop skill related to
the business and here personally very thankful to the Prof. P .C. Makhija who
helped me a lot in developing my idea related to my business.
I would thanks to God for their blessing and my Parents also for their valuable
suggestion and support in my project report.I would also like to thank our friends and those who have helped us during this
project directly or indirectly.
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INTRODUCTION
This document is basically divided into two parts. In the first
part, I have explained about ENTREPRENEURSHIP. In which I have explained
about the views of different personality and my own view regarding Entrepreneurs.
Entrepreneurs can be social, political, industrial and there can be intrapreneurs
who are working as an employee in organization and bring changed in
organization which is beneficial to both organization and society through theirinnovative ideas.
I am going to join my family business which is related to trading of
commodities. So here I have also explained regarding to commodities market
and also its present trend in India.
In the later part I have explained my Business Plan related to my Family
Business. In which I have explained how I will bring change in my family business through my idea.
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ENTREPRENEUR
PASSION
ENTREPRENEUR:
Entrepreneur is
According to the different Personalities:
1734: Richard Cantillon: Entrepreneurs are non-fixed income earners who pay known costs of production but earn uncertain incomes.
1934: Schumpeter: Entrepreneurs are innovators who use a process ofshattering the status quo of the existing products and services, to set up new
products, new services.
An individual or group ofindividual
who has an idea
implement the idea
which work for societyand earned profit
Sustain for long time.
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1961: David McClelland: An entrepreneur is a person with a high need forachievement [N-Ach]. He is energetic and a moderate risk taker.
1964: Peter Drucker: An entrepreneur searches for change, responds to itand exploits opportunities. Innovation is a specific tool of an entrepreneurhence an effective entrepreneur converts a source into a resource.
2013: Ronald May: An Entrepreneur is someone who commercializes his orher innovation.
1st Generation:
1st Generation Entrepreneur means an individual who start
the new business with his\her innovative ideas.
2nd
Generation:
2nd
Generation Entrepreneur means an individual work
within the Organization or who joined his\her family business and bring change in
to the organization or his\her family business and to the society through his\herinnovative and creative idea. This type of personality referred to as an
INTRAPRENEURS.
Entrepreneurs
1st generation2nd
generation
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ENTREPRTENEURSHIP
ENTREPRENEURSHIP:
Entrepreneurship is a process of identifying and
starting a business venture, sourcing and organizing the required resources and
taking both the risks and rewards associated with the venture.
First used in 1723, today the term entrepreneur implies qualities of leadership,initiative and innovation in manufacturing, delivery, and/or services.
Economist Robert Reich has called team-building, leadership and
management ability essential qualities for the entrepreneur. The successful
companies of the future, he has said, will be those that offer a new model for
working relationships based on collaboration and mutual value.
In the 20th century, entrepreneurship was studied by Joseph Schumpeter in the
1930s and other Austrian economists such as Carl Menger, Ludwig von Misesand Friedrich von Hayek.
Functions of An Entrepreneurs:
An entrepreneur frequently has to wear many
hats. He has to perceive opportunity, plan, organize resources, and oversee
production, marketing, and liaison with officials. Most importantly he has to
innovate and bear risk. The main functions of an entrepreneur are as follows:
1. Innovation:
Innovation is one of the most important functions of an entrepreneur
according to Schumpeter. An entrepreneur uses information, knowledge and
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intuition to come up with new products, new methods of reducing costs of a
product, improvement in design or function of a product, discovering new markets
or new ways of organization of industry. Through innovation, an entrepreneur
converts a material into a resource or combine existing resources into new and
more productive configurations. It is the creativity of an entrepreneur that results ininvention [creation of new knowledge] and innovation [application of knowledge
to create new products, services or processes.]
Systematic innovation means monitoring the following for innovative
opportunity:
i. The unexpected success or failure or any unexpected outside event, (e.g. when
the IT bubble burst the ITES sector started growing.)
ii. Innovation based on process need [e.g. plate based cameras, film based cameras,
digital cameras]
iii. Changes in industry and market structure [e.g. video cassette VCD, DVD, Blue
ray disc]
iv. Demographics changes (e.g. increasing number of working women and nuclear
families in most metropolitan cities)
v. New knowledge (e.g. Pentium chip)
2. Risk and uncertainty bearing:
According to Hozelist an entrepreneur performs
the function of risk and uncertainty bearing. Every decision pertaining to
development of new products, adapting new technologies, opening up new markets
involves risk. Decision-making in an environment of uncertainty requires
anticipation of risk. Profit is said to be the reward for anticipating and taking such
risks. However it is pertinent to mention that the entrepreneur is not a gambler, he
only takes calculated risks. An entrepreneur develops the art of decision-makingunder conditions of uncertainty as a matter of survival.
3. Organization building:
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An entrepreneur has to organize men, material and
other resources. He has to perform the functions of planning, co-ordination and
control. He has to use his leadership qualities to build a team, generate resources
and solve problems. With his organizational skills an entrepreneur builds an
enterprise from scratch, nurtures it and makes it grow. His vision sows the seedsfor a sound and vibrant organization and synergies are built in the enterprise.
According to Kilby in a developing country even the imitator entrepreneurs are
very important and the entrepreneurial role encompasses the following:
i. Perception of market opportunities
ii. Gaining command over scarce resources
iii. Purchasing inputs
iv. Marketing the products
v. Dealing with bureaucrats
vi. Managing human relations within the firm
vii. Managing customer and supplier relations
viii. Managing finance
ix. Managing production
x. Acquiring and overseeing assembly of the factory
xi. Industrial engineering
xii. Upgrading process and product
xiii. Introducing new production techniques and products
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BUSINESS PLAN
INTRODUCTION:
I am going to join my family business which is of
Trading of Commodities. So before going in detail here I have explained about
the Commodity Market which contains its history and the position of Commodity
Market in India.
COMMODITY MARKET
What is “Commodity”?
Any product that can be used for commerce or an article of commerce which is
traded on an authorized commodity exchange is known as commodity. The
article should be movable of value, something which is bought or sold and
which is produced or used as the subject or barter or sale. In short commodityincludes all kinds of goods. Indian Forward Contracts (Regulation) Act
(FCRA), 1952 defines “goods” as “every kind of movable property other than
actionable claims, money and securities”.
In current situation, all goods and products of agricultural (including
plantation), mineral and fossil origin are allowed for commodity trading
recognized under the FCRA. The national commodity exchanges, recognized by
the Central Government, permits commodities which include precious (gold
and silver) and non-ferrous metals, cereals and pulses, ginned and un-ginnedcotton, oilseeds, oils and oilcakes, raw jute and jute goods, sugar and gur,
potatoes and onions, coffee and tea, rubber and spices.
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What is a Commodity Exchange?
A commodity exchange is an association or a company or any other body
corporate organizing futures trading in commodities for which license has been
granted by regulating authority.
Evolution of Commodities Market:
Commodities future trading was evolved from need of assured continuous
supply of seasonal agricultural crops. The concept of organized trading incommodities evolved in Chicago, in 1848. But one can trace its roots in Japan.
In Japan merchants used to store Rice in warehouses for future use. To raise
cash warehouse holders sold receipts against the stored rice. These were known
as “rice tickets”. Eventually, these rice tickets become accepted as a kind of
commercial currency. Latter on rules came in to being, to standardize the
trading in rice tickets. In 19th century Chicago in United States had emerged as
a major commercial hub. So that wheat producers from Mid-west attracted here
to sell their produce to dealers & distributors. Due to lack of organized storage
facilities, absence of uniform weighing & grading mechanisms producers oftenconfined to the mercy of dealers discretion. These situations lead to need of
establishing a common meeting place for farmers and dealers to transact in spot
grain to deliver wheat and receive cash in return. Gradually sellers & buyers
started making commitments to exchange the produce for cash in future and
thus contract for “futures trading” evolved. Whereby the producer would agree
to sell his produce to the buyer at a future delivery date at an agreed upon price.
In this way producer was aware of what price he would fetch for his produce
and dealer would know about his cost involved, in advance. This kind of
agreement proved beneficial to both of them. As if dealer is not interested in
taking delivery of the produce, he could sell his contract to someone who needs
the same. Similarly producer who not intended to deliver his produce to dealer
could pass on the same responsibility to someone else. The price of such
contract would dependent on the price movements in the wheat market. Latter
on by making some modifications these contracts transformed in to an
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instrument to protect involved parties against adverse factors such as
unexpected price movements and unfavorable climatic factors. This promoted
traders entry in futures market, which had no intentions to buy or sell wheat but
would purely speculate on price movements in market to earn profit. Trading of
wheat in futures became very profitable which encouraged the entry of othercommodities in futures market. This created a platform for establishment of a
body to regulate and supervise these contracts. That’s why Chicago Board of
Trade (CBOT) was established in 1848. In 1870 and 1880s the New York
Coffee, Cotton and Produce Exchanges were born. Agricultural commodities
were mostly traded but as long as there are buyers and sellers, any commodity
can be traded. In 1872, a group of Manhattan dairy merchants got together to
bring chaotic condition in New York market to a system in terms of storage,
pricing, and transfer of agricultural products. In 1933, during the Great
Depression, the Commodity Exchange, Inc. was established in New Yorkthrough the merger of fours mall exchanges – the National Metal Exchange, the
Rubber Exchange of New York, the National Raw Silk Exchange, and the New
York Hide Exchange. The largest commodity exchange in USA is Chicago
Board of Trade, The Chicago Mercantile Exchange, the New York Mercantile
Exchange, the New York Commodity Exchange and New York Coffee, sugar
and cocoa Exchange. Worldwide there are major futures trading exchanges in
over twenty countries including Canada, England, India, France, Singapore,
Japan, Australia and New Zealand.
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History of Commodity Market in India:-
The history of organized commodity derivatives in India goes back to the
nineteenth century when Cotton Trade Association started futures trading in 1875,
about a decade after they started in Chicago. Over the time datives market
developed in several commodities in India. Following Cotton, derivatives trading
started in oil seed in Bombay (1900), raw jute and jute goods in Calcutta (1912),
Wheat in Hapur (1913) and Bullion in Bombay (1920).However many feared that
derivatives fuelled unnecessary speculation and were detrimental to the healthy
functioning of the market for the underlying commodities, resulting in to banningof commodity options trading and cash settlement of commodities futures after
independence in 1952. The parliament passed the Forward Contracts (Regulation)
Act, 1952, which regulated contracts in Commodities all over the India. The act
prohibited options trading in Goods along with cash settlement of forward trades,
rendering a crushing blow to the commodity derivatives market. Under the act only
those associations/exchanges, which are granted reorganization from the
Government, are allowed to organize forward trading in regulated commodities.
The act envisages three tire regulations: (i) Exchange which organizes forward
trading in commodities can regulate trading on day-to-day basis; (ii) ForwardMarkets Commission provides regulatory oversight under the powers delegated to
it by the central Government. (iii) The Central Government- Department of
Consumer Affairs, Ministry of Consumer Affairs, Food and Public Distribution- is
the ultimate regulatory authority. The commodities future market remained
dismantled and remained dormant for about four decades until the new millennium
when the Government, in a complete change in a policy, started actively
encouraging commodity market. After Liberalization and Globalization in1990, the
Government set up a committee (1993) to examine the role of futures trading. The
Committee (headed by Prof. K.N. Kabra) recommended allowing futures trading in
17 commodity groups. It also recommended strengthening Forward Markets
Commission, and certain amendments to Forward Contracts (Regulation) Act
1952, particularly allowing option trading in goods and registration of brokers with
Forward Markets Commission. The Government accepted most of these
recommendations and futures’ trading was permitted in all recommended
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commodities. It is timely decision since internationally the commodity cycle is on
upswing and the next decade being touched as the decade of Commodities.
Commodity exchange in India plays an important role where the prices of any
commodity are not fixed, in an organized way. Earlier only the buyer of produce
and its seller in the market judged upon the prices. Others never had a say. Today,commodity exchanges are purely speculative in nature. Before discovering the
price, they reach to the producers, end-users, and even the retail investors, at a
grassroots level. It brings a price transparency and risk management in the vital
market. A big difference between a typical auction, where a single auctioneer
announces the bids and the Exchange is that people are not only competing to buy
but also to sell. By Exchange rules and by law, no one can bid under a higher bid,
and no one can offer to sell higher than someone else’s lower offer. That keeps the
market as efficient as possible, and keeps the traders on their toes to make sure no
one gets the purchase or sale before they do. Since 2002, the commodities futuremarket in India has experienced an unexpected boom in terms of modern
exchanges, number of commodities allowed for derivatives trading as well as the
value of futures trading in commodities, which crossed $ 1 trillion mark in 2006.
Since 1952 till 2002 commodity datives market was virtually non- existent, except
some negligible activities on OTC basis. In India there are 25 recognized future
exchanges, of which there are three national level multi-commodity exchanges.
After a gap of almost three decades, Government of India has allowed forward
transactions in commodities through Online Commodity Exchanges, a
modification of traditional business known as Adhat and Vayda Vyaparto facilitate better risk coverage and delivery of commodities.
The three exchanges are:
1) National Commodity & Derivatives Exchange Limited (NCDEX) Mumbai,
2) Multi Commodity Exchange of India Limited (MCX) Mumbai and
3) National Multi-Commodity Exchange of India Limited (NMCEIL)
Ahmedabad.
There are other regional commodity exchanges situated in different parts of
India.
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Commodities Exchanged at NCDEX and MCX:
COMMODITY EXCHANGE
NCDEX MCX
Bullion Bullion
Minerals Minerals
Oil and Oil Seeds Oil and Oil Seeds
Pulses Pulses
Grain Grain
Spices Spices
Plantation Plantation
Fibers and Others Fibers and Others
Energy Energy
Petrochemicals
National Multi Commodity Exchange of India Limited (NMCEIL)
National Multi Commodity Exchange of India Limited (NMCEIL) is the first
de-mutualized Electronic Multi Commodity Exchange in India. On 25 th July
2001 it was granted approval by Government to organize trading in edible oil
complex. It is being supported by Central warehousing Corporation Limited,Gujarat State Agricultural Marketing Board and Neptune Overseas Limited. It
got reorganization in Oct 2002. NMCEIL Head Quarter is at Ahmedabad.
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The commodity trading system consists of certain prescribed steps or stages as
follows:
1) TRADING
2) CLEARING
3) SETTLEMENT
FAMILY BUSINESS
BACKGROUND:
I have a business of trading of commodities which was
initially set up by my grandfather and his cousin brother. It was founded in the year
of 1968. It was located in village called SAMNI which is 22 kms away from
Bharuch City. Initially it was started in one shop. It is a seasonable business.
Initially it was ran at very small scale due to limited sources and low financing
stability. After my grandfather business is going to be look after by my father and
my two uncles. My father had joined my family business in 1983.
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In initial period my business only around the village. Once the business got
stable they have started to expand in the city area like Surat, Valsad, Vapi and
Billimora. After getting succeed they have started to capture the business from
all other cities in Gujarat. Once the business is doing well in in Gujarat they
think to expand it in other states like Maharastra, Madhya Pradesh and UttarPradesh etc
The proper understanding and the coordination among the family members,
business is growing more year by year.
It is Proprietor Firm.
We are more in wholesaler rather than retailers. We are also providing bonus tothe workers at the Diwali time.
BRIEF OF MY BUSINESS:
Shop Name: JAYESH TRADERS
Proprietors: 3
Munim: 1
Accountant: 1
Workers: 22
Drivers: 3
Warehouse: 4
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FAMILY SUCCESSION:
Business
1st
Generation
2nd
Generation
1st
Generation
2nd
Generation
2nd
Generation
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PRODUCT LINE:
Commodities
Pulses
Chana Tur Masur Urad Val
Grain
Rice Bajra
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BUSINESS MODEL:
My family members have adopted a three tier
cooperative structure.
For implementing the business model, out of the three family member’s one
member is assigned for each area.
Working of the Business Model:
c o m m o d i t e s
Village
City
Outside Gujarat
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First the research is done by my family
members according to that they decide which type of commodity they are going to
make their strategy. For buying the commodities they first contact the farmer and
called him and invited him for the meeting with the samples of commodities but in
most of the time farmers directly come to the office with the samples and fixed thedeal at that time.
At the time of meeting farmer is coming with his samples. Before going to fix
the deal two important decisions are going to be made in this meeting.
1) Order:
Once the sample have been seen by us and if we satisfied with the
quality of that sample then the price related to that commodity is going to bediscussed between us and farmers. If deal is fixed then the order is placed by us.
2) Delivery of Commodity:
Once the order is placed then the decision related to
delivery of commodity is going to be made. It means whether the farmer is going
to deliver the commodity or we have to collect from the farmer location.
Village:
The Business Parties come to the office and face to face deal is made and
then on the decided date commodities are deliver to that particular parties.
Sometime deal can also be made on phones.
Before fixing the deal, parties see the sample and then give the order according to
their requirement.
City:
A member who is assigned for it, went to the different places of the business
parties with the sample of commodities. After reaching to the location of parties,
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member put forward the sample of commodities and then after seeing the sample
parties give their orders.
Outside Gujarat:
A member who is assigned for it first contact some agents and
then with the help of that agent member contact with the other parties. Once the
contact is done then we send our samples via courier at their address. If they satisfy
with our sample then they placed the order. Here also the decision related to
delivery of commodity is important.
FINANCIAL REPORT:
FINANCIAL
YEAR SALES PURCHAESES STOCK
GROSS
PROFIT (%)
NET
PROFIT (%)
2010/11 13802751 12875706 391970 6.81 2.51
2011/12 9408131 8700514 483615 8.49 3.61
2012/2013 14020202 13464797 887775 6.84 3.33
GROWTH REPORT:
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From the above graph you can get the idea about the growth of my business in
last three years. We can easily see the how the fluctuation in price affects my
business.
Key Points Related to My Business:
-Relationship with farmers
-Relationship with the Business parties and Transportation
Company
-Relationship with the workers
-Market Trend
-Competitor
2.51
3.613.33
0
0.5
1
1.5
2
2.5
3
3.5
4
2010/11 2011/12 2012/13
N E T P R O F I T
FINANCIAL YEAR
FINANCIAL YEAR Vs NET PROFIT (%)
NET PROFIT (%)
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MY ROLE
After joining the family business I would first like to learn about the
business and its working which help me to know how I should imply myself in the
business.
I would like to learn
1) How the quality of commodity is going to be measured
2) How to deal with the farmers and the business parties
3) How to deal with the workers
4) Which steps going to be taken in the critical situation.
from my father.
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According to me there are following problems present in my business which I
would like overcome with my knowledge.
1) Not proper organization structure
2) Technology:
My family members are not using the computer technologies for
writing the transaction still they are using their old traditional method.
INNOVATION:
I have following Idea which I would like to implement for
expanding my business.
FLOUR BUSINESS
PROJECT PROFILE:
At present we are just collecting the commodities from
farmers and Business Parties and transferred it to the other business parties.
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One of the limitation of my business is that it is totally depended upon the
season. Once the season is over business gets carried away. So to convert it for
whole year I would like to start the Flour Business.
In Flour Business, I am going to convert some commodity in Flour at one of my
warehouse. Once the flour of each commodity is ready then for selling in bulk I
would like to contact
1) Provide to Caterers
2) Contact with Hotels
CAPACITY: 80%
UTILITIES:
Electricity
Telephone
Water
Gas
INITIAL INVESTMENT IN FLOUR BUSINESS:
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INITIAL INVESTMENT
SR. NO PARTICULARS Rs in lakhs
1 MACHINARY & EQUIPMENT 30000000
2 FURNITURE 200000
3HUMAN RESOURCEREQUIREMENT 275000
4 FIXED ASSET REQUIREMENT 5000000
5 OPERATING COST 1500000
6 CASH 500000
7 OTHER 300000
TOTAL INITIAL INVESTMENT 37775000
Initially I required investment of Rs. 37775000. Once I get succeed I would like to
start my own FLOUR MILL.