PRESENTATIONON

STEEL SILOS PROJECT

IN

MADHYA PRADESH

GOVT. OF MADHYA PRADESH

1

The Need - WheatGrowth in Production, Procurement & PDS requirement

Wheat Production PDS requirement

Surplus Stock

20

Pro

cure

-

men

t (1

9)

10

0

2009-10 2010-11 2011-12 2012-13

Pro

cure

men

t (4

9)40

11

Pro

cure

men

t (3

5)

30

24 L

MT

PD

S

Req

uir

emen

t

-5

90

9288 61

Pro

cure

men

t (8

5)

80

70

60

50

25

170

160

161

150

140

130

127

120

110

100

2

The Need - PaddyGrowth in Production, Procurement & PDS requirement

3

E-procurement

Computerization of Food grain Procurement System

in Madhya Pradesh

__

Department of Food, Civil Supplies and Consumer Protection, Government of

Madhya Pradesh

4

Inefficiencies prior to e-procurement

Long waiting queues of farmers for selling their crop

Manual cheque payments to farmers (delay, loss, malpractices)

Below optimum functioning of Procurement Centres

Poor Decision Support System/ Irregular Forecasting

Less-efficient Monitoring and Control of procurement processes

Absence of transparency and citizen interface

Malpractices

5

e-procurement - Objectives

To enable smooth, regulated and efficient process of

procurement at the Procurement Centres.

To gain the trust and confidence of farmers through

simplification of procedures and transparency of operations,

from ‘purchase to payment’.

To weed out malpractices.

To develop a near real-time reporting mechanism of the field

level operations, such as forecasting, purchase, transportation,

storage, payment etc, to enable better planning, monitoring and

management.

6

Purchase Center

Farmer

Farmer Registration

Wheat Procurement

Procurement Center

Slip with Registration

Code is given to Farmer

Advance SMS alert sent to Farmer intimating about the

Date of Procurement Farmer goes to

ProcurementCenter on Date

Farmer

Procurement TransactionPerformed and Receipt is

given to Farmer

Ban

k Amount is credit to Farmers Account

1

2

34

5

6

e-procurement - – Process Snapshot

7

e-procurement - – Key Indices

1.42 Million Farmers registered after physical verification.

9.8 Million SMS sent to farmers to intimate dates for selling their wheat.

6.4 Million of wheat procured through the e-procurement System from 0.90

Million farmers through 1.3 Million transactions.

Rs. 95300 Million transferred to farmers bank account as payments.

Computer Hardware worth Rs. 33 Million given to Procuring Agencies

3,500 people given Hands-on Training organized at State and District level for

all stakeholders.

Employment of 2,852 Data Entry Operators and 714 Runners.

Total Cost, including Application design, development, Implementation,

Trainings, Support & Maintenance, Hardware and temporary man-power;

Rs 196 Million 33.3 Million – Non Recurring+162.5 Million– recurring exp.)

Rec. exp(Data entry operation+runner 6 month salary +runner conveyanc)

Rabi 2013-14

8

e-procurement – Successful Outcomes

Decision Support System

Near-elimination of corruption and malpractices existing in the procurement processes.

Unified database of genuine farmers

SMS alert mechanism

Monitoring and Tracking

Transparency and citizen interface

E-Capacity Enhanced

Digital Inclusion

Prompt and full payment to farmers, through direct bank transfer ensuring that farmers

actually received the Minimum Support Price (MSP) for their food grains, and saving

them from the clutches of middlemen.

9

e-procurement –Recognitions and Awards

Officials from Uttar Pradesh, Rajasthan and Bihar have visited the Madhya

Pradesh to have an understanding of the eUparjan Project.

The e-procurement Project has been awarded as the “Best IT initiative”

in Madhya Pradesh for the year 2011-12.

Awarded “CSI - Nihilent eGovernance Award 2011-12” in the

Projects Category – G2B by the Computer Society of India -

Nihilent.

Awarded “Best Government Project in Social Inclusion in the

Horizontal Category” in the IT Innovation Awards presented by

Lenovo and powered by NASSCOM and CNBC-TV18.

Short-listed by United Nations for Public Service Award

10

Vision

1. Available Storage capacity in State

i) MPWLC / Other Govt.

Agencies

ii) Private

2013

40 LMT

51 LMT

2014

50 LMT

65 LMT

Total 91 LMT 115 LMT

2. Proposed creation of Additional

Storage capacity

35 LMT

In the year 2013 the available capacity with

the state was 91 LMT. It was planned in 2013

been to increase this capacity by another 60

LMT in next two years.

11

Mix of Storage Solutions

1. Conventional Godowns

2. Silo Bags

3. Steel Silos

12

Investment – Incentives 15.0 LMT

Business Guarantee 13.0 LMT

Rural Godowns 03.5 LMT

Steel Silos (VGF) 05.0 LMT

Steel Silos (BG) 03.5 LMT

Total 40.0 LMT

(2) Govt.Resoures 20.0 LMT

Grand Total 60.0 LMT

Strategy

(1) Private Investment

13

Need for Setting up Steel Silos

Frequent upward revisions of the Minimum Support Price (MSP) for

procurement of food grains have led to a rise in the level of procurement

over the last few years.

Due to this, the state faces the problem of managing large stocks of food

grains. It is estimated that post-harvest losses are round 10% due to

lack of modern storage facilities. This constitutes a huge national waste

in terms of food as well as public money.

Therefore, it becomes necessary to create additional modern storage

facilities on a large scale.

Silos are better option for bulk storage of grains due to their various

benefits like assured shelf life of grain for 2-3 years, easier grain

management, 1/3rd land requirement compared to traditional

warehouses and no risk of pilferage.

14

Why PPP Approach in Storage Management

The investments required are large compared to available

public resources, and private capital could, therefore, enable an

accelerated roll out of modern storage capacity.

Functional efficiency of private entities would enable early delivery

of quality services.

Risk of project completion and delivery of agreed outputs would be

transferred to the private entity.

Public funds would be expended only upon delivery of agreed

outcomes, and

Private sector efficiency in the context of a long-term agreement is

expected to optimize on life-cycle costs and improve on quality of

grain storage.

15

Silo Project in M.P. – VGF Model

DBFOT Model

10 Locations

50,000 MT Capacity at each location

Land by State Government (8 acres).

VGF : 20% by GoI

20% by GoMP

Storage Charges same as Conventional

Godowns

10 Years Business Guarantee

30 Years Concession Period

Bidding on VGF

16

Project Cost & Project Financing

Total Project Cost – Rs 31 CrBuilding & Civil works – Rs 14 Cr

Plant & Machinery – Rs 13 Cr

Other/IDC/Contingencies- Rs 4 Cr

Sources of Financing:

Equity from the Concessionaire.

Central VGF (Maximum of 20% of the Project Cost)

VGF from GoMP (Maximum of 20% of the Project Cost) *

Senior Debt

*VGF from GoMP, if any, will be provided as “O&M Support”

to the project 17

Major Sources of Revenue

S.

No.

REVENUES INR/QTL INR/MT/

YEAR

(YEAR 2013)

REMARKS

1 Receipt &

Dispatch Charges

9.12 91.20 Reimbursement at actual

expenses incurred

2 Commission

Charges

1% On value of actual

quantity handled under

central pool system.

Storage Charges INR/QTL/M

ONTH

INR/MT/YEAR

3 Variable Charge 0.5 67.30 As on April 1’2012

4 Fixed Charge 5.75 723.46 As on April 1’2012

18

FINANCIAL ANALYSIS

Description INR Lakhs

Land & Site Development 0.70

Building and Civil Works 1445.63

Plant & Machineries 966.95

Electrical, Automation & other Utilities 287.50

Preliminary & Pre-Operative Expenses 218.77

Contingency 135.04

Total Block Cost 3054.58

Margin Money 8.93

Total Capital Cost 3063.52

Financial indicators

Value Unit

Project IRR 12.14% -

Equity IRR 14.05% -

DSCR 1.00 Times

Pay Back Period 9.96 Year

Notes:

Capital structure - 30% Equity & 70% Debt of the total project cost.

VGF – 0% for evaluation in the base case.

Utilization of facilities after 10years of guaranteed period - 100%

• Project Cost • Financial Indicators

19

FINANCIAL ANALYSIS

• Sensitivity Analysis

Availability of VGF Base Case 10% 20% 25% 30% 35% 40%

Total Project Cost 3063.52 2757.17 2450.81 2297.64 2144.46 1991.29 1838.11

Amount of VGF 0.00 306.35 612.70 765.88 919.06 1072.23 1225.41

Project IRR 12.14% 13.23% 14.55% 15.34% 16.21% 17.19% 18.32%

Equity IRR 14.05% 15.85% 18.23% 19.75% 21.57% 23.83% 26.68%

DSCR 1.00 1.11 1.24 1.31 1.40 1.50 1.61

WACC – 9.97%

Project IRR > WACC

Utilization & VGF Availability of VGF

Equity IRR 14.05% 10% 20% 25% 30% 35% 40%

Utilization after 10 Years

100% 15.85% 18.23% 19.75% 21.57% 23.83% 26.68%

90% 14.87% 17.27% 18.80% 20.64% 22.93% 25.82%

80% 13.77% 16.16% 17.69% 19.55% 21.87% 24.83%

70% 13.12% 15.52% 17.07% 18.95% 21.29% 24.29%

60% 10.75% 13.19% 14.77% 16.70% 19.13% 22.28%

WACC – 9.97%Equity IRR > 12.00%

20

Procurement ProcessTwo Stage bidding process has been adopted for selection of developer for

Steel Silos. RFQ for Pre Qualification issued in the month of March 2013.

Pre-Qualification Requirements are:

FINANCIAL CAPACITYThe Applicant shall have a minimum Net worth of Rs. 30 Cr at the close of

the preceding Financial Year (March 2012).

TECHNICAL CAPACITYOnly those projects (over the past 5 years) which have payments/receipts of

more than Rs.6 Cr considered for evaluation purpose such that total sum of

payments/receipts of the projects considered is more than Rs 45 Cr

Bidders allowed to bid as a Consortium. For Consortia, the scores are

calculated using the sum of scores of members holding more than 26%

stake in consortium

21

Projects considered for Evaluation of Technical Capacity

Category –I Category –II Category –III Category -IV

Sector PPP projects in

Warehousing

/Storage Sector

PPP projects in

Core Sector

EPC projects in

Warehousing/

Storage Sector

EPC projects in

Core Sector

Sector

Contribution

Payment for

development/

Revenues

received

Payment for

development/

Revenues

received

Payments

/Receipt for

construction

work

Payments/

Receipt for

construction

work

•Warehousing/Storage sector would be deemed to include warehousing/ Storage,,

whether modern or otherwise, including cold storage, storage for food processing,

grain/paddy/millets etc.

•Core sector would be deemed to include includes Road, Highways, Bridges, Power,

Telecom, Ports, Airports, Railways, Metro rail, Industrial park, Real Estate, Logistics,

Park, Pipelines, Irrigation, Water Supply, sewerage and Real estate Development

22

Evaluation of Technical Capacity The applicant shall, over the past 5 financial years have:

• Paid for, or received payments for, construction of eligible project(s);

and /or (i.e. Role as Construction Contractor)

• Paid for, development of eligible project(s) in category 1 and/or

category 2; and/or (i.e. Role as Project Developer)

• Collected and appropriated revenues from eligible project(s) in

category 1 and/or category 2 (i.e. Role as Project Operator)

The experience score for an eligible project in a given category would

be the eligible payments and/or receipts divided by one crore and

then multiplied by the applicable factors in as stated below:

Category Factors

Category –I 1.5

Category –II 0.8

Category –III 0.9

Category –IV 0.423

Procurement Process – Bid Evaluation Tremendous response shown by bidders & for all ten locations total

168 proposals were received from 31 bidders.

The evaluation has been carried out on the basis of Technical &

Financial capability of the bidders as per requirement set forth in

bidding documents.

On the basis of financial proposal submitted by Technically Qualified

Bidders the Developers have been selected successfully for all ten

locations.

Financial Proposal were invited for the Project on the basis of the lowest

financial grant required by a Bidder for implementing the Project.

OR

Bidders instead of seeking a Grant, may offer to pay a premium in

the form of annual payment to MPWLC over the full tenure of the

Concession Period. (In case of premium being offered by applicant, such

Premium shall be determined by increasing the amount for the

respective year by 10% as compared to the immediately preceding year)

24

Financial Proposals of Bidders - Grant / Premium (All Figure in Crores)

Location Dewas HardaHoshangab

adRaisen Satna Sehore Ujjain Vidisha Bhopal Indore

Sr.

No

Applicant Name/

Financial QuoteVGF

Reqd.

VGF

Reqd.

VGF

Reqd.

VGF

Reqd.

VGF

Reqd.

VGF

Reqd.

VGF

Reqd.

VGF

Reqd.

VGF

Reqd.

VGF

Reqd.

1Pristine

Logistics10.25 9.11 9.71 10.00 10.75 8.74 9.99 10.51

2Adani

Enterprise 2.11 2.91 2.41 2.31 3.11 2.21 2.41 2.21 3.51 3.11

3LT Foods

Limited6.26 12.20 11.30 11.46 6.26 5.77 6.11 11.70

0.05

Premium0.05

4Techno Electric

& Engineering - - 8.42 - - 5.82 9.85

5Veerprabhu

Marketing 10.70 11.38 10.70 9.41 - 7.95 - 9.41

6Sri Avantika

Contractors (I) - - 9.00 - - 9.00

7Total Shipping

& Logistics - - 5.25 -

0.01

Premium-

8Oakridge

Energy - 8.99 - - -

9Vishandas

Asnani1.65 1.45

LOWEST

BIDDERSAdani

Enterprise

Adani

Enterprise

Adani

Enterprise

Adani

Enterprise

Adani

Enterprise

Total

Shipping &

Logistics

Adani

Enterprise

Adani

Enterpris

LT Foods

Limited

LT Foods

Limited

25

.

Signing of Storage Agreement with successful bidders is under process

for all ten locations.

Successful bidders is required to complete the Financial Closure of the

project within 60 days from the date of signing of Storage Agreement

Scheduled Completion period for each project has been set as 1 Year

(365 Days) from the date of Financial Close.

The Successful bidders is also required to construct additional facilities

like Vehicle parking area; Reception, cafeteria and rest rooms & Public

address system etc.

Present Status of Project

26

Milestones/Achievement

Warehousing & Logistics Policy formally

launched : August, 2012

Road shows : September / October, 2012

Global Investors Meet : November, 2012

EOIs signed : November / December, 2012

VGF Model formulation under Planning

Commission’s guidance

State Government approval (in principle) :

October, 2012

Selection of Technical Consultant : Nov. 2012

Feasibility Study in 10 Districts : Dec. 2012 to

February, 201327

Proposal submitted for In Principal approval to DIF 04.03.2013

RFQ floated 15.03.2013

In Principle approval accorded by SLEC 06.04.2013

Pre-Bid Meeting (NIC Studio, Vindhyachal Bhavan, Bhopal) 08.04.2013

Concession Agreement finalized May, 2013

RFQ received (142 Bids by 25 firms for 08 locations) 01.06.2013

RFP issued (18 firms) 15.07.2013

Proposal submitted to DEA, GoI for In Principal approval to grant VGF 19.07.2013

First Pre-Bid Meeting (Madhyanchal Bhavan, New Delhi) 13.08.2013

Pre Appraisal Meeting in Planning Commission, GoI 22.08.2013

Second Pre-Bid Meeting (M.P. Bhavan, New Delhi) 07.09.2013

In Principle approval accorded by DEA, Ministry of Finance, GoI 29.10.2013

Final Concession Agreement Issued to Pre Qualified Bidders 15.11.2013

Third Pre-Bid Meeting (H.O. MPWLC, Bhopal) 30.11.2013

RFP received and opened (38 Nos. for 8 locations) 16.12.2013

Milestones achieved for 08 locationsContd…..

28

Way forward

It is expected to store Wheat of

Rabi, 2015

in the Steel Silos

at 10 locations

in

Madhya Pradesh

29