setting up of steel grain silo in sehore, madhya pradesh

Setting up of Steel Grain Silo in Sehore, Madhya

Pradesh

Feasibility Report

May 2013MPWLC, Government of Madhya Pradesh

Confidential

320162 MCB ISA AA 01

P:\320162\MP Grain Silo\FM_Report\Submissions\Feasibility Report_Sehore.doc

27 May 2013

Setting up of Steel Grain Silo in Sehore, Madhya Pradesh

Feasibility Report

May 2013

MPWLC, Government of Madhya Pradesh

Confidential

Mott MacDonald, 501 Sakar II, Ellisbridge, Ahmedabad 380 006, Gujarat, India

T +91 (0)79 2657 5550 F +91 (0)79 2657 5558, www.mottmac.com

Office Complex, Block 'A', Gautam Nagar, Bhopal - 462023

Setting up of Steel Grain Silo in Sehore, Madhya Pradesh Confidential

Mott MacDonald, 501 Sakar II, Ellisbridge, Ahmedabad 380 006, Gujarat, India

T +91 (0)79 2657 5550 F +91 (0)79 2657 5558, www.mottmac.com

A 06/03/2013 SP RS, MK SM Draft Feasibility Report

B 20/03/2013 SP RS, MK SM Revised Feasibility Report

C 24/04/2013 SP RS, MK SM Revised Feasibility Report

D 27/05/2013 RS MK SM Re-revised Feasibility Report based on comments of MPWLC and Planning Commission

Issue and revision record

This document is issued for the party which commissioned it

and for specific purposes connected with the above-captioned

project only. It should not be relied upon by any other party or

used for any other purpose.

We accept no responsibility for the consequences of this

document being relied upon by any other party, or being used

for any other purpose, or containing any error or omission

which is due to an error or omission in data supplied to us by

other parties

This document contains confidential information and proprietary

intellectual property. It should not be shown to other parties

without consent from us and from the party which

commissioned it.

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Glossary of Acronyms v

Executive Summary vii

1. Introduction 1

1.1 Report content _____________________________________________________________________ 1

2. Project Background 2

2.1 Objectives of the policy _______________________________________________________________ 2

2.2 Incentives to the developers ___________________________________________________________ 2

2.3 Details of the Proposed Silo ___________________________________________________________ 3

2.3.1 Proposed Capacity of Silo ____________________________________________________________ 3

2.4 Roles and Responsibilities ____________________________________________________________ 3

2.4.1 Role of State Government ____________________________________________________________ 3

2.4.2 Role of Developer ___________________________________________________________________ 3

3. Storage Techniques 5

3.1 Conventional covered warehouse ______________________________________________________ 5

3.2 Covered Area Plinth CAP ___________________________________________________________ 5

3.3 Silos Concrete and Steel ____________________________________________________________ 6

3.3.1 Typical movement of grain in Silo _______________________________________________________ 7

3.3.2 Movement of grain in the proposed Silo facility at Sehore ____________________________________ 9

3.3.2.1 Bulk Procurement at Silo Facility _______________________________________________________ 9

4. Location Analysis 10

4.1 Location of the site _________________________________________________________________ 10

4.2 Current Status, Documents / Agreements _______________________________________________ 10

4.3 Utility connectivity at proposed site ____________________________________________________ 10

4.4 Connectivity ______________________________________________________________________ 11

5. Wheat Scenario in Madhya Pradesh 13

5.1 Wheat Supply Chain ________________________________________________________________ 13

5.2 Wheat Production __________________________________________________________________ 14

5.2.1 State Level Scenario _______________________________________________________________ 14

5.2.1.1 Factors leading to the growth _________________________________________________________ 16

5.2.2 District Level Scenario ______________________________________________________________ 20

5.3 Mandi Arrivals _____________________________________________________________________ 22



Content

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5.4 Procurement ______________________________________________________________________ 25



5.5 Summary of Wheat Scenario _________________________________________________________ 28

6. Storage Facilities 29

6.1 Present storage facilities ____________________________________________________________ 29

6.2 Storage Gap Assessment in Sehore District _____________________________________________ 32

7. Project Cost & Means of Finance 34

7.1 Project Cost ______________________________________________________________________ 34

7.1.1 Land and Land Development Cost _____________________________________________________ 34

7.1.2 Building and Civil Works _____________________________________________________________ 34

7.1.3 Plant and Machinery ________________________________________________________________ 35

7.1.4 Electricals, Automation and Other Utilities _______________________________________________ 38

7.1.5 Preliminary and Pre operative cost _____________________________________________________ 39

7.1.6 Contingencies _____________________________________________________________________ 39

7.1.7 Margin Money for WC _______________________________________________________________ 39

7.2 Means of Finance __________________________________________________________________ 40

8. Financial Feasibility Study 41

8.1 Assumptions ______________________________________________________________________ 41

8.1.1 Base case Assumptions _____________________________________________________________ 41

8.1.2 Assumptions considered for operations _________________________________________________ 41

8.1.2.1 Storage Capacity and Feed rate _______________________________________________________ 41

8.1.2.2 Operating Days ___________________________________________________________________ 41

8.1.2.3 Escalation Rates __________________________________________________________________ 41

8.1.3 Revenue Assumptions ______________________________________________________________ 42

8.1.4 Cost Assumptions__________________________________________________________________ 43

8.1.4.1 Power Cost _______________________________________________________________________ 44

8.1.4.2 Manpower Cost ___________________________________________________________________ 44

8.1.4.3 Receipt & Dispatch Expenses ________________________________________________________ 45

8.1.4.4 Fumigation Cost ___________________________________________________________________ 45

8.1.4.5 Repair & Maintenance Cost __________________________________________________________ 45

8.1.4.6 Insurance Cost ____________________________________________________________________ 46

8.1.4.7 Administration Expenses ____________________________________________________________ 46

8.1.4.8 Depreciation ______________________________________________________________________ 46

8.1.4.9 Taxation _________________________________________________________________________ 47

8.1.5 Feasibility Indicators and Ratios _______________________________________________________ 47

9. Sensitivity Analysis 48

9.1 Change in Capex __________________________________________________________________ 48

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9.2 Change in Revenues _______________________________________________________________ 48

9.3 Change in Opex ___________________________________________________________________ 49

9.4 Availability of VGF _________________________________________________________________ 50

9.5 Utilization of Facilities & Availability of VGF vs. Equity IRR __________________________________ 51

Conclusions & recommendations ________________________________________________________________ 51

Appendix A. Land Documents __________________________________________________________________ 53

Appendix B. Production _______________________________________________________________________ 54

Appendix C. Mandi Arrivals _____________________________________________________________________ 57

Appendix D. Procurement ______________________________________________________________________ 60

Appendix E. Storage Facility ____________________________________________________________________ 63

Appendix F. Quotations _______________________________________________________________________ 66

F.1. Buhler ___________________________________________________________________________ 66

F.2. Scafco __________________________________________________________________________ 74

F.3. Agrosaw _________________________________________________________________________ 83

Appendix G. Typical Layout Plan for setting up of Silo Facilities _________________________________________ 88

Appendix H. Projected Financial Statements Base Case ____________________________________________ 90

Tables

Table 3.1: Steel Silos vs. Concrete Silos __________________________________________________________ 6

Table 3.2: General Supply Chain _______________________________________________________________ 8

Table 4.1: Details of Procurement Centres in 20 KM range __________________________________________ 12

Table 5.1: Wheat Production & Yield Details Madhya Pradesh ______________________________________ 15

Table 5.2: Area under Irrigation in Madhya Pradesh ________________________________________________ 19

Table 5.3: Wheat Production in Sehore (2003-04 to 2011-12) ________________________________________ 20

Table 5.4: Mandi Arrivals in Madhya Pradesh (2003-04 to 2012-13) ___________________________________ 22

Table 5.5: Mandi Arrivals in Sehore (2003-04 to 2012-13) ___________________________________________ 23

Table 5.6: Procurement in Madhya Pradesh (2003-04 to 2012-13)_____________________________________ 25

Table 5.7: Procurement of Wheat in Sehore (2003-04 to 2012-13) _____________________________________ 27

Table 5.8: Summary of Wheat Scenario (MMT) ___________________________________________________ 28

Table 6.1: Storage Facility in Madhya Pradesh (in Lakh Tonnes) ______________________________________ 29

Table 6.2: Storage Facility expansion plans in Madhya Pradesh by 2014-15 (in Lakh Tonnes) _______________ 30

Table 6.3: Agency wise break-up of Storage Facility ________________________________________________ 31

Table 6.4: Storage Facilities in Sehore (as on 28-09-2012) __________________________________________ 31

Table 6.5: Storage Gap Assessment ____________________________________________________________ 33

Table 7.1: Project Cost Estimates ______________________________________________________________ 34

Table 7.2: Land and Land Develpoement Cost ____________________________________________________ 34

Table 7.3: Break up of Building and Civil Works Cost ______________________________________________ 35

Table 7.4: Plant and machinery Cost Estimates ___________________________________________________ 36

Table 7.5: Optimum Cost of Plant & Machineries - SKAFCO _________________________________________ 36

Table 7.6: Cost of Electricals, Automation and Other Utilities _________________________________________ 38

Table 7.7: Preliminary and Pre operative Maintenance cost __________________________________________ 39

Table 7.8: Working Capital Norms ______________________________________________________________ 40

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Table 8.1: Various rates considered ____________________________________________________________ 41

Table 8.2: Revenue Assumptions ______________________________________________________________ 42

Table 8.3: Power Cost Details _________________________________________________________________ 44

Table 8.4: Cost Assumptions for Permanent Manpower _____________________________________________ 44

Table 8.5: Cost Assumption for Contract Labour___________________________________________________ 45

Table 8.6: Repairs & Maintenance Expenses _____________________________________________________ 45

Table 8.7: Insurance Cost ____________________________________________________________________ 46

Table 8.8: Depreciation Rates _________________________________________________________________ 46

Table 8.9: Tax Rates ________________________________________________________________________ 47

Table 8.10: Project Financial Feasibility Indicators __________________________________________________ 47

Table 9.1: Change in Capex __________________________________________________________________ 48

Table 9.2: Change in Revenues _______________________________________________________________ 48

Table 9.3: Applicability of Commission Charge ____________________________________________________ 49

Table 9.4: Change in Opex ___________________________________________________________________ 49

Table 9.5: Availability of VGF vs Financial Indicators _______________________________________________ 50

Table 9.6: Availability of VGF & No commission charge vs Financial Indicators ___________________________ 50

Table 9.7: Utilization of Facilities & Availability of VGF vs. Equity IRR __________________________________ 51

Figures

Figure 3.1: Supply Chain & Indicative Process Flow of Silo Facilities ____________________________________ 8 Figure 3.2: Chain for Bulk Arrival at Silo Location ___________________________________________________ 9 Figure 4.1: Connectivity ______________________________________________________________________ 12 Figure 5.1: Supply Chain of Wheat in MP _________________________________________________________ 13 Figure 5.2: Wheat Production in Madhya Pradesh (2003-04 to 2012-13) _________________________________ 16 Figure 5.3: Wheat Production in Sehore (2003-04 to 2011-12) ________________________________________ 21 Figure 5.4: Mandi Arrivals of Wheat in Madhya Pradesh (2003-04 to 2012-13) ____________________________ 23 Figure 5.5: Mandi Arrivals of Wheat in Sehore (2003-04 to 2012-13)____________________________________ 24 Figure 5.6: Wheat Procurement in Madhya Pradesh (2003-04 to 2012-13) _______________________________ 26 Figure 5.7: Wheat Procurement in Sehore (2003-04 to 2012-13) _______________________________________ 28

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AAY Antyodaya Anna Yojana

APL Above Poverty Line

BPL Below Poverty Line

CAP Covered Area Plinth

CST Central Sales Tax

CWC Central Warehousing Corporation

Consultants Mott MacDonald Private Limited

DSCR Debt Service Coverage Ratio

FCI Food Corporation of India

GoI Government of India

INR Indian National Rupees

IRR Internal Rate of Return

LIFO Last In First Out

Markfed Marketing Federation

MPSCSC Madhya Pradesh State Civil Supplies Corporation

MPWLC Madhya Pradesh Warehousing & Logistics Corporation

MMT Million Metric Tonnes

MSP Minimum Support Price

PDS Public Distribution System

PPP Public Private Partnership

PMGSY Pradhan Mantri Gram Sadak Yojna

Glossary of Acronyms

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ROCE Return on Capital Employed

SLM Straight Line Method

RFP Request for Proposal

TPDS Targeted Public Distribution System

VGF Viability Gap Fund

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M.P. Warehousing & Logistics Corporation (MPWLC) has decided to undertake the development of steel

silos for storage of wheat at ten (10) locations in Madhya Pradesh through Public-Private Partnership on

Design, Build, Finance, Operate and Transfer (the "DBFOT") basis. In the process, Global Engineering,

Development and Management Consultants, Mott MacDonald, has been appointed by MPWLC for

preparation of feasibility report for setting up of steel silos for storage of wheat at all ten locations.

The conventional covered warehouses, covered godowns and CAPs have some short comings related to

Shelf Life of grains, Land requirement and Operational Cost. 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. Therefore, steel silos

are considered to be the best modern alternative storage technique suitable for Indian conditions. The silo

capacity of 50,000 MT has been considered at the proposed site in Sehore. This facility would have 4 bins,

each bin of capacity 12,500 MT.

The site for the proposed silo facility is already in possession of the State Government and is located in the

Murli village having an area of about 7 acres (following map). The site is about 3 kms from the nearest rail

head and is connected by Pradhan Mantri Gram Sadak Yojna (PMGSY) road. The procurement centres

are within the range of 20 kms of the site and have a total procurement capacity of about 60,000 MT of

wheat.

Location Map

There is an increasing trend in the production, Mandi arrivals and procurement of wheat over the past 3

years in Madhya Pradesh. The same trend is noted in the Sehore district as well.

The State Government has set up the Warehousing & Logistics Policy 2012 to promote establishment of

Silos in Madhya Pradesh. The incentives provided under the Policy include:

The projects shall be implemented by Design-Build-Finance-Operate-Transfer (DBFOT) mode.

Land shall be provided by the State Government on license basis for 30 years (extendable by mutual

consent for another 5 years at a time subject to a maximum period of 10 years).

Executive Summary

Proposed Site, Village: Murli

viii

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The State Government will provide upto a maximum of 20% Viability Gap Funding (VGF) support, if

required, in addition to 20% VGF by Government of India under the VGF Policy. However, such projects

will not be eligible for Capital Investment Subsidy and the Interest Subsidy.

Such projects shall be awarded through a transparent bidding process and such projects shall be

eligible for business guarantee for 10 years.

The project cost is estimated to be INR 3,063.52 lakhs for development of 50,000 MT capacity of Steel

Grain Silo consisting 4 (four) bins of 12,500 MT of capacity each. The land of about 7 acres would be

allotted by the State Government to the private developer.

The project cost is summarised in brief as below:

Project Cost Estimates

Description INR Lakhs

Land & Site Development 0.70

Buildings and Civil Works 1445.63

Plant and Machinery 966.95

Electrical Automation and 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 (TPC) 3063.52

The proposed capital structure includes 30% Equity & 70% Debt of the total project cost. As stated in State

Warehousing & Logistics Policy 2012 - the project is eligible for viability gap funding but the same has not

been considered in the base case.

The proposed break up of sourcing of funds under base case for development of the silo project is

tabulated as:

Proposed source of funds Base Case

Description Amount (Rs. Lakhs) Proportion (% of TPC)

Total Project Cost (TPC) 3063.52

Viability Gap Funding 0.00 0.00%

Equity 919.06 30.00%

Debt IIFCL Funding 612.70 20.00%

Debt Bank Funding 1531.76 50.00%

Major revenue streams & applicable charges are detailed in the following table:

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Revenue Assumptions

Sr. No. Revenues

Remarks INR / Qtl. INR / MT / Year (2013)

A. Receipt and Dispatch Charges

Reimbursement at actual expenses incurred

9.12 91.20

B.

Commission Charges

On value of actual quantity handled under

central pool system

1%

C. Storage Charges INR / Qtl. / Month INR / MT / Year

1. Variable Charge As on April 1, 2012 0.5 67.30

2. Fixed Charge As on April 1, 2012 5.75 723.46

Source: Details provided by MPWLC

As per the Warehousing & Logistics Policy 2012, the guaranteed storage charges shall be paid for 10

years at 100% utilization. Financial analysis has been carried out for a concession period of 30 years. The

base case financials assume that even after 10 years of guaranteed period, the project would achieve the

100% utilization for the proposed project facilities.

Financial feasibility indicators for base case have been assessed by analysis of projected financial

performance and are tabulated below.

Feasibility Indicators

Feasibility indicators / Ratios Value Unit

Project IRR 12.14% -

Equity IRR 14.05% -

Average DSCR 1.00 Times

Pay Back Period 9.96 Years

Source: IMM Analysis

It can be observed that the project IRR of the project for the base case assumptions is greater than WACC

of 9.70% and Equity IRR is also greater than 12% (minimum expected rate of return on equity). Apart from

that the DSCR for the project is 1. Since the project is also eligible for availing VGF, the consultant has

carried out sensitivity analysis to know the financial viability of the project at various levels of VGF

availability and the same has been given in the following table.

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Availability of VGF vs Financial Indicators

Availability of VGF Base

Case - 0% 10% 20% 25% 30% 35% 40%

Total Project Cost less VGF (INR lakhs) 3063.52 2757.17 2450.81 2297.64 2144.46 1991.29 1838.11

Amount of VGF (INR Lakhs) 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

Source: MM Analysis

From the above table, it can be observed that the project IRR is greater than the WACC of 9.97%, Equity

IRR is greater than 12% (minimum expected rate of return on equity) at all levels of utilization on

availability of VGF. However to achieve the desirable level of DSCR i.e. 1.20 times, at least 20% of VGF is

required.

Apart from above, the consultant has carried out sensitivity analysis to know the effect on various financial

indicators at various levels of utilization of facilities after guaranteed revenue period of 10 years. Financial

indicators at various levels of utilization of facilities after guaranteed revenue period of 10 years for base

case has been tabulated as:

Utilization after 10 years 100% 90% 80% 75% 65% 60%

Project IRR 12.14% 11.53% 10.86% 10.49% 9.69% 9.23%

Equity IRR 14.05% 13.22% 12.31% 11.80% 10.68% 10.03%

DSCR 1.00 1.00 1.00 1.00 1.00 1.00

Payback Period 9.96 9.96 9.96 9.96 9.96 9.96

It can be observed from the above table that with reduction in the utilization of facilities after 10 years of

guaranteed period from base case affects financial indicators adversely. No changes in DSCR and

payback period are observed because debt repayment is made during first 10 years of project life and

payback period is also less than 10 years while the cash flows are affected only after 10 years of project

life.

Also, the effect on equity IRR due to changes in utilization of facilities after 10 years of guarantee period

and various levels of availability of VGF cannot be ignored. The same has been tabulated as follows:

Utilization of Facilities & Availability of VGF vs. Equity IRR

Equity IRR Availability of VGF

0% 10% 20% 25% 30% 35% 40%

Utilization of Facilities after 10 years

100% 14.05% 15.85% 18.23% 19.75% 21.57% 23.83% 26.68%

90% 13.22% 15.02% 17.43% 18.97% 20.80% 23.07% 25.95%

80% 12.31% 14.11% 16.52% 18.07% 19.92% 22.22% 25.14%

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Equity IRR Availability of VGF

75% 11.80% 13.62% 16.03% 17.56% 19.41% 21.73% 24.70%

60% 10.03% 11.82% 14.24% 15.81% 17.71% 20.11% 23.18%

From the above table, Equity IRR under various cases of availability of VGF and utilization of silo facilities

after 10 years of guaranteed period can be observed. Equity IRR is greater than 12% (Minimum Expected

return on Equity) at all levels of utilization of facilities after 10 years and availability of VGF greater than

20%.

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Madhya Pradesh Warehousing & Logistics Corporation (MPWLC) has

decided to undertake the development of steel silos for storage of

wheat at ten (10) locations in Madhya Pradesh through Public-Private

Partnership on Design, Build, Finance, Operate and Transfer (the

"DBFOT") basis. These ten locations include Sehore, Dewas, Vidisha,

Bhopal, Indore, Ujjain, Satna, Harda, Hoshangabad and Raisen.

For preparation of feasibility report for setting up of steel silos for

storage of wheat at all ten locations, MPWLC, on behalf of the

Government of Madhya Pradesh, has engaged Mott MacDonald as the

Technical Consultant through competitive bidding.

This is the Feasibility Report of the Silo Project for Sehore for the

purpose of enabling the prospective bidders to assess the MPWLCs

requirements. The data and information should be validated by the

developer in order to take judicious decision for bidding for the project.

The Feasibility Study Report mainly comprises following sections:

1) Project Background

2) Storage Techniques

3) Location Analysis

4) Wheat availability

5) Present Storage Facilities

6) Project Cost & Means of Finance

7) Financial Feasibility Study

8) Financial Indicators

9) Sensitivity Analysis

1. Introduction



In order to make Madhya Pradesh as the Warehousing & Logistics

Hub of the country and increase the storage capacity of the state by 20

lakh MT through private investments, the Government of Madhya

Pradesh has framed the Warehousing & Logistics Policy 2012. The

Cabinet Order for the same was passed by the State Government in the

month of February 2012.

The objectives of Warehousing & Logistics Policy 2012 are as follows:

To develop the state of Madhya Pradesh as a Warehousing &

Logistics Hub of India

To provide modern warehousing and logistics facilities

To encourage private investment in development of

warehousing and logistics infrastructure in the state

To benefit the existing industries, traders, farmers and

agriculturists at large by providing cost effective warehousing

and logistics facilities

To generate employment in the State

The incentives under the scheme have been classified into two broad

heads:

Part A - Long Term Incentives

Part B - Early Bird Incentives

The guidelines and incentives as provided under the scheme include:

Projects shall be implemented under Design-Build-Finance-Operate-

Transfer (DBFOT) mode.

The land shall be provided by the State Government on the license

basis for 30 years (extendable by mutual consent for another 5

years at a time subject to a maximum period of 10 years).

The state Government will provide upto a maximum of additional

20% Viability Gap Funding (VGF) support, if required, in addition to

20% VGF by Government of India under the VGF Policy. However,

such projects will not be eligible for Capital Investment Subsidy and

the Interest Subsidy.

2. Project Background



Projects shall be awarded through a transparent bidding process

and such projects shall be eligible for business guarantee for 10

years.

! "

! "

The State Government has proposed that the capacity of the storage

facility at Sehore would be 50,000 MT. It is proposed that the facility will

have 4 bins each having a capacity of 12,500 MT.

#

As per the MP Warehousing & Logistics Policy 2012 and Information

Memorandum pertaining to Storage of Food Grains through Public

Private Partnership, the silos will be constructed under PPP mode for

which MPWLC will be the nodal agency.

# "$%

Selection of Private developers through transparent bidding

process

Land allotment

Providing VGF support, as required (20% from GoI and additional

20% from State, if required)

Business Guarantee ( guaranteed utilization and payment of the

silo facility ) initial 10 years

#

Project Financing

Construction - The developer will be responsible for the

construction of modern and temperature-monitored silos.

Operation & Maintenance of Silos - The developer will be

responsible for the maintenance of modern and temperature-

monitored Silos.

Scientific Management & Handling of Stocks The Developer will

be responsible for cleaning and drying, de-bagging (if required),



unloading, weighing, testing, storing, re-bagging, loading and

despatching the foodgrains in accordance with the terms of the

Concession Agreement. The designated State Authority will

arrange for delivery of foodgrains to the developer for storage and

for taking delivery of foodgrains from the Silos.

The developer may use upto 1.5 acres of land for other commercial

activities related to agro-based industry so as to enhance his

revenue streams. However, such activities shall be limited only to

agro-based activities but not limited to food processing, flour mills,

cold storage, sale of agricultural inputs, warehousing of agricultural

produce other than food grains, and may include convenience

shopping and eateries. This will help to cross-subsidise the

expenditure on preservation of food grains. The nature and extent

of such use shall be regulated in accordance with the concession

agreement and local laws.

For the above purpose, MPWLC may allot another 1 acre of land

over and above 7 acres of land allotted for Silo development.

The developer will undertake activities in compliance with

government regulations & laws.



! &

'

The conventional covered warehouses are the traditional godowns

developed with RCC type columns and roof structures. Godowns are

constructed with super structure of brick masonry in cement mortar. It

has generally brick or stone masonry for foundation. Godown units are

generally constructed in modules of capacity 5000 MT. The Food

Corporation of India (FCI) has developed guidelines for construction of

godowns suitable for the storage of food grains. Covered godowns can

store wheat in bagged as well as bulk form. However, FCI stores wheat

mainly in godowns in bagged form only, in the absence of mechanical

handling required for bulk storage.

Shelf Life: The shelf life of grains in godown depends on grain

management and preservation and therefore there is no fixed

period. In genera,l the grain can be kept safely in godowns until 16-

18 months.

Land Requirements: Warehouses are horizontal structures which

require significant land area. It is learnt that a 50,000 MT warehouse

would require an area of approximately 18-20 acres.

Ease of Construction & Maintenance: FCI has standardised the

construction and maintenance guidelines for godowns and it is

understood that a godown can be easily built in a short timeframe of

3-4 months as materials are available locally and the technical

know-how is also available.

Multiple Commodity Storage: As the warehouses have bagged

storage therefore it can accommodate multi commodities. Primarily

FCI and other procurement agencies store wheat and rice in the

existing godowns together.

! (

CAP is a scientific yet temporary storage technique with guided

specifications of concrete plinth, dunnage and tarpaulin. As CAP

storage is an open storage the grains need to be essentially bagged.

Shelf Life: Similar to godowns the shelf life of grains in CAP storage

is dependent on grain management and preservation and therefore

there is no fixed period. In general, the standard time for which the

grain can be kept completely safe in CAP storage is about 6 months.

3. Storage Techniques



Land Requirements: CAP storages are horizontal structures which

require sizeable land area. Since there is no peripheral structure, the

land requirement is lesser than that of a warehouse.

Ease of Construction & Maintenance: The FCI has standardised

the construction and maintenance guidelines for CAP and it is

understood that a CAP is easily built in short timeframe of a few

days as materials are available locally and the technical knowhow is

also available.

Multiple Commodity Storage: As the CAP storages are bagged

storage therefore they can accommodate multi commodities.

!! "( "

Silos are primarily the large tank type structures either made of steel or

concrete for storage of food grains or other materials in monitored

atmosphere. As silos are tank type high vertical structures, wheat or

other materials are stored in bulk form only.

Silo requires mechanized handling for loading and unloading of

material. At port locations which are more prone to corrosion, concrete

silos are constructed while for inland locations, steel silos are better as

they are quite cost effective as compared to concrete silos.

Techno-commercial comparison of steel and concrete silos are

summarised in Table below:

Table 3.1: Steel Silos vs. Concrete Silos

Parameters Steel Silos Concrete Silos

Capital Cost Lower Capital Cost Higher Capital Cost

Speed of Construction Faster to build in 10-12 months Takes more time 14 months

Scale of Capacity Bins of upto 20,000 MT Bins of Up to 3000-4000 MT

Requirement of Soil Quality Can be mounted where the soil quality is not optimum

Requires very good soil quality to erect concrete silo

Industrial Life 25-30 Years 50 Years

Risk Against Earthquake Less prone to earthquake More prone to earthquake

Mobility Can be dismantled from one place and erected again somewhere else

Cannot be erected again with same material, once dismantled

Source: MM Research

Only in case of port locations where the steel silos may be more prone

to corrosion, concrete silos are preferred.



Shelf Life: In silos, there are many aspects of grain management,

the management is mechanical rather than manual. In general, the

grain may be kept safely in silos for a period of 2 years.

Land Requirements: Silo is basically a vertical storage option as

compared to godowns or CAP which are horizontal type storages.

Hence, silos save a lot of land compared to warehouses. For a

50,000 MT silo, 7 acres land is required.

Ease of Construction & Maintenance: The construction of steel

silos can be done within 10 months including the lead time of

importing the steel structures. The erection time is about 2-3

months. Steel silos are quite easy to maintain.

Multiple Commodity Storage: As silos are meant for bulk storage,

two commodities cannot be kept within the same silo bin or even in

different bins as they have the same mechanical handling

equipment.

!! %%"

This section presents the typical concept for the Silo Facility based on

which the capital costs and O&M costs have been worked out. This

design has been based on discussions with major developers and

availability of information from plant & machinery suppliers and is

conceptual in nature.

Capacity of the Silo: The silo facility of capacity 50, 000 MT of wheat

would have 4 bins of 12,500 MT each.

Process: Grains could come in bulk or in bags. It would then be

unloaded from the conveyance it is brought to the facility (and

debagged if in bags at the debagging platform) and would be loaded

into the unloading hoppers. Upon unloading, the wheat grain would be

sampled through a pneumatic system linked to the laboratory. Upon

sampling results, the temporary storage hopper would dispatch the

grains into conveyor for pre-cleaning activities like removal of foreign

particles and weighing. Once in the storage bins, the grain will need to

be regularly ventilated. The ventilation is subject to constant

temperature controls through probes to maintain the grain quality all

along the storage period. To protect the grain from different

contamination sources, the grain will be fumigated by spraying as it

passes on the loading conveyors. During dispatch, the grain will be

taken out of each bin by a chain conveyor located in the gallery under

the bins. A bucket elevator would be connected to the chain conveyor



to carry the grain to the bagging plant. The wastes accumulated during

the process would be conveyed by a separate elevator to a waste bin to

be discharged locally.

The indicative process has been explained in figure 3.1

Figure 3.1: Supply Chain & Indicative Process Flow of Silo Facilities

Source: IMM Analysis

The generalised supply chain & process of activities of a typical grain

silo facility is as follows:

Table 3.2: General Supply Chain

At Mandi From Mandi to Storage point

1. Unloading of Wheat brought by farmers at Mandi 7. Loading onto trucks for further dispatch to storage point

2. Cleaning by Power Cleaner 8. Transportation from Mandi to Storage Point

3. Putting Mandi Marka on Bags 9. Unloading from trucks and stacking inside godowns for storage

4. Filling of wheat and placing it on beam scale platform 10. Storage in godowns

5. Weighment and unloading of bags from beam scale 11. Fumigation and Quality Control

6. Machine Stitching of bags 12. Destacking from stacks & loading onto trucks for issue to PDS

Source: MM Analysis

Bulk Arrival at Mandi Marking, Filling, Weighing, Bagging and Loading into

Trucks for Dispatch to Storage Depot

Truck Transport from Mandi to Silo Facility

Unloading, Debagging, Mechanized Handling,

Silo Storage and Preservation

Mechanized Unloading & Bagging

Bag Loading into Trucks for Further

Dispatch

Inter-State Arrivals

Local Produce of Wheat - Farmers

Debagging

Pre Cleaning Activities

Weighing

Storage

Despatch Chain Conveyor, Bucket Elevator

Bagging



!! )% ""

MPWLC has finalised the following activity chain for the proposed Silo

facility.

3.3.2.1 Bulk Procurement at Silo Facility

The bulk arrivals or bulk procurement facilities would be arranged at the

silo site by MPWLC. This would eliminate duplication of activities like

Marking, Filling, Weighing, Bagging, Loading & Unloading at Mandi or

by the procurement societies. The bulk arrivals can directly be moved

for quality check, followed by cleaning (if the grain is found suitable)

and then for preservation and storage. This option would help in

optimising the transportation cost between Mandi to storage point and

also reduce hassles of manual handling at Mandi during peak

procurement season. Bulk wheat as brought by farmer can be straight

away unloaded (after passed through quality check) into the dump-pit or

any other type of mechanized receiving arrangement of the silo facility.

The supply chain considering the bulk arrivals at the Silo facility is as

depicted in the figure below:

Figure 3.2: Chain for Bulk Arrival at Silo Location

Source: Discussion with MPWLC & IMM Analysis

A typical layout plan for setting up of Silo Facilities is attached herewith

as an Annexure G.

Bulk Arrival at Silo Debagging (If needed)

Weighing

Pre Cleaning Activities

Storage

Dispatch Chain Conveyor, Bucket Elevator

Bagging

Mechanized Receipts

Bag Loading into Trucks for Further

Dispatch

Local Produce of Wheat - Farmers



# *

Sehore is one of locations for the proposed Silo facilities in Madhya

Pradesh. The site for setting up the proposed steel grain silo of 50,000

MT capacity is located in the Murli village on an area of about 7 acres.

The detailed address of the site is as follows:

Patwari Halka No. 37, Khasra No. 5, Village Murli, Sehore, Madhya

Pradesh.

The indicative location of the proposed site is depicted in the map

below:

Map 4.1: Location Map

Source: IMM Analysis & Secondary Research

# '

"'+'%,%

The land for the proposed site of 7 acres in Murli village has already

been allotted by the State Government and MPWLC has taken

possession of the same. The documents pertaining to the land

agreement/allotment are attached as Appendix A. This land will be

provided by MPWLC to the developer for setting up the Silo in the

premises.

#! -

The estimated power requirement for the Silo facility is 800 KW, i.e 0.80

MW. The electricity to the proposed site would be made available from

an industrial area HT line passing within the site of the proposed

4. Location Analysis

Proposed Site, Village: Murli



project. However, the transformer is required at the project site for

further connectivity to the silo facility.

Moreover the developer will need to have the power back up facilities at

the site for uninterrupted operations of the facility as there is power cut

for about 2 - 3 hours on an average in a day.

The requirement of water for the silo facility would be met by installation

of bore / tube well at the site. The developer would need to install the

bore/tube well by undertaking suitable ground water depth assessment

at the site.

##

The site connectivity is an important factor due to involvement of

storage input from various locations.

The Branch Manager of MPWLC at Sehore, Mr. G.K. Saxena has

provided the details that the proposed site is about 3 kms from the

nearest rail head. The road connectivity of the site to the rail head is

also in place. The rail head is connected by 3 km stretch of Pradhan

Mantri Gram Sadak Yojna (PMGSY) road from the proposed site giving

the site an advantage in rail connectivity.

Also, the state highway, Bhopal Indore Highway is approximately 10

kms from the location. The PMGSY road connects the site to Bhopal -

Indore highway as well. The approach road to the site is the PMGSY

single lane road. The developer needs to consider any augmentation as

may be required in the approach road within his project costs and

accordingly the developer is advised to visit the site and assess the

local conditions and accessibility and use his technical knowledge in the

matter.

The details regarding the rail/road connectivity & the procurement

centres of the site is detailed in figure below:



Figure 4.1: Connectivity

Source: MM Analysis

The procurement centres which are in the range of 20 kms of the site

have the capacity to procure about 60,000 MT of wheat. Some of the

procurement centres which are in the 20 kms range of the proposed

site are tabulated below:

Table 4.1: Details of Procurement Centres in 20 KM range

Names of the Procurement Centres in 20 kms range

Sehore Vrujesh Nagar Jhagariya Jharkheda

Vijori Natlakhedi Pipliya Ahmedpur

Pachama Shyampur Meera Barkheda

Bhaukhedi Aariya Icchavar Chandbad

Source: MPWLC

Sehore Vijori

Pachama

Natlakhedi

Aariya

Pipliya

Bhaukhedi

Shyampur

Jhagariya

Meera

Ichavar Jharkheda

Ahmedpur Chandbad

Procurement Centres within 20 kms radius of Silo

Rail Head

Steel Silo Site

Transportation to PDS System

B I Highway

10 kms PMGSY Road 3 kms



. /"'

In Madhya Pradesh, the supply chain of wheat is as shown in figure

below:

Figure 5.1: Supply Chain of Wheat in MP

5. Wheat Scenario in Madhya Pradesh

State Farmers

FCI

Stored by Central, State and Private Agencies

Procurement Societies

State Agencies: Civil Supply +

Markfed

Private Traders/Dealers

End Consumers

PDS / Other Schemes

Field Production

Mandi Arrivals

Procurement

Allocation

Offtake

Storage



Source: MM Analysis

In MP, as shown in above figure the farmers bring their produce to the

procurement societies The Food Corporation of India and other State

Agencies purchase wheat, paddy and rice in large quantities from these

procurement societies at the minimum support price (MSP) announced

by the Government. If the farmers are able to get a higher price for their

produce, they are free to transact with private players, food grain

dealers and traders. The food grains are then stored at the various

storage facilities of State Agencies, Private Warehouses, Co-operative

Societies, etc. After procurement by the Central Government agencies,

they allocate the wheat to the states under the Targeted Public

Distribution System (TPDS).

For the proposed Silo facility, it is contemplated by MPWLC that bulk

procurements shall be done at the site of the Silo which shall eliminate

few activities and duplication of activities at Mandis and at Silo. The

process of bulk procurement at Silo site shall render benefits in terms of

integrated logistics as well as other factors as stated below:

Handling costs at Mandi would be eliminated as the bulk arrivals will

be directly at the silo location only.

Transportation from Mandi to Storage Point i.e. Silo location would

be eliminated as the bulk arrival of the grains would be at the Silo

location.

Transit Loss from Mandi to Silo would be eliminated

Duplication of the activities like Marking, Filling, Weighing, Bagging,

and Loading & Unloading carried out at the Mandi level & Silo facility

would be eliminated.

Procured grains would be immediately stored in scientific manner

which would preserve the quality and nutritional value.

. / '

. "*"

India is the worlds second largest producer of wheat- accounting for

about 12% of the global wheat production.

Madhya Pradesh is amongst the major wheat producing states of India.

Madhya Pradesh attained a rare achievement beating Haryana &

Punjab in wheat production in the last 10 years. The other major wheat

producing states in India are Uttar Pradesh, Punjab, Haryana,

Rajasthan, Bihar and Gujarat. These states together account for about

95% of total wheat produced in the country.



Madhya Pradeshs agricultural growth rate has been increasing over

the years and it was 18 percent during year 2011-12, highest in the

states history. The state received the Krishi Karman Award from

Central Government and was adjudged as the state with highest

agricultural production in the country. Madhya Pradesh not only

excelled in total agricultural production but beat Haryana and Punjab in

the production of wheat.

The area under the agriculture (and so is the area under wheat

cultivation) in Madhya Pradesh has increased considerably in the past

decade. In 2002-03, the area under wheat cultivation was about 3381

Hectares. This has increased to about 5434 Ha in 2012-13. The

production of wheat in the state has increased from 4.9 MMT in 2002-

03 to about 16.1 MMT in 2012-13. The increase in yield per hectare is

one of the major reasons for the increase in production of wheat. The

details are as tabulated below:

Table 5.1: Wheat Production & Yield Details Madhya Pradesh

Year Area

(000 Hectares)

Production

(000 Tonnes)

Yield

(Kg/Hectare)

YOY production Growth

(%)

YOY Yield Growth

(%)

2002-03 3381 4923 1456 -

2003-04 4091 7365 1800 49.60% 23.6

2004-05 4200 7327 1745 -0.52% -3.1

2005-06 3785 6200 1638 -15.38% -6.1

2006-07 4275 7848 1836 26.58% 12.1

2007-08 4101 6737 1643 -14.16% -10.5

2008-09 4010 7280 1815 8.06% 10.5

2009-10 4471 8873 1985 21.88% 9.3

2010-11 4645 9227 1986 3.99% 0.1

2011-12 4901 12703 2592 37.67% 30.5

2012-13 5434 16104 2964 26.77% 14.3

Source: Agriculture Department, Government of Madhya Pradesh

The wheat production of Madhya Pradesh for the last decade is

represented graphically in figure below



Figure 5.2: Wheat Production in Madhya Pradesh (2003-04 to 2012-13)

16.1

12.7

9.28.9

7.36.2

7.86.7

7.37.4

0

2

4

6

8

10

12

14

16

18

20

03

-04

20

04

-05

20

05

-06

20

06

-07

20

07

-08

20

08

-09

20

09

-10

20

10

-11

20

11

-12

20

12

-13

Year

Pro

du

cti

on

(in

MM

T)

Source: MM Analysis based on data of Agriculture Department, Government of Madhya Pradesh

The state has seen moderate increase in wheat production from 2003-

04 till 2008-09. There has been a considerable increase in wheat

produce in the state during the period 2008-09 to 2012-13 as compared

to the previous period. The short term CAGR (last 5 years i.e 2008-09

to 2012-13) is about 21.96% which indicates that considerable

improvement in the growth rate of the wheat produce has been

observed in the state. The Long term CAGR (last 10 years i.e 2003-04

to 2012-13) is about 9.08% which shows that over the longer time

frame, the growth is moderate.

Substantial year on year positive growth in wheat production has been

observed in Madhya Pradesh after year 2008-09.

5.2.1.1 Factors leading to the growth

A moderate growth in the yield (Kg/hectare) of wheat was registered

during 2002-2007. Further from 2008 onwards, the yield registered an

increasing trend. In 2011-12 maximum increase in the yield was

registered- an increase by about 30% over previous year. Thus, the

overall yield nearly got doubled from 1456 Kg/Ha in 2002-03 to about

2964 Kg/Ha in 2012-13. A number of concrete efforts/measures were

taken by the State Government and these were the reasons leading to



increase in productivity. Significant among this is the financial incentive

the State Government is offering to the farmers to grow wheat

The State Government is providing Rs. 100 per quintal bonus to

farmers on wheat and paddy in addition to the minimum support

price declared by the Union Government.

Further, the discussions with the Director, Agriculture provided the

following key insights leading to the growth in agriculture and that of

production of wheat in Madhya Pradesh:

In Madhya Pradesh, till 2002-03, Agriculture was not the priority

sector. But in the XIth Plan period, the State Government had

increased the budgetary allocation primarily to seek the matching

funds under the Central Government Schemes (RKVY and National

Food Security Mission). Under these schemes, the area and

productivity increase were mainly targeted by the GOI.

The agriculture growth rate in the state had been ve for many years

between 1996 to 2004. But over the last few years, the agricultural

growth rate in the state has been high, registering double digit

figures in the last two years:

2008-09: 9.91% (as against all India figures of 2%)

2009-10: 10.62%

2010-11: 1.48% (lower due to frost related disaster)

2011-12: 18.69%

2012-13: 14.28%

Wheat and paddy are not profitable crops for the state, primarily as

majority of the area (70% at present) is rainfed. However, only after

certain interventions were provided for cultivation of wheat and

paddy, the farmers in the state were encouraged to grow these

crops:

Electricity/Diesel subsidy was provided

Wells/ponds were dug under MNREGA

Subsidy was availed under RKVY for increasing the sprinkler

and drip irrigation facilities- additional subsidy provided by the

state government for sprinkler and drip irrigation facilities



Sowing of the wheat variety requiring less water ( can grow with

only 3 times water supply)

Release of water at right time( during the crop growth phase) by

Irrigation Department

Seed treatment

Weed control

Use of Urea only after field is watered ( as against earlier

practice of sprinkling urea and then watering the fields which

would drain the urea out of the soil)

Usage of Neem coated urea for better retention of the same to

the soil

Increase of zinc sulphate as micro nutrient for productivity

increase

Monetary Support by the State Government for growing wheat-

over and above on MSP, the state government provides bonus

of INR 150/quintal.

The above stated measures have enabled the increase in irrigated

area from 10% (of the total cultivated area) in 2002-03 to 30% in

2012-13.

In case of wheat, the average marketable surplus is 70% of the total

production in Madhya Pradesh (20% kept for seed and personal

consumption while another 10% is kept for exchange).

Their expectation for year on year growth rate is around 9% for next

two years subject to the same scenario of rainfall, growth in irrigation

facilities continue in future.

The productivity increase has also been supported by the irrigation

facilities. The priority to irrigation has been given to increase agriculture

production and productivity and constantly the area under irrigation has

also been increasing. During 2001-02 to 2012-13, the state succeeded

in increasing area under irrigation from 9 lakh hectares to 20 lakh

hectares. The State Micro Irrigation Mission has been launched to

ensure better use of irrigation water in the state. Following statistics

explain the development of irrigation facilities within the state of Madhya

Pradesh:



Table 5.2: Area under Irrigation in Madhya Pradesh

Year Irrigated Area

(In Lakh Ha)

YoY Growth Rate

2000-01 7.36 -

2001-02 9.40 27.72%

2002-03 7.69 -18.19%

2003-04 10.07 30.95%

2004-05 10.35 2.78%

2005-06 10.13 -2.13%

2006-07 9.37 -7.50%

2007-08 9.48 1.17%

2008-09 9.71 2.43%

2009-10 8.87 -8.65%

2010-11 9.76 10.03%

2011-12 16.34 67.42%

2012-13 20.21 23.66%

Source: http://www.mpwrd.gov.in/

From the above table it can be seen that the agricultural area under

irrigation has increased almost three times in a decade resulting into

the substantial growth in production of crops including wheat.

At present, majority of the districts in Madhya Pradesh are facilitated

with irrigation facilities. The same has been depicted in the figure

below.



Photo 5.1: District wise Irrigation Area percentage

Source: www.mp.gov.in/wrd/

On the power supply arena, the feeder separation project has been

launched to provide uninterrupted power to farmers. Also, the subsidy is

being provided to farmers for taking permanent electrical pump

connection.

. *"

The wheat production of Sehore district for the last 10 years is as

tabulated below.

Table 5.3: Wheat Production in Sehore (2003-04 to 2011-12)

Years Production (in MMT)

2003-04 0.3468

2004-05 0.3649

2005-06 0.2334

2006-07 N.A.



Years Production (in MMT)

2007-08 0.1890

2008-09 0.2269

2009-10 0.4011

2010-11 0.3272

2011-12 0.6668

Source: Agriculture Department & Land Records, Government of Madhya Pradesh

The wheat production of Sehore in 2003-04 & 2004-05 was about

0.3468 MMT & 0.3469 MMT respectively. The production decreased

considerably in 2005-06 to about 0.2334 MMT. The wheat production in

2007-08 was about 0.189 MMT which had increased gradually for the

next two years and was about 0.401 MMT in 2009-10. But in 2010-11,

the production dropped to 0.327 MMT. Subsequently in 2011-12, the

production doubled to about 0.667 MMT. The following graph depicts

the trend in wheat production in Sehore district over the period 2003-04

to 2011-12.

Figure 5.3: Wheat Production in Sehore (2003-04 to 2011-12)

0.33

0.67

0.40

0.230.19

0.350.36

0.23

0.000

0.100

0.200

0.300

0.400

0.500

0.600

0.700

0.800

2003-04 2004-05 2005-06 2007-08 2008-09 2009-10 2010-11 2011-12

Year

Pro

du

cti

on

(in

MM

T)

Source: Agriculture Department, Government of Madhya Pradesh

The short term (2007-08 to 2011-12) CAGR for Sehore district is about

37.05% signifying considerable growth in the recent years & an

increasing trend of wheat production in the district. However the long

term (2003-04 to 2011-12) CAGR is about 8.51% which indicates that in

the long run the growth has been moderate as compared to the growth



rate in the recent years. However, it can be observed from the year on

year trend of production in Sehore that the production has suddenly

increased from year 2008-09 onwards.

The production details of wheat in Sehore are enclosed as Appendix B.

.! )

In Madhya Pradesh, the farmers bring their produce to the nearby

Mandi where the activities like Marking, Filling, Weighing and Bagging

are done. Then the wheat is procured by the Central/State Procurement

agencies or private sector and the bagged wheat is loaded into trucks

for Dispatch to Storage Depot.

.! "*"

The wheat arrival to the mandis of Madhya Pradesh for the year 2003-

04 was about 2.456 MMT which increased by 55% to about 3.809 MMT

in 2004-05. A reduction was seen in Mandi Arrivals of wheat for the two

consecutive years 2005-06 & 2006-07. The Mandi Arrivals in 2007-08

was about 4.769 MMT registering the highest increase over its

preceding year by about 57% which increased moderately in 2008-09,

but registered a fall in 2009-10 to about 4.355 MMT. In 2010-11 and

2011-12 considerable increase was registered and the mandi arrivals

were about 6.098 MMT and 8.234 MMT respectively. The mandi

arrivals for 2012-13 were about 9.883 MMT indicating an increasing

trend in the past 3 years. The details pertaining to the Mandi Arrivals for

the State is as tabulated below

Table 5.4: Mandi Arrivals in Madhya Pradesh (2003-04 to 2012-13)

Years Mandi Arrivals(In MMT) Y.O.Y Growth Rate(%)

2003-04 2.456 18.10%

2004-05 3.809 55.07%

2005-06 3.136 -17.67%

2006-07 3.037 -3.13%

2007-08 4.769 57.02%

2008-09 4.990 4.62%

2009-10 4.355 -12.72%

2010-11 6.098 40.02%

2011-12 8.234 35.03%

2012-13 9.883 20.03%

Source: www.mpmandiboard.gov



The short term CAGR (2008-09 to 2012-13) is about 18.63% indicating

considerable increase of Mandi Arrivals in recent years. The long term

CAGR (last 10 years) is about 16.73% which also indicates that the

Mandi Arrivals during the last decade has been growing. The following

graph depicts the year-wise Mandi Arrivals of wheat during the period

2003-04 to 2012-13.

Figure 5.4: Mandi Arrivals of Wheat in Madhya Pradesh (2003-04 to 2012-13)

9.88

8.23

6.10

4.364.994.77

3.043.143.81

2.46

0.00

2.00

4.00

6.00

8.00

10.00

12.00

2003-0

4

2004-0

5

2005-0

6

2006-0

7

2007-0

8

2008-0

9

2009-1

0

2010-1

1

2011-1

2

2012-1

3

Year

Man

di

Arr

ivals

(in

MM

T)

Source: Mandi Board website

.! *"

The Mandi Arrivals of Sehore district for the last 10 years is as

tabulated below

Table 5.5: Mandi Arrivals in Sehore (2003-04 to 2012-13)

Years Mandi Arrivals (in MMT) Y.O.Y Growth Rate(%)

2003-04 0.124 12.17%

2004-05 0.223 80.29%

2005-06 0.143 -35.69%

2006-07 0.121 -15.26%

2007-08 0.208 70.92%

2008-09 0.215 3.56%

2009-10 0.136 -36.88%

2010-11 0.297 118.60%

2011-12 0.437 47.29%



Years Mandi Arrivals (in MMT) Y.O.Y Growth Rate(%)

2012-13 0.506 15.80%

Source: www.mpmandiboard.gov

The Mandi Arrivals for the district in 2003-04 was about 0.124 MMT

which increased by 80% to about 0.223 MMT in 2004-05. During 2005-

06 & 2006-07, a drop in Mandi Arrival was registered which thereafter

increased by about 71% in 2007-08. The Mandi Arrivals fell in 2009-10

by about 37% over preceding year. The Mandi Arrivals in 2010-11

registered the highest growth of more than doubling the arrivals over its

previous year to about 1.297 MMT. The increasing trend was followed

in 2011-12 and 2012-13 with Mandi Arrivals of about 0.437 MMT &

0.506 MMT respectively

The short term CAGR (2008-09 to 2012-13) for Sehore district is about

23.86% indicating considerable increase in Mandi Arrivals. But the long

term CAGR (2003-04 to 2012-13) for Mandi Arrivals is about 16.95%

which indicates that an increasing trend of Mandi Arrival in the district

has been registered over decade. The following graph depicts the year-

wise Mandi Arrivals for Sehore district for period 2003-04 to 2012-13.

Figure 5.5: Mandi Arrivals of Wheat in Sehore (2003-04 to 2012-13)

0.14

0.30

0.51

0.44

0.220.21

0.12

0.14

0.22

0.12

0.00

0.10

0.20

0.30

0.40

0.50

0.60

2003-0

4

2004-0

5

2005-0

6

2006-0

7

2007-0

8

2008-0

9

2009-1

0

2010-1

1

2011-1

2

2012-1

3

Year

Man

di A

rriv

als

(in

MM

T)

Source: Mandi Board website

It can be observed from the above graph that the mandi arrivals at

Sehore district have increased steeply over the last 4 years.



The details of mandi arrivals in Sehore are enclosed as Appendix C.

.# '%

When the farmer brings the wheat to the mandi, it is in the form of

harvested stalks with wheat grains attached to it. It needs to be cleaned

before the grains can be weighed. Before the auction, the grain is

cleaned, dried and sampled. After cleaning, the grains are heaped. The

stock is then auctioned in the presence of the Procurement Agency

Representative, Marketing Board Representative, Food and Civil

Supplies Inspector, procurement society representative and farmer.

In Madhya Pradesh, if the buyer is the state procurement agency, the

price offered is the Minimum Support Price (MSP) plus the bonus

amount. The procurement price is set by the Commission for

Agricultural Costs and Prices (CACP) based on considerations of cost

of production and includes a fair return to land and family labour of the

farmers. The Food Corporation of India and other State Agencies

purchase wheat in large quantities from mandis at the minimum support

price (MSP) announced by the Government.

.# "*"

In Madhya Pradesh, the State agencies have started procuring wheat

substantially from 2007 onwards. The wheat procurement by State

Agencies in Madhya Pradesh for the last 10 years is as tabulated below

Table 5.6: Procurement in Madhya Pradesh (2003-04 to 2012-13)

Years Procurement (in MMT)

Y.O.Y Growth Rate(%)

2003-04 0.200 -44.50%

2004-05 0.349 74.34%

2005-06 0.484 38.77%

2006-07 0.000 -

2007-08 0.057 -88.12%

2008-09 2.410 4092.61%

2009-10 1.967 -18.37%

2010-11 3.538 79.83%

2011-12 4.965 40.35%

2012-13 8.508 71.35%

Source: MPSCSCL

Since the concerted efforts on procurement of wheat by the state

agencies started in 2007 in Madhya Pradesh, thus before that the



wheat Procurement was quite negligible. The growth rate was negative

in the earlier years and in the year 2006-07 there was no procurement.

Based on the efforts of the State agencies, substantial procurement

started in 2008-09 which was 2.410 MMT which showed an increasing

trend in later years and was about 8.508 MMT in 2012-13. Thus, the

procurement by the State Agencies during recent years has been

considerably high owing to the incentives provided by the State

Government to the farmers like providing Rs. 100 per quintal bonus on

wheat and paddy in addition to the minimum support price declared by

the Union Government so that they get fair price for their produce.

The short term CAGR (2008-09 to 2012-13) of wheat Procurement by

the State agencies is about 37.07% which is a considerable increase

during the period.

The following graph gives the year-wise wheat procurement in Madhya

Pradesh over the period 2003-04 to 2012-13

Figure 5.6: Wheat Procurement in Madhya Pradesh (2003-04 to 2012-13)

8.508

4.965

3.538

1.9672.41

0.0570

0.4840.3490.2

0

1

2

3

4

5

6

7

8

9

20

03-0

4

20

04-0

5

20

05-0

6

20

06

-07

20

07

-08

20

08

-09

20

09-1

0

20

10-1

1

20

11-1

2

20

12

-13

Year

Pro

cu

rem

en

t (i

n M

MT

)

Source: MPSCSCL

.# *"

As discussed earlier, the State agencies in Madhya Pradesh started

procuring wheat substantially from 2007 onwards. The wheat

procurement by State Agencies in Sehore district for the last 10 years is

as tabulated below.



Table 5.7: Procurement of Wheat in Sehore (2003-04 to 2012-13)

Years Procurement (In MMT) Y.O.Y Growth Rate(%)

2003-04 0.007 -44.42%

2004-05 0.016 136.61%

2005-06 0.027 68.40%

2006-07 0.000 -

2007-08 0.001 -

2008-09 0.106 8722.48%

2009-10 0.068 -36.15%

2010-11 0.195 187.50%

2011-12 0.234 20.30%

2012-13 0.416 77.66%

Source: MPSCSCL

The same trend of wheat procurement is noticed at the district level as

was registered at the State level. The procurement of wheat by the

State agencies in 2008-09 was about 0.106 MMT which showed an

increasing trend in 2012-13 to 0.416 MMT. The procurement by the

State Agencies during recent years showed considerable high growth

owing to the incentives provided by the State Government to the

farmers leading to higher production.

The short term CAGR (2008-09 to 2012-13) of wheat procurement by

the State agencies in the Sehore district is about 40.74% which shows

considerable increasing trend. The following graph depicts wheat

procurement in Sehore district over the period 2003-04 to 2012-13



Figure 5.7: Wheat Procurement in Sehore (2003-04 to 2012-13)

0.234

0.416

0.195

0.068

0.106

0.0270.001

0.000

0.0160.007

0.000

0.050

0.100

0.150

0.200

0.250

0.300

0.350

0.400

0.450

2003-0

4

2004-0

5

2005-0

6

2006-0

7

2007-0

8

2008-0

9

2009-1

0

2010-1

1

2011-1

2

2012-1

3

Year

Pro

cu

rem

en

t (i

n M

MT

)

Source: MPSCSCL

.. "'%%

/"

The supply chain of wheat has been summarised in the following table.

Table 5.8: Summary of Wheat Scenario (MMT)

Year Production Mandi Arrivals Procurement

State Sehore District



2002-03 4.923 - - - - -

2003-04 7.365 0.347 2.456 0.124 0.200 0.007

2004-05 7.327 0.365 3.809 0.223 0.349 0.016

2005-06 6.200 0.233 3.136 0.143 0.484 0.027

2006-07 7.848 N.A. 3.037 0.121 0.000 0.000

2007-08 6.737 0.189 4.769 0.208 0.057 0.001

2008-09 7.280 0.227 4.990 0.215 2.410 0.106

2009-10 8.873 0.401 4.355 0.136 1.967 0.068

2010-11 9.227 0.327 6.098 0.297 3.538 0.195

2011-12 12.703 0.667 8.234 0.437 4.965 0.234

2012-13 16.104 N.A. 9.883 0.506 8.508 0.416

Source: MM Analysis based on data of Madhya Pradesh State Agencies



0

In Madhya Pradesh, there are three agencies in the public sector which

are engaged in building large scale storage or warehousing capacity.

These are:

Food Corporation of India (FCI)

Central Warehousing Corporation (CWC) & State Warehousing

Corporations

State Procurement Agencies Co-operative Societies, etc

Foodgrains procured by FCI and State/Govt agencies are stored in

godowns as well as cover and plinth (CAP).

The agency wise storage facilities for the past 7 years in the Madhya

Pradesh is as tabulated below

Table 6.1: Storage Facility in Madhya Pradesh (in Lakh Tonnes)

Agency Name 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13

MPWLC 10.47 10.97 11.29 11.47 11.61 11.66 11.86

CWC 4.52 4.52 4.56 4.56 4.56 4.56 4.56

MARKFED 5.06 5.06 5.29 5.29 5.43 5.43 5.43

FCI 3.29 3.29 3.29 3.29 3.29 3.29 3.29

MANDI BOARD 2.57 2.57 2.62 2.62 2.62 2.62 2.62

CO-OPERATIVE SO. 4.63 4.63 4.63 4.63 4.63 4.63 4.63

LVS 2.92 2.92 4.00 4.00 4.00 4.00 4.00

OILFED 2.07 2.07 2.07 2.07 2.07 2.07 2.07

M.P.AGRO 0.31 0.31 0.31 0.31 0.31 0.31 0.31

NAFED 0.15 0.15 0.15 0.15 0.15 0.15 0.15

PRIVATE warehouse (Rular godon scheme) 18.64 26.23 33.51 39.56 44.90 53.13 69.08

RIDF MPWLC - - - - - - -

PEG godown (Prt.) - - - - - - -

PIG (SILO) - - - - - - -

MPWLC (SILO) - - - - - - -

BUNDHELKHAND VISHESH PACAKAGE - - - - - - -

IAP - - - - - - -

Warehousing & Logistics Policy (Early Bird) - - - - - - -

Total 54.63 62.72 71.72 77.95 83.57 91.85 108.00

Y.O.Y Growth Rate in Storage capacity (%) 14.81% 14.35% 8.69% 7.21% 9.91% 17.58%

Source: MPWLC

6. Storage Facilities



The total storage capacity in 2006-07 was about 54.63 Lakh MT which

increased by about 14% in 2007-08 to 62.72 Lakh MT and by about

14% in 2008-09 to 71.72 Lakh MT. The growth in the storage capacity

was moderate in 2009-10 & 2010-11 which registered a growth of about

8 to 9%. In 2011-12, the storage capacity increased by about 10% over

previous year and was about 91.85 Lakh MT which thereafter increased

by 17.58% and was about 108.00 Lakh MT in 2012-13.

The expansion plans for storage capacity by different agencies in

Madhya Pradesh during 2013-14 & 2014-15 are tabulated below:

Table 6.2: Storage Facility expansion plans in Madhya Pradesh by 2014-15

(in Lakh Tonnes)

Agency Name Proposed Expansion Total Capacity as of 2014-15

MPWLC 6.23 18.09

CWC 1.3 5.86

MARKFED 5.43

FCI 3.29

MANDI BOARD 2.62

CO-OPERATIVE SOCIETY 4.63

LVS 4.00

OILFED 2.07

M.P.AGRO 0.31

NAFED 0.15

PRIVATE warehouse (Rural Godown Scheme) 2 71.08

RIDF MPWLC 7 7.00

PEG godown (Private) 12.85 12.85

PEG (SILO) 3.5 3.50

MPWLC (SILO) 5 5.00

BUNDHELKHAND VISHESH PACKAGE 6.5 6.50

IAP 1.8 1.80

Warehousing & Logistics Policy (Early Bird) 15 15.00

Total 61.18 169.18

Source: MPWLC

The total anticipated expansion in the storage capacity by various

agencies between years 2013 to 2015 is proposed to be about 61.18

Lakh MT thereby enhancing the capacity in 2014-15 to about 169.18

Lakh MT.



The short term CAGR (last 5 years) i.e. for the period 2010-2015 is

about 15% and the long term CAGR (last 9 years) i.e. for the period

2006-2015 is about 13% which signifies that the growth rate of the

storage capacity is increasing moderately in the range of 13% to 15%.

The details regarding the district wise storage facility as provided by

MPWLC have been enclosed as Appendix E.

The agency wise break-up of the storage facility is as tabulated below:

Table 6.3: Agency wise break-up of Storage Facility

Agency Name

2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15

MPWLC 19% 17% 16% 15% 14% 13% 11% 21% 27%

CWC 8% 7% 6% 6% 5% 5% 4% 4% 3%

MARKFED 9% 8% 7% 7% 6% 6% 5% 4% 3%

FCI 6% 5% 5% 4% 4% 4% 3% 2% 2%

MANDI BOARD 5% 4% 4% 3% 3% 3% 2% 2% 2%

Co-Op. Soc. 8% 7% 6% 6% 6% 5% 4% 3% 3%

Private 34% 42% 47% 51% 54% 58% 64% 55% 50%

Others 10% 9% 9% 8% 8% 7% 6% 9% 11%

Total 100% 100% 100% 100% 100% 100% 100% 100% 100%

Source: MPWLC

In 2012-13, MPWLC has about 11% of the storage capacity while that

of CWC & MARKFED are around 4% & 5% respectively. FCI, Mandi

Board and Co-operative society respectively have around 3%, 2% & 4%

of the storage capacity. A significant proportion of the storage capacity

in Madhya Pradesh is owned by the private developers, nearly 60%.

The other agencies like Olifed, MP Agro etc together have around 9%

of the total capacity.

Agency wise present storage facilities in the district of Sehore are

tabulated below.

Table 6.4: Storage Facilities in Sehore (as on 28-09-2012)

Sr. No. Name of Agency Capacity

(in MT)

1 WLC 27000

2 FCI 0

3 CWC 0

4 Markfed 9600



Sr. No. Name of Agency Capacity

(in MT)

5 Olifed 48490

6 Private 130594

7 Mandi Board 6400

8 Co-op Society 14360

Total 236444

Source: MPWLC

0 "$%"

Storage infrastructure is required to cover the time lag between

production and consumption.

The storage gap has been assessed based on the historical trend of

production, Mandi Arrivals and Storage facilities within the district of

Sehore.

As discussed in the previous section of this report, out of total

production in Sehore about 67% of the wheat was traded at mandis.

Based on the past production trends of wheat in the district (as

discussed in the previous chapter of this report), the future production

of wheat in the district is expected to increase at 8.94% in the short

term i.e next five years. However, after 5 years the production may

stabilise (with the optimum utilization of land) and could register 5%

growth rate for next 5 years after which the production can be expected

to grow at national growth rate of 3% in the subsequent years.

On the growth of storage infrastructure in the state, it was informed by

MPWLC that the growth rate in storage facilities in near future (for next

two years) is expected to be 5%.

The projections of the wheat production (based on assumptions as

mentioned above), mandi arrivals (at 67.54% of total production) and

storage facilities have been worked out. Based on the same,

anticipated storage gap in the district has been arrived at and is

tabulated as in following table.



Table 6.5: Storage Gap Assessment

Year Production Mandi Arrivals Storage Facilities Storage Gap

2012-13(actual) 749220 506010 278018 227992

2013-14 816167 551225 356764 194461

2014-15 889097 600481 435510 164971

2015-16 968544 654138 435510 218628

2016-17 1055089 712589 435510 277079

2017-18 1149369 776264 435510 340753

2018-19 1206837 815077 435510 379567

2019-20 1267179 855831 435510 420321

2020-21 1330538 898622 435510 463112

2021-22 1397065 943553 435510 508043

2022-23 1466918 990731 435510 555221

2023-24 1509605 1019561 435510 584051

2024-25