GLOBOIL
INDIA 2014
COLLATERIZED TRADE FINANCE UNDER SECURED WAREHOUSING
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The Indian Commodity Eco-system
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Agricultural Production increasing YoY. Oilseeds production expected to decline to 13.30MMT
from 14.20MMT last year
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Key growth drivers ranging from application of technology, agronomy practices usage of
chemicals & fertilizers , seeds, improved irrigation , etc.
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India continues to be a major importer of edible oil
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Food inflation, though moderating is cause of worry to the common man and the government
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Storage demand in agri-commodities though seasonal , evidences a secular growth trend
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Utilization levels as well as storage opportunity depict untapped opportunity
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Collateral Management in post-harvest credit directly co-related to WHR financing
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WHR financing estimated to grow to Rs 70,000 cr+ in 2018, from current level of Rs 25,000 cr
on the back of increasing Policy impetus ( like WDRA, increasing focus on agri-lending ), advent
of credible collateral management industry
• Improved and enhanced warehousing space , Regulatory measures , gradual improvement and
traction in investments , participation of private sector , endeavour to imbibe, global standards ,
etc. are enablers of structured finance in secured warehouses
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Few service providers have any focus in efficient commodity management , commodity quality
testing & certification as well as in commodity care & protection
* Source: Company / Industry / Consultants Data
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Basis of Structured Finance
Liquidity through
soft assets
Outsource non core
activities
Different colours of risk
Moderating Overall
working capital &
leverage BS
Counterparty
Liquidity
Fraud
Documenta
tion
Client &
Fiduciary
MIS
Leverage higher sales
on lower capital base
Compliance
Lower Administrative
Costs
Reporting
Accounting
Managing the above risks entails thorough knowledge of :
All the risks across the eco-system : recognize, identify, manage, control , mitigate
The eco-system : Commodities, warehousing , crop patterns, eco-system participants
Demand-supply dynamics
Insurance as a risk mitigant
The documentary aspects
The Regulatory and Administrative measures
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Crucial link in the Commodity-value chain
Structured Trade in Secured warehouse is key to a seamless value chain
Risk Management is the enabling catalyst for trade- farm gate to processor to wholesaler
Enables enhancing market share , reduce costs, mitigate risks across the value chain
The Commodity Ecosystem
Agri-production
Pre-harvest
Producers
Input credit
Working Capital
Asset Financing
Commodity Sales &
Primary Processing
Storage
Storage & Logistics
Post-harvest
Traders
Production &
post –Production
Processors
Working Capital
Collateral Management
Structured Finance
Trade Finance
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Processing
Packaging &
Logistics
Wholesalers
Working Capital
Trade Finance
Warehousing and Collateralized Trade Finance
Benefits to the Lenders
Benefits to the eco-system
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Access to credit working capital and postharvest liquidity
Easy liquidity services against inventory
Storage management facilities either at
door step or dedicated warehouses
Supplier liquidity ensures uninterrupted
supply flow on account of credit
constraints
Ability to negotiate payment and regulate
payment tenors
Liquidity matched to the seasonality of
the business
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Definable and un-encumbered Collateral
Real-time valuation and Mark to Market for margin calls
Assets with short term horizon < 1 year
Relatively non-NPA as risk of quantity and quality borne by
professional Collateral Manager
Ability to spread risks amongst larger cross section of stake
holders, commodities and eco-system
Expedient disposal of commodities in case of default
Key features of a Professional Collateral Manager
Brings invaluable and immense fiduciary trust within the eco-system
Well capitalized and completely integrated service provider, ensures commitment and high quality
of services
Integrated bouquet of services ensure mitigation of risks across segments
Price dissemination and commodity health care services , ensure value and quantity remains intact
during storage
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Warehouse receipt funding…Model-1
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2
Commodity
Document
Finance
Farm Produce
QC
3
1
4
QC
QC
Quality Certificate
WR
Warehouse Certificate
WR
Farmer/Trader
5
QC
WR
Bank
NBHC warehouse
Rs.
6
Quality Testing
Lab
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Process NBHC Flow – Model 1
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Warehouse Receipt Funding : Model 2
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Process Flow – Model 2
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Requisites for successful WRF System
• Regulatory and Policy enablers provide acceptability for commodity based funding, and also reduces
the cost to the recipients of credit
• Facilitators with requisite capabilities mitigate inherent risks via various mitigants like operational
control, insurance, legal agreements, etc.
• Facilitators act like connectors between the lender and borrower, enabling the lender to fund the
commodities under storage, and at the same time creating accessibility for the borrower
Acceptance
Ability
FINANCIAL INSTITUTION
STORAGE & SUPPORT INFRASTRUCTURE
Regulatory &
Supervisory
Agency
Policy &
Legal
Framework
ENABLERS
Value
Appraisal
BORROWERS
Accessibility
Affordability
Financial
Performance
Guarantee
Value
Protection
FACILITATORS
Value Realization
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Source: In-house , various USAID, UNCTAD WORLD BANK studies, etc
NBHC CecureCollateral Management Solutions
Cecure Risk management based on
• Policies,
• Infrastructure &
• Operations
Cecure’s Risk Management is a 4-step cyclic process.
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Risk Identification
Risk Measurement
Risk Management &
Risk Mitigation
Cecure puts emphasis on methodical and proactive risk
management
Services - NBHC Cecure provides collateral
management services based on structured
warehouse accreditation, risk prevention
& mitigation. Assurance of quality and
quantity of the commodities is provided to
both depositor and lender.
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Audit & Surveillance
ISO 9001 & ISO 22000 complied practices
Secure documentation
Insurance and Fidelity policies
Collateral Intelligence
In-house commodity profiling and protection services
Edge to clients
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Secure credit portfolio on commodities
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Enhances volume of business and productivity
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Enables spreading of risk and overall mitigation
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NBHC Services
Supply Chain
Management
Reducing
liquidity
risk
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Storage &
Bulk Handling
Testing &
Certification
Reducing
cost &
wastage
Reducing
market
adoption risk
Collateral
Management
Preservation &
Protection
Reducing
credit
risk
Reducing
Pest
risk
Audit
& Accreditation
Reducing
compliance
risk
MSP
Procurement
Reducing
cost &
inefficiency
NBHC Platform
Efficiency
Reward
in cost and operations
Get proper remuneration
globally benchmarked
of produce as per quality
commodity management
practices
Quality
Mitigates concern and
enhances value during
commodity storage
Liquidity
Enabled by liquidity
Commodities benefit
from easy conditions
Meet
Strict compliances
standards
Reach
Larger segment of
farmers to benefit from
MSP including cost
&efficiency
Informed
Better decision making
Brands
NBHC has a unique service basket offering customized end-to-end commodity management solutions fostering better utilization of resources
Each service is a part of supply chain as well as an independent service offering
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NBHC Fact-file
FACT FILE
Recent
Presence
23 states (in which NBHC has worked)
Sales & admin offices
59
Warehousing
Storage capacity
(All types )
2.15 + mn MT
Storage space
(All types )
12.90 + mn sq.ft
Storage facilities
(All types )
1320+
Storage facilities
(Lease Franchisee Owned )
570+
Collateral Management
Commodity under CM (cumulative)
25.68+ mn MT
Storage facilities under CM (cumulative)
9,000+
Geographical Spread
550+ locations
CM & SP Funding facilitated (cumulative)
Rs 43,000 + crs
Assets under CM Management (cumulative)
Rs 61,000 + crs
No. of Banks / Financial Inst. Associated with
43
No. of warehouse receipts issued (cumulative)
2,18,700+
Expertise in number of Commodities
160+
Quality Assurance & Pest Management
QA Laboratories / facilities
35+ (200+ mobile labs)
Number of Commodities tested
160+
Pest Management Services
15 states
Accreditations
23 licenses
Commodity Fumigation (cumulative)
33.33 mn MT
Human Resources
Sales, admin and operations support staff
Supervisory outsourced staff
Warehouses Security personnel
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690+
930+
920+
The NBHC Advantage…
Company Profile
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Services
• Customer centric
• Integrated commodity management
solutions
• Proficient at all stages of supply
chain
• Services across the eco-system
Corporate entity
Well established
Strong pedigree
Sound financials
Recognized brands
Able Management team
On-line
sampling
and assaying
Customized
Services
Platform
StrongWarehouse
SOPS
Management
Accreditation as per NBHC standards
- Selection
- Accreditation
- Management
• Inward & Outward SOPS
• Commodity assaying
• Lock & Key arrangements
• Personnel deployment
• Stack sealing
• Client stock demarcation
• Commodity Care
• Sample preservation
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Rake handling & surveying
Onsite and offsite services
Stackwise accounting
Clientwise stack management
Real time issuance of WHR
Export & Import consignments
Dry and Cold Storage environments
Agricultural commodities &
Non-Agricultural commodities
Assorted grades and varieties
Insurance – Claims management
pan –India operations
Commodity disposal solutions
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Expanse & Expertise
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550+ locations, cumulatively at 9000+
170+ districts
18 states
1320+ storage facilities under management
Capacity under management 2.15 mn MT
43 Banks in association with, for CM
160+ commodities
59 sales & admin offices
Elaborate Risk Management
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Warehouse Risk Matrix
Commodity assaying and valuation
Audit and Surveillance
Client selection and acceptability
Market Intellicom
Trade Intelligence
Assorted triggers for pre-emptive risk
reporting
• Insurance enablement
Our Promoters
India Value Fund Advisors established in 1999
One of the largest and most experienced Private Equity teams in India
India-oriented fund with focus on Indian Companies
Raised four funds with a corpus of US$ 1.2 billion from ~30 global top end institutional investors
IVFA management philosophy underscores the deep commitment it carries to all its stake holders- the
Investor, the Entrepreneur and the Management
Fund’s Evolution Trail
2010
India Value Fund IV
USD 600 Mln
2007
2005
2000
India Value Fund
IUSD 35 Mln
India Value Fund III
USD 400 Mln
India Value Fund II
USD 170 Mln
Managing
Partner
Corporate structure
Managing Partner plays a key pivotal role
Investment Managers involved in transaction & acquisitions
Business Managers involved in enhancing the businesses
Investee
Company
Funds
Management
www.ivfa.com
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Business
Management
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