Anuj EDI Report

8/12/2019 Anuj EDI Report

http://slidepdf.com/reader/full/anuj-edi-report 1/26

INDEX



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.



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.



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.

http://en.wikipedia.org/wiki/Schumpeter






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

http://en.wikipedia.org/wiki/David_McClelland


http://en.wikipedia.org/wiki/Peter_Drucker






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



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:



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



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.



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



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.



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



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.



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.



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.



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



FAMILY SUCCESSION:

Business

1st

Generation

2nd

Generation

1st

Generation

2nd

Generation

2nd

Generation



PRODUCT LINE:

Commodities

Pulses

Chana Tur Masur Urad Val

Grain

Rice Bajra



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



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,



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:



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 (%)



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.



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.



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:



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.

Documents

Anuj EDI Report