setting up of steel grain silo in sehore, madhya pradesh
TRANSCRIPT
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Setting up of Steel Grain Silo in Sehore, Madhya
Pradesh
Feasibility Report
May 2013MPWLC, Government of Madhya Pradesh
Confidential
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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
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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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Setting up of Steel Grain Silo in Sehore, Madhya Pradesh Confidential
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
5.3.1 State Level Scenario _______________________________________________________________ 22
5.3.2 District Level Scenario ______________________________________________________________ 23
Content
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Setting up of Steel Grain Silo in Sehore, Madhya Pradesh Confidential
5.4 Procurement ______________________________________________________________________ 25
5.4.1 State Level Scenario _______________________________________________________________ 25
5.4.2 District Level Scenario ______________________________________________________________ 26
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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Setting up of Steel Grain Silo in Sehore, Madhya Pradesh Confidential
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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Setting up of Steel Grain Silo in Sehore, Madhya Pradesh Confidential
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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Setting up of Steel Grain Silo in Sehore, Madhya Pradesh Confidential
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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Setting up of Steel Grain Silo in Sehore, Madhya Pradesh Confidential
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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Setting up of Steel Grain Silo in Sehore, Madhya Pradesh Confidential
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
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Setting up of Steel Grain Silo in Sehore, Madhya Pradesh Confidential
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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Setting up of Steel Grain Silo in Sehore, Madhya Pradesh Confidential
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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Setting up of Steel Grain Silo in Sehore, Madhya Pradesh Confidential
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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Setting up of Steel Grain Silo in Sehore, Madhya Pradesh Confidential
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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Setting up of Steel Grain Silo in Sehore, Madhya Pradesh Confidential
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
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Setting up of Steel Grain Silo in Sehore, Madhya Pradesh Confidential
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
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Setting up of Steel Grain Silo in Sehore, Madhya Pradesh Confidential
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),
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Setting up of Steel Grain Silo in Sehore, Madhya Pradesh Confidential
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.
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Setting up of Steel Grain Silo in Sehore, Madhya Pradesh Confidential
! &
'
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
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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.
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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
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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
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!! )% ""
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
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Setting up of Steel Grain Silo in Sehore, Madhya Pradesh Confidential
# *
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
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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:
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Setting up of Steel Grain Silo in Sehore, Madhya Pradesh Confidential
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
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. /"'
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
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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.
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Setting up of Steel Grain Silo in Sehore, Madhya Pradesh Confidential
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
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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
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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
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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:
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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.
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Setting up of Steel Grain Silo in Sehore, Madhya Pradesh Confidential
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.
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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
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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
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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%
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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.
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Setting up of Steel Grain Silo in Sehore, Madhya Pradesh Confidential
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
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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.
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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
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Setting up of Steel Grain Silo in Sehore, Madhya Pradesh Confidential
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
State Sehore District
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
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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
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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.
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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
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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.
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Setting up of Steel Grain Silo in Sehore, Madhya Pradesh Confidential
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