SUMMER INTERN-SHIP PROGRAMME REPORT

Title: To discover the feasibility and profitability of entering into agriculture produce warehousing.

SUBMITTED BY: Jayesh Kumar MBA (Logistics & Supply Chain) UPES, 2014-16

Agenda Introduction SC mapping Research Objective

INTRODUCTION India is an agriculture driven economy covering 65% of the population. However, around 20-30 per cent of total food grain harvest is wasted each year due

to:1. Inadequate storage capacity,2. Inefficient logistic management,3. Lack of adequate scientific storage and,4. Regional imbalance in warehouses. Extreme dearth of about 35 MMT of warehousing capacity-urgent need to develop

a strong warehousing system equipped with modern and scientific storage facilities. Govt. organizations viz. Food Corporation of India (FCI), Central Warehousing

Corporation (CWC), State Warehousing Corporation (SWC), store a total of 107 MMT of the produce in India.

Private companies like StarAgri, Shree Shubhum Logistics are the torch bearers in this genre.

Warehousing Scenario : Macro View

Dry agri commodities’ production/annum: 330 Million Tonnes. Including wheat, rice, other cereals pulses, oil seeds and feed grains•60 MT maintained by the FCI as mandatory food security reserves.•100 MT maintained by the farmers and the large rural Indian population as ‘on–farm’ storage, and immediate consumption.

•Current warehousing capacity:130 MT, of which 40 MT need upgrades•Government Agencies Control: 76%•Private Ownership: 24%

Dry Agri-Bulk Storage Industry of India

Agriculture Supply Chain Mapping

Agenda is to map the existing complete agriculture supply chain. Identifying the related parties. Identifying the areas that can be improved. Suggested improvements.

Step 1: Farmer/ zamindar The initiator of the supply chain, the farmer/

zamindar sows the crop based on various factors like the type of soil & the suitable crop, assured returns, harvesting cycle etc.

At the correct time, he harvests the crop, keeps some for own consumption & sells the rest in the market.

For eg. Say Ram Kishan is a wheat farmer, owns a land of 30 bigas= 6 acre.

He sows wheat only & thus harvests 120 quintals of it, keeps 800 kgs for a yearly consumption for a family of 4, leaving him with 112 quintals to sell.

Ram can either sell this to the local trader or can go himself go to the mandi to get the optimum price of his produce.

Lack of knowledge makes farmers to sell to these local traders @ low prices, who in turn collect from farmers & come to big mandis & sell at a better price.

Assuming ram decides to visit the Narela mandi, he has to take his 10 wheeler single-axle Tata truck to Narela mandi from Bulandshahr which is 113 kms one side, costing him 3000/- approximately.

10 Wheeler is permitted to carry 12.5 MT. He arrives at the mandi, pays a fees of 200/- at the gate, only tractors

are free of any fee.

Step 2: Commission Agent The farmer meets a commission agent, who does the

auction of the grain, whoever bids the highest, gets to purchase.

The commission agent charges 2% of the sale to the farmer, Ram in this case.

Weighing & jharai/ pitai of the grain is paid by Ram. Labor charges for loading/unloading+ packaging +

sewing of bags = 5.35/- per bag, paid by the purchaser= 1198.40/-

Bags belong to the purchaser, his choice of capacity (50,55 or 60 kgs) and material (plastic/jute).

Assuming purchaser chooses 50 kg jute bags, total bags= 224

Market rates or bids vary daily, generally in a range of 1450-1540/- per quintal.

Assuming Ram had an A-grade produce, he gets 1500/- per quintal. Earnings of Ram: Rs.1,68,000/-

Cost of Ram: 2% commission to agent: 3360/-, Fuel cost: 3000/-Entry gate fee: 200/- Weighing fee: 1.25/- per bag= 280/-Jharai/ pitai : 0.80/- per bag= 179.20/- Total cost = 7019.20/-Net earnings= Revenue-Costs= 1,60,980.80/-

Step 3: Artiyas The Artiya is the purchaser/ highest bidder. Any artiya can buy/ sell only if he has the license issued by the

govt. The artiya is the one who is buying from the market & then selling

to the corporate/ local clients, charging a margin in between. Has to pay 1% of the transaction to the APMC, Narela. Some artiyas also stock the grains, called “Stockiyas”. “Stockiyas” shall be the main clients of collateral managers/

warehousing companies. Big artiyas procure anywhere near 200-225 quintals everyday. Shanti traders, Bholenath Overseas, Om Shri Ganpati Impacts are

some of the big artiyas of Narela mandi.

Step 4: The Purchaser

Corporate & local mills, purchase directly as well as from artiyas. If buying from artiyas, the purchaser is responsible for the transportation

costs. Generally, artiyas transport to the purchaser & are reimbursed for it. The purchaser is liable to pick the purchase the same day or the next

day from the artiyas. Each company comes in a contract with the artiyas. For eg. ITC Ltd. Has

a contract to buy at the day’s lowest price, excluding the charges of the artiyas.

Major purchasers

Purchase is first done by corporate clients as well as local mills. Major local purchasers from Narela mandi are: Aggarwal rice Goyal foods Navbharat rice Major companies that procure grain from Narela mandi ITC Ltd. Shakti Bhog Delhi Roller Mills

LITERATURE REVIEWS-NO

AUTHOR TYPE NAME OBJECTIVE FINDINGS

1. http://agricoop.nic.in/imagedefault/trade/PulsesNew29.pdf

Report Commodity Profile for Pulses-March 2015

Pulses estimates for India (2014-15)

18.40 MMT in 2014-15

2. CRISIL INDIA Article Regulatory Impact on Collateral Management

Can collateral serve as a means to reduce credit risk?

13% increase reported in risk hedging since 2009

3. Jabir Ali Research Paper

Information and communication technologies (ICTs) and farmers’ decision-making across the agricultural supply chain

Using internet, can procurement be easier?

ITC’s E-choupal failed due to some reasons.

Research Objective

To determine the feasibility and profitability of entering into agriculture produce warehousing.

To describe the current warehousing practices, public & private. Additionally, to determine the govt. approvals required To determine the cost v/s benefit ratio of agri warehousing To lay a future plan of agriculture warehousing in India, including

activities that could directly benefit the farmer. Scope of Research : The research was conducted for pan India,

however, was filtered to Delhi after observing the current trends.

Sample Design: Samples were drawn at different levels:1. Governmental Org. such as FCI, CWC in Delhi.2. Private Co. such as StarAgri in Alipur, Delhi. Research Design: The research was conducted through a series of

structured personal interviews, questionnaire to which is attached.Since, the data collected was majorly primary & the investigation was done to draw conclusions, inferences, thus the research design is Descriptive. Limitations of the Study1. It was not possible to visit/ enquire about govt. held WH’s, specifically

FCI.2. The warehousing practices were not concrete but were highly flexible, at

will of the WH manager.

Agenda

Storing of which food grain shall give the maximum revenue? What commodity can be stored at minimum cost?

Revenue from rent

The rent for storing of commodities was the same irrespective of the nature of the commodity. For eg., the rent for wheat, chana, paddy etc. was the same for each metric tonne (MT) each month.

For eg. Staragri charges Rs.90/- per MT per month for normal customers & Rs.80-85/- per MT per month for bulk stokiyas.

This is approximately Rs.6/- per bag per month. For NCDEX warehouses, the rent was higher, Rs.150/- per MT per month. NCDEX warehouses stocked commodities pledged to the exchange, for

commodity trading. This rent was inclusive of the insurance charges covering the grain.

Continued.. Rent for NCDEX accredited WH was based on the nature of the

commodity. Rent for Wheat & Chana is Rs.150/- per MT per month. Rent for Maize is Rs.165/- per MT per month. The reason for higher rent of maize is the storing & handling

complexities of the grain. Maize tends to absorb moisture in a rapid manner than other

grains, thus demanding regular health reports and additional care.

Conclusion: The rent was independent of it’s trading position on the NCDEX.

Revenue from Collateral Management

This is a prime demand of the stockiyas, that they should be able to get loans on the basis of produce stored.

This is also the other source of revenue for collateral managers, for eg. StarAgri charges 0.75-1% from the bank on the loan amount against collateral receipt provided. (1% from Indus land Bank)

To avail loans from the banks, there has to be WDR/ NWR issued to the stockiya.

As per the WDRA norms, WDR/ NWR can only be issued for the following 115 commodities, thus narrowing our search for the commodity to be stored.

Sr. No Name of the Commodity Sr. No. Name of the Commodity 

1. Wheat (A) Pulses 

2. Rice 41 Urd Whole (Black Gram) 

3. Paddy 42 Urd split (husked) 

4. Jawar 43 Urd split (unhusked) 

5. Bajra 44 Moong (whole) 

6. Barley 45 Moong split (husked) 

7. Maize 46 Moong split (unhusked) 

8. Ragi 47 Masoor (Lentil) whole 

9. Soyabean* 48 Masoor (Lentil) split (husked) 

10. Mustard seed 49 Arhar /Tur (Red gram) whole 

11. Rapeseed 50 Arhar /Tur (Red gram) split 

   

(husked) 

       

12. Groundnut 51 Kabuli Chana 

13. Groundnut (pods) 52 Chana whole (Bengal Gram) 

14. Whole pulses and split 53 Chana split (husked) / Dal Chana  

 

pulses 

       

15. Sunflower oilseed 54 Matki / Moth (whole) 

16. Milled pulses 55 Matki / Moth split (husked) 

17. Cotton bales* 56 Yellow Peas (whole) 

18. Cotton seed 57 Rajma 

19. Jute bales* 58 Lobia 

20. Chillies* (B) Cereals 

21. Tamarind seeds 59 Raw Milled Superfine / Fine Rice 

22. Cumin seeds* 60 Raw Milled Medium Rice 

23. Castor seeds 61 Raw Milled Common (Coarse) Rice 

24. Cashew kernels 62 Parboiled Milled Superfine / Fine 

   

Rice 

       

25. Arecnut 63 Parboiled Milled Medium Rice 

26. Black pepper* 64 Parboiled Milled Common (Coarse) 

   

Rice 

       

27. Coriander* 65 Fine Broken Rice 

28. Fennel seeds* 66 Common Broken Rice 

29. Fenugreek seeds* (C) Vegetable Oils* 

30. Guar gum* 67 Mustard Oil 

31. Sesame seeds 68 Groundnut Oil 

32. Horse gram 69 Sesame (Til or Gingelly Oil) 

33. Isabgol* 70 Coconut Oil 

34. Black gram (Flour) 71 Linseed Oil 

35. Coffee beans 72 Castor Oil 

36. Sago* 73 Niger Seed Oil 

37. Turmeric* 74 Safflower Seed Oil 

38. Ball Copra 75 Cotton Seed Oil 

39. Cup Copra* 76 Rice Bran Oil 

40 Cardamom* 77 Soyabean Oil 

Sr. No Name of the Commodity Sr. No. Name of the Commodity 

78 Sunflower Seed Oil 97 Cloves 

79 Maize (Corn) Oil 98 Mixed Masala Powders 

80 Mahua (Mowrah Oil) 99 Sun Dried Raw Mango Slices And 

Powder  

      

81 Salseed Oil (Fat) 100 Compounded Asafoetida 

(D) Oilseeds* 101 Nutmeg 

82 Taramira Seeds 102 Curry Powder 

83 Sesame seeds 103 Saffron 

84 Cotton seeds 104 Tejpat 

85 Safflower seeds 105 Poppy Seeds 

86 Linseeds (G) Makhana 

87 Mahua seed 106 Makhana 

88 Sal seeds 107 Makhana Powder 

89 Niger seeds 108 Makhana Fried 

(E) Edible Nuts (H) Miscellaneous 

90 Walnuts 109 Guar Seed 

91 Raw cashewnuts 110 Tea ** 

92 Groundnuts 111 Coffee, Arabica and Robusta ** 

93 Coconut 112 Tobacco ** 

(F) Spices* 113 Rubber ** 

94 Ajowan Seeds (Whole And 114 Desi Chana  

Powdered)  

      

95 Mace 115 Indian sugar** 

96 Seedless Tamarind     

Agenda

Amongst the above commodities, what was India producing most? What commodity was produced seasonally, but had a strong year long

demand?

Findings

Rice (42% of total food crop produced) & Wheat (37.91% of the total food crop produced), were clear winners.

Both these commodities were the most produced, most consumed commodities of India

Followed by them is sugar, 28.3 MMT, 2014-15. Followed by pulses, 18.40 MMT produced in 2014-15, chickpea (8.28

MMT), Arhar (2.75MMT), Urad (1.61 MMT). Followed by Millets, 10MMT produced in 2014-15.

Based on production Rice is primary food crop of India, produced to a tune of 42% of the

overall food crop. Total production in yr. 2014-15 was 104.92 MMT. Major state producers (in decreasing order):1.West Bengal (15.3 MMT in 2014-15 i.e. 14-16%)2.U.P.(12 MMT in 2014-15 i.e. 13.5% )3.Andhra Pradesh4.Punjab Wheat is second most produced food crop in India (37.91%). Total

production in yr. 2014-15 was 94.7 MMT. Major state producers (in decreasing order):1. U.P. (34.34 MMT in 2014-15 i.e. 36.27%)2. Punjab (16.59 MMT in 2014-15 i.e.17.51%)

Agenda

Where to procure from, at low costs? Where to store/ make godowns? How to have an edge over the competitors, primarily StarAgri?

NARELA MANDI

NEW ANAJ MANDI, NARELA

SALIENT FEATURES

Largest paddy mandi all over Asia. Total land area 33 acre. Produce comes from all over India viz. Madhya Pradesh, Uttar Pradesh,

Rajasthan, Haryana & Punjab. Rice, wheat, urad dal, tur dal, chickpea, jowar, bajra, sorgum, ragi are

some of the commodities being traded here. Operated by Agriculture Produce Market Association (APMC), which is

governed by the state govt. 2.5 Lakh bags or 12500 tonnes daily, during peak season. There is immediate shortage of storage space/ shades, which makes it all

the more viable for a warehouse.

Market SizeCommodity

Total Arrivals

(In MT)

2013-14 2014-15WHEAT  48631.9  41894.1 ARHAR  579.8  244.6 BAJRA  1060.5  1118.7 GRAM  12  39.9 PADDY  392294.8  556778.8 MUSTARD  1623  897.1 BARLEY  1249.7  1245.2 JOWAR  2.5  4.1 GWAR  978.9  388.2 MAIZE  74.9  153.5 

92%

7%1%

PaddyWheatOther

Data provided by FCI

Market Size

From the above total of 6,02,764.2 MT of grain, 34.41 % i.e. 2,07,411.16 MT is maintained by the FCI as mandatory food security reserves. (Wheat-30% & paddy-35%)

2,15,962.2 Sq. Ft. of WH area maintained by NCMSL 1,02,227 Sq. Ft. of WH area keeping stocks pledged to NCDEX Remaining : 2,84,575 MT of grain to be stored in private WH’s. Area required: As 1 Sq. Ft. can store= 0.1851 MT volume of grain. Space required for above volume of grain = 284575/ 0.1851 Comes out to 15,38,243 Sq. Ft. of WH area is required. Largest player StarAgri has only 5,00,000 Sq.FT. of WH area in 45 WH’s,

average WH space=10,000 Sq.Ft. Remaining 10,38,243 Sq. Ft. is the untapped business opportunity.

CompetitionS.No. Competition Leased(MT) Owned(MT)1 FCI (Food Corporation of India) 160,00,000 155,00,0002 SWC (State Warehousing Corp.)   178,00,0003 CWC (Centre Warehousing Corp)   100,00,0004 NBHC 15,00,000  5 NCMSL 9,00,000  6 Staragri 8,50,000  7 JICS 3,50,000  8 LTC 2,80,000  9 Mahindra 2,00,000  10 SSLL (Shree Shubhum Logistics

Lt) 25,000 1,10,00011 Nokha Agro 50,000 90,000

Why is Narela Mandi chosen?

Farmers from all over North India choose Narela mandi as the farmers are paid in full & cash, immediately, thus they prefer selling here.

The farmer/ zamindar is liable for the packing of the grain in gunny bags, its sewing, labor charge @ Rs.5.35 per bag.

Labor for loading & unloading of the produce is charged to the purchaser @ 5.55 per bag.

The measurement of the grain is charged to the farmer @ Rs.5.35/- per bag.

The packaging is not fixed, it can be jute or plastic bags of 50, 55 or 60 kgs.

Farmers/ Zamindars come with their produce to the mandi.

Commission agent, who charges 2%, conducts the auction of the grain, whoever bids the highest, takes the produce.

The purchaser/artiya sells the produce to Corporate & local customers, which have to pay 1% (Narela Mandi) as market charge also, apart from Artiya commission.

Warehouse Requirements(As stated by local traders/Artiyas of Narela Mandi)

Major storage is done by local traders (Stockiyas) (Upto 80%), followed by corporate clients (10-20%).

The most important factor for them is less rents. Followed by the rent is the facility of collateral management. Then comes the proximity, the artiyas/traders prefer their storage to be

within 15-20 kms from the mandi Then comes the quality maintenance, that is the grain should not rot in

the WH. Followed are factors like safety of the grain through insurance &

facilities of transportation, dry warehousing etc.

Types of Warehouses (FCI)

Stacking Practices (In sheds)

Some insights

Transportation

Transport should be outsourced. Roadways are primarily used as a mode, trucks being the prime vehicle. Truck used: 10 wheeler- Fixed capacity of 12.5MT (TATA Prima) 18 wheeler- Max: 24T, Min: 20T Adjacent to Grand Trunk road is an added advantage.

Storage practices (In sheds)

Weight of empty jute storage bag: 665 gm. & HDPE : 130 gm. Aisle space between two stacks: 2-2.5 ft., between stack & wall: 1ft. Dimensions of 1 sack: 37.5” * 22” Storing is done in stacks of 13*8 gunny bags. Stacks are kept on plastics/ tarpaulin & not directly on the ground. Inventory is managed by FIFO technique, the stockiya is given a

commodity health report every month.

Space requirement (Stacking in 13/8) Height of the stack varies, generally the height of 22 gunny bags.(Total height in ft.= 15, thus height of each gunny bag = 15/22= 8.18 inch) Breadth of each stack = 37.5 (Length of a gunny bag) * 8=300 inch= 25 ft. Length of each stack= 6 (No. of Blocks) * 37.5 * 1.5 (Length of each block) +

22inch (Breadth of the last gunny bag) = 29.95 ft. = 30 ft. Area covered by 1 stack= 30*25 sq. ft. = 750 sq. ft.No. of gunny bags in each stack = (13+8)*6*22= 2772 Thus, the weight of grain stored in each stack = 2772*50 = 138.6 MT.Thus, the volume stored per sq. ft. = 138.6/ 750= 0.185 MT

Agenda How much space should be leased in the initial phase? What are the infrastructure requirements? What govt. clearances are required?

Infrastructure & Utility Requirements

Weight Bridge Godown No electricity required No water required Tarpaulin required – 2 per stack Insurance of the property & the grain stored

WAREHOUSE LOCATIONS Based on the findings, it can be concluded that the warehouse

should be located in proximity to the Narela Mandi. Adjoining locations:1. Alipur2. Hamidpur village3. Bakoli village4. Burari5. Kheda Kalan Here is a tentative list of warehouse that DIESL can take on rent/

lease. The list is in descending order.

Weight bridge is not available at any of these locations, but there are private scales in proximity. For eg.:

1. Shiva Dharm Kanta, Capacity 40 MT, provides printed slip.Mukhmel Pur Road Jindpur, Alipur, Delhi – 110036. Tarpaulin can be purchased in bulk & cheap from:1. Surendra Brothers, Ahemdabad (# +91-9978846289-Darshan) @ 1375/-

per piece for 30*24 on an order of 250 pieces, HDPE tarpaulin. Aluminum Phosphate tablets for fumigation can be purchased in bulk &

cheap from:1. Gabs Agri Pvt. Ltd., Delhi @ Rs.11/- for 3 Tablets, for 1MT. Insurance against fire, theft, misappropriation, riots, strikes or terrorism,

burglary is provided by:- The New India Insurance offers an umbrella insurance policy for pan India at cheaper rates, any new warehouse can be added, premium is decided on the stocks valued.

Labor requirements: No material handling equipment are used. 1 warehouse manager can look after more than 2 to 3 warehouses at a time.

Salary : 20,471/- per month (StarAgri). Unskilled labor is provided by vendors @ Rs.2.95/- per bag. 1 quality inspector at the time of transaction. 1 data entry operator, salary : 13,771/- per month (StarAgri). 1 guard per WH, salary: 9,534/- per month (StarAgri) Total fixed manpower expense: 43,776/- per monthOffice expense: (Major) 1 computer (connected to internet) per WH: 23,650/- 1 Printer: 2500/- 1 cooler for office : 4000/- Total Office Expense : 29,500/- (one time)

Fumigation & grain heath Aluminum phosphate tablets are used, 3 tablets for 1MT. Cover the grain with HDPE tarpaulin, tablets kept on gunny bags, left for

7 days. Should be done in every 45 days, approx. 8 times a year. Aeration should be done regularly, every 1-2 days by opening all the

gates. Ventilations should be with mesh wire, restrict birds. Commodity Health reports should be made, every 30 days for local

traders & every 15 days for corporate clients, including tests:1. Moisture check.2. Atta formation.3. PV for pests. Permissible levels of moisture : Wheat-12%, Rice- 14%.

Sampling: For NCDEX accredited WH, samples are drawn from each gunny

bag, at the time of arrival of grain as well as for CHR. If any commodity shows signs of deterioration, the client is

made aware, if it can be treated, it is done with heavier dosage of fumigation.

Samples are divided into 3 parts: Warehouse, Lab & lab reserve. Lab reserve is kept in case of any disputes.

In case of non-funding, only PV of the grain is done, if the client insists, then only lab testing (chargeable) is done.

Documentation required 3 copies of all the below documents are required, 1 for WH, 1 for client & 1

for the supervisor.1. Gate pass2. Commodity Transaction Slip (CTS)/ Vehicle Transaction Slip (VTS)3. Commodity Inward Slip (CIS) / Commodity Delivery Form(CDF)4. In case of loans, apart from all these, collateral manager has to provide

the lab report of the grain to the client & bank. In case of an NCDEX accredited WH, lab report is necessary in all cases. In case of loan, WDR/ NWR is issued to the bank directly, not to client. WDR/ NWR is valued at the current day market price of the stock in any

Delhi mandi or support price, whichever is lower.

Documentation in NCDEX

GATE PASSCOMMODITY DELIVERY FORM (CDF)

COMMODITY TRANSACTION SLIP (CTS)

VEHICLE TRANSACTION SLIP (VTS)

COMMODITY INWARD SLIP (CIS) MASTER STOCK REGISTER

Warehouse Requirements There is a complete guide to the procedure & registration of a WH,

according to Warehouse Development & Regulation Authority (WDRA), covering the norms of a WH construction, the process of registering a WH, the equipment, chemicals & lab set up.

The WDRA has not registered any WH in all over Delhi & the process is still in pipeline.

Thus, all WH’s in Delhi are unlicensed & thus do not adhere to any WDRA construction terms.

Though unregistered, these WH’s do have the liberty to issue NWR/ WDR’s, if storing for NCDEX.

Prospective Clients Major Local Clients (Stockiyas) (Above 250 quintals/day):1. Bholenath Overseas2. Shanti Trading Co.3. Om Shri Ganpati Impacts Major Corporate Clients:1. Cargill India Pvt. Ltd.2. Ruchi soya3. Glencore India Pvt. Ltd.4. Agricore

REVENUE GENERATION

Warehousing

State-of-the-art warehouses with latest technology

Rental income: capacity utilization is key

Procurement

Direct procurement for farmers/ zamindars.Commission on the procured quantity

Fee-based

Lab and other Value-added services

Lab fees, brokerage from retailing and insurance distribution

Collateral Managemen

tFinancing the farmer on collateral of his stock

Commission on the funds sourced from banks

Role of Banks Banks provide finance to farmer against pledge of receipt issued by WH. Objective:1. To provide liquidity to the farmers.2. To enable farmers to hold on their produce during the period of bumper crop

harvest when market price are at their lowest. Loan Amount: Subjective to the bank, for eg. SBI provides for 60-80% of the

produce subject to a maximum 50 lakhs. Documents: WDR & Lab report of the grain. Duration: Such loans are short term, 6-12 months. Rate of Interest: Upto 3 lakhs, @7% interest, above that is subjective to bank. Bank officials visit the WH and verify the storage before sanctioning the loan.

Location 7

42000 sq. Ft. Super Area : 50000 Sq. Ft. Alipur Height : 25 ft. Rent (negotiable): 6.3 Lakh @ Rs.15/- per Sq. Ft.

Location 6

27000 Sq. Ft. Alipur Waterproof shed Reserved parking Ceramic flooring Rent : 4.5 Lakhs @ Rs.16/- per Sq. Ft.

Location 5

1800 Sq. Ft. Burari Near Main road, Burari Rent: 40000/- @ Rs.22/- per Sq.

Ft.

Location 4

2700 Sq.Ft. Burari Rain-water harvesting Water storage facilities Rent: 30000/- @ 12/- per Sq. Ft.

Location 3 2250 Sq. Ft Kundli Near Singhu Border Rent: 23000/- @ Rs. 10/- per Sq. Ft.

Location 2

4640 Sq. Ft Burari Rent: 50000/- @ Rs. 11/- per sq.ft. 24*7 water supply Electricity available

Location 1

9600 Sq. Ft.-build up area 9900 Sq. Ft.- super area Height: 18 Ft. Mukhmel Pur, Alipur Cement flooring Adjacent to NH-1 Rent: 1.05 Lakhs @ Rs.11/- per

sq. ft., is ready to reduce by 5% to 99750 @ 10.39/- per Sq. Ft.

Total Cost Incurred (in Rs.)1. Cost of rent @ 10.39/- per Sq. Ft.= 99750*12= 11,97,000/- (annually)No. of stack in this property- 9500/750=12.667 or (12+0.667) stacks (50 kg gunny bag) Weight of grain stored (50 kg gunny bag)= 9500* 0.185= 1757.50 MT 2. Cost of HDPE Tarpaulin @ 1375/- piece (30*24) = 26*1375= 35,750/-3. Cost of fumigation @ 11/- per MT= 1757.50* 11= 19,332.50 * 8= 1,54,660/-4. Cost of insurance shall depend upon the valuation of the stock on current day price.5. Skilled manpower expense= 43,776/- (Going by StarAgri rates) * 12= 5,25,312(annually)6. Unskilled manpower expense= 2.95/- per bag (Outsourced)7. Office Expense: Computer with internet- 23,000/-Printer: 2500/- , Cooler: 4000/-Total Office Expense: 29,500/-Total costs= 1+2+3+4+5+6+7= 19,42,222/-, excluding insurance premium & daily wages of unskilled labor.

TOTAL REVENUE (In Rs)

Revenue received by rent: In case of non-NCDEX warehousing, assuming storing of paddy & wheat: 90/- per MT per month.

Thus, total revenue= 90* 1757.50*12= 18,98,100/- (per annum) In case of NCDEX warehouses= 150* 1757.50*12= 31,63,500/- (per

annum) Commission @ 1-2% received by banks providing collateral is variable. Lab Testing & procurement are optional services, shall vary. Thus, we conclude that it is highly profitable to setup an NCDEX

approved WH.

WSP Accreditation norms- NCDEX

Promoters/ Promoter Groups should be financially sound and have a successful track record of running their businesses for at least 5 years, out of which at least for 3 years their overall operations should be profitable.

Promoter / Promoter Group will be permitted to set up a Warehousing Company as a Private Ltd Company, Body Corporate or Public Limited Company only. Sole proprietorship or partnership entity shall not be eligible as approved WSP.

The WSP shall ensure that the financial activity as principal business activity does not result into its financial assets to constitute more than 50 per cent of the total assets and income from financial assets does not constitute more than 50 percent of the gross income.

Management of WSP or entities owned or controlled by management of WSP/Group concerns or persons ‘acting in concert’ shall not be allowed to trade on the commodity exchange in the commodity for which it is accredited by Exchange.

However, there shall be no such restriction on trading in forward segment of Exchange in delivery-based forward contracts.

Regulatory Norms

The WSP shall have warehouses that are registered with WDRA. The WSP shall obtain the license under FSS Act as a Food Business Operator (FBO).1. License fee: State License for 1 yr. for above 1MMT of storage: Rs. 5000/-Central License for 1 yr. (Suggested): Rs. 7500/- 2. Step 1 is to create an account with FSSAI through their website.Step 2 is to check for applying party’s eligibility, which requires the district & area where you wish to set-up.Step 3 is to apply, requires submitting the documents, visit: http://foodlicensing.fssai.gov.in/central_document_list.html#about-tab for info. The WSP shall have NABL accredited labs or shall avail the services of other empaneled

NABL accredited labor testing of FSSAI parameters, access to other FSSAI notified lab is permitted.

The WSP shall set up such Committee(s) to oversee the operations of the company. Audit committee is one of them. Audit function relating to Exchange approved warehouses could also be done by Independent/ External Auditors.

Cont..

The WSP Company should have a professional management team to oversee its functioning and operations.

The WSP should have a high powered Customer Grievances Cell to handle customer complaints and shall take proactive steps to resolve customer related issues and maintain a record of complaints received/ resolved/ outstanding.

Facilities & equipment requirements Apart from the WDRA approvals & the ones discussed above, basic equipment

such as sampling and grading equipment, moisture meters etc. firefighting equipment Dunnage to be laid under each stack (2 tarpaulins per stack). Clear signs or display boards such as ‘No Smoking’, ‘Fire’, ‘Police’, ‘Ambulance,

‘Exit’ WSP’s contact person’s name and cell no., etc. should be exhibited clearly.

Issue a Weight and Grade (including moisture content) receipt for each instance of inward delivery into warehouse received for storage and outward delivery that is delivered out of the WSP’s approved warehouse space

Implement, the ‘Know-your-Depositor’ (KYD) policy as prescribed by the Exchange.

Financial Requirements: Minimum net worth of at least Rs.50 crores. Minimum current ratio of 1.25 or evidence acceptable to the Exchange that

funds will be and will remain available to meet current obligations The WSP shall undertake to take insurance covers for risks such as Fire and

allied perils including Act of God to cover all NCDEX stocks. To calculate a WSP’s exposure for insurance cover, the value of stocks for

cover shall be calculated as spot price on a given day + 10% margin thereon.

Financial Security Deposits: Less than or equal to 250 cr- 3%, 4% for 250-500 cr, 5% for above 500 cr. Bank Guarantee from approved Bank, Fixed Deposit Receipt from approved Bank,

Cash, or other forms of security deposit as may be deemed acceptable by NCDEX Additional requirement of security deposit in the form of interest-free cash to the

extent of 0.20% of the value of goods stored for aggregate value of goods, subject to a minimum cash requirement of Rs. 50 lakhs at all times.

Procedure for application: Applications along with other details as mentioned above, should be sent to the

following address:The EVP – LogisticsNational Commodity & Derivatives Exchange Limited Gayathri Towers954,Appasaheb Marathe MargPrabhadevi, Mumbai 400025 Tel : (+91-22) - 66406789 Fax : (+91-22) – 66406736E-mail: askus@ncdex.com

Application for Deposit of Commodities submitted(CCL)

Acknowledgement

Branch Head informs Executive Operations

Executive Ops will confirm spaces

Space in godown? Type of commodity?

Informs client about date and time of deposit

Checks the stack planClient brings the goods for deposit

Delivery Intention Process

Deposit Process

Gate Pass issued

Gate in-out register

Total Weight taken

Weighbridge Slip

Sampling of Lots

Sample Slip filledStacking as per plan, Rejected good separated

Truck goes to Weighbridge Truck goes to godown

Stack Card/ Lot card

VTS / CTS issued

Gate Pass for exit

WR Issued to client

Demat Process

Deposit process completed MIS Officer submits CIS along with Duplicate copies of CTS, VTS to (NCDEX Central Ops)

NCDEX Central OpsAssayer Report

NCDEX Central Ops enters the details in N-comm connect after verifying CIS

ISIN generated

Warehouse Updates –

Basic Sheet

Godown-wise Stack register

Lot tags

The entire Demat process takes approximately 5 days.

Electronic Credit in account

Lab enters the Quality result in Ncomm

Remat Process

Commodity Withdrawal Application FormRemat Request Form

NCDEX Central Ops verifies the details and conveys to Branch Head, Executive Ops, client.

Remat request form to CP

CP checks the balance and pledge status

Stocks are blocked and RRN generated

Executive Ops sends the request to NCDEX Central Ops by e-mail with the scan copy of the original RRN papers

Withdrawal Process

Branch head prepares delivery schedule after approval from central operations

Tare Weight takenTruck goes to Weighbridge

Truck goes to Gate

Gate In-out register

Goods are de stacked and loaded in truck.

VTS/ CTS and CDF issued

Gate Pass for exit

Total Weight takenTruck goes to Weighbridge

A

Client submits original WR and authority letter for withdrawal

Withdrawal Process contd.

MIS officer updates withdrawal details

Daily report And duplicatesto NCDEX ops with CDF

NCDEX central Ops Team updates record and verifies quantity

‘RRN Completed' file

NCDEX central Ops team update

RRNARequest -NCDEX Central Ops

Improvements & Suggestions Procurement of the grain can be done directly from the farmers & paying

them in full, saving the additional cost of transportation levied on the farmer & eliminating the middleman, thus procuring at a lower cost.

Setting up of private mandis at nearby locations. Setting of e-auctioning, connecting the farmers through an intranet, thus

eliminating the role of commission agents & the additional 2%. Setting a limit to which 1 artiya can buy, eliminating hoarding & black-

marketing. Encouragement of direct purchases by APMC buy building more sheds &

storages in the mandi itself.