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Case Study on Adani Agri Logistics Limited: Blocking the Grain Drain

Introduction

Food grains play an essential role in nourishing the nation’s populace. Adani Agri Logistics
Limited founded in 2005, is a division of Adani Group of Companies with mandate of facilitating
logistics solution for the bulk goods with the public-private partnership with Food Corporation of
India. Adani Agri Logistics Limited provides integrated logistics solutions for movement of
commodities. Adani has secured an all India license to manage container train operations on Indian
Railway. In order to provide pan-india multi –modal logistics services, Adani logistics limited has,
developed the facilities for movement of goods in containers by train, road and sea.

Case Summary

Adani Agri Logistics Limited (AALL) was created to execute a national project for the bulk
handling of food grains via a public-private partnership with the Food Corporation of India.

This case study entailed designing, planning, funding, constructing, using and maintaining
infrastructure that was modern for the mass handling, storage and transfer of grains necessary for
the public supply system. Although a technology driven supply chain solution was implemented,
the benefits of this advanced supply system did not come after four years of operation.

According to the case, farmers were averse to accept the brand new storage system it was a
departure in the relationship based transactions they were used to endeavor with traditional
intermediaries. India is the mainly agricultural based country where 25% of GDP is contributed
by the agricultural sector which employs 70% of the working population. India has mainly two
phases of growth, first one is when India is under control of Britain, and another is after the
independence. After 1960 “green revolution” a program which focuses on the increasing the
production of food grains by using superior yielding method, disease resistant wheat varieties and
better farming knowledge. In the initial phase of this program India is going slowly towards the
industrialization and have high unemployment. The government is able to get low cost labor
intensive for the packaging, manual stacking and manual loading/unloading.
In the wake of green revolution a parliament brought the responsibility of procurement and
distribution of grain under the individual state government. During the phase of Industrialization
food grain surpluses became a cause for seeking the better ways to develop good storage
infrastructure. The government focus shifted from food grain production to food grain storage.

While CAP was an economical system and was considered to be “scientific storage”, the losses
caused by rodents, insects, fungi, moisture exposure handling were high. In order to have less
losses the new system for the bulk handling of good grain was announced via the National Policy
on Bulk Handling. The PPP project also initiated with the objective of providing food security to
nation’s populace via comprehensive supply chain solution. The concept of bulk handling was to
be in central to the project, ensuring that all handling activities (collecting, receiving, cleaning,
drying, fumigating, storing and transporting) were performed in bulk with minimum human
interface and intervention.

There is the certain sequential operation to collect and receive the food grains: - The receiving
system, Pre-storage, Process Tower, Main Storage, and Shipment.

From the PPP Pilot project the farmers were benefited in a sense that, the full transaction,
including weighment, quality assessment and unloading was completed within an hour at the
AALL complex. The farmers also enjoyed speedy payment processing, with their payment
finalized within just 72 hours.

Problem Statement

In the case of Adani Agri Logistics limited: Blocking the Grain Drain, the main problem is a middle
who comes between the farmers and the industry. There are other problem as well. In the first
phase the nation worked towards becoming self-sufficient with respect to its domestic food grain
requirement. The agents were primarily concerned with the number of transactions they could
undertake and did not attempt to negotiate better rates for farmers. The initial transaction took
place in mandis, where the prices were negotiated. Transaction occurred on the open and there was
often significant grain wastage and damage. The produce are sold through the private or
government run supply chain with each link in the chain the price were marked up and the farmers
were put downward pressure on the rates that farmers received. With the use of government run
supply chain, there were many players throughout the value chain and was marred by inefficiencies
and wastages.

SWOT Analysis:

Swot analysis helps the business to identify its strength and weaknesses, as well as understanding
of opportunity that can be availed and threat that the company is facing. The SWOT analysis of
the Adani Agri Logistics Limited Blocking the Grain Drain is as follow:

1. Strength
 Conventional Rail Transportation
 Integrated bulk supply chain
 Distibution Model
 Transparent and accurate QC check
 The AALL is a conglomerate company public-private-partnership with the
government owned Food Corporation of India.
 Being the PPP company the AALL is providing a good facility to the farmers with
the decrement of the middle man.
 The processing time of transaction is also minimal which create a good benefit to
the farmers.
 AALL always focus on new system acquiring which minimizes the wastage and
damage of the food grain.
2. Weakness
 The AALL is still lacking in some features. The AALL is still not able to get
touched with the local farmers.
 AALL haven’t a highly modernize equipment to store the food grain for longer
period of time.
 Jute bags used by AALL for storage were in short supply and use of the polythene
plastic bag created environmental risk as well as safety risk in terms of stacking
them.
3. Opportunity
These are the external factors which create a some growth way to the organization.
 An introduction of new system for bulk handling is one of the important
opportunities for AALL to perform the relevant process.
 The PPP project provide food security to the nation’s populace which also increase
the farmers benefit.
 Use of the base and field depots create a good link between the AALL and farmers.
4. Threats
These are the external forces which influence the overall organization performance
 Not updating according to the technological change.
 Having a controlled system and lengthy process.
 The railway transportation for logistics activities is quite outdated

PEST Analysis of Adani Agri Logistics Limited:

Pest analysis is widely used to analyze the Political, Economic, Socio-cultural, Technological
situation which can provide great and new opportunities to the company as well as these factors
also threat the company.

1. Political
The political factor means the governmental rules and regulation which influence the
company. In this case the company is collaborating with the governmental organization
that is Food Corporation of India, and for the transportation Indian railway is used, so the
AALL must follow the certain legal activities set by the government.
The food corporation of India face the challenge to monitor pilferage and reduce wastage
through mechanization of warehouses. The political environment is in favor of farmers as
the government agreed to purchase farmers’ produce via the FCI at a declared price
established the minimum support price scheme to appease and safeguard the farmers.
2. Economic
The country’s economic situation is not satisfactory. After the independence from Britain,
the nation only focus towards becoming self-sufficient with respect to its domestic food
grain requirements.
Funding for food security came through the parliamentary budget, and all post-harvest and
storage losses were registered to the account of central government. So we can say that the
government is oversaw food security as a whole.
3. Socio-Cultural
Collaboration was a more intense form of relationship than coordination and cooperation.
Collaboration had a cultural context, and so the level of trust in business dealings was
inherently related to the norms and values of native culture.
Indian society is representative of a tight culture. Indian society reinforces trust in
institutional trust to control behavior and sanction deviance. In a tight culture, people
deemed on institutional gurantors when conducting business. So the cultural diversity of
the nation is one of the factors to block the grain drain and affect the supply chain of the
Adani Logistics.
4. Technological
In the beginning phase the AALL is using outdated technology which cause the wastage
of food grains in the storage. After the introduction of new system the AALL is efficiently.
AALL setup seven base and field depots across the country. All AALL facilities were
equipped with fire hydrant systems, superior handling systems, full security cover,
watchtowers and wireless system. There was also a central control system, which used
state-of-the-art technology to automate and monitor operations, thus providing quality,
accountability and transparency within the whole structure.

Solution of the case

In the given case of Adani Logistics limited, the main problem is middle man between the farmers
and the company or Food corporation of India. So the company must focus on the farmers’ because
they are the supplier for the adani logistics. While using the supply chain system of the government
there should not be too much player in the value chain activities. In this case there are lot of players
in the supply chain which hesitate the farmers.

The AALL should run the base depots function efficiently which create integrated bulk handling
and transportation facilities under a build-own-operate agreement to supply food grains. The
purpose of base depots was to collect and receive the food grains, which should be controlled from
the central.