Year: 2025 | Month: September | Volume 70 | Issue 3
Investment Analysis of Warehousing System in Telangana
K. Divya
D.A. Rajini Devi and K. Suhasini
DOI:10.46852/0424-2513.3.2025.11
Abstract:
Warehousing plays a crucial role in the agricultural supply chain by offering scientifically structured storage facilities that reduce post-harvest losses, maintain produce quality, and prevent distress sales. This study investigates the financial and economic viability of warehouse investments in Telangana using discounted cash flow techniques such as Net Present Value (NPV), Benefit-Cost Ratio (BCR), and Internal Rate of Return (IRR). Telangana has experienced a surge in agricultural output, especially in paddy, red gram, and maize production, necessitating enhanced warehousing infrastructure. Data was collected from two districts Mahbubnagar and Jagtial chosen for their contrasting number of active warehouses. Four warehouses were selected for financial analysis: two small warehouses in Jagtial (30,000 MT each) and two large warehouses in Mahbubnagar (1,00,000 MT each). The findings revealed that all warehouse projects were financially viable, with IRRs exceeding or matching the benchmark interest rate of 12 per cent, positive NPVs, and BCRs greater than one. Specifically, the small warehouses had a BCR of 1.25, NPV of ` 0.60 crore, and IRR of 15 per cent, while the large warehouses demonstrated stronger feasibility with NPVs of ` 6.81 crore and ` 6.53 crore, IRRs of 17 per cent and 12 per cent, and BCRs of 1.59 and 1.49, respectively. These results underscore the importance of continued investment in warehousing to support agricultural growth and market stability in Telangana.
Highlights
- Large warehouses in Mahbubnagar show higher NPV and IRR, making them more profitable than small ones.
- All warehouse models are economically viable with BCRs above 1, especially Mahbubnagar’s large warehouses
- The investment also offers social benefits like lower post-harvest losses and better farmer incomes.
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