Transforming logistics, creating value

Transcription

1 Vol 3 Issue 6 Nov - Dec 2012 SHREE SHUBHAM LOGISTICS: Transforming logistics, creating value See Meeting today s UPS survey complex transportation challenges executives in Healthcare Asia Industries now look for a onestop shop for SCM You At

2 cover story SHREE SHUBHAM LOGISTICS: Transforming logistics, creating value V. RAMANUJAM Indian economy is an agrarian economy in nature with agriculture contributing to approximately 20 per cent of the country s GDP and providing livelihood to around 65 per cent of India s population, says Aditya Bafna, Executive Director of Shree Shubham Logistics Limited which plays a pivotal role in the agri business and agricultural warehousing sector. Farming households account for 60 per cent of rural areas and direct income from farming activities accounts for over 50 per cent of farm household incomes. This emphasizes the importance of agriculture and agricultural markets in India. Though India enjoys a leadership position in the production of several agricultural commodities, especially horticultural produce, its share in the global market is minimal due to the lack of competitiveness on cost and quality front and storage facilities, Bafna says. In an exclusive one to one with INDIAN TRANSPORT & 4 NOV - DEC 2012 INDIAN TRANSPORT & LOGISTICS NEWS

3 There is still a huge demand-supply gap of around million tonnes across all major States in India LOGISTICS NEWS, Bafna said that challenges faced by the Indian agricultural marketing and storage sector in India are many: usage of old storing, handling and transportation practices; absence of latest scientific storage infrastructure and practices (both dry and cold warehouses) result in substantial loss both at farm and mandi level, loss of food during transit and other old storage practices like absence/ lack of cleaning, grading and sorting facilities in the producing areas and inadequate facilities for proper weighing (often found absent); government food procuring agencies are the major participants in agri warehousing sector. The warehousing business in India is dominated by the public In our Phase I we have developed 12 Agri Logistics Parks (ALPs) in Rajasthan and Gujarat with storage capacity of around 2 lakh metric tonnes and investment of around Rs. 130 crore. Aditya Bafna Executive Director Shree Shubham Logistics Limited sector, Bafna said. Naming them he said Food Corporation of India (FCI), Central Warehousing Corporation (CWC) and State Warehousing Corporations (SWCs). The total capacity available for warehouse storage is around million tonnes, amongst which FCI has a capacity of 13 million tonnes, CWC contributes around 6.99 million tonnes, and SWCs contribute around million tonnes and other food grain procurement agencies owned by various governments contribute million tonnes. There is still a huge demandsupply gap of around million tonnes across all major States in India. Shree Shubham Logistics The foundation of Shree Shubham Logistics Limited was laid by the Bafna family and the concept of Agri Logistics Park (ALPs) was first conceived in India by Aditya Bafna and Shubhendra Kumar Bafna. Aditya Bafna was a pioneer in the concept of ALPs and spearheaded the setting up of Shree Shubham Logistics Ltd. With a strong vision, Aditya Bafna developed an extensive network for the new venture within a short span of time. Within eight years of professional experience, he became known well for his profound knowledge in the agriculture warehousing sector. Incorporated on January 19, 2007, Shree Shubham Logistics today serves all commodity stake holders involved in commodity value chain, and set up its own global standards in Agri Logistics Parks (ALPs) in the States of Rajasthan and Gujarat. SSLL s Agri Logistics Parks proved extremely beneficial in reducing the distance between primary producers and consumer by providing various services under one roof, avoiding multiple handling of stocks and reduction in transit loss of commodities. With an established and proven business model and on a growth path, SSLL became a subsidiary of Kalpataru Power Transmission Limited and subsequently converted into a Public Limited company. In continuation with the existing ALP at Jodhpur Basni and Jodhpur Mandore, SSLL developed its first Agri Logistics Park at Unjha in Gujarat on October 15, SSLL initiated its second ALP at Metra in Rajasthan on February 22, 2009, providing all range of agri services under one roof (single point solutions for agri logistics services). Bafna said, In our Phase-I we have developed 12 Agri Logistics Parks (ALPs) in Rajasthan and Gujarat with storage capacity of around 2 lakh metric tonnes and investment of around Rs. 130 crore. Cold chain facilities at SSLL Our cold storage facilities have innovative, quality and future flexibility designed at the initial stage of the process, Bafna says. They are developed to last and remain flexible and efficient enough to be used for decades. We design our cold storages to maximise the storage space within the building envelope. SSLL facilities are installed with scientifically proven cold storage systems based on the latest technology, developed considering multi- function facility and providing ambient temperature warehousing, cold storage, processing units, auc- / editorial@itln.in NOV - DEC

4 cover story Shree Shubham Logistics VISION: To meet the current and future logistics needs of the Indian commodity industry by building a strategic network of logistics infrastructure across India and integrating all value links of the agri and non-agri supply chain. SERVICES: Host of high quality services include: storage & preservation with weighing facilities; testing and certifi cation (Analysis & Certifi cation Laboratory); fumigation and pest management; Collateral Management for commodity funding; commodity procurement; domestic & international trading; retail sales of branded commodities. COMPETITIVE EDGE: Single-point solutions for storage and preservation, quality assurance by following best fumigation method and other related services. Best infrastructure facility: auction yard, one-way traffi c movement, pre-engineered building. Walls and ceilings made of Polynum help regulate the inside temperature of the warehouse (8-12 degrees C). Turbo ventilators and roof monitors on the ceiling for better aeration inside the warehouse building. Rodent repellents and gate curtains prevent rodent and bird entry in warehouses. Fire fi ghting system, roof insulation, docking arrangement prevents the warehouse from foreign particle entry and external hazards. The entire complex is affi xed with directional, safety and informational signage for disciplined and smooth movement of man, vehicle and material; 24 hours power back-up, fi re hydrant system along with round the clock security; electronic weigh bridges of 60/100 tonnes each; SAP enabled Infrastructure. tion yards, weigh bridges and other support amenities. Service Yards are designed to provide space for free movement of trucks. Estate roads are properly specified, maintained and policed to avoid congestion. SSLL is developing Agri Logistics Parks at Rajasthan (Kota, Chomu, Chomu Amla and Jodhpur); Madhya Pradesh (Sagar,Vidisha, Itarsi, Harda, Dewas, Neemuch, Mandsaur and Ujjain); Maharashtra (Nagpur, Sangli, Akola, Latur and Jalgaon); and Gujarat (Deesa). According to Bafna, all the Agri Logistics Parks will have minimum storage capacity of around 20,000 tonnes with the facilities like storage and preservation, weighing, auction yards, cleaning, grading and sorting units, kisaan bazar, farmer s institute, and bank extension counters to facilitate commodity financing, commodity exchange platforms, testing and certification, disposal services through its domestic and international trading department, etc. SSLL s aim is to provide complete commodity value chain to its customers. With this expansion, SSLL s presence will increase to 76 locations across the states of Rajasthan, Gujarat, Madhya Pradesh and Maharashtra. SSLL tie-ups SSLL has entered into a MoU with Rajasthan State Warehousing Corporation (RSWC) to manage and operate its warehouses at 38 locations with a storage capacity of around 4.78 lakh tonnes in Rajasthan. SSLL is currently operating and managing warehouses at more than 60 locations in Rajasthan and Gujarat with a total storage capacity of around 6.84 lakh tonnes. SSLL is also accredited by National Commodity & Derivatives Exchange (NCDEX) and NC- DEX Spot Exchange (NSPOT). Through the accreditation, SSLL has been approved as an assayer and a warehouse service provider to market participants of NCDEX and NSPOT in storage of goods as well as delivery of goods from SSLL and other NCDEX and NSPOT accredited warehouses/delivery centers. SSLL also has tie-ups with various banks like Axis Bank, ICICI Bank, HDFC Bank, IndusInd Bank, Union Bank of 6 NOV - DEC 2012 INDIAN TRANSPORT & LOGISTICS NEWS

5 India, State Bank of India, Development Credit Bank, Oriental Bank of Commerce, IDBI Bank, YES Bank, Punjab National Bank etc. WaY forward In order to play a pivotal role in the burgeoning agri business in India, SSLL plans to expand its footprints in the states of Bihar, Uttar Pradesh, Chhattisgarh, Karnataka, Andhra Pradesh and Delhi in Phase III and would be developing Agri Logistics Parks at 15 to 20 locations to create an additional storage capacity of around 4 lakh tonnes. We stand by our slogan: Transforming Logistics, Creating Value, said Bafna. We have created tremendous value in agri warehousing industry with the usage of modern infrastructure and by offering all allied services under one roof. In agri warehousing sector, SSLL has implemented scientific storage pattern with modern infrastructure both in our dry and cold storage to overcome issues on loss of food during transit. SSLL has a scientifically upgraded cold storage agri logistics parks with updated technology. We use Polynum insulation in all our warehouses which helps maintain the temperature and thus protects and preserves the stocks, ensuring its quality, Bafna said. benefits of Signing mou With SSLL SSLL has entered into Memorandum of Understanding (MOU) with Rajasthan State Warehousing Corporation (RSWC) in Financial Year to manage and operate its warehouses at 38 locations in the State. Following the MoU, SSLL has not only upgraded the RSWC s existing warehouses but has also created employment opportunity, technical efficiency and modern innovative facilities like electronic weigh bridge of 60T each, computerisation at all the warehouses covered under the MoU, testing and certification laboratories, implementation of SAP module across all locations to enable systematic entry of data, and generated employment of around 360 staff for RSWC management and operation. SSLL has also invested around Rs. 11 crore in upgradation and modernisation of RSWC warehouses. We have created tremendous value in agri warehousing industry with the usage of modern infrastructure and by offering all allied services under one roof. Due to efforts made by SSLL, the utilisation levels at 38 RSWC warehouses have increased to record 95 per cent in FY as against historical average of around 60 per cent. In , due to procurement by NAFED, RSWC had recorded unexpected utilisation levels. Post-signing of MoU, profit before tax of Rajasthan State Warehousing Corporation has shown an upward trend and has increased from Rs. 1 crore in FY to around Rs. 18 core in FY ending March 31, RSWC s profits have multiplied almost 18 times in last three years post signing of MoU with SSLL. hub-and-spoke model Bafna says that the most viable model is one with multiple options to all private participants for creation of warehouses/upgrading the existing warehouses with modern infrastructure/availing the benefits of subsidy through NABARD, creating a central warehouse with large capacity and / editorial@itln.in NOV - DEC

6 cover story providing all the services under one roof which includes centralisation of various warehouses related activities to minimise costs which includes storage and preservation, testing and certification, processing units, grading, sorting, cleaning and packaging. Suggestive steps Suggesting some steps for further development, Bafna said that the government procurement agencies like FCI, CWC, SWC should provide opportunities to private participants to manage and operate their existing warehouses. WDRA should expedite the process of accreditation of warehouses and increase their number in all States. This will not only ensure availability of quality warehouses in the country, but also give a boost to government s efforts for popularising financing against Negotiable Warehouse Receipts (NWR) and would ease commodity funding process by lenders through NWR. Concerned State governments should consider making available suitable land parcels under government control either on a long lease or through outright sale at concessional rates, and encouraging participant of private players. In view of the huge investments already made in these structures, both by the entrepreneurs and the government (in the form of subsidy), it would be in the fitness of the things to make these structures storage worthy by introducing scientific management and preservation practices, at least in the warehouses having a capacity of 1,000 tonnes or more, so that the objectives of government schemes are met fully. Under the PEG scheme floated by FCI, government may directly invite competent and organized private companies instead of following a long tender process. FCI may invite large private players for participating in creation of storage capacity at required locations based on the potential in the surplus producing areas. Instead of tender process FCI may offer the current approved storage charges which are applicable under one year reservation, i.e. Rs per tonne/month (rate for FY ) subject to revision from time to time. This will help in creation of additional storage capacities on immediate basis and will also ensure financial viability for the investments made by private companies in such high capital intensive projects. The Forward Market Commission (FMC) commodities regulator should increase the number of delivery centres for various agricultural commodities in Gujarat, Maharashtra, Rajasthan, MP and Karnataka, where commodities like pulses, oilseeds, cotton and other commercial crops are grown in abundance. Further FMC should allow commodity exchanges to extend their delivery center up to 150 km. Suggested financial assistance Suggesting financial assistance, Bafna said that banks/ financial institutions should design customised products to meet the specific requirements of this sector. Loans provided for setting up warehousing infrastructure, especially for large capacities, must be classified as Direct Agricultural Loans and be made available below the base rate declared by the banks. For such loans Rate of Interest may be fixed at 5 per cent p.a. Bafna added, Through NA- BARD, government may also consider providing an interest incentive, which will bring down the cost of funds by at least 4 to 5 per cent p.a. Thus, we would be able to provide the storage space at concessional rates to the farmers. Term lending institutions, like NABARD (which has been provided with low cost dedicated funds for supporting this sector), should be allowed to lend directly, so that funds are available at reasonable rates of interest. There is a need to ration the subsidy on the basis of location/ proximity to surplus producing centres, need/potential, minimum capacity benchmarks (that will ensure viability of investment), ability of the warehouse owner to provide scientific storage and preservation services/ other allied amenities, etc. No warehouse in the country should be provided any subsidy unless it is licensed/accredited by WDRA. Capital subsidy for private companies under the Agriculture Marketing Infrastructure, Grading and Standardisation (AMIGS) must be revised upwards to 30 per cent of the total project cost (land + construction) and the ceiling of Rs. 50 lakh be revised to Rs. 3 crore, so that large facilities can be developed under the huband-spoke model. Under the Gramin BhandaranYojana (Rural Godown Scheme), the normative cost of construction of warehouses of more than 1,000 tonnes may be increased to Rs. 4,500 per tonne and accordingly cap for private companies may be increased from 15 per cent to 30 per cent subsidy of the total project cost (land + construction). The ceiling on subsidy component may be increased to Rs. 4 crore from Rs.1.35 crore. This will help private companies to build large capacities with modern infrastructure in rural area. Government may also consider providing agri-industry status to warehousing industry and accordingly respective State governments may provide concession in water, electricity, stamp duty, and any other municipal charges or rents. 8 NOV - DEC 2012 INDIAN TRANSPORT & LOGISTICS NEWS

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