A warehouse refers to a commercial building for the storage of goods in large amount. The goods stored in warehouse can include any raw materials, packing materials, spare parts, components, or finished goods associated with agriculture, manufacturing, or commerce. When the storage is done in a large scale and in a specified manner it is known as warehousing. In other words, warehousing also refers to holding or preserving goods in huge quantities from the time of production till their actual sale. The person who looks after the warehouse is called Warehouse keeper or Warehouse Manager.
The warehouse that stores goods of farmers issues the warehouse receipt to them. Warehouse Receipt is a receipt of ownership of particular commodity which is intended to be delivered at a particular time frame. "Receipt" means a Warehouse Receipt in the prescribed form issued by a Warehouse Manager to a person depositing goods in the warehouse. An approved warehouse manager is authorized to issue a negotiable or a non negotiable warehouse receipt. It evidences a contract for storage of goods. It is accepted by the commercial banks as collateral security for grant of loan against the goods stored in the warehouses. A warehouse receipt can be negotiated by endorsement and delivery. It is a document of title of goods and in case of failure to liability it shall create contractual obligation to issuer. The goods covered by a negotiable warehouses receipt can be transferred by an endorsement on the Warehouse Receipt and its delivery to the endorsee. A person to whom warehouse receipt is negotiated acquires a title to the goods in respect of which such warehouse receipt has been issued. The endorsee gets a right to have the possession of goods covered by such warehouse receipt as per the terms and conditions contained in such receipt. The endorsee also gets a right to have such goods delivered to him or his authorized agent by the warehouseman.
Warehouse receipts are a crucial element for risk mitigation, enabling a financier to lend to a borrower, who wants to finance the shipment of commodities for sale or purchase. Using warehouse receipt finance, a bank, or trader, relies on goods in an independently controlled warehouse to secure financing. Usually providing (among many things) there is an off-taker and that there are other forms of recourse (the borrower's balance sheet for example) banks will lend against commodities stored in a reliable warehouse and which have been properly pledged to them in a sound legislative environment. So warehouse receipts provide for a degree of physical risk mitigation and, in support of an exchange-based trading system, they are important for underpinning futures. Accordingly, warehouse operators can act as key influencers of risk management. If they are able to issue warehouse receipts, which can be used as collateral by banks, they may use this as a way of encouraging deliverers of commodities to move stocks into their facilities. Warehouse operators receive goods into the warehouse and issue Receipts Showing the goods has been received into the store. Among other things, the receipts themselves contain information about the quality and type of the commodity taken into store. The receipts are for the information of the depositor of the goods or, if he is a borrower, for his bank.