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8/8/2019 Prospects of Infra Structural Financing for Warehousing
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Address onAddress on
Prospects of Infrastructural financing in Warehousing
AtAt
ASSOCHAM House, 47, Prithviraj Road, Opposite Safdarjung Tomb, New Delhi,INDIA
[November 15th, 2010 from 9.30 AM - 1.30 PM]
byby
Saurabh AgarwalSaurabh AgarwalViceVice--Chairman, Indian Institute of Finance, Delhi, INDIAChairman, Indian Institute of Finance, Delhi, INDIA
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AcknowledgementsAcknowledgementsThe author gratefully acknowledge the technical support of IndianInstitute of Finance and Faculty of Management Studies (DU). Wewould specially like to thank Prof. J. D. Agarwal (IIF), Prof. ManjuAgarwal (DU) and Prof. Madhu Vij (FMS) who have inspired me inmany ways to work on this complex issue.
We would also like to convey our thanks to Prof. Aman Agarwal (IIF),Prof. Yamini Agarwal (IIF) and Prof. Megha Agarwal (DU) for givingme their suggestions and comments.
The views and reviews presented in the presentation are views and opinions of theauthor, based on his research and do not depict institutional or countries views orof the institutions the author is associated with. All errors and omissions are myown.
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Section I:Section I: OverviewOverview
Section II:Section II: Micro Economic PerspectiveMicro Economic Perspective
Section III:Section III: Investment OpportunitiesInvestment Opportunities
Food grainsFood grains
HorticultureHorticulture
Water StorageWater Storage
Data WarehousingData Warehousing
PortsPorts
Public Private PartnershipPublic Private Partnership
Section IV:Section IV: Financing Infrastructure and BusinessesFinancing Infrastructure and Businesses
FocusFocus
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Warehousing Development and Regulatory Authority (notifiedWarehousing Development and Regulatory Authority (notified
October 2010)October 2010)
Warehousing (Development and Regulation) Act, 2007Warehousing (Development and Regulation) Act, 2007
Effects of the Act and AuthorityEffects of the Act and Authority
Few takers for Centres Subsidized Food grain releaseFew takers for Centres Subsidized Food grain release
Supreme Court Remark Give it free instead of wasting itSupreme Court Remark Give it free instead of wasting it
Recommendation of Smt. Sonia Gandhi headedRecommendation of Smt. Sonia Gandhi headedNationalNational
Advisory CouncilAdvisory Councilfor providing subsidised food grains tofor providing subsidised food grains to
everyone in 150 poorest districts of Indiaeveryone in 150 poorest districts of India
Saurabh Agarwal, Prospects of Infrastructural financing in WarehousingSaurabh Agarwal, Prospects of Infrastructural financing in Warehousing
Overview
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Agricultural economy and surplus production
Mohenjodaro
Great Granary of Mohenjodaro consisted oftwenty sevenblocks of brickwork criss crossed by ventilation channels
Presence of loading bays from which the grains were raised
in the storage .
HarappaHarappa has two rows ofsix granaries. The total area was
about 800 sq. m.
Area for threshing grains
Glorious Indus Valley Civilization
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235.13 (in lakh MT) of foodgrains with FCI (10/2010)
Storage
Better warehousing will enable better management ofInflation
Political will for promoting warehousing infrastructure
Liberalised Scheme for hiring of warehouses (2010)
GOI unique Private Entrepreneur Guarantee Scheme (2010)Guaranteed hiring of godowns
Income Tax Benefit u/s 35 AD
Foodgrains
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FIFO Technology to be part of the Warehousing Policy
System of Containers marked with date of storage to
enable quick transportation and disaster managementIn- Out Method of Storage
Storage
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Y shaped Storage of
Food grains
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How to Manage Warehouses
Adoption of EOQ Method to manage foodgrains
Quantity
Period
Maximum
Average
Minimum
Danger Zone
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Warehouse Receipt Financing Agricultural and Non
Agricultural Commodities
The negotiability of warehouse receiptThe negotiability of warehouse receipt
Registration and accreditation of warehouses intending toRegistration and accreditation of warehouses intending to
issue negotiable warehouse receiptsissue negotiable warehouse receipts
System of quality certification and grading of commoditiesSystem of quality certification and grading of commodities
How will the farmers and Financial Institutions BenefitHow will the farmers and Financial Institutions Benefit
Postponement of sales beyond the harvest season
WRs are secure collateral for obtaining finance
price takers to that of price takers to that of price negotiatorsprice negotiators
Is There a Downside for the Farmer?
Saurabh Agarwal, Prospects of Infrastructural financing in WarehousingSaurabh Agarwal, Prospects of Infrastructural financing in Warehousing
Micro Economic Perspective
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To provide information of
Accredited Warehouses
Availability of Warehouses
On time, On budget, Right Functionality
Serve Commodities Future Market and Spot Exchanges
The nationwide grid-computing initiative, Garuda, aggregatessupercomputing and storage resources nationwide, provides a
problem-solving environment, and enables collaborative R&D for
research and user community. Garuda connects 45 premier
institutions across17 cities.
Data Warehousing & Electronics and
information technology
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Ports
Areas have been opened up to the private sector on BOT
basis
Areas opened up include construction of cargo-handling
berths and dry docks, container terminals and warehousing
facilities and ship-repair facilities.
Ports Warehousing Investment Opportunities
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Introduced in 1997, under which food grains are procured and
distributed by the State Governments themselves
Advantages Wider coverage of farmers
Higher Efficiency in the form of saved transportation and
reduced pilferage.
Is successful for rice but not for wheat.Questions
How can this be made efficient?
How can it be extended to other agricultural commodities and
non-agricultural commodities
Decentralized Procurement Scheme (DCP)
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FinancingFinancing
A. Domestic FinancialMarkets:
i. Equity finance
ii. Debt Finance
iii. Domestic Capital Market
iv. Financial Developmental Institutions
B. International FinancialMarkets:
i. Multilateral Institutions
ii. Export Credit Agencies (ECA)iii. External Commercial Borrowing (ECB)
iv. Syndicated Loans
v. Private placement
vi. Global Depository Receipts (GDRs)
vii. Weather Derivatives & Hybrid Instruments
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C. Internal Resources
D. Public Private Partnership
E. Forward Need Financing
This will prevent cost of capital being added to cost of
foodgrains
FinancingFinancing
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Thank YouThank You
forforyour Patienceyour Patience
If you have any unanswered Questions . You can reach me atIf you have any unanswered Questions . You can reach me [email protected]
Saurabh Agarwal, Prospects of Infrastructural financing in WarehousingSaurabh Agarwal, Prospects of Infrastructural financing in Warehousing