Study of warehouse in India

PRAHLADRAI DALMIA LIONS COLLEGE OF COMMERCE & ECONOMICS
STUDY OF WAREHOUSE IN INDIA 1
CHAPTER – 1
Supply chain management
Supply chain management
Supply chain management (SCM) is the combination of art and science that goes into
improving the way your company finds the raw components it needs to make a product
or service and deliver it to customers. In many organizations, materials form the largest
single expenditure item, accounting for nearly 50 to 65 % of the total expenditure. With
competition growing by the day, cost reduction in business operations and yet making
available various products to customers, as per their requirement, come into sharp focus.
Maintaining a flawless supply chain across all its operations thus becomes absolutely
necessary for any business.
Importance of supply chain management need not be over emphasized as it
has become the cutting edge of business, after product quality and manufacturing
capabilities of any business firm. If your company makes a product from parts purchased
from suppliers, and those products are sold to customers, then you have a supply chain.
A supply chain is a network of facilities and distribution options that performs the
functions of procurement of materials, transformation of these materials into
intermediate and finished products, and the distribution of these finished products to
customers.

Definition
Supply chain management (SCM) is the oversight of materials, information, and finances
as they move in a process from supplier to manufacturer to wholesaler to retailer to
consumer. Supply chain management involves coordinating and integrating these flows
both within and among companies. It is said that the ultimate goal of any effective
supply chain management system is to reduce inventory . As a solution for successful
supply chain management, sophisticated software systems with Web interfaces are
competing with Web-based application service providers (ASP) who promise to provide
part or all of the SCM service for companies who rent their service
Elements of the Supply Chain
A simple supply chain is made up of several elements that are linked by the movement of
products along it. The supply chain starts and ends with the customer.
• Customer: The customer starts the chain of events when they decide to purchase
a product that has been offered for sale by a company. The customer contacts the sales
department of the company, which enters the sales order for a specific quantity to be
delivered on a specific date. If the product has to be manufactured, the sales order will
include a requirement that needs to be fulfilled by the production facility.

• Planning: The requirement triggered by the customer’s sales order will be
combined with other orders. The planning department will create a production plan to
produce the products to fulfill the customer’s orders. To manufacture the products the
company will then have to purchase the raw materials needed.
• Purchasing: The purchasing department receives a list of raw materials and
services required by the production department to complete the customer’s orders.
The purchasing department sends purchase orders to selected suppliers to deliver the
necessary raw materials to the manufacturing site on the required date.
• Inventory: The raw materials are received from the suppliers, checked for quality
and accuracy and moved into the warehouse. The supplier will then send an invoice to
the company for the items they delivered. The raw materials are stored until they are
required by the production department.
• Production: Based on a production plan, the raw materials are moved inventory
to the production area. The finished products ordered by the customer are
manufactured using the raw materials purchased from suppliers. After the items have
been completed and tested, they are stored back in the warehouse prior to delivery to
the customer.
• Transportation: When the finished product arrives in the warehouse, the shipping
department determines the most efficient method to ship the products so that they are
delivered on or before the date specified by the customer. When the goods are
received by the customer, the company will send an invoice for the delivered
products.

Features of Supply Chain Management
Features that Give You a Competitive Edge
Today’s popular supply chain softwares can help companies achieve and maintain a
competitive edge by empowering them to streamline and enhance their most important
supply chain operations from start to finish. With a supply chain software in place,
organizations can maximize cost-efficiency, increase productivity, and give their bottom
line a big boost.
How do supply chain softwares enable the realization of all these benefits? By offering a
broad range of robust features, delivered through a comprehensive suite of tightly
integrated modules and applications. This functionality is designed to fully automate and
support supply chain processes from end-to-end, and includes:
Inventory Management
With a supply chain package, companies can significantly improve the way they track
and manage their supplies of raw materials and components needed for production,
finished goods to satisfy open sales orders, and spare parts required for field service and
support. This eliminates excess and waste, frees up valuable real estate for other
important purposes, and minimizes related storage costs.
Order Management
A supply chain software can dramatically accelerate the execution of the entire order-to-
delivery cycle by helping companies to more productively generate and track sales
orders. Supply chain also enables the dynamic scheduling of supplier deliveries to more
effectively meet demand, and more rapid creation of pricing and product configurations.

CHAPTER – 2
Logistics
Logistics
As companies expand globally, their supply chains become more and more complex.
This makes the coordination of the numerous warehouses and transportation channels
involved quite a challenging endeavor without a supply chain software in place. With
supply chain, businesses can improve on-time delivery performance and boost customer
satisfaction by achieving complete visibility into how finished goods are stored and
distributed, regardless of the number of facilities or partners that participate.
Forecasting and Planning
With a supply chain software, organizations can more accurately anticipate customer
demand, and plan their procurement and production processes accordingly. As a result,
they can avoid unnecessary purchases of raw-materials, eliminate manufacturing over-
runs, and prevent the need to store excess finished goods, or slash prices to move
products off of warehouse shelves.
Return Management
A supply chain software can simplify and accelerate the inspection and handling of
defective or broken goods – on both the buy and sell side of the business – and automate
the processing of claims with suppliers and distributors, as well as insurance companies.
Many supply chain offerings also include add-on options or modules designed to
enhance related activities. Through these features, support is provided for a variety of
important processes such as contract management, product lifecycle management, capital
asset management, and more.

Benefits of Supply Chain Management
Four Key Benefits of Supply Chain Management Software
A supply chain software can offer tremendous value to any company that relies on the
smooth planning and execution of related operations to achieve long-term profitability
and maintain a solid competitive edge. That’s why more and more organizations are
purchasing and implementing supply chain applications. In fact, the market for supply
chain and related softwares has reached $7.4 billion in 2008, according to a report by
ARC Advisory Group.
What are the key benefits of today’s leading supply chain software?
Improve Your Supply Chain Network
Supply chain softwares provide complete, 360 degree visibility across the entire supply
chain network – something that cannot be easily achieved with disjointed manual
processes.
With supply chain, users can monitor the status of all activities across all suppliers,
production plants, storage facilities, and distribution centers. This enables more effective
tracking and management of all related processes, from the ordering and acquisition of
raw materials, through manufacturing and shipping of finished goods to customers or
retail outlets. So the status of mission-critical activities can be tracked at all times, and
potential inefficiencies or problems can be identified and corrected immediately, before
they become unmanageable.
lost business. Late shipments from vendors, slow downs on production lines, and
logistical errors in distribution channels are all common issues that can negatively impact
a company’s ability to satisfy customer demand for its products.
Deliver -:
This stage, at the logistics phase, customer orders are received and delivery of the
goods is planned. This is the part that many SCM insiders refer to as logistics, where
companies coordinate the receipt of orders from customers, develop a network of
warehouses, pick carriers to get products to customers and set up an invoicing system to
receive payments.

Return -:
As the name suggests, during this stage, customers may return defective products.
The company will also address customer questions in this stage. This can be a
problematic part of the supply chain for many companies. Supply chain planners have to
create a responsive and flexible network for receiving defective and excess products
back from their customers and supporting customers who have problems with delivered
products.

CHAPTER-3
Introduction of Warehouse
Introduction
In the present competitive market goods are produced in anticipation of
demand. It is therefore very much necessary to store and preserve the goods
produced properly until they are consumed. Many agricultural produce such as
wheat, sugar, rice, mustard seeds, bajra, etc. are produced in a particular season but
they are consumed throughout the year. Proper storage arrangements must be made
in order to make such goods available throughout the year.
Warehousing refers to the activities involving storage of goods on a large-
scale in a systematic and orderly manner and making them available conveniently
whenever needed. In other words, warehousing means holding or preserving goods
in huge quantities from the time of their purchase or production till their actual use
or sale. It removes all the hindrances and creates time utility by bridging the time gap
between production and consumption of goods or commodities.
In the words of O.N. Chhibber “man need houses, goods need warehouses”
both are essential for progress and survival of mankind. The term ‘warehousing’
derived from the word ware refers to commodity and housing means
accommodation. The literal meaning of Warehousing is housing of goods or
commodities.
Warehousing activities is an integral part to the continuing success of the
distribution function. Product and market characteristic such as the discontinuity of
the demand, seasonal peaks and valleys makes it almost impossible to synchronize
the acquisition of the finished goods and discrete demand, forcing companies to
stock pile inventories. Virtually no product exists in the earth for which there is no
variation in demand from period to period. Warehousing consists of other functions
necessary for the smooth flow of products as they move from the producer and
supplier through the distribution network and out to the end user of the product.
Warehousing is a distinct economic activity. It does not mean preservation of food
grains alone since it compasses the facilities and services, incidental or connected
with storage, transport, handling and distribution of inputs, products and various
other commodities. In the word of S.C. Sharma, “Warehouse can act as a real and
positive contributor to the value of the product”.

Warehousing can be defined as that segment of an enterprise logistic
functions responsible for the storage and handling of the inventories beginning with
suppliers receipt and ending with the consumption point. The management of this
process includes the management of goods, maintenance of records and information
relating to inventory status, location, condition and disbursement. A graphical
presentation showing the role of warehousing is presented below at figure
Warehousing Role
The warehousing in reference to the bonded goods implies the deposit of
goods in warehouse without payment of import duty. It can also be termed as a place
where the goods can be stored lawfully. It plays a vital
role in the overall supply chain process. It is evident that, continuing globalization
changes of challenges occurring in such areas as reverse logistics, environmental
sustainability, information technology and overall supply chain integration are
further evolving strategy roles and responsibilities for Warehouses.

Significance of Study
It is a universal fact that the goods produced naturally or artificially have
defined life span. For example the milk extracted from a cow may remain intact for
some hours, after which it will become waste if it is not consumed within its
specified life span. Proper preservation leads increase to the life span. Thus this rule
is applicable to each and every commodity produced in the earth. Since every
product has a limited life span, proper preservation of such product is of vital
importance and such preservation will lead to increase the life span of the product.
Agriculture is the backbone of the Indian economy which occupies a place of
pride despite concerned efforts on industrialization during last six decades.
Agriculture contributes a major share of national income in India as compared to
other developed countries. It is also reported that agriculture constituted only 2% of
national income in U.K , 3% in U.S.A, 4% in Canada and 5% in Australia1, India,
having not yet reached the stage of an advance economy, it’s agricultural sector is
still dominating in the national economy.
The agricultural production in the country has increased significantly due to
adoption of advance technology, use of improvised seeds, irrigation facilities, and
use of fertilizer. Therefore organized marketing and scientific storage of agricultural
produce has become vital one. Due to inadequate storage infrastructure in the
country, the post harvest loss of agricultural products like fruits and vegetables is to
the extent of 33-35 percent. The rural agricultural produce, its storage and
distribution remain neglected over the Warehousing helps in making the commodity
available at the time of requirement. It cannot be ignored that, there must be a time
gap between the production and the actual consumption of commodities. The
agricultural commodities are harvested during certain season but their consumption
takes place throughout the year. Similarly, the demand for wool and woolen
garments must be higher in winter season than in any other season. A number of
commodities are produced in a particular season and consumed throughout the year
and beyond also. The goods are produced in one corner of the country and required
throughout the country. Therefore, it is essential

Literature Review
In the past, warehousing was looked upon as a tactical function concerned
basically with the management of inventories. The role of warehousing was to ensure
that the firm possessed sufficient stock not only to respond the anticipated customer
requirements but also to act as a buffer guarding against uncertainties in supply and
demand. As such, the operating philosophy was to search for the appropriate trade-
offs between storage, purchasing and transportation costs on the one hand, and
customer serviceability targets on the other.
The review of literature on the subject would provide better insight into the
diversified aspects of warehousing. It would also provide the important findings of
various empirical studies carried out so far in this area. In India no serious attempts
has been made to study the performance of the warehousing corporations, although a
very few research works is found in the area of warehousing business in India. To be
more specific, little work has been done to study the warehousing business and no
study has been made to analyze the operational efficiency of different warehouses
situated in different parts of the Country dealing with diversified products. However,
the physical and financial performance of the Central Warehousing Corporation
(CWC) is reviewed periodically by the Department of Food, Government of India.
Apart from that, various Committees constituted by the Parliament such as, Estimate
Committee, Committee on Public

CHAPTER-4
Origin and Evolution of Warehousing
Warehousing was initially linked to the age of agriculture. The description of
Genesis of the use of granaries to store food and thus prevent famine in the Egypt
emphasizes the social benefit and commercial utility of warehousing. While a casual
reading might suggest that Joseph’s idea of constructing granaries was nothing more
than ancient social welfare program, the Egyptian monarch realized a commercial
gain from this project.
The Renaissance saw the birth of Industrial Era with the development of
transportation system to move spices from the Orient. The use of both transport and
warehousing also related to the age of agriculture. Before refrigeration, oriental
spices were the only means of preserving mint and vegetables. Marco Polo and other
Italian explorers went to the Orient to trade for spices and they gained a new
awareness of the commercial practices of China.

CHAPTER-5
Importance of Warehousing
It is a well known fact that any development in any sphere is backed by one
or more reasons. In the present section of the study attempt has been made to find
the reasons which culminate the development and growth of warehousing. Some of
the factors which attribute a lot towards the development of the warehousing are
discussed below.
i. Seasonal Production- The agricultural commodities are harvested in certain
seasons and the consumption or use takes place throughout the year.
Therefore, it is very much essential to preserve the commodities with proper
storage or warehousing from where that can be supplied as and when
required.
ii. Seasonal Demand- There are commodities, demanded seasonally, like
woolen garments in winters or umbrellas in the rainy season. The production
of these goods takes place throughout the year to meet the seasonal demand.
So there is a need to store these goods properly so as to make them available
at the time of need.
iii. Large-scale Production - The producer of each and every commodity
produces the goods in accordance to the demand. Therefore, the producer
always considered the present demand as well as future demand of the
products. Besides, manufacturers are also produces goods in huge quantity to
enjoy the benefits of large-scale production, which is more economical.
Hence, it is very much essential to preserve the finished products properly,
which are produced on a large-scale till they are cleared by sales.
iv. Quick Supply - Both industrial as well as agricultural goods are produced at
some specific places but consumed throughout the country. Therefore, it is
essential to stock these goods near the place of consumption, so that these
goods are made available to the consumers very promptly at the time of their
need.

CHAPTER-6
Types of Warehouses
Although the basic function of all the warehouses are more or less same
still it can be broadly categorised under the following heads.
ii. Private Warehouses - The warehouses which are owned and managed by
the manufacturers or traders to store, exclusively, their own stock of goods
are known as private warehouses. Generally these warehouses are
constructed by the farmers near their fields, by wholesalers and retailers near
their business centers and by manufacturers near their factories. The design
and the facilities provided therein are according to the nature of products to
be stored.
iii. Public Warehouses - The warehouses which are run to store goods of the
general public are known as public warehouses. Any one can store his goods
in these warehouses on payment of rent. An individual, a partnership firm or
a company may own these warehouses. To start such warehouses a license
from the government is required. The government also regulates the functions
and operations of these warehouses. Mostly these warehouses are used by
The warehouses preserve goods on a large-scale in a systematic and orderly
manner. They provide protection to goods against heat, wind, storm, moisture, etc.
and also cut down losses due to spoilage, wastage etc. This is the basic function of
every warehouse. In addition to this, warehouses now days also perform a variety of
other functions. In essence, warehousing
iv. manufacturers, wholesalers, exporters, importers, government agencies, etc.
v. Government Warehouses -These warehouses are owned, managed and
controlled by central or state governments or public corporations or local
authorities. Both government and private enterprises may use these
warehouses to store their goods. Central Warehousing Corporation, State
Warehousing Corporation and Food Corporation of India are examples of
government warehouses.

vi. Bonded Warehouses - These warehouses are owned, managed and
controlled by Government as well as private agencies. Private bonded
warehouses have to obtain license from the government. Bonded warehouses
are used to store imported goods for which
import duty is yet to be paid. Incase of imported goods the importers are not
allowed to take away the goods from the ports till such duty is paid.
vii .operative Warehouses - These warehouses are owned, managed and
controlled by co-operative societies. They provide warehousing facilities at the most
economical rates to the members of their society and farmers.

CHAPTER-7
Functions of Warehousing
To evaluate the use of warehousing in the business, it is necessary to
understand ways in which warehousing functions add value to products. It is the key
component of the overall business supply chain comprising of facilities and
distribution option for the requirement of materials from manufacturer to customer
and all points between. The requirement of warehousing started at the point of taking
a decision of procurement of raw materials and end at point when it reached at the
door of customers.
provides time and place utility for any product, through efficient management of
commodity, space and time. Ultimately, the use of warehousing in commercial
activity is related to its function in the business cycle. The following are the common
functions of warehousing:
i. Stockpiling - Warehouse act as a reservoir to handle production overflow.
Such overflow reservoirs are needed in two situations - one involves seasonal
production and level demand, and the other arises from level production and
seasonal demand. For example, the canner of tomato products builds a
warehouse inventory at harvest time, while customer demand for the product
is fairly level through the year. For the toy manufacturer, the highest demand
comes at certain seasons or holidays, but the manufacturer may need to
stockpile in order to accommodate seasonal demand. In either case the
warehouse is the reservoir used to balance supply and demand.
ii. Product mixing - A manufacturer who has product-oriented factories in
different locations also has the opportunity to use a product mixing
warehouse to combine the items in the entire line. For example, one food
manufacturer has factories in several communities, with each factory
producing a distinct line of products. To satisfy customers who wish and to
order full carloads or truckloads containing a mixture of the entire line,
warehousing points are selected at locations that permit economical mixing
of the product.

Consolidation - Warehousing facilitates the situation of consolidation to
gather goods that are to be shipped to final destination. Warehousing costs
are justified by savings in outbound shipping costs achieved through volume
loads. In one case, a fast-food company uses consolidation warehouses to
serve clusters of retail stores, thereby reducing costs and frequency of small
shipments to the stores. Suppliers of the food company are instructed to place
volume loads of their products in these consolidation centers. This enables
the fast-food company to cut its transportation costs by moving its suppliers
closer to its food-serving outlets. At the same time, the food retailer reduces
inventory costs by arranging for its suppliers to retain title to these
inventories until they are shipped from the consolidation center.
iii. Distribution - It is just the reverse of consolidation. Like consolidation, it is
justified primarily by the freight savings achieved in higher volume
shipments. Distribution involves the push of finished products by the
manufacturer to the market, whereas consolidation involves the pull of
supplies by the customer.
iv. Besides, the following are also some other important function of
warehousing. Warehouses perform the following functions
v. Storage of goods- The basic function of warehouses is to store large stock of
goods. These goods are stored from the time of their production or purchase
till their consumption or use.
vi. Protection of goods- A warehouse provides protection to goods from loss or
damage due to heat, dust, wind and moisture, etc. It makes special
arrangements for different products according to their nature. It cuts down
losses due to spoilage and wastage during storage. Goods in warehouses are
well guarded and preserved. The warehouses can economically employ
security staff to avoid theft, use insecticides for preservation and provide cold
storage facility for perishable items. They can install fire-fighting equipment
to avoid fire. The goods stored can also be insured for compensation in case
of loss.

vii. Risk bearing - Warehouses take over the risks incidental to storage of goods.
Once goods are handed over to the warehouse-keeper for storage, the
responsibility of these goods passes on to the warehouse-keeper. Thus, the
risk of loss or damage to goods in storage is borne by the warehouse keeper.
Since it is bound to return
viii. Storage of goods- The basic function of warehouses is to store large
stock of goods. These goods are stored from the time of their production or
purchase till their consumption or use.
ix. Protection of goods- A warehouse provides protection to goods from loss or
damage due to heat, dust, wind and moisture, etc. It makes special
arrangements for different products according to their nature. It cuts down
losses due to spoilage and wastage during storage. Goods in warehouses are
well guarded and preserved. The warehouses can economically employ
security staff to avoid theft, use insecticides for preservation and provide cold
storage facility for perishable items. They can install fire-fighting equipment
to avoid fire. The goods stored can also be insured for compensation in case
of loss.
x. Risk bearing - Warehouses take over the risks incidental to storage of goods.
Once goods are handed over to the warehouse-keeper for storage, the
responsibility of these goods passes on to the warehouse-keeper. Thus, the
risk of loss or damage to goods in storage is borne by the warehouse keeper.
Since it is bound to return
the goods in good condition, the warehouse becomes responsible for any loss,
theft or damage, etc. Thus, it takes all precautions to prevent any mishap.
xi. Financing- When goods are deposited in any warehouse, the depositor gets a
receipt, which acts as a proof about the deposit of goods. The warehouses can
also issue document in favor of the owner of the goods, which is called
warehouse-keeper’s warrant. This warrant is a document of title and can be
transferred by simple endorsement and delivery. So while the goods are in
custody of the warehouse-keeper, the businessmen can obtain loans from
banks and other financial institutions keeping this warrant as security. In
some cases, warehouses also give advances of money to the depositors for a
short period keeping their goods as security.

xii. Processing - Certain commodities are hot consumed in the form they are
produced. Processing is required to make them consumable. For example,
paddy is polished, timber is seasoned, and fruits are ripened, etc. Sometimes
warehouses also undertake these activities on behalf of the owners.
xiii. Grading and branding- On request warehouses also perform the
functions of grading and branding of goods on behalf of the manufacturer,
wholesaler or the importer of goods. It also provides facilities for mixing,
blending and packaging of goods for the convenience of handling and sale.
xiv. Transportation- In some cases warehouses provide transport
arrangement to the bulk depositors. It collects goods from the place of
production and also sends goods to the place of delivery on request of the
depositors.
xv. Continuity in production- Warehouse enables the manufacturers to carry on
production continuously without bothering about the storage

CHAPTER-8
Warehousing-An Instrument of Economic Development
In the primary sector, it is necessary at the farm and natural resources level;
in the secondary sector, it is essential at the processing and manufacturing level, and
in the tertiary sector, it is inevitable for the domestic, import and export trade.
One of the indicators of economic development of a country is the growth of
its storage facilities. The necessity for storage arises
fundamentally out of lack of adjustment between the time and place of production of
goods and time and place of their consumption. Storage is required for inter-temporal
and inter-spatial adjustments. The need for storage also arises from division of
labour.
Any programme or project of agricultural and industrial development should
have a component of storage and warehousing. Those who have ignored this
important aspect of physical distribution at the stage of initial planning have learnt
the hard way. It is now recognized that these facilities require careful planning.
Warehousing is an important link in the chain of marketing. Warehouses
serve as the place and time utility and add to the place value of goods. It also
smoothen out fluctuations in supply and demand which are often influenced by
natural events and national policies.
With the gradual change in the pattern of production, intra and interstate
trading activities, modes of transport and the systems of marketing different types of
warehouses have emerged to suit the requirements of trade.
Wherever there is trade and commerce, there is need for warehousing
services. Warehouses provide flexibility and versatility in distribution and movement
of goods, space cost and labour cost economy and accurate budgeting of distribution
costs.

CHAPTER-9
Warehousing Business In India
Indian history is full of references to food grains storehouses; the Cholas,
Nayak and Mahrattas had them. There are large grain storage structures built by
Chhattrapatti Shivaji at Panhala in Maharastra. In Tamil Nadu, the Palace at
Tanjavur and another at Tiruvaiyur nearby also indicate having the ancient storage
structures.
The public sector warehousing was developed in India with the twin
objectives of storing the agriculture produce and other notified commodities in a
scientific manner with pest free condition and preventing the farmers from distress
sell of their hard raised crops. Presently, there are three major public sector agencies
playing crucial role in the field of warehousing in the multi-tier system of
warehousing which was recommended by the Rural Banking Enquiry Committee
(1954) viz., Food Corporation of India (FCI), Central Warehousing Corporation
(CWC) and State Warehousing Corporations (SWCs). It has been noted that the
Ministry of Consumer affairs, Food and Public Distribution is the controlling
ministry for administration and implementation of various agricultural, food and
consumer affairs related policies in India. The present warehousing in India passed
through various stages and enactments.
The need for warehouses began to be increasingly felt in the context of the
policy of extension of agricultural credit to rural areas. It was necessary to provide
adequate scientific storage facilities for the preservation of food grains and other
allied agricultural produce. The emergence of licenced warehouse in India was the
outcome of implementation of recommendations made by various committees
constituted to look after the problems faced by the rural mass. The recommendations
of few committees are discussed below.
1 Royal Commission on Agriculture
The establishment of licensed warehouses in India was first recommended
by the Royal Commission on Agriculture in 1928. The importance of warehousing
was felt seriously and the Reserve Bank of India in the year 1944 urged all the State

Governments by issuing directions to enact legislation for setting up of warehouses
in their concerned States.
2 Agricultural Finance Sub-Committee
The Government of India appointed a Sub-Committee under the
chairmanship of late Prof. D.R. Gadgil to report on the ways in which indebtedness
could be reduced and finance, both short-term and long-term provided under
efficient control for agriculture and animal husbandry operations in accordance with
the recommendations of the Policy Committee on Agriculture, Forestry and Fisheries
in the year 1944.
The Committee submitted its report in 1945 and observed that the volume of
finance supplied by the commercial banks to the agriculturists could be considerably
increased by improving the arrangements for marketing of crops by grading and
standardization, creation of proper storage facilities and ushering in regulated
markets. The Committee felt that the establishment of warehouses in which the
goods could be stored against a negotiable receipt usable for obtaining loans from
banks, be introduced in India. The Committee was of the view that these steps would
open up an important channel for the commercial banks to provide finance to the
agriculturists
3 Rural Banking Enquiry Committee
In 1949, the Rural Banking Enquiry Committee was appointed by the
Government of India. Among its terms of reference, the committee was to consider
measures that could be adopted for the extension of banking facilities in rural areas.
In relation to promotion of warehousing, the committee observed that lack of proper
facilities for the storage and warehousing of agricultural produce has been a serious
obstacle in the way of increasing the scale of advances against agricultural produce
by cooperative marketing societies or commercial banks.
achieved only by improving and extending the storage and warehousing facilities for
good in order to enlarge the basis of the credit system.
The Committee recommended that Provincial Governments should consider
the desirability of advancing long-term loans at concessional rates of interest to
cooperative societies to build godowns in centers which provided good markets. It

also proposed that the Railway Board should also examine the feasibility of
constructing railway warehouses at selected centers or allowing private parties to
build such warehouses on favorable terms.
The Committee noted that the question of enacting appropriate legislation for
licensing warehouses was taken up by the Reserve Bank of India which circulated a
draft bill for this purpose to the Provincial and State Governments. On the model of
this bill, Acts were passed in Bombay, Madhya Pradesh, Travancore and Cochin. In
spite of this, no independent warehouse came into existence. The Committee was of
the view that without greater initiative and assistance from the State, much progress
in this direction not likely to be achieved.
The Rural Banking Enquiry Committee considered two courses of action:
firstly, it considered the scheme suggested by Gadgil Committee that a chain of
warehouses should be constructed by the State at all nuclear points of trade in
agricultural produce and this should be operated by a Public Corporation. The
second alternative was the provision of loans and subsidies to cooperative
institutions and commercial banks for building their own godowns in accordance
with certain approved specifications. The Committee did not favour the first
alternative as it would, in its view, have
4 Rural Credit Survey Committee (1954)
Public warehousing, as we know it today, stems from the recommendations
of the Committee of Direction of the All-India Rural Credit Survey Committee. It
would, therefore, be appropriate to go into some details of the reasons which led that
Committee to formulate its recommendations regarding the establishment of
Warehousing Corporation.
In February, 1951, the Reserve Bank of India had convened an informal
conference of cooperators, economists and others including the Registrars of
Cooperative Societies of some of the States for considering, among other things, the
steps necessary for enlarging the volume of
agricultural finance to the agriculturists through the cooperative credit system. This
informal conference recommended that the Reserve Bank of India should undertake a

rural credit survey which should include all strata of the rural population and cover
problems of capital formation in the rural areas as well as the credit requirements of
both economic and indigent farmers. This recommendation was accepted and in
August, 1951, the Committee of Direction for carrying out an All India Rural Survey
was constituted by Shri B. Rama Rao, the then Governor of the Reserve Bank of
India with the following terms of reference:-
i. to direct planning, organization and supervision of the survey;
ii. to interpret its results; and
iii. to make recommendations.
This Committee was constituted in the background of the demands reiterated
in Parliament and elsewhere, that a more constructive role should be played by the
Reserve Bank of India in the sphere of rural credit; and its policies and activities
should be so reoriented as to enlarge its participation in the extension of rural credit.
The Committee in reference to the problem of storage observed that lack of
storage is part of a wider deficiency namely, the lack of orderly marketing,
cooperative or other. Such storage as exists is mostly for cotton, jute and similar
commercial crops and is largely in the hands of traders and processing concerns.
Before the Second World War, the storage available was largely in the form of
private godowns owned by the more substantial cultivators, the wholesalers, etc.
During the war, the different Governments requisitioned a large number of private
godowns for stocking their food grains; they also constructed a certain number of
new godowns.Several of these godowns, old or new, private or, State owned are still
in the possession of Government.
5 Emergence of Public Sector Warehousing
The beginning of public Warehousing in India got recognized with the
enactment of agricultural produce (Development & Warehousing) Corporation Act.
The Act categorically states the setting up of public sector warehousing agencies at
all India level (CWC) and state level (SWCs).

According to the Act, the share capital of the CWC was to be subscribed by
National Co-operative (Development and Warehousing) Board and other institutions
like the Banks, Co-operative Societies, Insurance Companies etc. The shares of the
Corporation were guaranteed by the Central Government as to the repayment of the
principal and payment of annual divided at a minimum rate which was to be fixed by
the Central Government. The Warehouses of the Corporation could be utilized only
for the storage of agricultural and allied produce. There was no provision in the Act
enabling the Corporation to take up the storage of commodities other than
agricultural produce, inputs and implements.
The Agricultural Produce (Development and Warehousing) Corporation Act
also provides the establishment of State Warehousing Corporation (SWCs) in
different States. The share capital of the SWCs was to be subscribed by the Central
Warehousing Corporation and the State Government concerned with equal ratio.
Thus, both the Central Warehousing Corporation and the State Governments were to
be equal owners of the State Warehousing Corporation
In an enquiry conducted by the Reserve Bank of India in 1952, information
was collected by means of a questionnaire as to the state of existing godowns and
their suitability for conversion into licensed warehouses. The replies indicated that
some of the Government godowns could be readily converted into regular warehouse
so far as the technical quality of the accommodation was concerned. Some, however,
were not suitable for various reasons, e.g., they were situated at too great a distance
from trading centres or required considerable repairs including major structural
alterations.
The godowns owned by cooperative were reported in most instances to be
not fit for conversion into warehouses. The generality of them being makeshift
structures built out of makeshift recourses. Private godowns were as a rule
inconveniently situated (e.g. in residential houses) and in many cases were
structurally defective. The replies further indicated that in very few marketing
centres in the country could storage accommodation be said to be anywhere near
adequate.
In totality, the problem of the rural economy as revealed by the survey due to
the lack of adequate and proper storage facilities. The Committee in its report
pinpointed this deficiency and expressed the need for an extensive network of
godowns and warehouses and for establishment of licensed warehouses at suitable

centres. Emphasis was laid on these by the earlier Committees and Commissions
also. The Committee also noted that despite various efforts, the scheme of
establishing licensed warehouses had made no headway in any State and the existing
godowns were not fit to be run as warehouses as a number of them were makeshift
structures and inconveniently situated besides some of them were also structurally
defective.
The inadequacy of the warehousing facilities was considered by the
Committee as one of the gravest economic handicaps of the cultivator and expressed
its view that for its solution, a concerted and countrywide effort had to be made. In
this respect, the Committee observed that “the direction and endeavor required may
well be compared to those which have gone into the construction of the railway
system or lying out of the road ways.”
The integrated solution conceived by the Rural Credit Survey Committee in
its report on the multifaceted problem brought out by the survey, was, development
of Co-operative credit; The Co-operative economic activity, specially marketing,
processing and storage, warehousing and distribution; rural and co-operative banking
facilities; and facilities for the training of personnel.
The solution envisaged in regard to the development of storage and
warehousing included in its compass state entrepreneurship including financial
partnership, for the benefit of the rural producer. Thus the development of
warehousing was to be accomplished under State entrepreneurship and with public
funds. The Committee envisaged the participation of the State Governments at the
intermediate level but at the all-India level, it envisaged deriving funds not only from
the Central Government but also from the various insurance and other financial
institutions. The concrete recommendations in this regard were:
I. The establishment of a “National Board” to be called “the National Cooperative
Development & Warehousing Board" which has to plan and finance the scheme
and to be the in-charge of the function of storage and warehousing on the one
hand and on the other hand, distribution of basic and standardized requirements of
cultivator as producer and consumer.
II The establishment of an all India Warehousing Corporation with the investment in
the share capital by Central Government and various
institutions and the establishment of State Warehousing Companies in which the
State Governments and the All-India Corporation were to participate,.

III. The Co-operative Societies at the base.
The recommendations of the Committee with regard to the establishment of
the multi-tier system referred to above were neither isolated nor independent of other
factors. It had to be considered in the context of the totality of the problem. The
solution to the problem was an integrated scheme formulated by the Committee. The
development of warehousing and storage with State participation and the multi-tier
system having organic links with the Central Warehousing Corporation Based on the
recommendation of the committee the Agricultural Produce (Development and
Warehousing) Corporations Act, 1956, was enacted by the Parliament. The
recommendations of the Committee in regard to the establishment of a National Co-
operative Development and Warehousing Board and the Central Warehousing
Corporation were generally accepted by the Government. The following are the set
up as envisaged by the committee:

CHAPTER-10
Warehousing Board in India
National Cooperative Development Warehousing Board
The National Co-operative Development & Warehousing Board as well as
the Central Warehousing Corporation was to be established by statue. The State
Warehousing Companies were also to be established by statutes. The composition of
the National Co-operative Development and Warehousing Board was also suggested.
This was to be a high-powered Board with a Standing Committee. The Board was to
act through the All-India Warehousing Corporation (Central Warehousing
Corporation) for the discharge of such of its functions as they pertained to
warehousing. In regard to distribution, the Board’s functions were principally to be
those of planning, directing and co-ordination of the activities of the All-India
Warehousing Corporation and the State Warehousing Companies. The development
board was set up with the following objectives.
To provide funds to warehousing corporations and the State Governments for
financing co-operative societies for the purchase of agricultural produce on behalf
of the Central Government.
To advance loans and grants to State Governments for financing cooperative
societies engaged in the marketing, processing or storage of agricultural produce
including contributions to the share capital of these institutions.
To subscribe to the share capital of the Central Warehousing Corporation and
advance loans to State Warehousing Corporations and the Central Warehousing
Corporation;
To plan and promote the programmes through co-operative societies for the supply of
inputs for the development of agriculture and to administer
the National Warehousing Development Fund,

ii. All India Warehousing Corporation- Central Warehousing Corporation
The All-India Warehousing Corporation was to have an authorized share
capital of Rs.20.00 crores to be subscribed by the National Cooperative Development
& Warehousing Board as well as other institutions like banks, co-operative societies,
insurance companies etc. A minimum dividend rate guaranteed by the Central
Government was also suggested. It was also suggested that the debentures floated by
the Corporation should also be guaranteed by the Central Government as to
repayment of principal and the interest.
iii. State Warehousing Companies
The share capital contribution of State Warehousing Corporations not less
than 50% should be subscribed by the All-India Warehousing Corporation and the
rest by the State Government and there should not any other way of contribution to
the share capital. The establishment of a State Warehousing Corporations in any
particular State was to be effected as soon as the State Government agreed to pay its
stipulated part of the share capital. Only two shareholders of these corporations were
thus envisaged, namely, the All-India Warehousing Corporation and the State
Government. The functions of the State Warehousing Corporations were similar to
those recommended for the All-India Warehousing Corporation. The first state
Warehousing Corporation was setup by Government of Bihar in the year 1956-57
and the last state Warehousing Corporation was setup in the year 1973 in Meghalaya.
Nucleus for setting up Warehousing Corporation
The Rural Credit Survey Committee had inter-alia observed that there was
already a network of civil supplies godowns throughout the country and as a first
step, such godowns found suitable for the purpose should be taken
over from Government or from other owners by the National Co-operative
Development & Warehousing Board and a coordinated plan worked out.
The Committee further observed that it was also possible that the staff
engaged for several years in the civil supplies departments of different States, be
suitably made use by the All-India Warehousing Corporation, the State Warehousing
Corporations, etc. at different levels of operation in view of long experience. Hence,

the organization should start functioning even before the National Co-operative
Development & Warehousing Board. The All-India Warehousing Corporation, etc.
were statutorily established, the Committee also said and added that it did not
consider that there was likely to be any great legal or administrative difficulty in
building the nucleus of this organization and in taking over the civil supplies
godowns i.e., such of them as were really suitable, in advance of the proposed
legislation.
It was assumed by the committee that before warehousing corporations were
set up, State and Central Governments, particularly such of those as had very nearly
wound up their Civil Supplies Departments. After de-control, would have taken steps
to transfer storage spaces and some trained but retrenched staff to the warehousing
corporation to enable the later to make a beginning for implementing the scheme.
This was not done and the corporation was made to start from absolute scratch.
These warehousing corporations were not provided with any assistance in the form
of warehouses or business from Government or Public Sector Organizations. These
were left to fend for themselves and compete with other organization.
There has been a sea of changes in the level of agricultural and industrial
produce and channels of marketing since the Central Warehousing Corporation was
established with the main objectives of avoidance of distress sale of agricultural
produce, creating proper storage facilities to prevent losses in storage and creation of
an instrument of expansion of institutional credit. The Government had introduced
various schemes to ameliorate the sufferings of the economically weaker sections of
society. It is more involved now in price support and price control operations as also
in provision of easy credit to the farmers to ensure remunerative price for their
produce. The massive price support operations which are carried out by various
Government organizations are designed to avoid distress sale. These changes
continue to have a direct bearing on the progress of public warehousing in the
country.

CHAPTER-11
Laws regulating Warehousing & Enactment of Warehousing
Corporation Act
There are various laws regulating the working of public warehouses in India
and state warehouses act & rules is one of the oldest Act. Almost all the states have
passed the laws to regulate warehousing business of certain commodities and the
first such law was enacted in the year 1947.The State Warehouses Acts and Rules
framed there under with a view to encourage the establishment of independent
warehouses. It is obligatory for any person carrying on the business of warehousing
to run according to the terms and condition of license. The State Warehouse Act and
Rules also outline the obligation and duties of warehouseman and depositors. In the
year 1956 the Agricultural Produce (Development and Warehousing) Corporation
Act, 1956 was enacted by the Parliament .In the Act, the recommendation of the All-
India Rural Credit Survey Committee were broadly incorporated. Finally the
Warehousing Corporation Act passed in the year 1962.
With a view to develop the warehousing sector in the country, the
Government of India has introduced a negotiable warehouse receipt system in the
country. Parliament has enacted the Warehousing (Development and Regulation)
Act. 2007 (37 of 2007). The provisions of the Act has been made effective from 25th
October, 2010. The Warehousing Development and Regulatory Authority has been
setup by the Government from 26th October,
2010.
The main objectives of the Warehousing (Development and Regulation) Act,
2007 are to make provisions for the development and regulation of warehouses,
negotiability of warehouse receipts, establishment

of a Warehousing Development and Regulatory Authority (WDRA) and related
matters. The Negotiable Warehouse Receipts (NWRs) issued by the warehouses
registered under this Act will help farmers to seek loans from banks against NWRs
to avoid distress sale of agricultural produce.
Besides State Warehouses Acts and Rules, the following other Acts have
bearing on the warehousing business;
1. The Indian Contract Act, 1872
2. The Sale of goods Act, 1930
3. The Prevention of Food Adulteration Act, 1954
4. The essential Commodities Act, 1955
5. The Custom Act, 1962
6. The Shops and Establishment s Acts of respective State Governments
7. The Industrial Dispute Act, 1947
8. The Fertilizer (Control) Order, 1957
9. The National Security Act, 1980
10. The Essential Services and Maintenance Act, 1981.

CHAPTER-12
Public Sector Warehousing Agencies in India
At the present, there are three main agencies in the public sector in India
engaged in the field of building large-scale storage infrastructure and warehousing
namely;
xvi. Food Corporation of India (FCI),
xvii. Central Warehousing Corporation (CWC) and
iii. State Warehousing Corporations (SWCs)
The Food Corporation of India (FCI) is the main agency responsible for the
execution of food related policies of the Central Government. The function of Food
Corporation of India primarily relates to the procurement, storage, movement,
transportation, distribution and sale of food grains on
behalf of the Central Government. It is also engaged in the handling, storage and
distribution of sugar in North Eastern States and Jammu & Kashmir.
The Government of India fixes the Minimum Support Price (MSP) and
Central Issue Prices (CIP) of food grains distributed through the Public Distribution
System (PDS). The FCI coordinates its functions through a country-wide network of
offices with Headquarters at New Delhi and 5 Zonal Offices, 24 Regional Offices,
168 District Offices, and one Port Office at Kandla under its control.
The capacity available with FCI is used mainly for storage of food grains as
also certain other notified commodities. The total covered capacity available with
FCI for storage of food grains including the capacity hired from CWC and SWCs
was 288.36 lakhs MT as on 31.3.2010
The Central Warehousing Corporation is the premier warehousing agency at
national level was established as a statutory body in New Delhi on 2nd March 1957.
The authorized share capital of corporation is Rs. 100.00 crores. The issued and
subscribed share capital of the Corporation is Rs.74.02 crore. The paid up share
capital of the Corporation as on 31.3.2010 is Rs. 68.02 crore. The Central
Warehousing Corporation provides safe and reliable scientific storage facilities and
logistics services for various agricultural and industrial commodities. The total
warehousing capacity in the hands of Central Warehousing Corporation as on
31.03.2010 is 105.98 lakh MT.

The State Warehousing Corporations were set up in different States of the
Indian Union with primary focus on district importance as in the area of operation.
The share capital of the State Warehousing Corporations contributed equally by the
concerned State Government and the Central Warehousing Corporation. The
warehouses (CWC and SWCs) work under the respective Warehousing Acts passed
by the Central and State Governments. The State Warehousing Corporation spreads
throughout the country with the net work of 1595 units as on 31.03.2010. The
aggregate operating capacity of the state warehousing corporations as on 31.03.2010
is 209.26 Lakhs Metric Tonnes throughout the country.
The total state wise warehousing capacities held by these three public sector
undertakings are given table 3.1.

Table-3.1
State Wise Storage Capacity available with different Storage Agencies in the
Country as on 31.03.2010
(In lakh MT)
State FCI CWC SWCs Grand Total
Andhra Pradesh and A&N 38.18 15.04 20.32 73.54
Arunachal Pradesh 0.22
- —
0.22
Assam 2.73 0.65 2.50 5.88
Bihar 6.72 1.26 2.57 10.55
Chhatisgarh 8.43 2.84 10.24 21.51
Delhi 3.67 1.51
—
5.18
Goa 0.15 0.41 0.56
-
Gujarat 6.80 7.65 1.53 15.98
Haryana 24.45 5.37 16.24 46.06
Himachal Pradesh 0.25 0.07
—
0.32
Jammu & Kashmir 1.31 1.31
- -
Jharkhand 1.19 0.35 - 1.54
Karnataka 8.37 7.11 10.44 25.92
Kerala 5.37 1.23 2.25 8.85
Madhya Pradesh 9.50 5.17 20.82 35.49
Maharashtra 19.98 16.64 12.48 49.10
Manipur 0.20
- —
0.20
Meghalaya 0.26 0.40
-
0.14
Mizoram 0.23 0.23
- —
0.34 0.47Nagaland 0.13
-
Orissa 6.43 3.17 4.06 13.66
Philippines
—
0.80
—
0.80
Puducherry UT/Chandigarh 3.55 0.19
-
3.74
Punjab 73.73 6.95 57.00 137.68
Rajasthan 16.08 4.01 7.72 27.81
Sikkim 0.11
— —
0.11
Tamil Nadu 9.70 6.31 6.47 22.48
Tripura 0.51 0.24
-
0.75
Uttar Pradesh 26.87 11.63 32.33 70.83
Uttra Khand 2.37 0.71 — 3.08
West Bengal 11.06 6.54 2.15 19.75
Grand total 288.36 105.98 209.26 603.60
Source: www.fin.min

The warehousing capacity of 105.98 lakh MT belongs to Central
Warehousing Corporation includes 0.80 lakh MT capacities at Philippines. Hence
virtual capacity of CWC in India is 105.18 lakh MT. The capacity of FCI includes
105.54 lakh MT capacity hired from CWC and SWCs. Hence virtual capacity of FCI
is 182.82 lakh MT and the total warehousing capacity in India as on 31.03.2010 is
497.26 lakh MT.
In order to have a better insight and indepth analysis on the subject, the total
warehousing capacity held by these three undertakings, their trend for twelve years
period commencing from 1998-99 with initial index as 100 presented at Table 3.2.
Table - 3.2
Warehousing Capacity of three Major Public Sector undertakings in India
(Capacity in Lakh
MT)
SI.No. Year FCI CWC SWCs Total Trend
1 1998-99 191.56 73.48 113.89 378.93 100.00
2 1999-00 254.08 74.79 123.74 452.61 119.44
3 2000-01 314.26 83.91 149.05 547.22 144.41
4 2001-02 279.01 89.17 185.49 553.67 146.11
5 2002-03 265.87 91.14 199.31 556.32 146.81
6 2003-04 236.65 94.16 199.85 530.66 140.04
7 2004-05 233.70 101.87 200.38 535.95 141.44
8 2005-06 255.56 100.38 197.05 552.99 145.93
9 2006-07 252.57 102.20 192.20 546.97 144.35
10 2007-08 238.94 98.78 187.32 525.04 138.56
11 2008-09 252.79 105.25 196.87 554.91 147.23
12 2009-10 288.36 105.98 209.26 603.60 159.29
Source: Annual Report of Ministry of Consumer Affairs and Public
Distribution, Government of India

CHAPTER-13
Central Warehousing Corporation
Incorporation
Central Warehousing Corporation (CWC) was setup on 2nd March,
1957 after the enactment of Agricultural Produce (Development and Warehousing)
Act, 1956, which was subsequently repealed and re-enacted by the Parliament as the
Warehousing Corporations Act, 1962.The shares of the corporation were guaranteed
by the Central Government as to the repayment of the principal and payment of
annual dividend at a minimum rate to be fixed by the Central Government. It is the
premier warehousing agency in India and is one of the biggest public warehouse
operators in the country at National level. The corporation offers logistics services to
a diverse group of clients and operating at 487 warehouses across the country with
storage capacity of 105.98 lakh metric tones as on 31.03.2010. It provides
warehousing services for a wide range of products ranging from agricultural produce
to sophisticated industrial products. CWC is also an ISO 9001:2000, ISO 14001:2004
and OHSAS18001:2007 certified corporation.
Objectives
The main objective of CWC is to provide scientific storage facilities for
agricultural implements and produce and other notified commodities. The following
are some of the important objectives;
• To meet the challenging needs of agriculture, trade, industry and other
sectors by providing scientific warehousing, logistic services and related
infrastructural facilities.
• To assist in the implementation of the Warehousing (Development &
regulation) Act, 2007 with a view to expand credit through banking
institutions against warehoused goods.
• Efficient Human Resources Management in order to enhance productivity
and customers’ satisfaction.

• To achieve global presence in the warehousing services and related
logistics.
• To be a major player in the provision of pest control services.
• To reduce losses during warehousing, handling and distribution.
Function
The primary function of CWC is to provide scientific storage facilities for
agricultural implements and produce and other notified commodities. The following
are the other functions of Central Warehousing Corporation;
• To acquire and build godowns and warehouses at suitable places in India
or abroad;
• To run warehouses for the storage of agricultural produce, seeds, manures,
fertilizers, agricultural implements and notified commodities offered by
individuals, cooperative societies and other institutions.
• To arrange facilities for transport ofagricultural produce, seeds, manures
fertilizers, agricultural implements and notified commodities to and from
warehouses.
• To subscribe to the share capital of State Warehousing Corporations.
• To act as an agent of the Government for the purposes of purchase, ale,
storage and distribution of agricultural produce, seeds, manures, fertilizers,
agricultural implements and notified commodities.
• To enter into with the previous approval of the Central Government, joint
ventures with any Corporation established by or under any Central Act or
any State Act or with any company formed and registered under the
Companies Act, 1956 including foreign company or through its subsidiary
companies, for carrying out its functions as enumerated in the Warehousing
Corporations Act, 1962.

• To establish subsidiary companies.
• To undertake disinfestations services outside its warehouses also in respect
of agricultural produce or notified commodities.
• The corporation may, at its discretion, act as agent for the purpose of
purchase, sale, storage and distribution of agricultural produce seeds,
manures, fertilizers, agricultural implements and notified commodities on
behalf of a company as defined in the Companies Act, 1956 (1 of1956) or a
body corporate established by an Act of Parliament or of a State Legislature
or a Cooperative Society.
• The corporation may, at its discretion, and at the request of the Central
Government or any State Government or a Corporation established by or
under a Central Provincial or State Act, or a Government Company as
defined in section 617 of the Companies Act, 1956 (1 of 1956) or a
Cooperative Society, prepare any project or render consultancy service for
construction of warehouses or any matter connected therewith;
• The Corporation may operate warehouses, create infrastructure and arrange
facilities for storage, handling and transport of agricultural produce, seeds,
manures, fertilizers, agricultural implements and notified commodities,
bonded cargo, air cargo, containerized cargo and liquid cargo. Further, the
Corporation may also provide marketing or other warehousing related
services in respect of agricultural produce or notified commodities;
• The Corporation may provide consultancy services, assistance, finance,
programmes or projects related to agricultural produce or notified
commodities and undertake any other activities considered incidental to its
functions; and
• To carry out such other functions as may be prescribed.
• To educate the farmers on the preservation and its utilities;

Share Capital
The authorized share capital of the Corporation is Rs. 100.00 Crore. The
issued and subscribed share capital of the corporation is Rs.74.02 crore and the paid
up share capital is Rs. 68.02 crore as on 31.3.2010.The capital has been contributed
by Govt, of India, State Bank of India, 35 other Scheduled Banks, 721 Cooperative
Societies, 7 Insurance Companies, 6 Recognized Associations/ Companies dealing
in Agricultural Produces. The major share of capital has been contributed by
Government of India which is 55.02 % of the total capital and State Bank of India
contributes 21.67 % of the share capital while other schedule banks contributes
16.05 %. The capital contributed by 721 co-operative societies account for only
0.23 % to the total share capital. The capital Contribution is 7.02 % with respect to
insurance companies. The least capital contribution has been made by Recognized
Associations which accounts for 0.01 % only. The graphical presentation of share
capital of CWC presented

CHAPTER-14
Capital Contribution of CWC
Subsidiaries and Joint Ventures
The Corporation has setup a fully owned subsidiary company in the name
as Central Rail side Warehousing Company Ltd. (CRWC) on 10th July, 2007 with
authorized share capital of Rs.150.00 crores .The Central Rail
side Warehousing Company Ltd. (CRWC) operating 14 rail side warehousing
complexes (RWC’s) with a total storage capacity of 2.33 lakh MT throughout the
country. The Corporation also holds 50 % equity in 17 state warehousing
corporations throughout the country. The Corporation also formed joint venture with
the National Multi Commodity Exchange of India Limited (NMCE), the first
demutualised electronic multi commodity exchange in the country,.
Management
Central warehousing corporation is controlled by the Ministry of Consumer
affairs, Food and Public Distribution. The Corporation operates with its network
through out the country at three tiers level viz Corporate Office, Regional Offices
and warehouses. The management of the affairs of the corporation vested with Board
which is assisted by an executive committee and Managing Director. Section 20 of
the Agricultural Produce (Development and Warehousing) Corporations Act., 1956
related to the management of Central Warehousing Corporation which was replaced
by section 6 of the Warehousing Corporations at 1962. Section 6 (2) of the act
provides,” The Board of Directors shall act on business principles having regard to
the public interest and shall be guided by such instruction on questions of policy may
be assigned to them by Central Government.” Section 6 (3) states, “if any doubt
arises as to whether a question is or is not a question of policy, the decision of the
Central Government shall be final.”

Human Resources
The success of any organization depends on the utilization and management
of its resources. The resources are either in the form of man, machine, material or
money. Among all these resources the most important resources is man which is
having a bio-logical mind. The only resource which is having control over the
operations performed by all other resources. The efficient manpower will always
produce higher productivity and vice-versa. Thus, proper and efficient manpower of
any organisation plays an important role in the productivity of the organisation. The
corporation manages its activity with its skillful workforce, the detail of manpower
for the period 1998-99 to 2009-10 has been tabulated in the under mentioned table.
Table-3.3
Human Resources Analysis of Central Warehousing Corporation
(in nos)
SI.No. Year Cat-A Cat-B Cat-C Cat-D Total Trend
1 1998-99 309 1075 4036 3263 8683 100.00
2 1999-00 309 1098 4343 2926 8676 99.92
3 2000-01 315 1061 4323 2880 8579 98.80
4 2001-02 320 1153 4168 2814 8455 97.42
5 2002-03 329 1045 3455 1591 6420 73.94
6 2003-04 316 1137 3321 2039 6813 78.46
7 2004-05 304 1167 3239 1980 6690 77.05
8 2005-06 285 1138 3181 1809 6413 73.86
9 2006-07 261 1142 3070 1719 6192 71.31
10 2007-08 288 1095 3105 1571 6059 69.78
11 2008-09 278 1035 3104 1518 5935 68.35
12 2009-10 265 1057 2995 1448 5765 66.05
Source: Annual Reports of CWC
From the analysis (Table 3.3) depicts that the total man power as on 31.03.1999 was 8683 while the
total manpower in the concluding year of study stood at 5765. The above table indicates 33.95 percentage
reduction in the manpower as on 31.03.2010 as compared to the manpower as on 31.03.1999

Corporate Governance
The Warehousing Corporation Act 1962 describes the composition of Board
of Director. The Board has mixed of official and independent Directors. The Board
comprises of a part time Chairman, Managing Director, Three Functional Directors,
Six part time Directors appointed by the Department of Food and Public Distribution,
Ministry of Consumer affairs, Food and Public Distribution, Government of India
and three Directors elected by the respective class of share holders.
The corporation is a Government of India undertaking in which the Managing
Director and three functional Directors are appointed by the Department of Food and
Public Distribution Ministry of Consumer Affairs, Food and Public Distribution,
Government of India on their pay scales and perquisites. The Managing Director and
Functional Directors are appointed for a period of five years or till the date of their
superannuation or until further order which ever is earlier and official part time
independent Directors are appointed by the Department of Food and Public
Distribution, Ministry of Consumer Affairs, Food and Public Distribution,
Government of India or elected by the respective class of share holders(Co-operative
and Insurance Companies, Other scheduled Banks) for a period of three years.
The meeting of the Board are generally held at least once in a quarter at the
Corporate Office of the Corporation and scheduled well in advance. The meetings of
the Board are governed by a structure agenda and any member of the Board is free to
recommend inclusion of any subject matter in the agenda for deliberations. Detail
agenda papers are circulated in advance to facilitate the Board to take independent
decisions.

Corporate Social Responsibility
The Corporation with a great responsibility and sensitivity to Corporate
Social Responsibility (CSR) had joined the Global Compact Programme (GCP) of
the United Nations during 2001. The focus of the GCP is for internalizing the 10
principles of human rights, labour standards, environment and anti corruption in the
functional areas. With the joining in GCP, these core values have been
institutionalized with the organization. The Corporation is also one of the founder
members of the Global Compact Network (GCN), New Delhi. The networks primary
focus is furtherance of the idea of the UNGC initiative in India.
As a responsible corporate citizen the Corporation has been undertaking a
number of activities under its Corporate Social Responsibility scheme. During the
concluding year of the study the various activities were undertaken in the areas of
training and education, community development, health and sanitation promotion of
culture, sports, etc. involving a total expenditure Rs.117.70 lakh. This includes and
amount of Rs.8.75 lakhs spent towards training of farmers on post harvest loss
minimization and safe storage of grain at farm level.
Quality Management System
The Corporation being pioneer in the field of warehousing has successfully
implemented and maintained the ISO 9001:2000, ISO 14001:2004 and OHSAS
18001:2007 certification since 1999.There are 376 units certified under ISO
9001:2000 while 365 unit have been certified for ISO 14001:2004 as on 31.03.2010.
Further, 176 number of units certified under OHSAS 18001:2007 as on 31.03.2010.
The Corporation is having its quality policy which is the commitment of Chief
Executive Officer. The Corporation is also having its quality objectives and system
devised to attain the said objectives.

CHAPTER-15
Functional activities of Warehouse
In the previous chapter, it was analysed and found that the corporation is the
one of the largest / warehouse operator in the country with national importance. It
was set-up with the primary objective for providing warehousing services. Besides
warehousing, the Corporation also carrying out other ancillary activities such as
market facilitation, pest-control services, Farmer Extension Services Scheme and
Consultancy. The functional activities are analysed in detail as under;
i. Warehousing
The core activity of Central Warehousing Corporation is to provide scientific
storage facilities for agricultural implements and produce and other notified
commodities. CWC, as a bailee of the stock stored at its warehouses, is responsible
to assure its clients for Quantity and Quantity (Q & Q) of stocks stored at its
warehouses. For ensuring safe and scientific storage, the corporation has evolved
“CODE OF STORAGE PRACTICES” for more than 200 different types of
commodities including agricultural produce, industrial chemicals and other notified
commodities. The trained technical staff of the corporation takes proper care of the
stock by undertaking prophylactic and curative treatment making the Quality control
services provided by CWC of the highest standard in the country.
Besides, general warehousing, the corporation is also operating 99 Custom
Bonded Warehouses with 7 Lakhs Metric tonne capacity in the state of such as
Andhra Pradesh, Delhi, Gujarat, Karnataka, Kerala, Madhya Pradesh, Maharashtra,
Orissa, Punjab, Rajasthan, Tamil Nadu, Uttar Pradesh and West Bengal. The concept
of Custom Bonded Warehousing has been promoted with a view to facilitate
deferred payment of custom duty to encourage entrepreneurs and export oriented
units to carry out their operations with least investment. These bonded warehouses
are located all over the country at places well-connected with the port towns for
smooth movement of goods to and from the discharge points.

The corporation had envisaged the problems in the movement of imported
and exportable goods to and from the port towns and transcended the hurdles by
developing an extensive infrastructure of container freight stations, inland clearance
depots & buffer container yards throughout the country. Presently, CWC offers
import and export warehousing facilities at its 34 CFS/ICD/BCY in ports and inland
stations at Ahmedabad, Aurangabad, Bangalore, Baroda, Chennai, Coimbatore,
Delhi, Grater Noida, Haldia, Hyderabad, Kandla, Kanpur, Kolkata, Kota, Manglore,
Mumbai, Nasik, Navi Mumbai, Paradeep, Pune, Rajkot, Saharanpur, Toothukudi,
Udaipur, Vapi, Varanasi, Verna & Vishakapatnam, where composite services for
containerized movement of import/export cargo are provided.
The Corporation over the years has also brought out ambitious expansion in
the operation of air cargo complexes, which is a major step towards providing
complete services as a multi-modal transport operator. Presently, CWC is operating
3 air cargo complexes at the international airports of Amritsar, Goa and Singllur
besides managing the accompanied/mishandled cargo warehouse at Indira Gandhi
International Airport, New Delhi. The Corporation is also running air-conditioned
godowns at Calcutta, Bombay and Delhi, and provides cold storage facilities at
Hyderabad. Special storage facilities have been provided by the Central
Warehousing Corporation for the preservation of hygroscopic and fragile
commodities.
Besides, warehousing CWC also offers the services of rail transport of
containers by running train between Gate-way ports such as from Delhi to JNPT,
Mundra and vice-versa.
ii. Market Facilitation
The corporation in a big way helps the physical distribution, warehousing and
marketing of goods by arranging the facilities of transport of agricultural produce,
seeds, manures, fertilizers and other notified commodities. The storage charges fixed
by the corporation do not include any element of handling of the goods. The
depositors availing the facility of

storage at the warehouses of Central Warehousing Corporation require the services
handling and transportation of their stocks. Besides storage, the corporation also
offers market facilitation services to its valuable customers in the area of port,
clearing & forwarding, and handling & transportation inside the warehouse complex
and also outside the warehouse complex. The market facilitation and handling &
transportation services include the operations like loading, unloading and
transportation of commodities etc. The Corporation in consideration charge
supervision charges for the services rendered. It is the second important area of
revenue contribution.
iii. Pest Control Service
The Corporation took up disinfestations Services as an ancillary activity out
of its premises to facilitate proper maintenance of stocks at the client locations. Over
the years, this area has expanded vastly thereby establishing CWC as a major pest
control operator providing pest control services in health and hygiene, anti-termite
treatment, grain preservation including ship, aircraft and container fumigation, thus
earning it the title of National Pest Control Agency. CWC has earned a major
breakthrough in disinfestations of aircrafts of Air India with methyl bromide
fumigation using timer device.
The Corporation rendering state-of-threat pest control services to a varied
group of clients both private and public with the aim to prevent the economic and
health loss caused by pests, rodents and termites by using ISI marked / WHO
approved / eco-friendly pesticides. The corporation has obtained accreditation of its
officers under International Standard for Phyto-Sanitary Measures (ISPM -15) and
Australian Fumigation Accreditation Scheme (AFAS) - India Programme of AQIS
Standards. The corporation undertakes quarantine fumigation of cargo and
fumigation of export containers / shipments with MBr/Alp as per need of customers.
CWC has primarily focused on pre-shipment fumigation of export cargo as well as
on board (ship) fumigation of containerized cargo. The corporation is now also
offering ship fumigation services with port of discharge guarantee assuring freedom
from live insect infestation at the port of discharge. The Corporation

also undertakes disinfestations of rail coaches, aircrafts, airport premises etc.
iv. Farmers Extension Service Scheme
The Farmers Extension Service Scheme was launched by CWC in the
year 1978-79 .The following are the main objectives of the scheme: -
• To educate farmers about the benefit of scientific storage and use of public
warehouses.
• To impart training to the farmers on the techniques of scientific storage &
preservation of food grains.
• To demonstrate spraying and fumigation methods to control insects.
• To assist farmers in getting loans from the banks against pledge of
Warehouse Receipt.
v. Consultancy
The Corporation acts as leader in the field of warehousing and scientific
storage. Being pioneer in the field of warehousing and versatile expertise it provides
consultancy services in the area of preparation of project report, construction of
warehouses on deposit work basis. In consideration, the Corporation earns
supervision charges for the services rendered. The corporation not only earns
revenue by rendering the services of consultancy but also helps a lot in creating
storage infrastructure for the country as a whole.
Summary
Indian history is full of references to foodgrains storehouses; the Cholas,
Nayaks and Mahrattas had them. At Panhala in Maharashtra, there is the large grain
storage structure built by Chhattrapatti Shivaji. In Tamil Nadu in the Palace at
Thanjavur there is one and another at Tiruvaiyur nearby. Some foreign visitors who
had a look at these compared them to the modern silos.
The establishment of licensed warehouses in India was first recommended by
the Royal Commission on Agriculture in 1928. The

importance of warehousing was felt seriously and the Reserve Bank of India in the
year 1944 urged all the State Governments by issuing directions to enact legislation
for setting up of warehouses in their concerned States.
In 1949, the Rural Banking Enquiry Committee was appointed by the
Government of India. Among its terms of reference, the Committee was to consider
measures that could be adopted for the extension of banking facilities in rural areas.
The Committee recommended that Provincial Governments should consider the
desirability of advancing long-term loans at concessional rates of interest to
cooperative societies to build godowns in centers which provided good markets.
In an enquiry conducted by the Reserve Bank of India in 1952, information
was collected by means of a questionnaire as to the state of existing godowns and
their suitability for conversion into licensed warehouses. The replies indicated that
some of the Government godowns could be readily converted into regular warehouse
so far as the technical quality of the accommodation was concerned. The public
sector warehousing was developed in India with the twin objectives of storing the
agriculture produce and other notified commodities in a scientific manner with pest
free condition and preventing the farmers from distress sell of their hard raised crop
Presently, there are three major public sector undertakings playing crucial role in the
field of warehousing in the three tier system of warehousing which was
recommended in the Rural Banking Enquiry Committee (1954).
Public warehousing, as we know it today, stems from the recommendations
of the Committee of Direction of the All-India Rural Credit Survey Committee. It
would, therefore, be appropriate to go into some details of the reasons which led that
Committee to formulate its recommendations regarding the establishment of
Warehousing Corporation.
The beginning of public Warehousing in India got recognized with the
enactment of agricultural produce (Development & Warehousing) Corporation Act.
The Act categorically states the setting up of public sector warehousing agencies at
all India level (CWC) and state level (SWCs).

At the present, there are three main agencies in the public sector in India
engaged in the field of building large-scale storage infrastructure and warehousing
capacity namely; i) Food Corporation of India (FCI), ii) Central Warehousing
Corporation (CWC) and iii) State Warehousing Corporations (SWCs operating with
a capacity of 603.60 lakh MT as on 31.03.2010.
The Food Corporation of India (FCI) is the main agency responsible for the
execution of food related policies of the Central Government. The function of Food
Corporation of India primarily relates to the procurement, storage, movement,
transportation, distribution and sale of food grains on behalf of the Central
Government. It is also engaged in the handling, storage and distribution of sugar in
North Eastern States and Jammu & Kashmir.
Central Warehousing Corporation (CWC) was setup on 2nd March,
1957 after the enactment of Agricultural Produce (Development and Warehousing)
Act, 1956, which was subsequently repealed and re-enacted by the Parliament as the
Warehousing Corporations Act, 1962.The main objective of the CWC is to provide
scientific storage facilities for agricultural implements and produce and other notified
commodities. The Central Warehousing Corporation is the warehousing agency at all
India level and it is managed with a board having 14 Directors with authorized share
capital of Rs.100 crores and paid-up capital of Rs.68.02 crores. The Corporation was
started it operation with 7 nos of warehouses in the year 1957 and reached with 487
warehouses as an 31.03.2010. The Central Warehousing Corporation has to carry out
the function of acquiring and building warehouses, storage and preservation of
agriculture and other notified commodities, subscribe to the share capital of State
Warehousing Corporation, rendering disinfestations services besides training to
farmer and other ancillary functions.
The State Warehousing Corporations were set up in different States of the
Indian Union with primary focus on district importance as in the area of operation.
The state warehousing corporations operate through out the countries with its
network of 1595 warehouses with total capacity of 209.26 lakhs MT as on 31.3.2010.

CHAPTER-16
Warehouse Strategy
1. Outline your existing operation.
Begin creating a strategic plan for your warehouse by looking at your current warehouse
function. This will involve looking at your current facilities. Create an accurate sketch of
your warehouse building and floor plan. Make sure it is to scale so you can maintain
accuracy. Manually confirm the drawing by looking at the warehouse floor.
Record all equipment in your warehouse. Write down processes and staff responsibilities
in each section of your warehouse. Look at the procedures you have in place and then
actually what is happening on the warehouse floor. You will often find there is a
discrepancy in what you would like to be happening and what is actually happening with
procedures.
Interview your employees to get the big picture of operations in your warehouse. Use
observation and interviewing to find out the processes being used by staff.
This first step involves documenting your building, equipment, items and processes. You
cannot make improvements until you have reported on what is going on.
2. Determine your warehouse storage and inventory needs.
Once you have documented everything happening in your warehouse, you are ready to
look at your stock and inventory requirements. This involves planning and predicting the
amount of stock you will require as well as determining where you would like to store
inventory.
Consider organising items based on their material handling and storage traits. When
estimating your inventory requirements think about seasonality and high selling
products. Use previous data on inventory turnover to make accurate estimates.
3. Find weaknesses and areas for change in your current warehouse effort.
Where can you improve your warehouse operation? Look at the notes for your existing
operation for analysis. Seek out critical areas for improvement.
Perhaps you need to upgrade your infrastructure to house certain products. Look at your
warehouse facilities, processes and the equipment you are using. Search for the most
efficient and practical solutions to any weaknesses in your operation.
4. Identify alternative solutions.
If things aren’t working out then think of new solutions to these problems. You may
need to consider how to improve your warehouse facility, the equipment and staff
processes. Find any way you are able to erase flaws in the way things are run.
5. Evaluate your new plans.
When assessing your plan financially consider the following:
1. tax
2. time value of money
3. total operation costs
4. When conducting a qualitative analysis look at:

5. staff safety
6. how you will adjust to changes
7. how easy the new plan would be to manage
8. the possibility of inventory damage
6. Update your plan based on your assessments.
After making a financial and qualitative assessment, you are ready to draft an official
master strategy for your warehouse.
This should include the following items:
1. space
2. staff
3. equipment
4. processes
5. future plans

CHAPTER-17
Human Resources
The success of any organization depends on the utilization and
management of its resources. The resources are either in the form of man,
machine, material or money. Among all these resources the most important
resources is man which is having a bio-logical mind. The only resource which
is having control over the operations performed by all other resources. The
efficient manpower will always produce higher productivity and vice-versa.
Thus, proper and efficient manpower of any organisation plays an important
role in the productivity of the organisation. The corporation manages its
activity with its skillful workforce, the detail of manpower for the period 1998-
99 to 2009-10 has been tabulated in the under mentioned table.
Table-3.3
Human Resources Analysis of Central Warehousing Corporation
(in nos)
SI.No. Year Cat-A Cat-B Cat-C Cat-D Total Trend
1 1998-99 309 1075 4036 3263 8683 100.00
2 1999-00 309 1098 4343 2926 8676 99.92
3 2000-01 315 1061 4323 2880 8579 98.80
4 2001-02 320 1153 4168 2814 8455 97.42
5 2002-03 329 1045 3455 1591 6420 73.94
6 2003-04 316 1137 3321 2039 6813 78.46
7 2004-05 304 1167 3239 1980 6690 77.05
8 2005-06 285 1138 3181 1809 6413 73.86
9 2006-07 261 1142 3070 1719 6192 71.31
10 2007-08 288 1095 3105 1571 6059 69.78
11 2008-09 278 1035 3104 1518 5935 68.35
12 2009-10 265 1057 2995 1448 5765 66.05
Source: Annual Reports of CWC

From the analysis (Table 3.3) depicts that the total man power as on
31.03.1999 was 8683 while the total manpower in the concluding year of
study stood at 5765. The above table indicates 33.95 percentage reduction
in the manpower as on 31.03.2010 as compared to the manpower as on
31.03.1999.

CHAPTER-18
Warehousing in India - Changing Gears to Meet Future Challenges
A few decades ago, what we now call warehouses used to be dilapidated buildings called
godowns. The industry has come a long way from those days, to become the backbone of
the manufacturing and burgeoning e-commerce industry. The sector is evolving fast,
with both the nature of the business and technology driving it, and undergoing dynamic
changes. In the face of regulatory and infrastructural challenges, is the warehousing
industry changing gears fast enough to support the growth that the Indian economy is
trying to achieve
Online retail stores have become popular like never before, and a major reason for their
popularity is the convenience of placing an order from the comfort of your home and
getting it delivered to your doorstep within a stipulated timeline. Have you ever
wondered how the e-retailers manage to deliver the consignments with such ease? Apart
from the many other things involved in the lifecycle of a product delivery, one element
that acts as the deciding factor for seamless despatch of goods from one location to
another are warehouses.
Over a period of time warehousing industry in India has evolved from just brick and
mortar shelters for the purpose of storing goods to highly sophisticated stockrooms,
where, thanks to advanced tracking mechanism, each consignment can be tracked on a
real time basis at the click of a button. Without these state-of-the-art facilities it would
have been a Herculean task for companies to ship and deliver consignments to the
designated consignee, and the rise of the e-tail in India would have remained but a fairy
tale. Not just e-tail, in any industry segment, which deals with physical goods,
warehouses play a vital role in the entire value chain from raw material to customer
delight. Specifically in the manufacturing sector, with lean manufacturing becoming the
order of the day, a significant part of the functions from scheduling to labelling and
packaging are being outsourced to third party logistics providers. But naturally the
warehousing industry is gearing up, with the help of technology, to meet these new
requirements.
The leap forward
As India evolves as an economy, sophisticated logistics and warehousing systems would
be a key trigger for the manufacturing sector and the entire gamut of trade activities. And
warehouses are evolving at a rapid pace with the average size of warehouses in the
country increasing from around 20,000 sq. ft. to 2-3 lakh sq. ft. in a few years. Current
industry estimates show that warehouse space in India will grow from the current 909.5
million sq. ft. to about 1,439 million sq. ft. by the end of 2019.
Slicing the pie
According to a report by Ernst & Young and the CII Institute of Logistics, the size of the
Indian warehousing industry, across verticals, is estimated to be around Rs.560 billion.
The sector is growing at an average 10% per annum. While warehouses dealing with
agricultural and horticulture products account for about 15% of the total warehousing
industry, cold storages have a share of about 16%. It’s the warehouses catering to the
industrial and retail players that hold the maximum share, at 55%.
Inland Container Depots (ICDs) and Container Freight Stations (CFSs), which directly
deal with goods that are meant for export/import, account for the rest 14% share. In fact,
it’s the Customs-bonded warehouses that play a key role in faster shipment of export

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