Public Private Partnership –

RSWC & SSLL Case Study

13 Nov 2019

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Project Management is the Art of Making Things Happen 1
 What is PPP

Project Management is the Art of Making Things Happen 2

 Benefits of PPP
RSWC (Government) SSLL (Private) Public
Minimising Financial Reliable stream of Easy access / Quality
Outgo revenues service
Better Liquidity Slow risk One stop solution
Speedier Implementation Capturing business from Flexibility in access
related services Methods

Efficiency in Management Access to latest Saving of indirect cost and

technology , skill, Hardship
experience and innovation

Obsolesce Creation of employment Convenience

Technology

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 Risk of PPP

Risk factors
1. Limit the competitiveness – Cost effective partnering

2. Corruption in Granting Contracts

3. Perception of public towards Tariff /user fee increase
4. Regulator, auditor and evaluator procedures needs to built
5. Being long term nature, periodic review / negotiation may become tricky
6. Monopoly / Poor quality work
7. Requires detailed risk mitigation measures in advance/ Knowledge – Expertise
heavily on private side may affect inherent disadvantage during award
8. Brewing a competitor in long run

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 Was it the need of the hour for RSWC?
RSWC Remarks
Financial Outgo Need strong modernisation and upgradation of
facilities /Speedier Implementation
Falling capacity utilisation
Income from warehouse (FY 09-10= 1.65 Cr)
Better Liquidity Falling Cash flow / Profit / Capacity Utilisation /
Efficiency in Management Poor Management of stored Goods
Non Transparency/ Deemed Weight
No Credit Support from Commodity
No temperature Control
No Electronic weigh Bridge
No testing facility/ Centralised
No Major security/ Electronic
Affordability rather than commercial viability
Acute manpower shortage
Protection against technology obsolesce Technology outdated/ No weigh Bridge/ No
commodity

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 RSWC and SSLL : PPP in Agri Warehousing

Summary :

• PPP with Shree Shubham Logistics Limited (SSLL) for 38 out of 90 agri warehouses
owned by RSWC

• State Govt to double existing nearly 8 Lakh Tons warehousing capacity by 2013-14

• Focus of SSLL on modification of MoU which governed PPP & further growth in agri
warehousing domain in Raj.

• Saving of Rs 3.67 Cr in 2010-11, Rs 7.04 Cr in 2011-12 & Rs 4.39 Cr till Sept’12

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 RSWC and SSLL : PPP in Agri Warehousing
Exhibit – 1 : MoU

• MoU signed on 5th March 2010 with validity of 5 years (extendable)

• Objective: To provide various facilities to farmers traders and others to provide better storage facilities & to
facilitate availability of finance and evolve functional models for dev of efficient warehousing system.

• Roles of SSLL :
- To obtain warehousing license.
- To handle procurement & operational activities, insurance coverage (all expenses by SSLL)
- At least one member from RSWC in purchase committee.
- To fix storage charges for clients in consultation with RSWC.
- To install & operate electronic weigh bridge not less than 60 tons at selected / other locations.
- Commodity funding through banks with revenue sharing with RSWC.
- To set up testing & certification lab (with model of Dicky-Johns Company) with revenue sharing with RSWC.
- To provide services of pest control / fumigation (expenses recoverable by SSLL from clients).
- Record keeping with full access to RSWC
- Info sharing with Quality Control Division of RSWC about all activities by SSLL.
- Minimum 60% assured occupancy of total average storage capacity on yearly basis.(Chargeable if < 60%)
- BG of Rs 3 Crore by SSLL
Contd..

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 RSWC and SSLL : PPP in Agri Warehousing
Exhibit – 1 : MoU
• Roles of RSWC :
- To obtain necessary licenses and comply all statutory requirements
- To provide existing facilities at warehouse excl managers residence.
- Regular maintenance of warehouse buildings
- Monthly inspection of transactions & commodities stored.
- Disinfestations & pest control by RSWC.
- To collect storage charges from Govt Clients.
- Lock & Key of all warehouses with RSWC.
• Hiring of RSWC Staff by SSLL with debit of salary from SSLL
• All payment against invoices within 45 days
• Revenue Sharing :
For SSLL owned ALPs
- Warehousing – 15 % / 85% to RSWC & SSLL respectively
For RSWC Warehouses
- Warehousing – 68 % / 32% to RSWC & SSLL respectively
For both RSWC Warehouses & SSLL owned ALPs
- Commodity funding – 50 % / 50% to RSWC & SSLL respectively
- Testing & Certification Charges – 20 % / 80% to RSWC & SSLL respectively
- Weigh Bridge Charges – 20 % / 80% to RSWC & SSLL respectively
- Disinfestations Charges – 90 % / 10% to RSWC & SSLL respectively
For income out of Procurement activities – 90 % / 10% to RSWC & SSLL respectively

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 RSWC and SSLL : PPP in Agri Warehousing
Exhibit – 2 : Mid Term Performance Assessment
3000
2500
2000
Utilization Levels of Warehouse 1500
120% 1000
100% 500
80% Income from Warehouses
60%
40% 0
20% Utilization Levels of (Rs Lacs)
0% Warehouse Income from diversified
Activities (Rs Lacs)

Utilization Levels of Warehouse

300
250
Average Establishment Cost (Rs Lacs /
200 Ton)
150 Staff Strength
(RSWC 52* Centres)
100
Staff Strength
50 (MoU 38 Centres)
0
2008-09 2009-10 2010-11 2011-12
2012-13 (upto Sept'12)

Income from Capacity Average Staff Strength

Utilization Levels of Income from Staff Strength
FY diversified Activities (Lakh Establishment Cost (RSWC 52*
Warehouse Warehouses (Rs Lacs) (MoU 38 Centres)
(Rs Lacs) Ton) (Rs / Ton) Centres)
2008-09 47% 982.88 4.03 64.42
2009-10 80% 1888.64 4.04 76.71 191 142
2010-11 85% 2185.44 221.49 4.09 55.27 276 72
2011-12 95% 2790.17 507.04 4.14 40.80 264 61
2012-13 105% 1956.17 312.70 4.50 20.71 253 47
(upto Sept'12)

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 RSWC and SSLL : PPP in Agri Warehousing
Exhibit – 3 : RSWC’s Performance

ROC (%) 140.00

300 120.00

250 100.00

200 80.00
Expenses on
ROC (%) Warehousing (%)
150 60.00
Profit / (Loss) from
40.00 warehousing (a-b)
100
20.00
50
0.00
0 2007-08 2008-09 2009-10 2010-11 2011-12
2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 -20.00

Utilization (%)
120
100
80
60 Utilization (%)
40
20
0

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Project Management is the Art of Making Things Happen 11