Emergence of Collateralized Trade Finance under Secured Warehousing National Bulk Handling Corporation Private Limited (An ISO 9001:2008 & ISO 22000:2005 Certified Company) Emergence of Collateralized Trade Finance under Secured Warehousing 15th September 2017 www.nbhcindia.com

What is Structured Trade Finance? Trade Finance (TF) is a lending structure related to import and export transactions involving Letters of Credit or Documentary Collections. The stock or goods in transit act as the security and banks or trade financiers guarantee payment to the exporters upon meeting certain criteria. Structured Trade Finance (STF) is a variant of (TF) where the lender looks to shift risk from balance sheet to a commodity or cash flow. Structured trade products: warehouse financing pre-export financing Cash flow capturing

Structured Trade Finance The scope of discussion is inventory based funding in warehouses.

Indian Agri Commodity Markets 17 April 2018 Indian Agri Commodity Markets One of the large producers of Rice, Wheat, Sugar, Cotton, top producer of milk, largest in fruits and second largest in vegetables, jute, etc. and also one of the large consumers of these commodities Estimates (2016-2017) of food grain production pegged at 273 million MTs Largest government system for food grain procurement & distribution, market intervention for food prices and minimum support prices to the farmer. CHARACTERISED BY INITIATIVES Fragmented markets Post-harvest supply chain infrastructure deficient in quality and capacity Price Information opacity and asymmetry Access to affordable credit lines cumbersome Weak / inadequate support institutions Long commodity value-chains Commodity Futures – to develop one of the world’s largest and state-of-the-art e-Spot and Futures Markets Regulatory Impetus – APMC Act, WDRA, Food Safety Act, Tax Regime - GST, etc. Renewed focus on Agriculture development PPP enablement and facilitation for Private sector investments and participation

Agri-warehousing estimated to grow at 8-10% Total Agri-warehousing Capacity in India Key Growth Drivers MMT CAGR (2009-17) CAGR -8-10% 1 Growth in Agri Production In order to bolster the agri sector growth government is planning to invest in irrigation projects, Agri-R&D and farm mechanization 15% 8% 2 Increasing Private Player Participation In Agriwarehousing sector major investment in past 3-4 years have come from private players and as many as 3-4 new players have entered the market 3 Stricter Enforcement of WDRA norms WDRA is in the process of laying down clear framework for implementation of WDRA norms which will standardize the warehousing facility and there will be high demand for WDRA accredited warehouses Estimated Capacity Addition for Private Organized Player by 2020 in MMT 4 CAGR -15% Tax Incentives Government of India provides various tax incentives for setting up and operating warehousing facility for storage of agricultural produce 5 Deregulation and Public Private Partnership Outsourcing and/or public private partnership by government nodal agencies (FCI,CCI and CWC) for the procurement and storage of agri produces The share of organized players in agri warehousing capacity has increased from 4.5% in 2009 to 8% in 2017 Warehousing capacity of organized private players is expected to double by 2020 including owned warehouses and leased warehouses

Warehouse Led Collateral Finance Industry is growing at a 10-12% over last few years. Warehouse led finance is still nascent compared to conventional working capital products. Industry is characterised by 2-3 reputed players. Becoming preferred mode of inventory finance.

Warehouse Led Collateral Finance… Sugar and Paddy complex contributes more than 50 percent of the Warehouse Finance. Good opportunity for Domestic oils seeds and meal manufacturers.

POLICIES AND PARTNERSHIPS 17 April 2018 Way Forward – Warehouse led Finance INFRASTRUCTURE POLICIES AND PARTNERSHIPS Accelerated efforts to create new infrastructure Upgrading of existing infrastructure Creation of ecosystems rather than standalone facilities Expediting the impending tax and regulatory measures to create investment attractiveness Keeping conducive policies environment for private sector investments to create remunerative business participation WDRA to be sole Regulatory Authority TECHNOLOGY OPERATIONS AND OTHERS Adopting technology to streamline processes and enhance operational efficiency Research and Development for newer technologies for commodity management & care Adopting technology for transparency and price dissemination Creating pan-industry standards Product and operational innovation to reach wider base Awareness and promotion of WRF

Way Forward. Continued… Industry awareness, recognition, benchmarking Encouraging professional Collateral Managers and WSP. Accreditation of Collateral managers on well-defined benchmarks. Proliferation of best practices. Commensurate rewards Minimum ROI and ROE expectations. Ensure commercials awarded take cognizance of inherent risks. Industry and Banks to develop bench marks for enlisting WSP. Downstream risk awareness and recognition Infidel acts being a major challenge, a proper Insurance product and timely resolution of claims would help the Industry grow significantly.

NBHC Fact File FACT FILE Presence 23 states (in which NBHC has worked) As on 31st July 2017 Presence 23 states (in which NBHC has worked) Sales & admin offices 60 Warehousing Storage capacity (All types ) 4.00 + mn MT Storage space (All types ) 24.00 + mn sq.ft Storage facilities (All types ) 2500+ Storage facilities (Lease Franchisee Owned ) 1000+ Geographical Spread 1000+ locations Collateral Management Commodity under CM (cumulative) 40.70+ mn MT CM & SP Funding facilitated (cumulative) Rs 75,000 + crs Assets under CM Management (cumulative) Rs 1,08,000 + crs No. of Banks / Financial Inst. Associated with 51 No. of warehouse receipts issued (cumulative) 3,25,000+ Expertise in number of Commodities 170+ Quality Assurance & Pest Management QA Laboratories / facilities 40+ (200+ mobile labs) Number of Commodities tested 170+ Pest Management Services 15 states Accreditations 15 licenses Commodity Fumigation (cumulative) 50.80+ mn MT Human Resources Sales, admin and operations support staff 1100+ Supervisory outsourced staff 1400+ Warehouses Security personnel 1100+

THANK YOU Inderjeet Singh Inderjeet.singh@nbhcindia.com 9325102170 1111