KD3 Narela

Final Feasibility Report: Development of Silos at Narela, Delhi on
DBFOT basis under PPP Mode
Development of Silos for Storage of Wheat at Narela, Delhi on DBFOT

Basis under PPP Mode
Revised Final Feasibility Report

November 2015
Food Corporation of India (FCI)
Submitted by:
SREI Infrastructure Finance Limited

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Final Feasibility Report: Development of Silos at Narela, Delhi on DBFOT basis under PPP Mode
Ministry of Consumer Affairs, Food & Public Distribution
FOOD CORPORATION OF INDIA

Final Feasibility Report (KD3) for Development of
Silos on DBFOT at Narela, Delhi
CONTENTS
1.
INTRODUCTION....................................................................................................................................................... 5
1.1.
PROJECT BACKGROUND .......................................................................................................................... 5
1.2.
OBJECTIVES OF THE STUDY .................................................................................................................. 6
1.3.
SCOPE OF CONSULTANCY ...................................................................................................................... 7
1.3.1.
General TOR ......................................................................................................................................... 7
1.3.2.
Details of Scope of Services............................................................................................................ 7
1.4.
2.
CURRENT POLICIES DIRECTIVES & AGREEMENTS ...............................................................................11

2.1.
ORGANISATIONAL SETUP ....................................................................................................................11
2.2.
STRUCTURE OF FOOD GRAIN MANAGEMENT ............................................................................11
2.2.1.
National Food Security System ..................................................................................................11
2.2.2.
Procurement of Food Grains for Central Pool ......................................................................13
2.2.3.
Storage Management ......................................................................................................................14
2.2.4.
Capacity Augmentation Programmes......................................................................................15
2.3.
2.3.1.
2.4.
3.
CURRENT PROJECT STATUS .................................................................................................................. 9
GRAIN SUPPLY CHAIN & ROLE OF FCI ............................................................................................16

Existing role of FCI and Storage Capacity ..............................................................................16
REGULATORY FRAMEWORK ...............................................................................................................17
2.4.1.
National Food Security Bill, 2013..............................................................................................17
2.4.2.
Decentralized Procurement Scheme........................................................................................18
2.4.3.
High Level Committee Report, 2000 ........................................................................................19
2.4.4.
Private Entrepreneurs Guarantee (PEG) Scheme...............................................................19
EXISTING SUPPLY CHAIN OF STORAGE FACILITIES ..............................................................................21

3.1.
3.1.1.
CONVENTIONAL COVERED WAREHOUSE .....................................................................................21

Covered Area Plinth (CAP) ...........................................................................................................21
3.2.
SILOS ..............................................................................................................................................................22
3.3.
CONVENTIONAL STORAGE vs. MODERN SILO STORAGE ......................................................22
3.3.1.
Indian Scenario .................................................................................................................................22
3.3.2.
Flat Warehouse Vs Modern Vertical Silos ..............................................................................22
3.3.3.
Experience of Creating Silos in India .......................................................................................23
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3.3.4.
4.
Road Map for future Impetus on Bulk Handling and Transport ...............................23
TECHNICAL FEASIBILITY ..................................................................................................................................26

4.1.
SITE APPRECIATION: PROPOSED SILO AT NARELA, DELHI..................................................26
4.1.1.
Location Appreciation....................................................................................................................26
4.1.2.
Connectivity Status .........................................................................................................................26
4.1.3.
Existing Infrastructure ..................................................................................................................26
4.2.
FACTORS INFLUENCING CAPACITY PLANNING .........................................................................28
4.2.1.
Factors ..................................................................................................................................................28
4.2.2.
State Wise Production....................................................................................................................30
4.2.3.
Allotment and Off-take of Food Grain .....................................................................................31
4.2.4.
State Wise Storage Capacity ........................................................................................................32
4.2.5.
Gap Analysis: Allotment vs Storage Facility..........................................................................32
4.3.
SUPPLY CHAIN OF MODERN SILOS ..................................................................................................33
4.4.
CAPACITY PLANNING AND PROJECT FACILITY ..........................................................................35
4.5 PROJECT SCOPING .............................................................................................................................................35

4.6 ASSOCIATED INFRASTRUCTURE ................................................................................................................37
4.6.1 Internal Roads and Parking ...................................................................................................................37
4.6.2 Power Supply...............................................................................................................................................37
4.6.3
Fire Detection and Fighting System..............................................................................................38
4.6.4
Buildings and Sheds ............................................................................................................................38
4.7
RAILWAY SIDING ..........................................................................................................................................38
4.7.3
4.8
Methodology for Train Operation .................................................................................................40
TECHNICAL FEASIBILITY ..........................................................................................................................41
5. PROJECT FINANCIAL VIABILITY & SUSTAINABILITY................................................................................42

5.1 Rationale of Viability Analysis under VGF model on DBFOT basis under PPP .........................42
5.2 PROJECT COST ......................................................................................................................................................42
5.2.1 factors affecting Project Cost ..................................................................................................................42
5.2.3 CONSOLIDATED COST SUMMARY OF PROJECT ................................................................................43
5.3 PROJECT FINANCIALS ...........................................................................................................................................51
5.3.1 Assumptions and Summary........................................................................................................................51
5.4 Project Cost ........................................................................................................................................................53
5.4 .1 Means of Finance .........................................................................................................................................53
5.4.2
Revenues .......................................................................................................................................................54
5.4.3 Operational Expenses ..................................................................................................................................55

5.4.4 Projected Profitability ................................................................................................................................56
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5.4.5 DSCR Calculation...........................................................................................................................................57

5.4.6 Cash Flows .........................................................................................................................................................58
5.4. 7 Financial Returns.........................................................................................................................................59
5.4.8 Sensitivity Analysis .....................................................................................................................................60
3.11 Financial Viability and Sustainability .................................................................................................61
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Chapter 1
INTRODUCTION
1.
INTRODUCTION
1.1.
PROJECT BACKGROUND
The Food Corporation of India (FCI) was established on 14th January, 1965 under the Food
Corporations Act, 1964. FCI is a Public Sector Undertaking under the Department of Food &
Public Distribution, Ministry of Consumer Affairs, Food & Public Distribution, Government of
India (GOI).
The Corporation is the main agency responsible for execution of food policies of the
Government of India. The functions of FCI primarily relate to the Purchase, Storage, Movement,
Distribution and Sale of food grains on behalf of the Government of India. It is also engaged in
the Handling, Storage and Distribution of Sugar in North Eastern States and Jammu & Kashmir
and two Union Territories Andaman & Nicobar Islands and Lakshadweep Island.
The main objectives of FCI are;
(a) Procurement of food grains from farmers at remunerative prices;
(b) Distribution of food grains to consumers through PDS, particularly the vulnerable sections
of society at affordable prices; and
(c) Maintenance of buffer stock of food grains for food security and price stability.
Food Corporation of India (FCI) is a Public Sector Undertaking under Department of Food &
Public Distribution, Ministry of Consumer Affairs and Food & Public Distribution. The general
superintendence, direction and management of the affairs and business of the Corporation vest
in the Board of Directors.
Indias grain production has steadily increased due to advances in technology, but post-harvest
loss is constant at 10%. Losses during storage, accounts for around 6% of the total losses as
proper storage facilities are not available. In India, food grains are stored using traditional
structures by small farmers. The surplus grains are stored with government agencies like: Food
Corporation of India (FCI), Central and State warehousing Corporations. The commonly used
storage method is Cover and Plinth (CAP) storage, which is economical but loss of grains is
inevitable. Very few scientific storage structures like silos are available with these agencies.
The government is taking initiatives now in building silos for long-term safe storage of grains
since we do not have enough storage capacity as of now. Drying of harvested grains to safe
moisture levels will reduce losses to a greater extend. However, very less literature is available
on behavior of grains after harvest for Indian climatic conditions. Therefore, there is a need for
research to develop management guidelines for safe storage and drying to ensure quality
management of stored grains.
The High Level Committee (HLC) was constituted by GoI on 20th August 2014 to evaluate the
possibility of restructuring of Food Corporation of India by identifying the hiccups in the
existing supply chain. The HLC submitted the final report on 19th Jan 2015 and recommended
key steps to achieve the desired results. One of the recommendations of HLC is that the FCI
should invite bids to convert its conventional go-downs to modern silos under PPP mode,
which will not only substantially reduces the overall wastage of the food grains, but also the
private sector brings in investments in the system and mechanization / automation of
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operations will induce efficiency in the whole supply chain of procurement, storage and
distribution.
Therefore, based on the above recommendations, Food Corporation of India (FCI) is envisaging
the Development of Steel Silos for Storage of wheat in consuming and distributing areas,
initially at eleven (11) pilot locations in six states (Punjab, Delhi, Bihar, Assam, Maharashtra
and Karnataka) of India on Design, Build, Finance, Operate and Transfer (the "DBFOT") basis
under Public Private Partnership (PPP) mode. The modern silos are envisaged to be developed
within the premises of selected FCI depots by utilizing the vacant land and land covered under
Cover and Plinth (CAP). The current strategies of FCI have been to phase out and dispense with
the methods CAP storage by next financial year to enhance quality of storage
Against this background, FCI has rightly steeped forward and strategized to increase / develop
safe wheat storage in view of large demand existing in the various parts of the country. In this
connection FCI engaged Srei Infrastructure Finance Limited as Consultants through a
competitive bidding process for preparation of the Feasibility report for 11 locations Pan India
and manage the bid process management to attract the private investment in the project
through a transparent bidding process.
This is a pilot assignment and there will more locations needing development of modern
storage facility for wheat and rice storage in near future. FCI is already envisaging comprehensively phasing out the CAP storage and replacing it with modern silos with bulk
loading and unloading facilities.
1.2.
OBJECTIVES OF THE STUDY
In order to persuade and reassure the objectives & provisions for National Food Policy of GOI a
number of initiatives have been fast paced to enhance the quality of effective food storage
management with the discharge of following responsibilities:
i.
Effective price support operations for safeguarding the interests of the Farmers;
ii.
Distribution of food grains throughout the country for PDS and other Schemes of
Government of India; and
iii. Maintaining satisfactory level of buffer stocks of food grains to ensure National Food
Security.
The above objectives of the National Food Policy are being achieved by the Corporation
through its main operations of procurement, transportation, storage and distribution of food
grains. FCI has played a significant role in India's success in transforming the crisis
management oriented food security into a stable food security system, providing farmers with
remunerative prices through procurement of food grains, distribution of food grains
throughout the country for the Public Distribution System (PDS), particularly to vulnerable
sections of the society and also maintaining buffer stocks of food grains in order to ensure
national food security.
The Food Corporation of India (FCI) has been appointed as nodal agency for creation of
modern storage capacity through construction of Silos for food grains and as part of this
endeavor, FCI, decided to undertake construction of silos for storage of wheat at 11 locations
pan India as pilot projects through Public Private Partnership on Design, Build, Finance,
Operate and Transfer (DBFOT) basis.
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i.
The basic objective is to prepare a feasibility study for determining the technical feasibility
and financial viability of the Project through a transparent bid process management
procedure.
ii.
The consultants shall undertake feasibility study and prepare a Feasibility Report of the
Project for the purpose of firming up the FCIs requirements in respect of development and
construction of the Project and enabling the prospective bidders to assess the FCIs
requirements in a clear and predictable manner to ensure enhanced safety and level of
service for the silo and a superior operation and maintenance of the system with
operational efficiencies.
1.3.
SCOPE OF CONSULTANCY
1.3.1.
General TOR
i.
The Consultant shall be guided in its assignment by the Model Concession Agreement and
RFP/RFQ.
ii.
The Consultant shall be responsible for preparing the Schedules of the Concession
Agreement and for bringing out any special feature or requirement of the Project referred
to in the Concession Agreement.
iii. The Consultant shall assist FCI by furnishing clarifications as required for the Technical &
Financial appraisal and legal scrutiny of the Project and bid documents in the bid process
for selection of Concessionaire.
iv. The Consultant shall also participate in the pre-bid conference with the bidders of the
Project and assist the FCI in clarifying the technical aspects arising from the bid documents
including the Feasibility Report in the bid process for selection of Concessionaire.
v.
The Consultant shall be responsible for modification and fine tuning of existing RFQ & RFP
documents for selection of Concessionaire, if required and responsible for the entire bid
process Management for selection of Concessionaire, including bid evaluation, issue of
LOA, signing of Concession agreement.
vi. The Consultant shall also engage the services of a Railway approved Consultant for
preparing the feasibility report for construction / extension of railway siding amenable for
bulk / bagged loading / unloading from/to special bulk wagon / conventional rail wagon
as per specifications of Indian Railway for each identified project.
1.3.2.
Details of Scope of Services

i.
Collection, compilation and analysis of available information provided by FCI.
ii.
Consultant while preparing PFR will arrange for Feasibility Report from Railway Approved
Consultant for provision of railway siding connected to Indian Railway Network and
amenable for bulk and bagged loading/unloading from/to special bulk
wagon/conventional rail wagons for newly acquired land parcel and FCIs owned godowns
where railway siding is available or otherwise.
iii. Assess financial viability of the Project;

iv. Development of revenue model;
v.
Preparation of indicative BOQ and Rough Cost Estimates; and
vi. Preparation of Schedules A, B, C, D and H of the Concession Agreement.

Details of services:
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COMPILATION AND ANALYSIS OF DATA

vii. The Consultant shall, based on available information, compile and analyse the data
including technical, physical, economic, commercial and financial features of each of the
Project sites.
FINANCIAL VIABILITY
viii. The Feasibility Report shall include an assessment of the financial viability of the Project
with a view to estimating the likely IRR over a concession period of 15, 20 and 25 years
respectively. The Consultant shall calculate the NPV and EIRR for the Project., including
sensitivity analysis by identifying the most critical factors and determine their impact on
the EIRR, including varying project;
ix. Compute Costs and benefits, implementation period and combinations of these factors. The
Consultant shall also determine the likely requirement of Viability Gap Funding (VGF) in
accordance with the VGF Guidelines of the Government of India. While undertaking the
financial analysis and projecting the IRR, following assumptions shall be adopted:
a. Capital cost shall be adopted as per estimates of construction cost to which 25% (twenty
five per cent) shall be added for physical and price contingencies, interest during
construction, other financing costs etc.;
b. DE ratio may be assumed as 70:30; and
c. O&M costs may be assumed as per norms of the Authority;
x.
The Consultant shall:

a. Calculate the NPV and EIRR for the Project. It will undertake sensitivity analysis by
identifying the most critical factors and determine their impact on the EIRR, including
varying project costs and benefits, implementation period and combinations of these
factors; and
b. Conduct a risk analysis (using the Monte Carlo method) by considering the possible
values for key variables based on records, and their occurrence probability.
c. If the IRR of the Project, based on the aforesaid calculations is less than 12% (twelve per
cent), an effort should be made to reduce the capital costs in consultation with the
Authority. This may be done either by omitting/ modifying some of the proposed
structures or by phasing them after a period of seven years or more, such that the IRR
reaches a minimum of 12% (twelve per cent).
REVENUE MODEL
xi. The Consultant shall identify and quantify all costs, expenses and revenues of the Project
and shall prepare cash-flow statements for a period of 10 years. With a view to examining
the feasibility of attracting private sector participation, the Consultant shall prepare the
Revenue Model which will indicate the possible capital structure, likely sources of
financing taking into account the viability gap funding or grant provided by the Central
Government and the Project Authority, the costs of financing, the cash flow, debt service,
return on investment etc. (the Revenue Model).
COST ESTIMATES
xii. The Consultant shall work out indicative BOQ of various components and prepare rough
cost estimates of the location specific Project with a break up of cost for each component
separately. To the construction cost so arrived at, the Consultant may add 25% (twenty
Page 8
five per cent) thereof as a lump sum provision for physical and price contingencies,
interest during construction and other financing costs, pre-construction expenses etc.
xiii. Assistance in preparation of Schedules of the Concession Agreement
xiv. The Consultant shall assist FCI in the finalization of the technical Schedules A, B, C, D and H
of the Concession Agreement and for bringing out any special feature or requirement of the
Project referred to in the Concession Agreement.
1.4.
CURRENT PROJECT STATUS

The consultants have completed the site visits of all 11 locations along with the Railway
Empanelled Consultants (Ms / Vogue Consultants, New Delhi covering Delhi and Punjab State
locations and E to E Consultants, Bangalore covering Bihar, Assam, Maharashtra and Karnataka
State locations.
The draft feasibility report has been prepared to assess the technical viability of selected
project site to accommodate the modern wheat steel silos of minimum targeted capacity of
25000 MT upwards with bulk loading/unloading facility through railway siding arrangement.
The step driven approach has been followed for finalization of draft feasibility report and
structured into following chapters
i.
Brief Background of the Project
ii.
Regulatory Framework
iii. Existing Supply Chain of Storage Facilities

iv. Comparison between Conventional Storage and Modern Silo Storage
v.
Site Appreciation
vi. Importance of Railway siding in Modern Silos

vii. Gap Analysis
viii. Supply chain of Modern Silos
ix. Capacity Planning and Project Facility
x.
Project Scoping
xi. Technical Feasibility
The steel silos main project components are long term storage Silos, Pre Storage Silos,
Shipping Silo, Loading & Unloading facilities, fumigation and Aeration, Bagging and De-bagging
facilities, Cleaning facilities, Weighing facilities, Lab for testing, Miscellaneous Storages, Admin
Block and Utility Infrastructure
The Central Government will provide up to a maximum of 20% Viability Gap Funding (VGF)
support, if required, in addition to 20% VGF by State Government. However, such projects will
not be eligible for Capital Investment Subsidy and the Interest Subsidy.
The project shall be awarded to private developer by following two stage transparent bidding
process. The indicative project implementation structure under PPP mode is as follows:
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Proposed Project Implementation Structure

Food Corporation of India
Concession rights on
land for creation of the
project facility
Bid Parameter: VGF/Upfront

Concession Premium
Equity
Private Investor / SPV
Debt
Bank
Concessionaire
Develop and maintain the project till

the end of concession period and
collect user charges fixed by FCI
THE PROJECT
Development of Wheat Silos at 11 Locations
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Chapter 2
CURRENT SETUP, DIRECTIVES AND AGREEMENTS

2.
CURRENT POLICIES DIRECTIVES & AGREEMENTS
2.1.
ORGANISATIONAL SETUP
The affairs of FCI are managed by a Board of Directors headed by Chairman & Managing
Director along with two Directors representing Ministry of Consumer Affairs, Food and Public
Distribution, one Director from Ministry of Agriculture & Co-operation, one ex-officio (Managing
Director of Central Warehousing Corporation) and two non-official Directors.
All the Directors are appointed by the Central Government. As against the provisions of the Act
of having 12 Directors in the Board, the present FCI Board consists of only seven Directors. Its
functions are managed through country-wide network of offices with headquarters at New
Delhi with five Zonal offices, 24 Regional offices, 168 District offices and one Port office at
Adipur (Kutch), Gujarat.
2.2.
STRUCTURE OF FOOD GRAIN MANAGEMENT
2.2.1.
National Food Security System

Food security as a concept originated only in the mid-1970s, in the discussions of International
food problems at a time of global food crisis. The initial focus of attention was primarily on
food supply problems - in assuring availability and to some degree the price stability of basic
foodstuffs at the international and national level. That supply side, international and
institutional set of concerns reflected the changing organization of the global food economy
that had precipitated the crisis. A process of international negotiation followed, leading to the
World Food Conference of 1974, and a new set of institutional arrangements covering
information, resources for promoting food security and forums for dialogue on policy issues.
The issues of famine, hunger and food crisis were also being extensively examined, following
the events of the mid-1970s. The outcome was a redefinition of food security, which
recognized that the behaviour of potentially vulnerable and affected people was a critical
aspect.
A third, perhaps crucially important, factor in modifying views of food security was the
evidence that the technical successes of the Green Revolution did not automatically and rapidly
lead to dramatic reductions in poverty and levels of malnutrition.
The initial focus, reflecting the global concerns of 1974, was on the volume and stability of food
supplies. Food security was defined in the 1974 World Food Summit as:
Availability at all times of adequate world food supplies of basic foodstuffs to sustain a steady
expansion of food consumption and to offset fluctuations in production and prices.
In 1983, FAO expanded its concept to include securing access by vulnerable people to available
supplies, implying that attention should be balanced between the demand and supply side of
the food security equation:
Ensuring that all people at all times have both physical and economic access to the basic food
that they need.
In 1986, the World Bank report, Poverty and Hunger, focused on the temporal dynamics of
food insecurity. It introduced the widely accepted distinction between chronic food insecurity,
associated with problems of continuing or structural poverty and low incomes, and transitory
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food insecurity, which involved periods of intensified pressure caused by natural disasters,
economic collapse or conflict. This concept of food security is further elaborated in terms of:
Access of all people at all times to enough food for an active, healthy life.
By the mid-1990s food security was recognized as a significant concern, spanning a spectrum
from the individual to the global level. However, access now involved sufficient food, indicating
continuing concern with protein-energy malnutrition. But the definition was broadened to
incorporate food safety and also nutritional balance, reflecting concerns about food
composition and minor nutrient requirements for an active and healthy life. Food preferences,
socially or culturally determined, now became a consideration.
The 1996 World Food Summit adopted a still more complex definition:
Food security, at the individual, household, national, regional and global levels [is achieved]
when all people, at all times, have physical and economic access to sufficient, safe and nutritious
food to meet their dietary needs and food preferences for an active and healthy life.
This definition is again refined in The State of Food Insecurity in the World 2001:
Food security [is] a situation that exists when all people, at all times, have physical, social and
economic access to sufficient, safe and nutritious food that meets their dietary needs and food
preferences for an active and healthy life.
Essentially, food security can be described as a phenomenon relating to individuals. It is the
nutritional status of the individual household member that is the ultimate focus. So, Food
security exists when all people, at all times, have physical, social and economic access to
sufficient, safe and nutritious food which meets their dietary needs and food preferences for an
active and healthy life. Household food security is the application of this concept to the family
level, with individuals within households as the focus of concern, and Food insecurity exists
when people do not have adequate physical, social or economic access to food as defined
above.
The amount and quality of food available globally, nationally and locally can be affected
temporarily or long-term by many factors including climate, disasters, war, civil unrest,
population size and growth, agricultural practices, environment, social status and trade.
Affordable age, status, gender, income, geographic location and ethnicity all affect a person's
ability to access and afford sufficient food. When there is a shortage of food the rich are
unlikely to go hungry but their demand for food increases the price and makes it harder for
poor people to obtain food
A National Food Security System of the Government of India is operated under an
operational framework involving procurement of food grains through price support operations
by fixing Minimum Support Price (MSP), maintenance of buffer stocks, food subsidy regime,
allocations and distribution of food grains to weaker and vulnerable sections of society through
TPDS. Timely and efficient procurement and building up of adequate buffer stocks in the
Central Pool, through efficient storage and movement of food grains are central to the food
security strategy of the GOI. Storage Management and movement of food grains, therefore, are
important links in the whole system from procurement to distribution of food grains to the
consumers.
Page 12
THE NATIONAL
FOOD SECURITY
ACT, 2013
An Act to provide for food and nutritional security in human life cycle
approach, by ensuring access to adequate quantity of quality food at
affordable prices to people to live a life with dignity and for matters
connected therewith or incidental thereto
Enacted by, The Parliament of India
Procurement of food grains for the Central Pool is carried out by FCI, State Government
Agencies (SGAs) and Private Rice Millers. In addition, 10 states/UTs which are presently under
De-centralised Procurement (DCP) scheme also procure food grains for the Central Pool but
directly store and distribute under TPDS and Other Welfare Schemes (OWS) based on the
allocation made by the GOI. Any surplus stock over their requirement is taken over by FCI and
in case of any shortfall in procurement against allocation made by the GOI, FCI meets the deficit
out of the Central Pool.
The procured food grains are taken over into the Central Pool by FCI, only Government agency
entrusted with movement activities, from SGAs and private rice millers and are moved from
the procuring States to the consuming States for distribution to the consumers and for creation
of buffer stock in various States. Food grains of the Central Pool are stored by FCI in both its
owned capacity and hired godowns in different parts of the country. The function of
distribution of food grains to the consumers is carried out by the State Governments through
TPDS and OWS. The food grains are also disposed of by FCI and State Governments based on
allocation of the GOI through sale under Open Market Sales Scheme (OMSS).
2.2.2.
Procurement of Food Grains for Central Pool

Under the existing procurement policy of the GOI, food grains for the Central Pool are procured
by various agencies such as FCI, State Government Agencies (SGAs) and private rice millers.
Procurement of wheat and paddy for the Central Pool is carried out on open ended basis at
MSP fixed by the GOI. In addition, rice is also procured by FCI from private rice millers under
statutory levy scheme through price support mechanism.
Procurement of rice for the Central Pool is undertaken through two routes, namely, Custom
Milled Rice (CMR) and levy rice. Rice obtained out of paddy procured for the Central Pool by
SGAs under price support system is known as CMR. Rice purchased by FCI from private rice
millers against paddy procured by them at MSP under levy orders issued by respective State
Governments at state-wise levy prices fixed by the GOI is known as levy rice.
Paddy and wheat procured by the State Governments falling under DCP scheme are also part of
the Central Pool. Under this scheme, the DCP states procure, store and directly distribute food
grains including levy rice towards TPDS and OWS. Any surplus stock over their requirements is
taken over by FCI for the Central Pool and in case, of any shortfall in procurement against
allocation made by the GOI for distribution to TPDS, FCI meets the deficit out of the Central
Pool.
The production, mandi arrival and procurement of food grains (wheat and rice) between the
period 2006-07 & 2011-12 are presented in Table 2.1.
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Table 2.1 PRODUCTION, MANDI ARRIVAL AND PROCUEMENT OF WHEAT (lakh metric tonne)
Procurement
% Mandi
Mandi
State Govt. Agencies
Crop Year Production
arrival to
arrival
FCI
Total
Non-DCPproduction
DCP-States
States
2006-07
758.10
137.01
13.43
78.39
0.49
92.31
18
2007-08
785.70
154.30
15.41
89.88
5.99
11l.28
20
2008-09
806.80
244.13
52.88
126.29
47.72
226.89
30
2009-10
808.00
268.58
47.88
148.78
57.16
253.82
33
2010-11
868.74
259.47
34.19
157.18
33.76
225.13
30
2011-12
939.03
324.62
39.74
192.87
50.74
283.35
35
2012-13
935.10
280.24
49.92
244.3
87.25
381.47
30
2013-14
959.10
338.98
38.95
147.78
64.19
250.92
35
Source:FCI, indexmundi.com, meclai.com
2.2.3.
Storage Management
The primary policy objective of the GOI, obviously, is to ensure food security in the country
through timely and efficient procurement and distribution of food grains. This involves
procurement of food grains, building up and maintenance of food stocks, storage, movement
and delivery of food grains to distributing agencies. Storage management is an important link
in the whole system from procurement to distribution of food grains to the consumers.
Under the existing operational framework for ensuring food security in the country, FCI is the
main Government agency entrusted with management of food grains in the Central Pool held
by SGAs and DCP states. FCI is also responsible for storage of the Central Pool stock by taking
over the food grains procured by SGAs; whereas the food grains procured by DCP States are
stored and directly distributed by them under TPDS and OWS.
FCI, however, has to resort to hire space from various agencies such as CWC, SWCs, SGAs and
private parties as its own storage capacity is sometimes insufficient to accommodate the
Central Pool stock of food grains. The stock of food grains is normally stored in covered
godowns, silos and uncovered godowns called Covered and Plinth (CAP) as presented in Table
2.2.
Table 2.2 AVAILABILITY OF STORAGE CAPACITIES
FCI (Owned covered
As on 31 March
CWC
SWCs
and CAP)
2007
152.33
102.20
191.86
2008
151.54
98.78
187.32
2009
151.40
105.25
196.82
2010
154.77
105.98
209.26
2011
156.07
102.47
211.27
2012
156.40
100.85
234.61
2013
156.40
108.02
250.93
2014
156.40
104.94
266.96
Total Storage Capacity

446.39
437.64
453.47
470.01
469.81
491.86
515.35
528.30
Source: FCI, CWC, State WCs
The total storage capacity for the central pool available with FCI inclusive of the capacity hired
from various sources (State Government, SWC, SWC and Private Sector) ranged (Table 2.3)
between 252 LMT in 2007 and 369 LMT in year 2014.
Page 14
Table 2.3 STORAGE CAPACITY AVIALABLE WITH FCI (includes hired)

Financial year
end
2007
2008
2009
2010
2011
2012
2.2.4.
Owned
129.41
129.48
129.67
129.69
129.91
130.03
Covered
Hired
93.42
87.13
101.24
128.90
154.59
172.13
Total
222.83
216.61
230.91
258.59
284.50
302.16
Owned
22.92
22.06
21.73
25.08
26.16
26.37
CAP
Hired
6.32
0.27
0.15
4.69
5.44
7.51
Total
29.24
22.33
21.88
29.77
31.60
33.88
Total
252.07
238.94
252.79
288.36
316.10
336.04
Capacity Augmentation Programmes
The most critical infrastructure in context of capacity augmentation is storage. There have been
several initiatives by FCI to resolve the storage constraints. FCI recognises the facts that
construction of safe storage facilities will ultimately become valuable assets. Therefore, FCI has
made long term strategic planning with a flexible approach to plan infrastructure and manage
them with changing scenarios and secure the benefits of value appreciation with the passage of
time. In this regard role of private sector will be important in synergising the development
process for building the storage infrastructure and capacity for the nation.
Various augmentation programmes of FCI are;
i.
Construction of owned storage in XI Five year Plan including schemes for North
East.
ii. Implementation of National Policy on Handling, Storage and Transportation of

Food grains.
iii. Private Entrepreneurs Guarantee (PEG) Scheme, 2008
FCI is a step closer in building state-of-the-art grain storage and movement facilities through its
public-private participation projects to add about 2 million tonne capacity Silos by 2014-15.
This is one of the most significant projects in the food sector and a step towards modernization
of food grain storage logistics aimed at bringing together the expertise with private and public
sector on key design, structure and financing of the project and be regarded as a major
endeavour by the FCI and Ministry of Consumer Affairs, Food and Public Distribution towards
modernizing the countrys food grain storage and movement.
It is challenge and responsibility to ensure the annual availability of an estimated 62 million
tonne food grains for distribution under the Public Distribution System (PDS), therefore, new
paradigm of food security would necessitate extensive and sizeable augmentation of the
countrys grain storage capacity. The current initiative will be a PPP initiative on DBFOT basis
for 11 pilot locations in the States of Maharashtra, Punjab, Assam & Bihar. This will create a
vast opportunity for private investors representing Silo equipment suppliers and
manufacturers and financial institutions, Silo operators, warehousing and logistics companies.
All these efforts will be beneficial for creating integrated modern warehousing capacities in the
country. For meeting the capital expenditure on construction of silos, the private entrepreneurs
would be eligible for Viability Gap Funding (VGF) under the existing VGF scheme which allows
grants of up to 20% of capital cost on the basis of competitive bidding. The FCI would provide
an additional VGF to enhance the viability. For storage of wheat in these silos, the developer will
Page 15
be entitled to receive a recurring service charge provided he meets the required performance
and maintenance standards.
2.3.
GRAIN SUPPLY CHAIN & ROLE OF FCI

Grain supply chain efficiency depends primarily on two things: (a) what is the overall volume
(scale) of grain to be procured, stored and moved; and (b) at each segment of the supply chain,
what technology is adopted to handle grain so that per unit cost is reduced. Normally, if the
scale of operations is large, it would be desirable to introduce bulk handling facilities with
better mechanized system at every level so that one can save on not only the time to turn
around, but also give some relief to labour from carrying lakhs of bags on their backs.
If India implements the NFSA, 2013 in its current envisaged form, it would require
procurement and distribution of about 61 MMT of grains annually as flow variables. Strategic
reserves are fungible and they are accounted for in the buffer stocking norm for each quarter.
Currently, the highest buffer stocking norm (including strategic reserves) is 31.9 MMT. Keeping
in mind the needs of NFSA, GoI has recently approved new buffer norm of 41.12 MMT, but
revised downwards the buffer norm of January 1st from the current level of 25 MMT to 21.41
MMT. Efficiency of the entire logistics of grain-chain depends upon how fast one can move
around grains from surplus to consuming areas. And this necessitates bulk handling systems in
grain supply chain.
The procurement of grains has hovered around 63 MMT and off-take from TPDS has remained
around 60 MMT, and the long distance movement of grains has been around 40 MMT. Almost
70 percent of this long distance movement originates in the north-west, indicating that surplus
is concentrated in the north-west.
2.3.1.
Existing role of FCI and Storage Capacity

Existing storage capacity with FCI and State agencies for Central Pool stocks as on 01.01.2015
was 72.49 MMT, of which 15.71 MMT was in Cover and Plinth (CAP).
Break-up of FCIs cost as per Budgetary Estimates 2014-15 are summarised below:
Particulars
Pooled Cost of gran
Proc. Incidentals
Acquisition Cost
Freight
Handling
Storage
Interest
Losses
Admin Overheads
Distribution costs
Economic costs
Average sales
realization
Subsidy
Wheat
1353.25
348.50
1701.75
113.85
57.25
36.57
58.32
2.66
23.30
291.95
1993.70
539.57
%age
68%
17%
85%
6%
3%
2%
3%
0%
1%
15%
100%
27%
Fixed by
GoI
GoI State Govt.
Railways/ Open tender
Wage settlement/min wage act
GoI open tender
Consortium of banks
Operational losses
GoI as per DPE guidelines
GoI/tender
Page 16
Table 2.4 STORAGE CAPACITY SCENE IN INDIA (COVERED VS. CAP) - LAKH TONNES
Owned
130.09
Covered
Hired
225.38
Owned
26.38
CAP
Hired
4.42
Storage Capacity with FCI
Total Owned (41%)
156.47
Total Hired (59%)
229.80
Total (FCI)
386.27
Covered
219.86
Storage Capacity with State Agencies
CAP
150.41
(excludes capacity allotted to FCI)
Total (State)
370.27
Grand Total
756.54
The total hired capacity with FCI (Table 2.4) is about 60% i.e. 260 lakh tonnes. CWC, SWC &
Private hired capacity are about 9%, 24% & 27% respectively.
The shortages in food grains can be classified under three heads, namely, storage loss, transit
loss and non-issuable / damaged food grains. As per FCIs data, the third category is negligible.
The factors contributing to the storage loss are:
(i) Loss in moisture
(ii) Prolonged storage
(iii) Poor texture of gunnies, accentuated by use of iron hooks
(iv) Improper storage practices
The factors contributing to the transit loss are:
(i) Multiple handling
(ii) Poor texture of gunnies, accentuated by use of iron hooks
(iii) Poor quality wagons
(iv) En route pilferages
(v) Inadequate security at rail points, especially during night working and BG/MG
transhipment
2.4.
REGULATORY FRAMEWORK
2.4.1.
National Food Security Bill, 2013

The National Food Security Bill, 2013 passed by the parliament gives right to subsidised food
grain to 67 percent of India`s 1.2 billion people and provides for penalty for non-compliance by
public servants. The bill`s salient features include:
Page 17
i.
Seventy five percent of rural and 50 percent of the urban population entitled to five kg food
grains per month at Rs 3, Rs 2, Rs 1 per kg for rice, wheat and coarse grains, respectively.
ii.
The work of identification of eligible households has been left to the states.
iii. Pregnant women and lactating mothers entitled to nutritious meals and maternity benefit
of at least Rs 6,000 for six months.
iv. The central government will provide funds to states in case of short supply of foodgrain.
v.
The current food grains allocation of the states will be protected by the central
government.
vi. The state governments will provide food security allowance to the beneficiaries in case of
non-supply of food grains.
vii. Public distribution system to be reformed.
viii. The eldest woman in the household, 18 years or above, will be the head of the household
for the issue of the ration card.
ix. There will be state and district level redress mechanisms
2.4.2.
Decentralized Procurement Scheme

The scheme of Decentralized Procurement of food grains was introduced by the Government in
1997-98 with a view to enhancing the efficiency of procurement and PDS and encouraging
local procurement to the maximum extent thereby extending the benefits of MSP to local
farmers as well as to save on transit costs. This also enables procurement of food grains more
suited to the local taste.
Under this scheme, the State Government itself undertakes direct purchase of paddy and wheat
and procurement of levy rice on behalf of Government of India, and also stores and distributes
these food grains under TPDS and other welfare schemes. The Central Government undertakes
to meet the entire expenditure incurred by the State Governments on the procurement
operations as per the approved costing. The Central Government also monitors the quality of
food grains procured under the scheme and reviews the arrangements made to ensure that the
procurement operations are carried on smoothly.
At present following States are under DCP system:
S.N.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
State/UT
A&N Islands
Bihar
Chhattisgarh
Gujarat
Karnataka
Kerala
Madhya Pradesh
Odisha
Tamil Nadu
Uttarakhand
West Bengal
Punjab (for NFSA obligations)
Rajasthan ( in Alwar District)
Andhra Pradesh (6 Districts)
Telengana (9 Districts)
DCP adopted for

Rice
Rice/Wheat
Rice/Wheat
Wheat
Rice
Rice
Rice/Wheat
Rice
Rice
Rice/Wheat
Rice/Wheat
Wheat
Wheat
Rice
Rice
Page 18
2.4.3.
High Level Committee Report, 2000

The Union Ministry of Consumer Affairs, Food & Public Distribution constituted this High Level
Committee for formulating a Long-term Grain Policy for the country on the 17th of November
2000. The Terms of Reference (see Annexure 1) assigned to it required examination of the
following areas:
i.
Minimum Support Prices (MSP) and Price Support Operations
ii.
The Role of the Food Corporation of India (FCI)
iii. Functioning of the Public Distribution System (PDS)

iv. Policies regarding buffer stocks, open market sales and foreign trade
v.
Allocation of grain for Rural Development and other Welfare programme
These cover almost all aspects of the present system of national food security, under which:
2.4.4.
The Union Government announces MSPs at which it guarantees open-ended purchase of

whatever grain is offered by farmers.
The Centre also has responsibility for maintaining buffer stocks and for the allocation and
pricing of grain supplied to States for sale through the PDS.
The actual implementation of the procurement, storage and distribution functions that
follow from these decisions of the Central Government rests on the FCI, a Central public
sector undertaking, which is also required to maintain the food security buffer stocks and
to carry out price stabilisation operations through open market sales.
It is the responsibility of State governments to maintain and provision the network of retail
fair price shops required to reach the PDS to consumers and to implement any other
welfare programmes, such as mid-day meal schemes in schools and food-for-work
schemes for rural development, through which food grains may be distributed to those in
need.
Private Entrepreneurs Guarantee (PEG) Scheme

Higher MSP coupled with better outreach led to higher procurement in the past few years. As a
result of higher procurement of food grains, the Central Pool stock had increased from 196.38
lakh MT as on 1.4.2008 to a peak level 823.17 lakh MT as on 1.6.2012. Hence, necessity was
felt to augment the storage capacity for food grains. The Department is implementing a
scheme, namely Private Entrepreneurs Guarantee (PEG) Scheme, for augmenting the storage
capacity in the form of covered godowns and to reduce the dependence on CAP storage.
i.
Under the PEG Scheme, which was launched in 2008, godowns are constructed in PPP
mode through private parties, as well as various agencies in Public Sector for guaranteed
hiring by FCI.
ii.
Guarantee period for private parties is 10 years whereas for Public Sector agencies it is 9
years. In case of private parties, state wise tenders are invited by designated nodal agency
under a 2 bid system. At the technical bid stage, sites are inspected and bids in respect of
only those sites which are found suitable, are processed further. Tenders are allotted to the
lowest bidders. Non railway siding based godowns are to be constructed in one year
whereas godowns with railway siding are allowed two years construction period. This
period can be extended by one year at the request of the investor. After completion of the
godown, final inspection is carried by a joint committee of FCI and the Nodal agency and
Page 19
godowns completed in all respects and as per specifications are taken over on guarantee
basis.
iii. Locations for construction of godowns were identified by the FCI on the basis of
recommendations of State Level Committees (SLCs) to meet the storage gaps. For
consuming areas, the storage gap is assessed on the basis of 4 months requirement of PDS
and OWS while for procuring states the storage gap has been assessed based on the highest
stock levels in the last three years, and keeping in view the potential of procurement.
iv. Accordingly, approximately 200 lakh MT capacity creations were planned with
construction of godowns at various locations in 19 states. As on 30.06.2014, capacity of
153.16 lakh MT has been sanctioned for construction and 120.30 lakh MT has been
completed.
v.
The Government has also approved construction of modern storage facilities in the form of
silos of 20 lakh MT capacity within the overall approved capacity for PEG Scheme. Each silo
will have capacity of 25,000 or 50,000 MT. FCI has identified the locations of silos in 10
States. Construction is being planned in the PPP in both Viability Gap Funding (VGF) and
non-VGF modes.
Page 20
Chapter 3
EXISTING SUPPLY CHAIN OF STORAGE FACILITIES
3.
EXISTING SUPPLY CHAIN OF STORAGE FACILITIES
3.1.
CONVENTIONAL COVERED WAREHOUSE

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 godowns depends on grain management and preservation
and therefore there is no fixed period. In general 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 godowns 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.
3.1.1.
Covered Area Plinth (CAP)

CAP is a scientific yet temporary storage technique with guided specifications of concrete
plinth, dun-age 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.
Storage Techniques
Land Requirements: CAP storages are horizontal structures which require sizeable land area.
Since there is no peripheral structure, the land requirement is lesser than that of a warehouse.
Ease of Construction & Maintenance: The FCI has standardised the construction and
maintenance guidelines for CAP and it is understood that a CAP is easily built in short
timeframe of a few days as materials are available locally and the technical knowhow is also
available.
Multiple Commodity Storage: As the CAP storages are bagged storage therefore they can
accommodate multi commodities.
Page 21
3.2.
SILOS
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.
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.
3.3.
CONVENTIONAL STORAGE VS. MODERN SILO STORAGE

Food Security cannot be complete without addressing the rudiments on scientific storage of
Grains. According to a report published by UN, world loses ARE ABOUT one third of the food
produced. This amounts to a staggering 1.3 billion tons annually. India loses about 10% of its
grain and oilseeds annually. Harvest to Household losses may actually be more than what a
country like Australia Exports.
The current covered ware house capacity available with FCI is 33.63 Million Tons. With
procurement exceeding 63.68 Million Tons, adequate storage actually falls short. A large
quantity of Wheat is still lying in open under CAP Storage waiting to be evacuated, through it
has been phased out by FCI.
Private sector investment in Agriculture in our country declined from around 12% in 19992000 to less than 6% currently. It is in this back drop we would examine the opportunities and
challenges of improving Post-Harvest infrastructure in our country.
3.3.1.
Indian Scenario
India produces about 250 Million Tons of Food Grain and Wheat production has skyrocketed to
95 million tons on the strength of Govt. buying. Corn production has gone up to 21 million tons.
States like Karnataka, Bihar have done exceedingly well in this regard.
Warehousing capacity in India has not kept pace with Production/Procurement increase.
Storage Gap of 35 Million Tons is estimated for 12th Plan period.
3.3.2.
Flat Warehouse Vs Modern Vertical Silos

In India we have been debating for decades whether Flat warehouses are good for our country
or we need to modernise by having vertical Silos. The most important aspect would be to
understand and study the International Best Practices as existing globally.
Page 22
USA: USA has more than 310 Million Ton Silo storage capacity. On farm / Silo capacity is almost
equal to off farm capacity, adopting the ideal Hub and Spoke System. On farm storage helps
farmer to store Grain at the site at harvest time and move to off farm. As compared to this in
Punjab/Haryana, scene is chaotic at harvest time.
Canada: Canadian Wheat Board is the nodal agency for Wheat. Major food grains holdings of
CWB are at farm level and grain terminals same as Hub and Spoke System.
China: China procures, handles, stores & transports its food grains viz., Wheat, Paddy, Rice &
Corn in Bulk only. Bags are used at the final stage i.e. while selling to consumer. State
intervention in China is quite strong. Just, like India, they have planned remunerative prices for
farmers and low prices to consumers. The CAP storage in China is nil. Transition from CAP to
Flat Warehouse happened in 1998 when China realized the quantum of wastage in CAP.
Punjab/Haryana stores a lot of Grains in CAP. China stores grains in Bulk in their warehouses
also. Transition from Warehouse to Silo came when China realized construction of Warehouse
was more expensive than Silos.
3.3.3.
Experience of Creating Silos in India

The pilot projects were built on BOO basis and FCI was the Nodal Agency. This was the first
experience for FCI. The quality of Wheat stocks even after 5 years has been excellent. Transit
loss is below 0.25%. Fumigation and insect control is excellent with zero residues in the Grain.
Farmers are benefitted as they get accurate weighments and are free in 1 hour.
Rake loading is completed within 3/4 hours as against 8/9 hours in conventional bag loading.
Similarly unloading is done within 3/4 hours as opposed to 8/9 hours in Bags unloading.
3.3.4.
Road Map for future Impetus on Bulk Handling and Transport

Labour costs in our country are going through the roof. Apart from costs arranging labour is
becoming a nightmare. Cost of Jute bags has become prohibitive. With Indian Railways
stretched for funds and new rolling stock difficult to procure.
The need of the hour is to improve capacity utilization. Freight Income for Railways is around
6700 Crore. Grain accounts for 8.3% of freight revenue; if we reduce 50% turnaround time in
loading/ unloading of wagons the savings for the Nation would be humongous. Preservation of
Grain is much better in Silos apart from lower land requirement (1/3rd of Flat Godowns).
Our farmers use Sun-Drying method for corn which has disastrous results. Invariably our corn
suffers Aflatoxin issues due to improper drying and gets rejected. Huge value destruction takes
place. Proper Driers attached to Silos are the basic needs to address this issue. If we, analyse
end to end solution Silos score over flat warehouses even in terms of cost. The Myth of Silos
being expensive needs to be broken. In conclusion, Flat Warehouses are no match for silos in
terms of Quality/ Quantity/ Handling losses/ Logistics cost and Storage Space in Grain.
Similarly, procurement and storage of wheat will be greatly affected by the development of
silos pan India.
Important suggestions:
i.
Promote and develop an efficient, integrated and Mechanized Bulk Handling, Storage and
Transportation System in the country.
ii.
Give full-fledged infrastructure status to warehousing with all financial benefits like cheap
loans, IT and Service Tax benefits.
Page 23
iii. Hub and Spoke System needs to be implemented in India. Smaller Silos at Mandi level
connected to Mother Silos. Mother Silos should have Bulk handling and Rail connectivity.
iv. Upcountry Silos also should have rail connectivity.
v.
Changeover from Box Wagons to Top Loading/Bottom discharge.
vi. Wagon would go a long way in improving capacity utilization for Railways.
vii. Suitable Top loading/ Bottom discharge wagon to be made available for handling Grain. If
Railways is stressed for funds Private Sector should be suitably incentivised to create
required wagon capacity.
viii. Silo sites should be notified as Mandis under relevant APMC Act by State Governments.
ix. Post-Harvest Agriculture Infrastructure could be created under PPP model to encourage
Private Sector Investment.
x.
Our Port Infrastructure should be suitably tweaked to receive and store Grain in Bulk. This
will facilitate both Import & Exports.
Unless these vital issues are not addressed, destruction of Grain may be much faster than its
creation. High productivity/yields may prove futile in real terms. Construction of silos is going
to be the first step to achieve the above objectives. The techno-commercial comparison of silos
and traditional flat warehouse is epitomised below in Table 3.1.
Table 3.1 COMPARATIVES ON SILOS AND FLAT WARE HOUSES
SILOS
TRADITIONAL WAREHOUSING
Erection cost of Rrs 6000 to 6800 per MT

Commissioning within 8-12 months
Erection cost of Rs 3500 to 7800 per MT

Completion time of 1-2 years & more.
Mechanical process for bulk handling
Huge manpower cost
Smaller land parcel required
Land requirement 2-3 times that of silos
Lower maintenance cost
Regular repair required
High degree of automation
No automation
No requirement for multiple bagging
Huge cost incurred in multiple bagging
Quality monitoring at all the stages with

minimum human interference
No such provisions
Comparison of Costs (construction and operational) of Silos and Conventional Godowns of

50,000 tonnes capacity as studied in HPC Report is presented in Table 3.2.
S.N
1
2
3
4
5
6
7
Table 3.2 COST COMPARATIVES SILOS VS. WAREHOUSES

COMPONENTS OF COSTS
SILO
GODOWN
Land (in acre)
7.00 *
17.50
Land Cost (Rs. crore per acre)
0.50
0.50
Total land cost (Rs. Crore)
3.50
8.75
Construction cost (including civil work, roads, ancillary
26.00
25.00
units, weigh bridge, electrical, plant & machinery for silos
(Rs. in crore)
Total construction cost (Rs. in crore)
29.50
33.75
Construction cost per tonne (in Rs)
5900
6750
Operational Cost per tonne (in Rs)
4442
4530
(*) May vary subject to operation plan and track arrangement, Source: HLC Report
Page 24
The international best practices handle food grains storages in modern silos with bulk
loading/unloading through railway sidings, which reduces the storages and transit losses
substantially. Hence, it is also important to minimize the number of stages of handling. Based
on the above the outsourcing storage and movement through Public Private Partnerships
(PPPs) on a competitive bidding basis would provide the required investments and managerial
competence for effectively managing the supply chain.
Grain supply chain efficiency depends primarily on two things: (a) what is the overall volume
(scale) of grain to be procured, stored and moved; and (b) at each segment of the supply chain,
what technology is adopted to handle grain so that per unit cost is reduced. Normally, if the
scale of operations is large, it would be desirable to introduce bulk handling facilities with
better mechanized system at every level so that one can save on not only the time to turn
around, but also give some relief to labour from carrying lakhs of bags on their backs.
Therefore the vision of the Government and FCI, is to develop modern silos initially at pilot 11
locations with bulk handling facility and thereafter, take on a larger scale to about 85 locations
in next five years.
Page 25

Chapter 4
TECHNICAL FEASIBILITY
4.
4.1.
SITE APPRECIATION: PROPOSED SILO AT NARELA, DELHI

The Site visit and appreciation has been undertaken in detail for the proposed brownfield site
at Narela, North-West Delhi for development of Steel Silos. The main objective is to study the
existing infrastructure of the FCI facility and to assess the feasibility for the proposed silo
development in the facility
4.1.1.
Location Appreciation
FSD Narela proposed as one of the locations for development of silos is located on the North
West side of Delhi region. This facility is consuming complex for FCI operations. The facility is
surrounded by DSIDC Industrial area from the South-East side, Narela residential area from the
North-East side, other residential area from North and North-West side and agriculture land on
the west side.
4.1.2.
Connectivity Status
FSD Narela is well connected by rail and road. The nearest railway station is Narela railway
station present approximately 0.6 km from the facility to the north and Halambi Railway
station at 3.6 km to the south. The nearest major highway is National Highway -1 (Grand Truck
road) which is 5 km away from the facility connecting Narela FSD through arterial road i.e
Alipur road and Narela Bawana Road.
4.1.3.
Existing Infrastructure
The Narela FSD is enveloped with boundary wall in good condition. The proposed site for Silo
development is currently green with dense vegetation area and requires grubbing. The
proposed site land is moreover flat with no major undulations. The internal roads of the facility
are 6 m wide with ROW of 15 m. Total existing storage capacity of the facility is 50,000 MT.
Total 10 no of warehouses with 5000 MT capacity are present in the facility with intermediate
gap of 3 m. The covered warehouses are in good condition while the plinth area are damaged
Page 26
and are non-usable. Area of a 5000 MT warehouse is 3465 sq.mt (27.5 x 126 mt). Three railway
tracks are present in this FCI Godown but are not currently functional and operational. The
ROW of railway track is 13.20 m. All the goods movement and Loading/Unloading in the
facility is done by trucks. Truck parking area is 4500 sq.mt and at peak 200 trucks can parked
inside the facility. A flyover of approximately 1.5 km is proposed across the facility connecting
the Alipur road to the Bawana road. As such there is no information on the height of the flyover
proposed above the facility. There is a Level crossing present adjoining the FCI Godown
boundary wall for the spur incoming into the FCI facility. As of now 432 labours are working in
this warehouse facility. Per month 1,25,000 katte (bories) are loaded from this facility for
distribution of grains. On average 120 320 katte (bories) are loaded on the truck depending
upon the capacity of the truck.
Existing Utilities - There is a power supply consumption of 75 KW for site operations with
Generator backup of 62 KW. There are 3 bore well present in the facility from which 02 tanks
of 5000 ltr, 01 tank of 3000 ltr, 07 tanks of 1000 ltr and 09 tanks of 500 ltr are filled with the
help of 4 no of submersible pumps. For sewerage there are 3 dumping pits present in the
Facility.
Observations/Constraint - There are three issues regarding the proposed silo development.
At first the level crossing present adjoining the boundary wall of the facility could pose
problem as it will interfere with the traffic movement of the road. Secondly the height of the
flyover proposed across the existing facility could restrict the development of silo
infrastructure. Lastly the requirement of dismantling of one or more existing misc building is
envisaged.
Site Visits Photos Some pictures showing the existing facility are shown below;
Page 27
Between Warehouse
and Open Plinth Area
Railway Tracks
between Warehouses
Open Plinth area in

degraded condition
Office Building
Proposed Silo location
Weighbridge near to
Entrance
Truck Parking Area
Road Condition
Condition of Railway
Tracks
Existing Layout Plan of FCI Depot Complex at Narela, Delhi, India is presented in Figure 4.1.
4.2.
FACTORS INFLUENCING CAPACITY PLANNING
4.2.1.
Factors
The capacity planning part of infrastructural development is one of the most integral parts of
planning and dependent on number of parameters, which need to be critically analysed in
detail. The development of new project need capital investment, hence possibilities and
limitations need to be factored judiciously and properly. The development of the modern silos
means creation of better storage capacity keeping in view;
-
Regulatory framework / recommendations by various applicable committees
Availability of the land for construction of modern silos
Conversion of old storage facilities into the modern silos, which means phasing out &
dismantling of CAP for development of modern silos
Railway Siding feasibility factoring the bulk loading/unloading facility
Gap analysis is to identify the storage shortfall by assessing demand supply of storage facilities.
Further, for the wheat procurement region, gap will be difference between procurement of
wheat and storage facilities available, whereas; for the consuming regions, the gap will be the
difference between the yearly wheat allocation for the State and the storage facilities available.
Page 28
CAPACITY PLANNING
Regulat
ory
Framew
ork
Railway
Siding
Feasibilit
y
In the present scenario the modern silos are not only required to add the storage facility for
meeting the storage requirement but to modernise the existing storage system to reap the
benefits of the scientific methods of storage based on the recommendations of the various
committees, which will reduce the intermediaries of supply chain and increase the overall
efficiency of supply chain. Therefore on this basis, first we will follow the regulatory
framework.
a) Schemes and Recommendations
High Level Committee (HLC) set-up by the Government is of the view that;
Outsourcing storage and movement through Public Private Partnerships (PPPs) on a competitive
bidding basis would provide the required investments and managerial competence for effectively
managing the supply chain. Where required, existing land/facilities can be provided to the PPPs.
FCI should invite bids to convert its own conventional warehouses to modern silos under PPP
mode.
The whole system of grain management is lagging behind with technology of 1960s and 1970s,
with thousands of workers carrying sacks on their backs, which need to be upgraded to conveyor
belts, forklifts, containers and silos. A major modernization drive of this grain supply chains will
need lot of investments which should be leveraged by inviting private sector and FCI offering its
existing lands with conventional storages, wherever possible. A shift from 'human back' to
'machine back' will promote dignity of labour, will save on time and resources, and be in line with
best international practices in storage and movement.
b) Availability of Land for Construction of Silos
In the VGF based PPP model, the government will provide land to the private developer on
concession and the private developer shall be responsible for development of the project,
hence the land is the critical part for the success of the project, which means the land
ownership either lies with the FCI or state agencies or FCI will acquire land at such a place
where the railway siding facility can be accommodated to enable the bulk loading facility.
Page 29
The land acquisition is somewhat a time consuming process factoring the availability of land at
such strategic locations, hence FCI is of the view that they will first utilize the vacant land
available within the FCI depots which are having existing railway siding facilities to expedite
the whole process and modernize the existing storage system which will provide enumerable
benefits. Out of proposed 11 locations, 8 locations are within the FCI depots and the remaining
3 are Greenfield sites including the land belonging to State Governments.
c) Dismantling of CAPs / Creation of Land / Conversion of CAPs into Modern Silos
The FCI is envisaging the development of the modern silos in the premises of FCI depots by
using vacant land and also the creation of the land by dismantling of the existing CAPs (Cover
and Plinth). The CAPs are one of the conventional ways of storage of wheat grains, which need
to be upgraded considering the wastage of grains due to CAP storage. Therefore the project
facilities are planned by including the creation of the land area from dismantling of the CAPs. It
also justifies the demand side, because there is transformation from old silo facility to the
modern silo facility
d) Railway Siding Facility
All the modern silos needs to be developed along with bulk loading/unloading facilities
through railway siding, hence it is imperative to plan the capacity in conjunction with the
railway siding. For accommodation of railway rake inside the premises, the minimum length is
required as per the guidelines of railways; therefore this factor will impact the final capacity of
each site in big way.
e) Gap Analysis
This is the last factor taken into consideration, which further revalidates the final capacity of
the modern silos for each site. The overall wheat scenario from macro and micro point of view
detailed out to understand the concept. The details of total wheat production and area over the
years are given below the figure;
4.2.2.
State Wise Production

The data showing State wise production for FY 12-13 is presented in Table 4.1.
Table 4.1 STATE-WISE ANNUAL WHEAT PRODUCTION
State
Andhra Pradesh
Arunachal Pradesh
Assam
Bihar
Chhattisgarh
Goa
Gujarat
Haryana
Himachal Pradesh
Jammu & Kashmir
Jharkhand
Karnataka
Kerala
Madhya Pradesh
Maharashtra
Manipur
Meghalaya
Mizoram
Nagaland
Orissa
Punjab
Thousand Tonne (FY 2012-13)

10
4
44
5357
141
2944
11117
609
462
319
179
13133
1181
6
1
6
2
16591
Page 30
Rajasthan
Sikkim
Tamil Nadu
Tripura
Uttar Pradesh
Uttarakhand
West Bengal
Union Territory:
A. & N. Islands
Chandigarh
D. & N. Haveli
Daman & Diu
Delhi
Lakshadweep
Puducherry
Others
9275
1
1
30302
858
896
65
-
Top Ten Wheat Producing States (Figure 4.2) reveal that UP, Punjab, MP, Haryana and
Rajasthan are the top 5 wheat producing States. Bihar produces about 5.25 MMT of wheat
annually. Gujarat, Maharashtra, WB and Uttrakhand produce between 1 to 3 MMT annually.
4.2.3.
Allotment and Off-take of Food Grain

The details of Allotment and Off-take of food grains under NFSA during 2014-15 (up to Jan
2015) from Central Pool is given below in the Table 4.2.
Table 4.2 ALLOTMENT AND OFF-TAKE OF FOOD GRAINS (in lakh tonne)
State
Wheat
Rice
Total
Page 31
Allotment
8.7
19.65
2.7
25.4
3.78
1.2
Punjab
Bihar
Delhi
Maharashtra
Assam
Karnataka
4.2.4.
Off-take
1.91
17.41
2.7
20.78
3.45
1.28
Allotment
0.00
29.48
0.81
19.90
16.54
24.08
Off-take
0.00
18.17
0.68
16.16
14.51
19.73
Allotment
8.7
49.13
3.51
45.3
20.32
25.28
State Wise Storage Capacity

The State Wise Monthly Average Storage Capacity with FCI for the Month of July 2014 is given
below in Table 4.3.
4.2.5.
PEG
PWS
40.22
0.84
0
2.94
0.24
1.3
36.55
0.2
0
5.15
0
0.75
0
0
0
0.32
0
0
3.81
0.49
0
0.95
0.51
0.9
86.31
2.43
0
11.26
0.98
3.61
107.48
6.09
3.36
23.16
3.1
7.42
Hired
SWC
4.99
0.87
0
1.9
0.22
0.66
Owned
CWC
0.74
0.03
0
0
0.01
0
Total
Covered
State
21.17
3.66
3.36
11.9
2.12
3.81
Total
Hired
FCI
Punjab
Bihar
Delhi
Maharashtra
Assam
Karnataka
CAP (in lakh tonne)
Private
Covered (in lakh tonne)

Region
7.14
1
0.31
1.02
0
1.36
2.6
0
0
0
0
0
Total
Table 4.3 STATE-WISE STORAGE CAPACITY

Grand
Total
(Lakh
tonne)
9.74
1
0.31
1.02
0
1.36
117.22
7.09
3.67
24.18
3.1
8.78
Gap Analysis: Allotment vs Storage Facility
The details of the gap analysis between state allotment (Wheat & Rice) and state total storage
capacity are given below in the table.
State
Delhi
(lakh MT)
Total Storage
Facility (Lakh
MT)
Storage Gap
(Lakh MT)
CAP Storage
(Lakh MT)
Proposed Capacity of
Steel Silos
3.51
3.67
0.16
0.31
50000 MT
Total Allocation
From the above analysis, it could be inferred that around 31000 MT CAP storage facilities is
available at Delhi, therefore, provision of new facility of 50000 MT has been made to transform
the existing CAP facility into the modern steel silos facility factoring future expansion.
Therefore, the idea of development of the modern steel silos for wheat is well justified. The
development of modern silos are not only required from storage gap point of view, but for
better quality of food grain storage and downsizes the redundancies of existing supply chain,
which will reduce the cost of operations substantially.
Page 32
4.3.
SUPPLY CHAIN OF MODERN SILOS

The supply chain of a Silo Complex of FCI depends on the geographic location of the Complex
i.e. it may be located in a Producing Area or a Consuming Area.
The supply chain of a Silo complex is as described below:
Page 33
General Arrangement Drawing (GAD) of both Producing Area and Consuming Area Silo
Complex is presented as Annexure A and Annexure B.
Page 34
4.4.
CAPACITY PLANNING AND PROJECT FACILITY

The Project is being planned in wheat Consuming Area and hence the silo complex shall have
facilities of receiving food grain in bulk form by rail. The primary offtake/issue shall be in
bagged form and shall be transported by road. However provision of bulk dispatch by road
shall also be made.
Narela Depot of FCI at present has a storage capacity is little more than 50,000 MT. The
storage capacity available in CAPs in Narela is 7,230 MT. The entire capacity is shared for
storage of both wheat and paddy.
The average stock of wheat maintained at Narela Depot is about 35000 MT per month. If a
buffer stock for 3 months is maintained then the storage requirement is approximately
1,
00,000 MT. Further, various policies adopted by FCI aims towards phasing out of bag storage
of wheat and move towards Steel Silo storage with bulk loading / unloading facilities.
FCI has about 25 Acres of land at Narela Depot earmarked for development of a Silo Complex.
The same is sufficient to accommodate a Silo Complex of the required capacity. Development of
a railway siding from the existing siding servicing the depot is also feasible. Further, the land is
only at a distance of 5 km from NH-1 and connecting roads are wide and well maintained.
In view of the above facts, a Silo Complex of 50,000 MT has been planned.
The following Project facilities are envisaged:
The following Project facilities are envisaged:
Modern Silo Complex
Railway Siding, Truck Parking, Grain Testing Laboratory, Administrative Block, Bag Storage,
Power Infrastructure, Water Infrastructure, Drainage Infrastructure, Fire Detection & Fighting,
Gates & Boundary,
4.5 PROJECT SCOPING

Narela Depot of FCI is planned to have a 50,000 MT silo complex. The land area utilised to
accommodate this Silo complex is approximately 7.95 acres. The Complex shall have the
following facilities:
Page 35
Page 36
4.6 ASSOCIATED INFRASTRUCTURE
4.6.1 Internal Roads and Parking

Internal roads of width 7 m are planned for the Silo Complex. Concrete pavements are
envisaged in view of the fact that mostly heavily loaded vehicles shall be plying on them. The
pavement design shall be as illustrated below:
The parking bay shall have space for parking at least 20 Trucks, 4 Cars and 24 Two wheelers as
per provisions of the Model Concession Agreement.
4.6.2 Power Supply

The power sub-station of capacity at least 600 KW shall be installed. The substation shall have
the following components.
It is envisaged that all cables shall be laid underground through RCC hume pipes and
inspection chambers shall be provided at every 30 m interval.
Further 320 KVA DG backup is also planned.
Page 37
4.6.3 Fire Detection and Fighting System

The entire complex shall be provided with fire detection devices which would include smoke
detectors, alarms and public announcement system. The fire fighting system shall consist of
the following major components:
a. Underground Water Storage Reservoir (UGR) of at least 3,00,000 Litres capacity

(2,00,000 Litres for fire storage + 1,00,000 Litres for consumption)
b. Underground pump house which shall have space for
I.
Fire Pumps: 1 Working + 1 Stand by
II.
Diesel Pumps : 1 Working + 1 Stand by
III.
Jockey Pumps : 1 Working + 1 Stand by
c. Supply main of 200 mm dia. to UGR

d. Distribution main of 150 mm with Hydrants fitted at every 30 m intervals
e. All electrical equipment rooms and the process tower shall also be equipped with
suitable numbers of CO2 or Dry Powder based extinguishers.
4.6.4 Buildings and Sheds

Other than the bagging shed already mentioned the following buildings and sheds shall be part
of the complex Administrative Buildings: The administrative building shall be a RCC structure with floor
space of 85 sq.ft minimum.
Laboratory: The laboratory may be a separate structure or clubbed with the Administrative
building. The minimum floor space of Laboratory shall be 80 sq.mt.
Reception & Canteen Room: The canteen and rest room may be a separate structure or
clubbed with the Administrative building. The minimum floor space for the same shall be 250
sq.mt.
Bag Storage Shed & CAP: The same shall be a MS Steel structure with sheet roofing. The
minimum area required shall be 200 sq.mt. A separate compartment of at least 80 sqm shall be
made for storage of empty bags etc. The capacity of the storage shed shall be 200 MT.
CAP of 500 MT shall also be provided for storage of bagged grains.
Utility & Maintenance Shed: The same shall be a MS Steel structure with sheet roofing. The
minimum area required shall be 250 sq.mt as per specifications and standards adopted by FCI.
Security Post: Silo complex shall have at least 5 security post the minimum size of each post
shall be 4 sq.m.
4.7
RAILWAY SIDING
4.7.1 Location:
The proposed layout of the rail infrastructure at this location is shown in Annexure C. It will be
observed from the same that due to limited length available within the gate, it will be necessary
to extend the buffer end of the siding at Delhi end to be extended beyond FCI depot boundary
into railway land by 470 mts. to provide for full rake length on either side of the receiving silo.
Page 38
Indian Railways prefers full rake unloading/loading during operations and hence Indian
Railway have given their in-principle consent to extend the siding within its land for the length
required. The proposed layout shows such extension of the buffer up to Ch.1608 needing
approx.470 mts. single line being accommodated in the existing railway land boundary. Further,
within Ch. 087 and Ch 228 a dilapidated misc. building of FCI needs to be dismantled. This is
required since the Break Van siding can only be planned near the entry point due to operational
reasons.
The proposed layout has been designed for full rake unloading with unloading pit provided
centrally in the unloading line. Moreover, as this depot falls on electrified section of Northern
Railway, the train working will be by electric traction. As such, the OHE for the unloading line
will have to be terminated about 30 mts. ahead of unloading pit as it is preferable not to have
any OHE above the unloading pits. As the rake will be placed by pushing on unloading line and
unloading of rake shall be carried out by pushing over the pit single line unloading layout with
adequate length to accommodate empty rake before silo and unloaded rake after silo has been
planned.
The proposed layout also provides for a brake-van siding needed for reversal of brake van.
4.7.2 Important Points to be Considered
For laying of railway siding for the project, the existing canteen within the FCI depot
needs to be dismantled by FCI at its own cost.
Land for this extended portion of railway line to be taken on lease by FCI from Indian
Railways.
Indian Railways have already given their consent to permit the extension of the post silo
loading line into railway land to the minimum length essentially needed for the same.
Developer shall take into consideration the alignment of proposed flyover being planned by
DDA which is passing though the FCI area adjacent to proposed Silo complex and the proposed
railway siding for silo to be planned accordingly.
Page 39
4.7.3
Methodology for Train Operation

i. The loaded rake shall normally be received at Narela, the serving station
from Delhi end and the same will be placed at FCI siding by pushing
from serving station. However, in rate case if any rake is received at
Narela station from Ambala end, the engine will be reversed at Narela
yard before pushing the rake to FCI depot.
ii.As OHE will be terminated 30 m ahead of silo, it will be necessary to
attach 2 empty wagons / 2 brake vans to the engine at the rear of the
last wagon of the rake to ensure that whole rake is unloaded while the
engine remains within the electrified length of the track. For this, one
additional brake van or a dummy wagon has to be brought with the
empty rake or to be kept at Brake Van siding at FCI depot.
iii. Care shall be taken to detach the brake van and place it on brake van
siding if any reversal is needed depending on the direction from which
empty rake is received at Narela.
iv. The train engine after entering the FCI godown boundary will pick up
an additional brake van /empty wagon from brake van siding to
ensure its availability of two dummy wagons attached to engine before
starting unloading process of the rake.
v. Train Engine shall push the rake till the first loaded wagon within
electrified length of the pre silo line and then detaches the empty
dummy wagons/brake vans and places them on the brake van siding
keeping the brake van on FCI gate end. Thereafter engine gets again
attached to unloaded rake standing on post silo line for exit. At this
stage, the rake is pulled out of FCI gate on the approach siding till the
rear portion reaches brake van siding to enable attaching of the brake
van in the rear before finally moving out of the silo complex.
vi. After entering the FCI depot the rake will be pushed on pre silo line till
first wagon reaches under the silo. The rake thereafter is pushed at
designed speed to unload whole of the rake wagon by wagon on post
silo line. The unloaded rake thereafter is pulled out by Engine till first
unloaded wagon enters the electrified length of pre-silo line.
vii. The brake van /empty wagon are thereafter detached by engine on
brake van siding and engine gets attached to the loaded rake.
viii. The unloaded rake is then pulled out of FCI godown with engine facing
Page 40
Narela station.
ix. The brake van is attached at the rear of the rake before final
movement of the unloaded rake to Narela station yard.
4.8
The Narela Silo complex is planned within the existing Depot at Narela. The land area
earmarked by FCI for the same is approximately 25 Acres. The railway siding for the complex
takes off from the existing siding that presently services the Depot.
The Silos, Process Tower, Grain receipt and dispatch infrastructure planned are positioned to
facilitate unloading of grain in wagons at middle length of the new tracks planned. As
described in the earlier section a full placement of rack is envisaged for the new Silo Complex.
Annexure C: Site Layout Plan, illustrates the alignment of the new siding along with the
various components of the Silo Complex.
7.95 Acres of land has been utilised for accommodating the Silo Complex with the railway
siding. The railway siding alone shall require 3.14 Acres of land. It is pertinent to note that out
of the required land for siding 0.79 Acres has to be leased from the Indian Railways to
accommodate full rack placement and due to operational reasons 1 dilapidated misc. building
of FCI will require dismantling.
It is evident from the average yearly/monthly storage done at Narela Depot that 50,000 MT
facilities planned will be sufficient to replace Bag storage of wheat in CAP to Bulk Storage in
line with policies adopted by FCI for wheat storage in the better interest of the Nation and
Food Security of the population.
The land available in Narela Depot is suitable and sufficient to accommodate all infrastructure
required for a 50,000 MT Silo Complex including Railway Siding as illustrated in Annexure C.
The road connectivity for dispatch of grain is adequate. Further, power supply in the region is
sufficient. Water and drainage infrastructure is present at site.
Hence, considering the above facts it is concluded that a Silo Complex in Narela Depot is
technically feasible. The key parameters of the site are as presented in Table 4.5 and 4.6.
Table 4.5 KEY PLANNING PARAMETERS AT PROPOSED NARELA SILO COMPLEX CIVIL AND STORAGE
EQUIPMENT
Project Site
Nature of
Site
Narela
Brown Field
Type of
Facility
Planned
Consuming
Area Silo
Complex
Existing
Capacity of
Wheat Storage
57320 MT
Capacity
Planned for
Silos
50000 MT
Future
Capacity
Planned
N.A.
Area of Silo
Complex
(acre)
4.81 acres
Table 4.6 KEY PLANNING PARAMETERS AT NARELA SILO COMPLEX RAILWAY SIDING
Project Site
Length of
Railway Track
ahead
unloading
Point
Length of Railway
Track behind
unloading Point
Type of Railway
Siding
Number of
New Tracks
Area of Siding
(acre)
Narela
796 m
808 m
Full Placement
1 + 1 B/V
escape
3.14
Page 41
Chapter 5
Financial Feasibility
5. PROJECT FINANCIAL VIABILITY & SUSTAINABILITY
5.1 RATIONALE OF VIABILITY ANALYSIS UNDER VGF MODEL ON DBFOT BASIS UNDER PPP
One of the key objectives of the PPP mode of implementation is to ensure projects are viable and
sustainable as a whole covering technical, commercial, financial, economic and social aspects. A
detailed study of financial viability of the Silos for Narela, Delhi with sensitivity analysis has been
undertaken under various cases to assess the impact on cash flows for different operating
conditions and judge its sustainability.
5.2 PROJECT COST

5.2.1 FACTORS AFFECTING PROJECT COST
The cost of project needs to be estimated to assess the financial viability of the project. The project
scoping and sizing is critical aspect while evaluating the project cost, therefore following factors are
taken into consideration
Regulatory framework / recommendations by various applicable committees
Availability of the land for construction of modern silos
Conversion of old storage facilities into the modern silos, which means phasing out &
dismantling of CAP for development of modern silos, which means up gradation of existing
storage facility into modern silos
Railway Siding feasibility factoring the bulk loading/unloading facility
As per the submitted technical feasibility report, the total capacity of 50000 MT is proposed for the
Narela, Delhi location for development of modern silos under PPP mode
The block estimated project cost primarily comprises of four major components, which are given
below:
a) Building & Civil Works
b) Silos Plant & Machinery
c) Electrical & Other Utilities
d) Railway Siding
The cost of the Project has been arrived with the help of predominantly the following the
quotations received against P&M, prevalent market rates and effective SoRs.
Page 42
5.2.3 CONSOLIDATED COST SUMMARY OF PROJECT
The summary of the Total Block Cost is given in Table below

Sl no.
Item Description
Rs. in Million
Land & Land Development
Building & Civil Works
Electrical & Other Utilities
Silo Plant and Machineries
Railway Siding
3.05
107.33
33.24
177.31
61.51
Total Block Cost
382.44
The component wise further detailed break up of block cost is given below in the table:
Land & Land Development

Sl No.
Particulars
Unit
Qty
Rate in Rs
Land
Acres
7.94
Amount
in
Million
Rs
0
Land Development
Acres
7.94
384465
3.05
Total (Rs. in million)
3.05
Remarks
on Qty
4.81 Acres
for Silo
Complex
+
3.13Acres
for
Railway
Siding
Remarks on Rate
CPWD PAR - 2012

6.1 Development of
Land : Rs 95.00 /
Sqm
Page 43
Building & Civil Works
Sl
No.
Particulars
Unit
Qty
Rate in
Rs
Main Silo Foundation
sqm
4309
9500
Amoun
t in
Million
Rs
40.94
Civil Works related to other Process Infrastructure
sqm
1307
19000
24.83
Remarks on Qty
Remarks on Rate
Area of all Silos as per details provided in

table captioned "Silo and Grain Handling
equipments" + 25% to account for
greater width of foundation.
CPWD PAR - 2012

1.2.9 Raft Foundation - Rs
6450
1.2.8 Earthquake Resistance Rs 1140
1.2.5 Additional 0.3 Mts below
Normal foundation depth of
1.2 Mts - Rs 270
1.2.4 Additional 0.3 Mts above
Normal plinth of 0.6 Mts - Rs
270
Depth of Foundation
considered 3 Mts hence
additional amount to be added
Rs 1620
Plinth Height considered 0.9
Mts hence aditional amount to
be added Rs 270
Hence over all rate Rs 9480
rounded to Rs 9500
CPWD PAR - 2012
1.3.1 Basement with 3.35 Mts
Height - Rs 19000
Area of Process Tower, Bagging Shed and

In motion Weighbridge & Unloading
shed +300 Sqm (3m wide x 100m long)
added to account for conveyor tunnels
Page 44
3a
Bag Storage Godown
sqm
200
8073
1.61
MCA advocates a 700 MT storage of

Bagged Grains. 200 MT covered & 500
MT CAP.
As per standard adopted by FCI 1500
sqm is required for 2500 MT storage.
Hence for 200 MT 120 Sqm of area is
required.
Additional 80 sqm has been considered
for misc. storage eg. Empty bags, etc. The
80 sqm area shall be a separate
compartment
3b
Bag Storage CAP
MT
500
1250
0.63
Utility & Maintenance Work Shop Shed
sqm
250
8073
2.02
As per standard and specification

adopted by FCI
Reception & Canteen Building
sqm
250
11700
2.93
As per MCA
Security Rooms
sqm
20
11700
0.23
5 guard room of size 2.5m x 1.5 m
Admin. Building
sqm
85
11700
0.99
15 staff @ 60 sq ft per staff = 84 sqm

Rounded to 85 sqm
Laboratory Room
sqm
80
11700
0.94

adopted by FCI
Thumb Rule rate of Rs 750

/sqft adopted for Shed
Structure and Rs 1250/MT for
CAP (The CAP rates is as per
rates adopted by FCI)
CPWD PAR - 2012

2.2.2 Rate for Double Storied Rs 11700
Civil Works for Weight Bridges (2 nos 60 MT)
Nos
250000
0.50
As per MCA
As per Quotation 1 enclosed
10
Civil Work for In-motion Weighbridge for Rail
LS
390000
0.39
As per MCA
As per Quotation 1 enclosed
11
Civil Works related to Sub-station & area lighting
KW
600
4500
2.70
Power requirement calculated as per

Industry standard
As per Industry Standards
12
Hume Pipe laying for HT & LT cables
Rmt
2000
566
1.13
1000 Rmt for HT cables & 1000 RMT for

LT cables (considering multiple run of LT
cable within the same hume pipe
network
CPWD DSR E&M 2014

Item No. 14.14.4
Page 45
13
Civil Works related to Water & Fire Fighting

Infrastructure
Lts
300000
17
5.10
2.00 Lacs Dead Storage for Fire + 1.00

Lacs consumption
PAR - 2012
5.5 Underground Sump - Rs 15
Rate considered Rs 17
13.5% increase considered to
account for two wheeler
parking on top
14
Civil Works related sanitation Infrastructure
Lts
90000
15
1.35
PAR - 2012
5.5 Underground Sump - Rs 15
15
Open Truck Parking
sqm
1400
1684.05
2.36
16
Open Car Parking
sqm
128
1514.17
0.19
Convention is to taka 80 % of
consumption. However 10% more
considered considering mass kitchen at
canteen
20 Trucks x 70 sqm per truck (area
includes circulation) [Numbers as per
MCA]
4 Cars x 32 sqm per car (area including
circulation) [Numbers as per MCA]
17
Existing Road Refurbishment
sqm
1214
2628.52
3.19
Existing Road Length = 693.72 m

Existing Road width required by Silo
complex = 7.0 m
Area of Existing road = 4856 Sqm
Area considered for refurbishment @
25%
Refer Rate Analysis - RA 1
18
Internal Roads
sqm
2078
2628.52
5.46
Length of Road =296.80 m (approx) say

200m
Width of Road = 7 m
19
Internal Pathways
sqm
1784
740.35
1.32
DSR - 2014
Code No. 16.91
20
Internal Sewerage
sqm
885
110
0.10
Length of Road = 990.50 m

Width of Pathway = 1.6 m (2 pathways
on each side of road of width 0.80 m)
Hence Area of Pathway = 1584 sqm
(approx)
Add 200 sqm for entrances
Hence total quantity = 1784 sqm
(approx)
Total area of Sl no. 3, 4, 5, 6 and 7
21
Internal Drainage
sqm
32133
85
2.73
Area of 7.54 Acres converted to Sqm
CPWD PAR 2012

6.5: Storm water Drainage
Page 46

CPWD PAR 2012

6.3: Sewer
22
Boundary/Fencing including Gates
mts
2258
2500
5.65
Proposed length of boundary wall as per

drawing
23
Soft Land Scape
sqm
250
175
0.04
Adhoc consideration
Same for all project location
24
Market Rate for 1.5 m high

brick work boundary wall
with concrete columns on
isolated footings connected by
concrete tie beam. Distance
between columns 3m.
Concentring coil on MS Y angle
on top
CPWD PAR - 2012
6.6 Land Development for
Horticulture Operations Rs 80
/ sqm
Additional Rs 95 / sqm for
Plants & Tress
Rate considered Rs 175 / sqm
107.3
3
Electrical and Other Utilities

Sl
No.
Particulars
Unit
Qty
Rate in
Rs
In Motion Weigh Bridge for Railway Siding
Nos
60 MT weigh bridge for Trucks
Nos
Sub-station Equipments & Installation
KV
A
HT Cables
Rmt
LT Cables
Area Lighting
1600000
Amoun
t in
Million
Rs
1.60
Remarks on Qty
As per MCA
As per quotation 1 enclosed
680000
1.36
As per MCA
750
7500
5.63
600 KW power is required considering a

power factor of 80%, 750 KVA is
considered
1000
4023
4.02
Assumed Quantity
CPWD PAR 2012,

Supplementary for specialised
E&M works publised in 2014
Item No. 1
Rmt
2000
743
1.49
Assumed Quantity
LS
32133
95
3.05
100% of the Area of site considered for

artificial illumination during dark hours
CPWD PAR 2012

6.7.1: Street Lighting
Page 47
Remarks on Rate
Electrical Connection Cost
KW
600
750
0.95
600 KW power is considered
Internal Electrification for buildings
LS
1090294
1.09
Lump Sum
Back Up Power DG (2 x 160 KVA DG Set)
KV
A
320
10000
3.20
50% power backup is considered
10
Fire Fighting Equipments
Sq
m
7001
75
0.53
Total area of Sl no. 1, 2, 3, 4, 5, 6,7 and 8

of Building and Civil Works Head
11
RFID Cost
Set
6000000
6.00
1 set required per site
12
Fumigation System
MT
50000
36
1.80
13
Office Furniture
LS
1500000
1.50
Total long term storage capacity is 50 Th

MT
Lump Sum
14
Communication Equipments
LS
186947
0.19
Lump Sum
15
Internal Water Supply and Sanitation Installation
LS
373894
0.37
Lump Sum
16
Connection of Sl no. 13 above to Mains
LS
467368
0.47
Lump Sum
17
33.24
Page 48
Rate adopted from Silo Project

done by MP Warehousing
Corporation which has been
approved by EI of DEA
Rs 750 per KW + additional
lump sum amount of Rs
5,00,000/CPWD PAR 2012
3.3 : 12.5% of the cost of
building works
CPWD PAR 2012,
Supplementary for specialised
E&M works published in 2014
Item No. 2
CPWD PAR 2012
6.7.1: Peripheral Grid
25% increment made to
provision for Hydrant points
Rate adopted from Silo Project
done by MP Warehousing
Corporation which has been
approved by EI of DEA
CPWD PAR 2012
3.6.4: 0.5% of the cost of
building works
building works
building works
Hence total 2% of the building
works
CPWD PAR 2012
3.1: 4% of the cost of building
works
CPWD PAR 2012
3.2: 5% of the cost of building
works
Silos and Grain Handling Equipments

Sl
No.
Particulars
Unit
Qty
Rate in
Rs
Main Storage Silos 12500 MT capacity
Nos
Receiving Silo 4000 MT capacity
Nos
2042900
0
7939000
Bulk Truck Dispatch Silo 100 MT capacity
Nos
1181000
1.18
Bagging Silo 60 MT capacity
Nos
1063000
2.13
Support Structures
LS
20.40
As per supplier specification
Material Handling Equipments & Electricals
LS
71.06
As per requirement
Erection and Commissioning
LS
10.73
As per supplier specification
Transportation
LS
2040400
0
7106400
0
1073200
0
1840000
Total
10
Amoun
t in
Million
Rs
81.72
7.94
Remarks on Qty
Remarks on Rate
Total Capacity required is 50000 MT

adopted by FCI
1.84
1% of the cost of equipments
197.01
Normative cost considered for calculating Project

Cost
177.31
Reduction of 10% considered since the quoted price is bugetory in

nature
Railway Siding
S.No.
1
2
3
4
Description
Earthwork Excavation
Earthwork in formation including
compaction
Blanketing 60 cm depth including
compacting
Supplying & laying track 60 Kg IU
rails and 1540 PSC Sleepers/Km.
with Elastic fastenings and 250
mm ballast cushion.
Supplying and laying 1 in 8.5 BG,
Turn outs 60 Kg. on PSC sleepers &
250 mm Ballast cushion.
Unit
Qty.
Rate (In
Rs.)
Amount
(Rs. in
million)
Remarks on Qty
Remarks on Rate
Cum
9800
160
M3
1.57
As per Industries Standard
CPWD DSR - 2014 Item No. 16.1
3100
180
0.56
M3
8300
800
6.64
Km.
1.630
1450000
0
23.64
Set
1500000
3.00
Track length required for siding
Page 49
6
7
Supplying & laying derailing switch

60 Kg. PSC Sleepers.
Buffer stops
Drainage of yard lines
L.S.
L.S.
L.S.
1.00
Electrification of track 1.70 Km and

auxillary works
Signalling and Interlocking
Km.
1.70
6000000
10.20
L.S.
L.S.
L.S.
10
Sub Total
11
Supervision / Departmental
Charges @ 10%
set
355000
0.36
Nos.
150000
0.15
5.00
As per Indian Railway Norms
As per Indian Railway Norms
52.11
5.21
57.32
12
Contingency charges @ 1%
0.57
57.89
13
Codal charges @ 6.25%

Grand Total
3.62
61.51
Page 50

5.3 PROJECT FINANCIALS
The project financials are important to assess the project viability under various scenarios. The detailed
financial analysis of the project has been worked out to ascertain the cash flows generated from the
project.
5.3.1 ASSUMPTIONS AND SUMMARY
Project: Development of Modern Silo Complex at Narela, Delhi under DBFOT basis under PPP
mode
Rationale of the project: Food grains storages in modern silos with bulk loading/unloading
through railway sidings reduces the storages and transit losses substantially.
Social Impact: Reduce the wastage of grains, improves the quality of the grain, reduces the
O&M expenses and improves the efficiency of the supply chain of food grain procurement and
distribution
Total land area required: 7.95 acre
Total land area for silos complex: 4.81 acre
Total land area for railway siding: 3.14 acre
Total Capacity of the Silos: 50000 MT ( 4 bins with 12500 bin Capacity)
Components of the Project: Long term storage Silos, Pre Storage Silos, Shipping Silo, Loading &
Unloading facilities,
Fumigation and Aeration, Bagging and De-bagging facilities, Cleaning
facilities, Weighing facilities, Lab for testing, Miscellaneous Storages, Admin Block, Utility
Infrastructure and Railway Siding
Total estimated financial project cost: Rs. 418.45 million
P&M Cost: Rs.177.31 million
Building & Civil Works: Rs.107.33 million
Term Loan: Rs.209.22 million
Maximum VGF of 20% of the TPC: Rs.83.69 million
Equity from promoters: Rs.125.53 million
Construction period: Two years Concession Period: 30 years including construction period
Term Loan period: 11 years including two years construction period
Repayment Period of principal amount: 9 years
Installments: Quarterly installments
Interest rate: 11% (Concessional funding from FIs considering agri sector)
Interest During Construction: Rs.14.38 million
Corporate Tax: 34.60% and Minimum Alternate Tax (MAT): 21.34%
Revenue sources to private developer: Fixed Charge, Variable Charge and Handling Charges
Page 51
Expenses: Power, Manpower, Handling Costs, Fumigation, Insurance, Railway Siding R&M and
Miscellaneous expenses
Yearly escalation of Charges as per Price Index: Indexation (70 % of WPI and 30% of CPI for
Fixed and Variable) and 80% of CPI for handling charges
Assumed yearly O&M expenses escalation

Particulars
Yearly Growth
Escalation in Fumigation Charges
5.0%
Power Cost escalation
3.0%
Manpower Cost escalation
5.0%
Administrative Expenses Escalation
3.0%
Insurance escalation
3.0%
Insurance assets escalation
3.0%
Admin charges as % of sales
1.0%
R&M Charges
1-3 years
1.00%
4 - 8 years
2.00%
9 to 13 years
3.00%
14th Year onwards
4.00%
Railway Siding expenses escalation
2.0%
Miscellaneous Expenses escalation
2.0%
WACC: 11.09%
Base case: 20% VGF
Average DSCR: 1.42 assuming 20% VGF and 11% interest rate.
Financials Indicators: Project IRR, NPV, Equity IRR and DSCR
Particulars
Project IRR
Project NPV (Rs.in mill)
Equity IRR
DSCR
40%
30%
20%
15%
10%
No VGF
VGF
VGF
VGF
VGF
VGF
15.97%
13.72%
11.96%
11.17%
10.49%
9.23%
74.84
52.24
25.84
9.90
-5.86
-41.55
22.09%
19.17%
16.75%
15.61%
14.62%
12.78%
2.30
1.74
1.42
1.29
1.19
1.03
Bid Parameter: VGF Positive or Negative
VGF requirement for financial sustainability: The expected VGF for the project is around in
the range of 13% to 20% of the total estimated project cost for financially sustainability on the
basis of assumed base case. However the detail sensitivity analysis has been carried out to assess
the financial viability under various scenarios.
Page 52
5.4 PROJECT COST

The details of the final estimated project cost are given below in the table. In the calculation of financial
project cost, the essential project cost components such as preliminary expenses, preoperative expenses
(IDC etc.), margin money for working capital and contingency.
The proposed project shall be
implemented under VGF model of the PPP, therefore the means of finance comprises of three parts
constitutes equity infused by the promoters, the debt in form of term loan from banks/FIs and the
viability gap funding from GoI. The equity in the project is assumed to be 30% and the remaining share
of 70 % shall be in form of debt from banks and the VGF from GoI. As per the guidelines of VGF under PPP
mode for the infrastructure project, the central government will provide up to 20% VGF for the project
and state government will provide another 20% for the project, therefore the VGF is capped at 40% of the
total project cost. But in this project the maximum permissible VGF is capped at 20% in form of VGF
provided by central government only, as the project is envisaged by the central government agency.
Particulars
Land
Land Development
Building and Civil Works
Electrical & Other Utilities
Plant & Machinery
Railway Siding
Prelim and Pre- operative costs @2%
IDC
Margin Money for working capital
Contingency@ 3%
Total estimated project Cost
Rs. in million
Amount
0.00
3.05
107.33
33.24
177.31
61.51
7.65
14.38
2.50
11.47
418.45
5.4 .1 MEANS OF FINANCE
Base Case
Particulars
Equity from promoters
Sub Total
Rs. in million
Amount
125.53
125.5
VGF Grant (20% VGF)
83.69
Term Loan from Bank

Sub Total
209.22
209.22
Total
418.45
Note: The debt repayment period assumed 11 years including two years construction period for the
project. The interest rate assumed on debt (Term Loan) component is 11% pa factoring the concessional
funding from FIs/ Banks for agriculture related activities.
Page 53
5.4.2
REVENUES
The proposed project capacity is 50000 MT for storage of wheat. As per the model concession agreement, the authority will pay to the concessionaire the fixed
storage charges for the created capacity for the defined concession period and also pay the variable charges as per the actual handling of wheat. Apart from these
two mentioned charges the authority will pay handling charges to the concessionaire.
Revenues Stream from the Silo Project
Fixed Storage Charges for the created capacity
Variable Charges for the actual handling of the food grains
Handling Charges
Therefore the revenues are assured
by authority
and the details of revenues generated from the silo project for 28 years (assuming two years construction
period) are present in the table given below:
Revenue from Silos

Capacity of the Silo Complex (MT)
Capacity Utilization (%)
Capacity utilization in MT
Fixed Storage Charge (Rs./MT/ Month)
Escalation as per WPI & CPI
Final storgae charge after factoring price index
Reduce annually by 2%
Above the normative capacity additional 1 %
Financial Year
2018-19
2022-23
1
5
50,000.00
0.98
49,000.00
97.40
0.06
97.40
97.40
500.00
2027-28
10
3032-33
15
2038-39
20
2043-44
25
2046-47
28
50,000
98%
49,000
50,000
98%
49,000
50,000
98%
49,000
50,000
98%
49,000
50,000
98%
49,000
50,000
98%
49,000
142.93
140.07
500.00
172.90
169.44
500.00
209.15
204.96
500.00
252.99
247.94
500.00
306.04
299.91
500.00
343.06
336.20
500.00
Page 54
Applicable Fixed Storage charge

Fixed charge from additional 1% capacity
Fixed Charge
48.70
0.29
57.56
70.04
0.42
82.8
84.72
0.51
100.1
102.48
0.61
121.1
123.97
0.74
146.5
149.96
0.90
177.2
168.10
1.01
198.7
49,000.00
5.70
3.35
49,000
8.95
6.00%
5.27
49,000
11.98
6.00%
7.05
49,000
16.04
6.00%
9.43
49,000
21.46
6.00%
12.62
49,000
28.72
6.00%
16.89
49,000
34.20
6.00%
20.11
Total Storage Charge (Rs. in Million)
60.92
88.0
107.2
130.6
159.1
194.1
218.8
Net Revenues from Silos (Rs. in Million)
60.92
88.0
107.2
130.6
159.1
194.1
218.8
Volume of Grain Handled

Variable Charges (Rs./MT/ Month)
Increment in variable storage costs p.a.
Variable Charge (Rs. in Million)
5.4.3 OPERATIONAL EXPENSES

There are various heads of yearly operational expenses presented in the table which need to be incurred by the selected private developer to maintain the facility.
The O&M expense will cover all the major heads and also provision has been made for miscellaneous expenses.
Particulars
10
15
20
25
28
Power / Energy Charges
5.00
5.63
6.52
7.56
8.77
10.16
11.11
Manpower Cost
5.00
6.08
7.76
9.90
12.63
16.13
18.67
Admin Charges
0.61
0.88
1.07
1.31
1.59
1.94
2.19
Fumigation Costs
0.81
0.98
1.26
1.60
2.05
2.61
3.02
R&M Cost
4.18
8.37
12.55
16.74
16.74
16.74
16.74
Page 55
Insurance of grain
2.50
2.81
3.26
3.78
4.38
5.08
5.55
Insurance of Assets
1.50
1.69
1.96
2.27
2.63
3.05
3.33
Railway Siding and other Expenses
1.85
2.00
2.21
2.43
2.69
2.97
3.15
Miscellaneous Expenses
2.00
2.16
2.39
2.64
2.91
3.22
3.41
23.45
30.60
38.98
48.23
54.39
61.90
67.17
Sub -total (Rs. in million)
5.4.4 PROJECTED PROFITABILITY
Rs. in million
Particulars
Revenues
Rev from Silos
10
15
20
25
28
60.92
60.92
88.05
88.05
107.19
107.19
130.56
130.56
159.15
159.15
194.14
194.14
218.80
218.80
Expenses
Operation & Management expenses
23.45
30.60
38.98
48.23
54.39
61.90
67.17
EBITDA
37.47
57.45
68.21
82.33
104.75
132.24
151.63
Depreciation
22.57
22.57
22.57
22.57
22.57
22.57
22.57
Operating profit (EBIT)
14.90
34.88
45.64
59.76
82.19
109.67
129.07
Financial charges
Interest on Term loan
Interest on working capital
22.06
0.31
11.83
0.31
0.00
0.31
0.31
0.31
0.31
0.31
Page 56
Sub Total
22.37
12.14
0.31
0.31
0.31
0.31
0.31
PBT
Tax Calculation
-7.47
0.00
22.74
4.85
45.33
18.47
59.45
25.65
81.88
34.57
109.36
44.70
128.75
51.63
PAT
-7.47
17.89
26.86
33.80
47.30
64.66
77.12
5.4.5 DSCR CALCULATION
The debt service coverage ratio is important to understand the financial strength of the project to payback the banks financial charges over the period loan tenure.
This ratio determines that yearly cash flows generated from the project are sufficient enough to cater the principal repayment and interest charges. Generally for
infrastructure projects it should be more than 1.25.
DSCR Calculation
Cash Accrual
Interest on term loan
Sub Total
FY1
15.10
22.37
37.47
FY2
31.72
19.81
51.53
FY3
35.65
17.25
52.90
FY4
36.36
14.70
51.06
FY5
40.45
12.14
52.59
FY6
44.63
9.58
54.21
FY7
44.05
7.03
51.08
FY8
46.77
4.47
51.24
FY9
46.95
1.91
48.86
Repayment
Interest on term loan
Sub Total
23.25
22.37
45.61
23.25
19.81
43.06
23.25
17.25
40.50
23.25
14.70
37.94
23.25
12.14
35.39
23.25
9.58
32.83
23.25
7.03
30.27
23.25
4.47
27.71
23.25
1.91
25.16
DSCR
Avg DSCR
0.82
1.20
1.31
1.35
1.49
1.42
1.65
1.69
1.85
1.94
Page 57
5.4.6 CASH FLOWS
Year
-1
5
10
Rs. in million
15
20
25
26
27
28
0.00
44.96
63.07
41.84
149.88
0.00
80.57
146.15
41.84
268.57
37.47
0.00
0.00
57.45
0.00
0.00
68.21
0.00
0.00
82.33
0.00
0.00
104.75
0.00
0.00
132.24
0.00
0.00
138.44
0.00
0.00
144.90
0.00
0.00
151.63
0.00
0.00
37.47
57.45
68.21
82.33
104.75
132.24
138.44
144.90
151.63
149.88
254.18
14.38
0.00
268.57
0.00
23.25
22.37
0.00
45.61
0.00
23.25
12.14
4.85
40.24
0.00
0.00
0.31
18.47
18.78
0.00
0.00
0.31
25.65
25.96
0.00
0.00
0.31
34.57
34.89
0.00
0.00
0.31
44.70
45.01
0.00
0.00
0.31
46.93
47.24
0.00
0.00
0.31
49.24
49.55
0.00
0.00
0.31
51.63
51.94
0.00
149.88
0.00
0.00
0.00
0.00
0.00
0.00
0.00
-8.15
-8.15
25.84
17.21
43.04
132.45
49.43
181.88
394.60
56.37
450.96
701.93
69.87
771.80
1084.37
87.23
1171.60
1171.60
91.20
1262.80
1262.80
95.35
1358.15
1358.15
99.69
1457.84
Sources of cash (A)

EBITDA
Equity
Term Loan Amount
Grant
Total (A)
Application of cash (B)
Capital Expenditure
Principal Repayment
Interest payment (TL)
Taxation
Total (B)
CASH FLOW
Opening Balance
Addition Net (A-B)
Closing Balance
Page 58
5.4. 7 FINANCIAL RETURNS
Cash Outflows
Capital Investment
Net cash Outflows
Rs. in million
0
184.88
184.88
1
0.00
0.00
5
0.0
0.00
10
0.0
0.00
15
0.00
0.00
20
0.0
0.00
25
0.0
0.00
28
0.0
0.00
-149.88
-184.88
-7.47
22.57
14.63
15.10
15.10
17.89
22.57
7.94
40.45
40.45
26.86
22.57
0.20
49.43
49.43
33.80
22.57
0.20
56.37
56.37
47.30
22.57
0.20
69.87
69.87
64.66
22.57
0.20
87.23
87.23
77.12
22.57
0.20
99.69
99.69
44.96
44.96
-1
80.57
80.57
0
0.00
-44.96
0.00
-80.57
0.00
0.00
1
-7.47
22.57
23.25
-8.15
-8.15
0.00
0.00
5
17.89
22.57
23.25
17.21
17.21
0.00
0.00
0.00
0.00
0.00
0.00
10
15
20
26.86 33.80 47.30
22.57 22.57 22.57
0.00
0.00
49.43 56.37 69.87
49.43 56.37 69.87
0.00
0.00
25
64.66
22.57
0.00
87.23
87.23
0.00
0.00
28
77.12
22.57
0.00
99.69
99.69
-1
149.88
149.88
Cash Inflows
PAT
Depreciation
Interest (1-tax rate)
Net Inflows
Net cash flows
Cash Out Flow
Equity outflow
Net cash out flow
Cash Inflow
PAT
Depreciation
Less TL repayment Instalment
Net cash inflows
Net cash flow
Project IRR 30 years
Equity IRR in 30 years
NPV 30 years (Rs. in million)
11.96%
16.75%
25.84
Page 59
5.4.8 Sensitivity Analysis
Rs. in million
Case 1: Sensitivity of Project IRR with respect to concession period
6.48%
10.38%
11.16%
11.96%
Project NPV 30 years (Rs. in million)
25.84
Equity IRR 30 years
16.75%
Case 2: Sensitivity of Project NPV vs VGF and Constant Discount Rate
DiscountRate
25.84
11.09%
5%
-44.58
V
10%
-20.94
G
15%
2.53
F
20%
25.84
Case 3: Sensitivity of Project NPV vs VGF and Discount Rate

Variation in Discount rate
25.84
10%
11%
12%
13%
5%
-7.79
-41.73
-69.89
-93.32
V
10%
16.50
-18.04
-46.76
-70.73
G
15%
40.61
5.48
-23.80
-48.31
F
20%
64.55
28.84
-1.00
-26.04
Case 4: Sensitivity of Project NPV vs VGF and escalation of Charges as per WPI and CPI
Variation in Indexataion of WPI and CPI
25.84
4%
4.50%
5.0%
5.5%
6.0%
6.5%
5%
-153.17 -124.74
-94.00
-60.88
-24.79
14.57
V
10%
-131.66 -104.06
-74.40
-42.14
-7.00
31.30
G
15%
-110.90
-84.36
-55.55
-24.21
9.90
46.86
F
20%
-91.11
-65.41
-37.50
-7.17
25.84
60.06
Case 5: Sensitivity of Project NPV vs VGF and Interest Rate
Interest rate on term Loan
25.84
10%
11%
12%
5%
-16.84
-24.79
-32.81
V
10%
0.17
-7.00
-14.23
G
15%
16.31
9.90
3.45
F
20%
30.73
25.84
20.12
7.0%
57.53
71.99
84.97
96.85
on Term Loan
13%
-40.91
-21.51
-3.06
14.37
Case 6: Sensitivity of IRR, NPV, DSCR vs. Variation in Project Cost

Variation in project cost (capex)
Project Cost (Rs in million)
Project IRR
NPV (Rs in million)
Equity IRR
DSCR
80%
90%
100%
110%
120%
335.27
14.89%
94.70
21.91%
1.73
376.86
13.30%
60.50
19.06%
1.56
418.45
11.96%
25.84
16.75%
1.42
460.03
10.81%
-8.95
14.85%
1.30
501.62
9.82%
-43.59
13.28%
1.21
Page 60
Case 6a: Sensitivity of IRR, NPV, DSCR vs. Variation in O&M cost
Variation in O&M Expenses (Opex)
Project IRR
NPV (Rs. in million)
Equity IRR
DSCR
80%
90%
100%
110%
120%
13.06%
59.53
18.65%
1.53
12.50%
42.02
17.65%
1.47
11.96%
25.84
16.75%
1.42
11.38%
8.55
15.78%
1.36
10.82%
-7.99
14.85%
1.30
Case 7: Sensitivity of Project IRR vs VGF and escalation of Charges as per WPI and CPI
Variation in Indexataion of WPI and CPI
11.96%
4.00%
4.50%
5.00%
5.50%
6.00%
6.50%
5.00%
5.01%
6.33%
7.55%
8.70%
9.80% 10.86%
V
10.00%
5.66%
6.97%
8.19%
9.35% 10.45% 11.52%
G
15.00%
6.35%
7.67%
8.89%
10.06% 11.17% 12.25%
F
20.00%
7.11%
8.43%
9.66%
10.84% 11.96% 13.00%
Case 8: Sensitivity of Project IRR vs VGF and Interest Rate

Interest rate on term Loan
11.96%
10%
11%
12%
5%
10.01%
9.80%
9.58%
V
10%
10.66% 10.45%
10.25%
G
15%
11.38% 11.17%
10.97%
F
20%
12.14% 11.96%
11.76%
7.00%
11.89%
12.54%
13.23%
13.99%
on Term Loan
13%
9.38%
10.04%
10.77%
11.57%
3.11 Financial Viability and Sustainability

The option of no VGF is not viable since the project cash flows need to be strengthened in form of
VGF to payback financial charges (repayments of principal and interest)
The option of concession period less than 30 years is not viable factoring the inadequate cash flows
generated from the project to meet the financial obligations and to achieve the targeted IRR.
However if the concession period is reduced, in that case more VGF sought by the private developer
for financial sustainability. Hence it is in better to have 30 years concession period factoring the
financial viability of the project as well as machinery life of the project
The option of VGF in the range of 13% to 20% of the total estimated project cost makes the
project viable and financially sustainable with adequate cash flow.
Sensitivity Analysis shows that both increase in project cost by 20% and increase in O&M expenses
by further 20% make the project unviable. However any reduction in the estimated project cost will
substantially improve the financial viability of the project considering the fixed revenues linked
with the total capacity of the silos, hence there is an opportunity for the developer to optimize the
project cost subject to the specifications mentioned in the concession agreement, which will help in
to achieve better margins from the project over the years.
In base case the DSCR (debt service coverage ratio) of the project is 1.42 assuming the maximum
20% VGF for the project, which is more than the acceptable DSCR of 1.25 for infrastructure projects
Page 61

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Final Feasibility Report: Development of Silos at Narela, Delhi on

DBFOT basis under PPP Mode

Development of Silos for Storage of Wheat at Narela, Delhi on DBFOT

Revised Final Feasibility Report

SREI Infrastructure Finance Limited

Ministry of Consumer Affairs, Food & Public Distribution

FOOD CORPORATION OF INDIA

PROJECT BACKGROUND .......................................................................................................................... 5

OBJECTIVES OF THE STUDY .................................................................................................................. 6

SCOPE OF CONSULTANCY ...................................................................................................................... 7

General TOR ......................................................................................................................................... 7

Details of Scope of Services............................................................................................................ 7

CURRENT POLICIES DIRECTIVES & AGREEMENTS ...............................................................................11

ORGANISATIONAL SETUP ....................................................................................................................11

STRUCTURE OF FOOD GRAIN MANAGEMENT ............................................................................11

National Food Security System ..................................................................................................11

Procurement of Food Grains for Central Pool ......................................................................13

Storage Management ......................................................................................................................14

Capacity Augmentation Programmes......................................................................................15

CURRENT PROJECT STATUS .................................................................................................................. 9

GRAIN SUPPLY CHAIN & ROLE OF FCI ............................................................................................16

National Food Security Bill, 2013..............................................................................................17

Decentralized Procurement Scheme........................................................................................18

High Level Committee Report, 2000 ........................................................................................19

Private Entrepreneurs Guarantee (PEG) Scheme...............................................................19

EXISTING SUPPLY CHAIN OF STORAGE FACILITIES ..............................................................................21

CONVENTIONAL COVERED WAREHOUSE .....................................................................................21

CONVENTIONAL STORAGE vs. MODERN SILO STORAGE ......................................................22

Indian Scenario .................................................................................................................................22

Flat Warehouse Vs Modern Vertical Silos ..............................................................................22

Experience of Creating Silos in India .......................................................................................23

SREI Infrastructure Finance Limited

TECHNICAL FEASIBILITY ..................................................................................................................................26

SITE APPRECIATION: PROPOSED SILO AT NARELA, DELHI..................................................26

Connectivity Status .........................................................................................................................26

Existing Infrastructure ..................................................................................................................26

FACTORS INFLUENCING CAPACITY PLANNING .........................................................................28

State Wise Production....................................................................................................................30

Allotment and Off-take of Food Grain .....................................................................................31

State Wise Storage Capacity ........................................................................................................32

Gap Analysis: Allotment vs Storage Facility..........................................................................32

SUPPLY CHAIN OF MODERN SILOS ..................................................................................................33

CAPACITY PLANNING AND PROJECT FACILITY ..........................................................................35

4.5 PROJECT SCOPING .............................................................................................................................................35

Fire Detection and Fighting System..............................................................................................38

Buildings and Sheds ............................................................................................................................38

RAILWAY SIDING ..........................................................................................................................................38

Methodology for Train Operation .................................................................................................40

TECHNICAL FEASIBILITY ..........................................................................................................................41

5. PROJECT FINANCIAL VIABILITY & SUSTAINABILITY................................................................................42

5.4.3 Operational Expenses ..................................................................................................................................55

5.4.5 DSCR Calculation...........................................................................................................................................57

SREI Infrastructure Finance Limited

SREI Infrastructure Finance Limited

OBJECTIVES OF THE STUDY

SREI Infrastructure Finance Limited

Details of Scope of Services

Collection, compilation and analysis of available information provided by FCI.

iii. Assess financial viability of the Project;

Preparation of indicative BOQ and Rough Cost Estimates; and

vi. Preparation of Schedules A, B, C, D and H of the Concession Agreement.

SREI Infrastructure Finance Limited

COMPILATION AND ANALYSIS OF DATA