Public Sector Undertakings in Food Transport
As per the discussions held with the officials of MSRTC, it was discussed to explore the opportunities of MSRTC tying-up with the Government Agencies for transportation of their goods. As a part of the study, we have taken up study of the Departments which have published RFPs or are involved in the business of transportation food products, agriculture, dairy products etc. within Maharashtra:
Maharashtra State Warehousing Corporation
Public Distribution System
Food Corporation of India (within Maharashtra)
Fair Price Shops
Maharashtra State Seeds Corporation Ltd.
Mahanand Diary under Maharashtra Rajya Sahakari Dudh Mahasangh MaryaditThis note also encompasses regulatory and licensing requirements to transport the goods especially food items.
Analysis of Transportation and Warehousing Requirements of Government Undertakings
Maharashtra State Warehousing Corporation
Maharashtra State Warehousing Corporation (MSWC) started with 3 Warehousing Centers and gradually grew up to the extent of 193 Centers with total capacity of 15.73 Lakhs M.Ts. (as on 31stMarch 2016). Warehousing activities of MSWC include scientific storage of food grains, industrial goods, fertilizers, , cement, cotton bales, and at some places it runs custom bonded warehouses and container freight stations.
MSWC has floated various tenders for transport contractors. While specification of truck capacity has not been categorically provided, however, the payment section below gives a brief idea of the Truck Capacity envisaged in the contract. All RFPs floated have the same specifications as below:
Period Hours Truck Capacity Price
For full day 5 hours and upto 8
hrs. per truck 10-14 MT
Rs.1562/- (Rupees One thousand Five hundred Sixty Two only)
For half day upto 5 hours per truck 8-10 MT Rs.825/- (Rupees Eight hundred twenty five only)
For full day Over 5 hours and upto 8 hrs. per truck
Rs.1320/- (Rupees One thousand Three hundred Twenty only)
For utilization per hour of truck Per hour 08 –10 MT Rs.165/- (Rupees One hundred Sixty five only)
Out of the number of godowns owned by the State in 2017 was 1,102 holding a total storage capacity of 6.94 lakh MT, 18 godowns with 0.09 lakh MT capacity had been given on rent and 225 godowns with total capacity of 0.99 lakh MT were not in suitable condition for storage. As a result, 106 godowns with the capacity of 0.73 lakh MT were hired. In order to build capacity, the State proposes to construct new godowns with a holding capacity of 3.66 lakh MT.
Conclusion: The Department can be approached for a G-2-G contract for transportation of goods. However, the range of required capacity varies from 3-4 MT capacity for Stage II transportation and 16 – 26 MT capacity for Stage I transportation. To meet this criteria, the buses need to be converted to minimum 16 MT capacity trucks. The cost benefits analysis and the feasibility of this conversion is worked out in the next section.
Public Distribution System
Public distribution system (PDS) in India is one of the largest welfare institutions in the world and operates through a multi-level process in which the centre and states share responsibilities. While the task of procuring or buying food grains, such as wheat and rice, from farmers at a minimum support price is with the centre along with allocating the grains to each state on the basis of a formula; state governments shoulder the task of identifying eligible households and families in their respective state. Once the centre delivers the grains to central depots at each state, the state government is thereafter responsible for delivering the allocated food grains from these depots to the ration shops. Across the country, food grains are distributed to a network of around 5.27 lakh Fair Price Shops.
The Ministry of Women and Child Development released operational guidelines for Food Safety and Hygiene for supply of food material etc. under the ICDS, which include:
Vehicles carrying the raw /finished food must be checked for the cleanliness and should disinfect if required.
The duration in transit should be as short as possible, so that chances of contamination and spoilage are low.
Before receiving the product the receiver should check that the packaging is intact and contamination has not occurred.
Analysis of PDS have revealed several gaps in implementation. These challenges pertain to the inaccurate identification of households and a leaking delivery system. With 46.7% of grains at an all-India level and Maharashtra standing among High Leakage states with 25% – 50%, leakage of food grains during transportation to the ration shop and from the ration shop itself into the open market is a major challenge faced by PDS.
Fair Price Shops
The State governments are also responsible for transporting food grains from the state godowns to the doorstep of each FPS in the state. Till December, 2017 the total number of FPS in the state were 51,273 operational, of which 5,427 placed in tribal areas and 28 operating as mobile shops. Transport of ration is an important aspect and the mode of transport used varies with the location of the shops in distant and inaccessible areas. It also varies with the size of the consignment to be lifted.
The usual mode of transport used by the majority of the dealers are bullock-carts, cabstars, trucks, lorries depending upon the area of transportation. In the table below, the mode of transport for both rural and urban areas has been computed:
Col. PctBullock cart CabstarsSmall Trucks Lorries Others Row Total
Column Total 11
Conclusion: A view of the table above indicates that the use of cabstars is the highest (40%) for urban and rural combined, closely followed by Bullock carts and trucks. The market share of trucks, as we see, in rural areas is the highest along with Lorries and cabstars and is higher than urban requirement viz. 30%.
While the target market share herein is the 20% of the truck, however, pertinence shall be laid on the 14% market of Lorries. The weight load capacity of a lorry is approximate 9MT, which is the near capacity of the non-modified converted trucks by MSRTC. The additional benefit of targeting the market share of Lorries is that it is a 100% rural sector mode. With the route accessibility MSRTC holds, tapping the rural market is a feasible option.
However, there is a need for technology driven checks to prevent leakages and strong operational processes for clean and safe delivery of food grains. The Central and State Government are in continuous efforts of curtailing the same. With digitalization of the PDS system, transparency in allotments and building storage infrastructures, the state has during 2017-18 (upto November, 2017) contained storage losses and transit losses to (-) 0.04% and 0.32% against the MoU target of 0.36% and 0.36% respectively for FCI.
AnganwadisMaharashtra houses 1,08,005 Anganwadi / Mini Anganwadi Centres. With more than 550+ (Integrated Child Development Services) ICDS projects being operational, the work force comprising of over 4000 supervisors and around 2 Lakh Anganwadi Workers / helpers and Mini-Anganwadi Workers drive the entire ICDS machinery starting from grass root level.
A Mini Anganwadi can be proposed on the population of 150 in a village/hamlet. iii) A Mini-Anganwadi should be located within one km from the main Anganwadi and there should be 15 to 20 beneficiaries therein. A godown is to be constructed for every 5 centers for storage of food at the cost of Rs.50,000/- by the State Government from JRY funds.
With respect to transportation, the scope of work for transport contractors are extremely wide and beyond the basic task of transporting food from FCO FCI godowns to Angandwadi Centres. The scope for a contractor includes:
Procurement , Lifting and transportation of Wheat & Rice under Wheat Based Nutrition Programme ( WBNP) Scheme from designated depots of FCI godowns
Unloading of raw material at manufacturing unit
Procurement of raw materials other than Wheat & Rice like Soya Grid, Moongdal, Toordal, Coconut Flakes, Sugar, Edible Oil, Spices, Flavours and Micronutrients.
Procurement of Laminates & HDPP woven bags.
Quality checks of procured raw material & Packing Material, its approval.
Storage of all raw material, micronutrients, packing materials in separate godown,
Cleaning, processing of raw materials as per requirement,
Mixing of grinded raw materials as per specification as per RFP
Roasting of the mixture.
Adding Sugar / Spices / Dry Vegetables / Roasted Coconut Flakes as per specifications.
Fortification with required micronutrients and Testing of final product before dispatching for Anganwadi centers
Packing of the final product as per packing specifications
Testing of quality as per specifications
Storage of final product at manufacturing unit,
Loading of final product,
Transportation of final product up to the ICDS anganwadi centers of the respective sector,
Putting banners on vehicles during transportation of final product
Finalization of transportation plan in consultation with Deputy Chief Executive Officer (CW) Concern Sectors CDPO in advance.
Manufacturing of precooked recipe as per Manufacturing Process Flow Chart prescribed
Conclusion: The Aanganwadi model looks at only one contractor from procurement of raw materials, to storage, preparation and transportation of the final product. Hence, this model may require building up the capabilities inhouse, to manage the entire logistics chain, by MSRTC, as it involves the entire chain of transportation as mentioned above. It may be taken as 2nd phase of logistics activities subject to economics .
Maharashtra State Seeds Corporation Ltd.
Maharashtra State Seeds Corporation Ltd., popularly known by its brand name “MAHABEEJ” is one of the largest and leading State Seeds Corporation among all State Seed Corporations in India serving in the larger interest of farmers from three decades with farmer’s faith brand loyalty, quality assurance, dedicated service and sustainable contribution for upliftment of farmers with Glorious achievements.
MAHABEEJ is primarily engaged in production, processing and marketing of seeds of more than 50 crops and 250 varieties and hybrids in almost all categories i.e. Cereals, Pulses, Oilseeds, Fiber Crops, Fodder, Green Manuring Crops ; Hybrid Vegetables. Following are the MSSCL dispatching units from Maharashtra State:
Shioni, Dist – Akola
Amravati, Dist – Amravati
Chikhali and Malkapur, Dist – Buldhana
Shrirampur, Dist – A’nagar
Erandol, Dist -Jalgaon
Jalna, Dist = Jalna
Satana, Dist- Nashik
Dhoki, Dist – Osmanabad
Butibori, Dist- Nagpur
Seloo, Dist- Wardha
Erandol Dist- Jalgaon
Dondaicha, Dist- Dhule
Ashta, Dist- Sangli
Requirements of Transport Vehicle according to MSSCL Transport Tender
The minimum truck Capacity entailed in one of the tenders floated by MSSCL is 9 MT.
ln case of 9MT truck transportation the average transportation will be considered as 4.5 Km per litre
In case of 16MT truck transportation the average transportation will be considered as 3.5 Km per litre.
In case of truck transportation above 16 MT the average transportation will be considered as 2.5 Km per litre.
Conclusion: The Department can be approached for a G-2-G contract for transportation of goods. However, the range of required capacity varies 9-16MT capacity trucks for transportation. To meet this criteria, the buses need to be converted to these capacity trucks. The cost benefits analysis and the feasibility of this conversion is worked out in the next section.
Mahanand Dairy under Maharashtra Rajya Sahakari Dudh Mahasangh MaryaditMRSDMM (Maharashtra Rajya Sahakari Dudh Mahasangh Maryadit) was established on 09th June, 1967. At present MRSDMM has more than 24000 primary milk societies & 25 lakh milk producers with plants at
MAHANAND DAIRY, established on 18th August 1983, is the unit run by the MRSDMM and spreads over t Maharashtra. In order to take care of seasonal fluctuations in milk procurement, the dairy has installed its own Milk Powder Plant of 30 tons per day capacity and is distributing 3.00 Lacs liters milk per day(LLPD) in Mumbai with the help of one packing depot located at Navi Mumbai.
The total sale of milk under Mahanand Brand name in the state is 4.00 LLPD including the sale of milk in Konkan, Pune & Nagpur region.
Mahanand Konkan Dairy plant has been established for giving special impetus for development of backward region. At present, they are selling about 20,000 ltrs. of milk per day from Konkan Dairy Project.
Mahanand Pune Dairy Plant is established to supply Mahanand MIlk to the huge population in Pune city and surrounding area. At present, they are selling about 30,000 ltrs. of milk per day from Pune Dairy Project.
Mahanad Nagpur Dairy Plant is establish to provide special impetus to backward region of Vidarbh in general and Nagpur in particular. At present they are selling about 15,000 ltrs. of milk from Nagpur Dairy.
Mahanand Dairy Latur During the financial year 2002-03 the MRSDMM has taken over the Government Milk Scheme Latur (Government of Maharashtra) on long term lease basis (30 years). The Mahanand Latur Dairy Plant has been started to provide special support to develop dairy activity in Marathwada region. At present they are selling about 15,000 liters per day of milk from Latur Dairy Plant.
The Modes of milk transportation in India normally include the following options varying in load and distance:
Mode Optimum load (kg) Optimum distance (km)
Head-load 15-25 3 – 8
Shoulder-sling Up to 40 3 – 6
Pack-animal Up to 80 6 – 10
Bullock-cart 300-400 10 –12
Tonga 250-300 12 or more
Bicycle 40 or more 15 or more
Cycle-rickshaw 150-200 10 or more
Boat 40-200 2 – 8
Auto-rickshaw 250-500 15 or more
Motor truck ½ to 3 tonnes15 or more
Railway wagon 11 tonnes or more 80 or more
Tankers 5 tonnes or more 80 or more
With respect to road transport, a Motor truck can carry ½ to 3 tonnes of milk for a distance of 15 or more.
One of the RFPs floated by MRSDMM had the following capacity requirement:
Sr. Name of Route Contract Kilometer /month Type of Vehicle Capacity
1 FROM Mahanand Dairy, Goregaon Unit to All over Maharashtra as per requirement of Mahanand Dairy 7000 Insulated Vehicle 3.5 M.T
2 FROM Mahanand Dairy, Goregaon to Mumbai, Thane, Kalyan, Mira Bhayender, Virar Vasai & Igatpuri2100 Non-Insulated Vehicle 2.5 M.T
While FSSA does not specifically provide requirements for a carrier of milk or dairy products, however, a tender published by Amul provides following requirements for vehicles transporting Milk:
“Refrigerated Vehicles having following conditions is preferred.
Vehicle must have Carrier or Thermoking brand refrigeration plant with liquid PUF injected insulation of the container.
This refrigeration plant must be mounted on the vehicle chassis not older than 5 years.
All refrigerated vehicles must have data lodger in working condition.”
Conclusion: Since the transportation of the milk and its products require specific conditions to the trucks such as refrigeration plant and other cold storage machinery, the cost of conversion of the buses to these specific trucks will require huge investments and is risky at this stage for MSRTC. Hence, this opportunity is considered for further analysis
Compulsory Licensing under FSSA
Section 31(1) of the Food Safety and Standards Act, 2006, states that: “No person shall commence or carry on any food business except under a license” which makes it clear that a license is mandatory for carrying on food business in India. Further, section 3(n) of the act defines food business as “any undertaking … carrying out any of the activities related to any stage of manufacture, processing, packaging, storage, transportation, distribution of food, import and includes food services, catering services, sale of food or food ingredients.” Therefore, reading of section 31 along with section 3(n) of the Act elucidates that any undertaking carrying out the transport of food can be said to be doing food business and therefore shall necessarily obtain a license under the Act to do so.
The Food Safety and Standards (Licensing and Registration of Food Business) Regulations lay down the procedure for obtaining a license to commence or carry out food business in India. The regulations state that if a food operator operates in two or more states the license shall be granted by the Central Licensing Authority. As per the 2011 Regulations “any person who is a transporter of food must make an application using Form B of Schedule II for grant of license”.
Key determinants & regulatory intervention
An analysis of the above PSU operations and requirements, it can be concluded that there exists enough scope to be tapped into in the field of transportation as well as warehousing:
As we are aware that the MSWC is aiming to increase storage capacity to the tune of 5 lakh MT, in order to support MSWC for transport and warehousing, MSRTC can offer to lend warehouse space. This can work as an immediate step.
The capacity that may be estimated as required by MSWC for transportation ranges from 3-4 MT capacity for Stage II transportation and 16 – 26 MT capacity for Stage I transportation. Since 3-4 MT are smaller vehicles, MSRTC can target Stage I transportation. Similarly for MSSCL requires a truck capacity of 9MT and 16MT, which will require MSRTC buses to be converted to minimum 16 MT capacity trucks.
With respect to Aanganwadis, Mid-day meals and other social centers, MSRCT would require to build a complete infrastructure of procurement, preparation, storage, handling and transport to manage the entire logistics chain of public distribution. Similarly with milk and dairy products, the trucks will require insulation so as to preserve milk and will have to satisfy the FSSA criteria
Obtain necessary transport license under the Food Safety and Standards Act, 2006 and the regulations to carry out activities.
# Organization Total Volume handled Investment Requirements Operational Complexity Decision ( Phase 1 , Phase 2 , No Go)
MSWC 1701062 MT per annum Medium Low Phase 1/Phase 2 (depending on the feasibility and intent of increasing the capacity of trucks
Fair Price Shops under FCI 296080 MT per month Medium Low Phase 1 (target Cab star and truck market)
Anganwadis, Mid-day, and other social centers 296080 MT per month High High No go for now
MSSCL 198879.7 MT per annum Medium Low Phase 1/Phase 2 (to be targeted to initiate with MSWC)
Mahanand Dairy 3.00 Lacs liters milk per day in Mumbai High High Phase 2
Note: Operational complexity is the function of system development requirements, process complexities , learning requirements for MSRTC , regulatory requirements etc.