Project Profile on Mott MacDonald

Grain Storage Silos with Mechanized Handling – Port based iNDEXTb

Sector Agro and Food Processing

Sub - sector Agri-infrastructure
Project No. AF-22
Project Title Grain storage Silos with Mechanized Handling System– Port-based
Project Description
The project envisions setting up of a Mechanized grain storage silos and handling system, which can
cope with the problems of post harvest storage and handling of surplus grains and oil seeds. These
silos can help in minimizing the wastage of food grains and oil seeds, and thus will ensure availability
of additional quantities of grains for domestic and export markets.

Product Application
Galvanized iron mechanized silos are required to store grains effectively, curbing the problem of
surplus, and reducing problems in post harvest storage and handling of seeds prevalent in current
rectangular godown storage system. These silos can effectively protect grains and oil seeds against
damage by rain, flood, birds, rodents and pests. This integrated system will also help in efficiently
handling the grains by international standards and assist in amplifying the export potential.

Market & Growth Drivers

Market
 World food grain production for the year 2005-2006 was estimated at 2015 million tons, while
India’s contribution was approximately 209 million tons.
 Food storage capacity in Gujarat is 16.45 Lac tons in 2005, which represents about 1.6% of
the total national capacity, and port based Food grain storage and Mechanized handling
systems are almost non existent, even at newer ports like Kandla.
 The Indian food grain storage capacity for the year 2004-2005 was 261.21 Lac tons and is
proposed to be increased by 15.79 Lac tons by the end of tenth five year plan. Central
warehousing corporation (CWC), Food corporation of India (FCI) and 17 state warehousing
corporation (SWCs) are the three agencies in the public sector that are betrothed in building
large scale storage/warehousing capacity.
 Storage and bulk handling system for Food grains and oilseeds, particularly at ports and bulk
cargo handling terminals is becoming the bottleneck in developing exports / imports of these
products as manual handling becomes more tedious and results in delay of loading /
unloading operations at ports and causes heavy demurrages.

 Furthermore, lack of appropriate storage facilities for food grains and oilseeds results into
very high spoilage, which deteriorates the quality of material being stored.

Growth Drivers
 Increased domestic production of food grains in India has opened up opportunities for export,
which requires basic infrastructure like the proposed project.

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Project Profile on Mott MacDonald
Grain Storage Silos with Mechanized Handling – Port based iNDEXTb

 Globalization of food grains and oilseeds trade has opened up vast opportunities for India in
general and for states like Gujarat in particular.
 Due to the globalization and World Trade Organization (WTO) regime, the trading of food
grains and oilseed as commodities in the futures market is increasing as large domestic and
international companies are participating in such markets.

Why Gujarat?
 Investment opportunities exist in Gujarat in the areas of Mechanized food grain /
Oilseeds bulk handling systems and Bulk storage silos, with the proposal for essential
port based infrastructure development.
 Gujarat ports are being used by Central and North Indian states (hinterland for Kandla,
Mundra and Bedi ports) for export of rice, wheat and other food grains. Mechanized
grain handling system will be advantageous as it will reduce loading and unloading time
for such export operations.
 The production of food grains and Oilseeds in Gujarat, in the last five years is
summarized in the following table:

Production of Food Grains and Oilseeds in Gujarat

Year Food grains production Oil seeds production Total

( ‘000 Tons ) (’000 Tons) (‘000 Tons)
2000-01 2548.5 1656.0 4204.5
2001-02 4905.7 3630.4 8536.1
2002-03 3621.0 1673.1 5294.1
2003-04 3908.5 5655.0 9563.5
2004-05 2858.1 2898.8 5756.9
Source : Directorate of Agriculture, Gujarat

 The above production will escalate in the coming years, as Gujarat is poised for second
agriculture revolution with the availability of Narmada canal irrigation in North Gujarat,
Saurastra and Kutchh region. The increased food grain and oilseeds production will
amplify the export of surplus material. Storing the surplus production will need
appropriate infrastructure to prevent post harvest and storage loss, occurring presently
at the time of exports.

Technology/Process
The Mechanized Grain Handling and storage system generally includes following sections:
 Bulk grain receiving and Drying system: This section includes equipment for bulk
grain receiving, such as Bulk hoppers with bulk conveyors, elevators, drum / plate
magnets / dog chutes with magnets, etc.; optionally grain dryers for drying of food
grains at the time of fresh harvest season for control of moisture in grains and

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Project Profile on Mott MacDonald
Grain Storage Silos with Mechanized Handling – Port based iNDEXTb

continuous weighing system to get estimate for refractions in grains received can be
installed at Agriculture Produce Market Committees (APMC) or district and taluka level,
wholesale grain markets.
 Grain cleaning and handling system: Vibratory screens for grain cleaning, pneumatic
De-stoners for removal of stalks stones / pebbles etc; dust removal pneumatic systems
with cyclones and bag filters, Silo loading elevators and conveyors etc.
 Mechanized Silos: Mechanized Silos are vertical Galvanized Iron huge structure with
conical shape roof and top loading and bottom retrieval (unloading) systems. It also has
temperature and moisture sensors for monitoring temperature and moisture in different
storage pockets and air blowers for control of temperature and moisture. This air
handling system is also used for fumigation of grains to preserve them for long-term.
These are available in sizes of 1000 MT to 20,000 MT storage capacities. Hence, they
are suitable for medium as well as large storage needs.
 Grain retrieval and silo unloading system: Silo unloading system includes Sweep
augur, bottom hoppers and conveyors and elevators, optionally continuous weighing
system and sampling system, etc.
 Bulk loading system for Domestic / Export cargo to vessels and rail racks: Bulk
loading system includes Elevators and Conveyors for loading into bulk trucks, Railway
wagons, Ship or Barge loading. This system is combination of mechanized as well as
pneumatic handling system depending upon the distance and quantity to be handled.
The technology for Mechanized grain handling system and storage silos can be sourced from
reputed international suppliers like Behlen International Ag Systems - USA, MFS /York / Scafco
- USA, and Chief industries - UK etc;.
Suggested Plant Capacity & Project Cost
The suggested Mechanized grain handling and Storage capacity - 40000 MT. The estimated project
cost for the proposed size projects would be INR 400.20 million (US $10 – 13.33 million).

Estimated Project Cost & Means of finance

Sr.
Cost of project INR in million
No.
1 Land and Land development 8.00
2 Building and Civil works 50.00
3 Plant & Machinery 250.00
4 Misc. Fixed Assets 18.00
5 Preliminary & Pre-operative 15.00
6 Provision for contingencies 20.00
Total Fixed Assets 361.00
7 Margin Money for working capital 39.20
Total 400.20

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Project Profile on Mott MacDonald
Grain Storage Silos with Mechanized Handling – Port based iNDEXTb

Sr.
Cost of project INR in million
No.
Means of Finance
8 Promoters contribution 100.05
9 Term loan 300.15
Total 400.20

As indicated above, the proposed project will require an approx 40000 sq. mt of land with proposed
built up area of 10000 sq. mt. The total fixed cost of the project is estimated at INR 361 million and
INR 39.20 million is the working capital margin which adds upto total capital cost of INR 400.20
million. The unit being proposed to cater to domestic as well as to International markets and hence it
is suggested to have a Debt equity ratio of 2:1. Thus, the estimated term loan amounts to INR 300.15
million and Equity at INR 100.05 million.

Suggested Location
Large size Mechanized Grain handling systems are part of Agri-infrastructure, that can be located at
bulk rail / road transport head or at bulk Cargo handling ports of Kandla, Mundra, Bedi-Jamnagar, and
Pipavav. Project may be located at large APMC as common agri - infrastructure, where bulk quantity
food grains and oilseeds are received in peak season.

Project Time Line

The proposed project will have cumulative implementation period of 14-16 months of which 5-6
months would entail obtaining the obligatory clearances from various authorities.

Financial Indicators
Based on the profitability projections worked out for the proposed project, key financial indicators are
as summarized below:
Key Financial Indicators
St nd rd
Sr. No. Financial Ratios 1 Year 2 Year 3 Year
A Break-Even Point in % capacity 53.87 48.39 43.11

B Debt-service Coverage Ratio 1.54 2.12 3.37

C Average DSCR 2.34

D Return on Investment (ROI) 5.11 % 8.41 % 11.39 %

E IRR for a project period of 10 years 12 %

Being an infrastructure project the suggested Debt Equity Ratio for the proposed project is 3:1. The
internal rate of return for the proposed project is approx. 12% projected for a period of 10 years.

Clearances Required
Approval of respective port authorities for setting up of proposed project.

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Project Profile on Mott MacDonald
Grain Storage Silos with Mechanized Handling – Port based iNDEXTb

Registration of proposed project as service industry unit with respective state /central authorities.

Agencies to be contacted
Industrial Extension Bureau
Mott MacDonald India
Gujarat Agro Industries Corporation Ltd.

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