1. 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

2. 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

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

4. 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 ( ) 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

5. Agri-warehousing estimated to grow at 8-10%
Total Agri-warehousing Capacity in India
Key Growth Drivers
MMT
CAGR
( )
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

6. 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.

7. 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.

8. 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

9. 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.

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

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