Yes Bank

Modern Terminal Market Scheme – Status & Scope for Private Participation Agri Marketing Summit - 2006 New Delhi September 28, 2006

About YES BANK Incorporation of the Bank (company limited by shares)

RBI grants license to commence banking; Board of pedigree Directors established

A1+ Rating by ICRA (Moody’s affiliate) for the Bank’s CD program (current size INR 12 bn)

Mar 10, 2004 Aug 23- Oct 14, 2004 Oct 2004 Nov 21, 2003 May 24, 2004

Infusion of capital by promoters, Rabobank and private equity investors (CVC, ChrysCapital & AIF)

High quality mgmt team in place; Launch of C&IB, business banking, financial markets & transaction banking

Successful listing of the Yes Bank stock through an IPO of USD 72 mn (issue subscribed 30 times over)

FY2006 (first fully operational year) PAT: INR 553 mn ROA: 2.0% ROE: 14.0%

Feb 17, 2004 March 2006 July 12, 2005 March 2006

ISO 9001:2000 Certification for back office processes and operations

‘Full-service’ commercial bank; Established significant momentum in all businesses

High Pedigree Investors Original Private Equity Held by Citigroup Venture Capital, ChrysCapital II LLC and Asia Infrastructure Fund Investment at premium of 25-40% prior to receipt of banking license Three year lock-in of entire holding

Other Investors

Original Private Equity 19%

Key investors include Mirae AMC, Fidelity, Arisaig, NWI, UBS, ABN Amro, Norges Bank, Bear Sterns, AXA, Morgan Stanley FIIs 10%

Employees 2% Public / MFs 11%

Rabobank AAA rated private bank and among top 15 banks in the world Lock-in of entire pre-IPO holding (15% post dilution) for a five year period Increasing stake to 20% through market purchases – RBI approval obtained for the same Shareholding pattern as at Mar 31, 06

Indian Promoters 38% Rabobank 20%

Promoters Successful entrepreneurial track record at Rabo India Ashok Kapur – Over 25 years at Grindlays Bank, First Asian to be appointed “Country Manager”, ABN Amro, India Rana Kapoor - 16 years at Bank of America at various senior positions; Head of ANZ Grindlays’ Investment Bank

Customer-focused Integrated Service Model Infrastructure Food & Agri

Equity Capital Markets

Healthcare & Life Sciences

Transaction Banking

Lending, Syndication

Commodities

Structured Finance

Customer

Retailing

Financial Markets

Textiles & Apparel

Retail Manufacturing & Engineering

Private Banking Advisory Services Financial Services

Gems & Jewellery

Media & Entertainment

End to end banking needs of our clients satisfied with strong multiple product offerings

India is a leading producer of several agri commodities Milk Banana Fennel Castor Beans Chick Peas Pulses Spices Meat (Buffalo & Goat) Jute Mangoes Okra Peas

Rice Sugarcane Tea Beans Cole Crops Cashew Cocoons Eggplants Garlic

Eggs

Ginger

Chicken Meat

Groundnuts

Coconuts

Lemons

Condiments

Lentils

Potatoes

Oilseeds

Rapeseeds

Onions

Sorghum

Sesame Seeds

Tobacco

With positive demographic trends… Growth Rate of 15-24 years and 25-59 years age group India China

Mexico

Russia

Netherlands UK Japan

US -6%

-5%

-4%

-3%

-2%

-1%

15-24 yrs

0%

25-59 yrs

1%

2%

3%

4%

…and increasing disposable incomes Distribution of Households by Income Group (million households) Income in US$ per year (PPP)

2001-02

2006-07

2009-10 2014-15

< 1900

24

17

12

7

1900 – 2600

33

20

14

7

2600 – 5200

74

82

81

73

5200 – 25000

46

76

95

127

> 25000

2

5

9

20

Source: NCAER for 2001-02 and 2006-07 estimates, * 2009-10 and 2014-15 are estimates

… it is all set towards achieving a high value food market status Evolution of global food demand Diet / functional / organic foods

Nortth America, Japan, Western Europe, Australia

Convenience foods Snacks / prepared meals Dairy, meat, fresh fruits Carbohydrate staples

Eastern Europe India , China, Latin America

Africa (Sub - Saharan)

Surviving

Mass Market

Food Service Convenience Snacking

Quality Hygiene

High Tech

Demand side factors are changing... From licence to produce towards licence to deliver

Select products

From retail- quality management is forced upon every single link in the chain backwards All products Autonomous control upon control systems

ETHICS

CHAIN QUALITY FOOD QUALITY

FOOD SAFETY AVAILABILITY

Government, laws, choice of suppliers

Inefficiencies due to redundant intermediaries across the value chain Cost build up for one kg. of an average basket of fruit

Retail Markups 350 160

220

100

FARM GATE PRICES

MILK

FISH

The present state of markets for perishables… Market infrastructure Primary grading/ Collection centers - non existent Warehousing and Cold storage - inadequate Cold chain - non existent Quality certification systems - non existent Transportation for perishables - inadequate Rural markets - complete lack of infrastructure Wholesale markets - in government control, lack modern facilities Private / direct markets - not permitted Post harvest losses - 25 to 30 % in perishables

The Way Forward… Modern Terminal Markets A professionally managed competitive alternate marketing format to provide Multiple choice to farmers for sale of produce Comprehensive solution aimed at meeting emerging needs of consumers Processing industry Exports Retail chain

Involves high investment cost and efficient managerial skills Can be infused by private enterprise

Terminal Markets 1st state of art Terminal market complex for fruits and vegetables setup at Bangalore, by NDDB At Bangalore Conference of 19th Nov, 2004, several States desired setting up of such markets in their respective states On 24th March, 2005, MoA decided to formulate DPRs for following places: Nasik Rai (Haryana) Bhopal Patna Kolkata Nagpur Mumbai Chandigarh

The Modern Terminal Markets Concept Hub-and-Spoke Format: Terminal Market (the hub) to be linked to number of collection centres (the spokes) Collection centres (Spokes) would be conveniently located at key production centres to allow easy farmer access Provide state of art infrastructure facilities viz electronic auction, grading, washing and packing lines, transactional banking services etc. Commodities to be covered include Fruits, Vegetables, Flowers, Aromatics, Herbs, Meat & Poultry Alternate modern market system to be run by professional agencies, independent of and parallel to existing regulated markets

Infrastructure Terminal Market Electronic Auction facility Packhouse Quality Testing Facility Pallestisation Material Handling Equipment Cold Storage Temperature Controlled Warehouses, Ripening Chambers Collection Centre Washing, Grading & Sorting facility Weighment system Plastic Crates

Services Terminal Market Transport (including cool chain) Warehousing and commodity exchange Transactional Banking services Dissemination of Market information Settlement of payment Collection Centre Collection & Aggregation of produce Spot payments to farmer Advisory on inputs, prices, quality Multi-modal transportation to TM

Key features Feature

Mumbai

Nasik

Chandigarh

Rai

Patna

Bhopal

Kolkata

Nagpur

Area of market (in acre)

200

100

100

88

75

59

55

100

Yearly handling capacity (lac MT)

6

3

2.25

3

2

2

5.47

2.4

No. of collection centres

60

20

20

30

26

25

12

25

Peak throughput (MT/day)

3000

1500

800

1000

800

1000

1500

800

Cold Store Capacity (in MT)

15000

5000

3000

5000

2550

2000

10000

2000

120

59.96

53.68

65.64

59

49.62

93.42

54.54

Total cost of project (Rs. Crore)

Expectation from the Private sector Provide envisaged infrastructure at the TM and the CC in the hub- and- spoke format Establish backward linkage with growers in the catchments area of the TM through establishing the collection centers Progressively involve farmers and their organizations in the operation and management of the collection centers Facilitate direct supply to processing units, retail chains and exporters, in addition to auction facility via the collection centers as well as the terminal market

Expectation from the Private sector (cont’d) Provide advisory services to farmers on inputs, production planning, prices, quality, multi modal transport and exports Infrastructure and services to be provided by the TM and CC to conform to recognized national /international standards, if any Private enterprise free to Prepare their own business plans (decide scale of operation based on financial viability and commercial considerations) Set up additional facilities to provide complimentary services to farmers ( input supply, processing, consumer goods etc.)

Expectation from the State Government Reforms in the APMC Act To allow the private enterprise to source material from collections centers and/ or from farmers field directly in the catchments area of the TM

Regulatory Concessions Single license to operate in the entire State/ adjoining States Allow single point levy & collection of market fee Levy at the point of first transaction with the grower Collection at the Terminal Market

Autonomy in commercial operations of TM Clearance of land use for the TM/ CCs Provision of Civic amenities (including drinking water, municipal waste disposal, police security, post office etc) Facilitate Statutory clearances from Local authorities Town planning & Urban development Revenue department

Role of the Central Government Financial Support Equity Assistance up to 49% of the project equity returnable at par on the successful operation of the project and the repayment of the Term Loan of the financing bank

Develop PPP framework Provide framework for selection of Private Enterprise Private enterprise to be selected through an open, transparent competitive bidding process Project appraisal to be undertaken by the Bank financing term loan

Progress so far… Features of the Modern Terminal Market Role of the Private Enterprise Role of the State Government Central Government Support

Preparation of Concept Note

February 3rd, 2006

National Conference on Modern Terminal Markets

February 20th, 2006

Preparation of Revised Concept Note

February 23rd, 2006

Selection of Consultant for Development of framework for selection of PE

Submission of OMDA & SSA to States

May 26th, 2006

July 13th, 2006

EFC Committee Meeting

August 31st, 2006

Progress so far Chaired by Hon'ble Union Minister for Agriculture Maharashtra, Madhya Pradesh, West Bengal, Andhra Pradesh, TamilNadu, Uttaranchal, Chandigarh shortlisted for implementation Concerns expressed include: -Availability of contiguous land

-Defined catchment area of TM & CC -Stake holding of existing APMC traders in the TM -Prevention of TMC assuming role of trader -Stipulation of basic fee chargeable to market users -Ensuring Quality control within the market -Permission to set-up of CCs across States -Competitor to TM cannot assume role of regulator -Provision of adequate infrastructure support to and within the TM

Preparation of Concept Note

February 3rd, 2006

National Conference on Modern Terminal Markets

February 20th, 2006

Preparation of Revised Concept Note

February 23rd, 2006

Selection of Consultant for Development of framework for selection of PE

Submission of OMDA & SSA to States

May 26th, 2006

July 13th, 2006

EFC Committee Meeting

August 31st, 2006

Progress so far

Revised Note in light of the discussions & recommendations made during the Consultative Meeting

Preparation of Concept Note

February 3rd, 2006

National Conference on Modern Terminal Markets

February 20th, 2006

Preparation of Revised Concept Note

February 23rd, 2006

Selection of Consultant for Development of framework for selection of PE

Submission of OMDA & SSA to States

May 26th, 2006

July 13th, 2006

EFC Committee Meeting

August 31st, 2006

Progress so far Selection of National Consultant based on Technical & Financial criteria NC to assist the Central Committee in laying down Framework for Selection of the PE. Preparation of the Bid Documents & Development of the Bidding Process Fix Milestones for monitoring progress of bids and selection

Preparation of Concept Note

February 3rd, 2006

National Conference on Modern Terminal Markets

February 20th, 2006

Preparation of Revised Concept Note

February 23rd, 2006

Selection of Consultant for Development of framework for selection of PE

Submission of OMDA & SSA to States

May 26th, 2006

July 13th, 2006

EFC Committee Meeting

August 31st, 2006

Progress so far

OMDA & SSA documents circulated to states for feedback States feedback taken into consideration and modifications made

Preparation of Concept Note

February 3rd, 2006

National Conference on Modern Terminal Markets

February 20th, 2006

Preparation of Revised Concept Note

February 23rd, 2006

Selection of Consultant for Development of framework for selection of PE

Submission of OMDA & SSA to States

May 26th, 2006

July 13th, 2006

EFC Committee Meeting

August 31st, 2006

Progress so far

Approval obtained for Financial support Number and Location of markets to be decided based on interest from states Debt: Equity ratio to be at 1:1 Market fee ceiling of 2% may not be rigid

Preparation of Concept Note

February 3rd, 2006

National Conference on Modern Terminal Markets

February 20th, 2006

Preparation of Revised Concept Note

February 23rd, 2006

Selection of Consultant for Development of framework for selection of PE

Submission of OMDA & SSA to States

May 26th, 2006

July 13th, 2006

EFC Committee Meeting

August 31st, 2006

Status Phase I

Nearing completion

Developing

Drafting the

the technical Detailing the Project Concept

Developing the

/ financial

scope of work for project

Evaluation parameters

implementation

and the bidding criteria

Drafting OMDA

Request for Proposal (RFP)

Finalisation of Draft RFQ

Our Approach Phase II

Developing Designing the

Establishing

Framework for

Bidding

time-lines

monitoring

Methodology

the bidding process`

Way Forward Required Action Steps from State Governments Amendment of APMC Act Formal Communication from the State Govt. regarding implementation of project on a pilot basis Selection of site for project

States will need professional assistance for Initiating Concession Agreement Preparation Broad Structure of the bid documents prepared by NC shall remain the same, Schedules will be detailed as per State specific requirements Fee Notification would require re-structuring based on the revenuesharing decision between State Marketing Board & Concessionaire

Thanks for your attention!