After Myanmar success, storage major SLCM eyes other S-E Asian markets

After a successful foray into Myanmar, warehousing management firm Sohan Lal Commodity Management Private Ltd (SLCM) plans to enter other South-East Asian countries.

SLCM, which revolutionised warehousing of agricultural commodities by implementing scientific monitoring and storage methods, said it was actively looking at countries like Cambodia, Vietnam and Laos, which have very high post-harvest losses.

“Post-harvest losses in most South-East Asian countries are very similar to that in Myanmar. If Myanmar has a post-harvest loss of 30-32 per cent, in these countries it is in the high 20s,” said SLCM CEO Sandeep Sabharwal.

SLCM, which entered the Myanmar market in April 2014, has so far managed nearly 13 million sq ft of commodity storage space in 51 industrial zones and handled 171 commodities with a total volume of 2.33 million tonnes.

Even though the size of its operation is much smaller than that in India, where it manages a throughput 200 times more and storage area three times larger, SLCM Myanmar has managed to break-even in two years, flat. Apart from offering storage solutions to farmers and traders, SLCM has been helping them get finance from banks and financial institutions using commodities as collateral.

Both in India and Myanmar, SLCM has been able to reduce post-harvest losses to 0.5 per cent, and thus helped every player in the farm-to-market chain.

The success that it achieved in a greenfield market like Myanmar has encouraged SLCM to turn its attention to the Asean market, Sabharwal said.

The problems in these countries are very similar to India and Myanmar. Moreover, microfinance institutions, which fund most farmers in these countries, are desperately looking for better post-harvest storage solutions for two reasons. First, it will help the farmers get more from their fields. Second, it will help them (the MFIs) securitise the loans that they hand out to the farmers, said Sabharwal.

“Unlike in India and Myanmar, where we had to market ourselves hard, these microfinance organisations have been inviting us to come in as they know the value of proper storage of grains,” Sabharwal told BusinessLine .

What is currently holding the firm back is structural issues in some of these markets. They, he said, lack clearly laid-down policies when it comes to allowing foreign firms in the farm sector and they want to ensure the companies that enter do not have hold over the land.

Sabharwal, however, is confident that they will start operations in at least one of these countries in the coming financial year.

SLCM is looking at the African commodity storage market. “We have been looking at the African market for two-three years. The reason why we haven’t penetrated the African market is that we are yet to assess which countries will make commercial sense to us,” said Sabharwal.

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