“Adding Value to Commodities”

Presented by:

Divya Boddu (07) Saurabh Goswami(10) Kamlesh Kunhara(16) Navjot Kaur Nagra(20)

Nitika Singh(22)

Sagar Shinde(38)

COMMODITY CHAIN

3

Farmers getting just 35 % of consumer rupee against 65-70%

Less focus on forming forward and backward linkages Poor Infrastructure – Storage, Packaging,

transportation / no cold chain Poor linkages in the marketing channel High level of post harvest wastages due to poor and

multiple handling Improper bagging without crating Perishable agro-commodities very sensitive to post

harvest facility & care Have potential of saving post harvest loss of agro

commodities (10-15% in grains & 30-35% in fruits and vegetable)

More emphasis on quality of food shift from quantity to quality (nutrition) food

CHALLENGES IN AGRO

COMMODITIES PHYSICAL SUPPLY CHAIN

INITIATIVE FOR SUPPLY CHAIN INFRASTRUCTURE

Infrastructure efforts should concentrate on Integration between farmers and markets Supply chain gaps in Inputs i.e farm inputs,

machinery, consultancy for productivity & quality improvement, credit.

Provide seed capital for development activities of value adding infrastructure i.e. Marketing, Storage, Processing & Export.

Forming national level association dedicated for post harvest infrastructure development initiatives and education

WAREHOUSING

Warehouse are commercial buildings for the storage of goods.

These are usually large, plain buildings in industrial areas of various cities and towns.

In India, its was started in 1957 under the name of Central Warehousing Corporation, which provided logistic support agricultural sector.

These are used by Manufacturers, importers-exporters, wholesalers etc in transport business.

National Bulk Handling Corp.

India's leading integrated commodity and collateral management company

First and only such service provider in the country to obtain an ISO 22000:2005 certification

'Category G' membership of GAFTA (The Grain and Feed Trade Association, UK).

A part of a unique commodity ecosystem. Provides Complete Solutions in Commodity

and collateral Management Stakeholders: FTIL & group Com. (MCX and

NSEL) SBI (30%)

NBHC- Services

Storage and Bulk Handling Services Warehousing Bulk Handling Weighment Loading/Unloading Logistics Farm gate handling services

Integrated Pest Management Services

Integrated Pest Management Maintenance Contracts Fumigation and Commodity Pest

Management

Testing and Certification Services Quality Testing & Certification Commodity Grading & Certification Cargo Inspection

Cont…

Structure of NHBC

Headquarter (Mumbai)

Regional office -PuneRegional office -DelhiRegional office - Indore

363 warehouses in 17 states

Chairman

Business development

Quality assuranceOperations Commodity core and

pest managementAuditing & vigilance

Zonal VP & BD

ASST V P

GM

SRM

RM

ARM

CORPORATE RELATIONSHIP

Company Product

ITC Ltd Wheat , Maize

Cargill Wheat, Maize

Adani Group Soyabean, Sunflower, Jawar, Bajra

Tirumala milk Milk powder

Godrej Agrovet Maize

FARMER

AGRI-WARE HOUSE

BANK

QUALITYCONTROLTESTING

QUALITY ASUURANCEREPORT

SAMPLE

FOODPROCESSING

INDUSTRY

REJECT

BANK

COLLATERAL CERTIFICATION

LOAN SANCTION

14

INHERENT RISKS IN COMMODITY SUPPLY CHAIN

Agro-Commodities by nature carry some inherent risks, resulting into wastage and monetary loss during handling and logistics

Risk Result

Market RiskPrice risk , Demand risk, Payment risk ,Access risk

Operational Risk Quality risk, Quantity risk

Performance Risk

Documentary risk , Security risk

Credit Risk Interest risk, Access risk, Cost risk

Policy Risk Policy risk

COLLATERAL MANAGEMENT SERVICES•NBHC Cecure provides collateral management services based on structured warehouse accreditation & operational fundamentals. Assurance of quality and quantity of the commodities is provided to both depositor and lender.

•NBHC Cecure’s Risk Management is a cyclic process. They adopt a 4-step process which includes Risk Identification, Risk Measurement, Risk Management & Financing. This process is methodical and proactive, and helps Lenders Manage Risk and Maximise Value.

RISK MANAGEMENT- BEST PRACTICE

Risk NBHC Risk Management Solutions & Practices

Market Risk

•Warehouse Receipt Financing , •Trade Consultancy, •Procurement & Disposal services for standardized commodities,•Information services-Commodity futures reports (NBHC Technical Reports)

Operational Risk

•ISO 9001:2000 Complied standard operating procedures•Warehouse Accreditation, •Warehouse Audit / Vigilance, •Logistics services *•Commodity analysis and protection solutions (NBHC ProComm & NBHC CommGuard)

* In Process

Risk NBHC Risk Management Solutions / Practices

Operational Risk•Human Resource Expert and Experienced in commodity management•Farm gate handling services*

Performance Risk

•Secure Warehouse Receipt ( 6 security features)•Insurance / fidelity /security /close circuit cameras•Strict adherence to ethical trade practices

Credit Risk

•Collateral management services,•Periodical Information reports on collateral status and commodity prices (NBHC IntelliComm)•Commodity futures reports (NBHC Technical Reports)

Policy Risk

* In Process

RISK MANAGEMENT- BEST PRACTICE

OPERATIONS Loan = Max.70-75% of the value of

produce Duration of storage should not exceed 6-

8 monthsExample: Warehouse capacity-1000MT Area of warehouse-10000 ft2

Stake height – 14 bags for 100kg bags

Requirement : 01 Supervisor @6000/month 1-2 security personnel @5000/month Quality testing Documentation : Quality report,

Commodity acceptance documents, Insurance(0.25%)

Delivery by customer up to warehouse Charges:10% of total value + expenses

Requirements cont…

Service Request Form Commodity Deposit Form Customer Declaration Document Revalidation of Commodity Form

STORAGE Design of warehouse On wooden planks Fumigation: ALP Spraying:DDVP,CH3Br Periodical checking Regular cleaning Equipments: Fork lifter, Nylon nets, Bamboo mats, Sprayers and sand snake

THE NEW ECOSYSTEM

NBHC Advantages Tie-ups with 24 major banks Single point solutions for quality

assurance, fumigation and other storage-related services

Providing early warning signals on price fluctuations, commodity quality

Insurance (Fire, Burglary and Special Perils) and Fidelity Policies

24-hours security Secure warehouse receipts

Access to Futures & Spot prices from MCX & National Spot Exchange Limited  trading platforms

Demat facilities Logistics arrangement >500 trained and expert staffs >90 commodities Quality checks, warehouse accreditation,

warehouse audits, commodity analysis etc.

Cont…….

Benefits To Banks - Reduced risk + Wider customer base = More profits

Benefits to Warehouse Owners - NBHC accreditation = Professionalism = Goodwill = More business

Benefits to Farmers, Merchants, Corprates (Depositors) - Convenience of one-point contact + Access to real-time market information + Nationwide reach = Hedging price risk + Access to new markets = More business + More profits

Benefits to Logistic Agencies - Nationwide network + Access to real-time market data = Higher market penetration + Smooth commodity movement = Goodwill = More business

Benefits to Quality Certification Agencies - More business + International standards = Reduced overheads = More profits

LIMITATIONS Still in growing stage Lack of awareness among customers Lack of support in the form of policies Not feasible for the commodities which

are highly perishable.

ACKNOWLEDGEMENT

Mr.Suresh Hattlli, Zonal Manager,NBHC, Pune.

Mr.Piyush Pathak, Field Manager, NBHC, Aurangabad.

Mr.Asaram Morage, Manager , Agilility warehouses Pvt. Ltd, Wagholi

www.nbhcindia.comwww.nbhcindia.com

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