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OPERATIONALISING THE AGRIBUSINESS INFRASTRUCTURE DEVELOPMENT INVESTMENT PROGRAM- PHASE II FINAL REPORT

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DPR: AURANGABAD‐ AMRAVATI

INTEGRATED VALUE CHAIN PROJECT

Description of Hub and Spokes

Spoke Warud

Spoke Anjangaon

Spoke Akola

Spoke Sangrampur

Spoke Jalna

Spoke Paithan

Spoke locations

Paithan

Warud

Jalna

Akola

Sangrampur Anjangaon


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20 SPOKE: WARUD

Warud has been identified as a spoke due to its proximity to the major orange growing regions in Amravati district. It is also well connected by roads to major cities such as Nagpur and Amravati and hence can act as feeder to these major orange trading hubs. It lies on the intersection of State Highways 10, 244 and 248. State Highway 10 connects Warud to Amravati and State Highway 248 connects it o Nagpur.

Proposed aggregation points are as follows:

Aggregation Points Focus Crop

Jarud Orange

Bihoda Orange

Themburkheda Orange

Loni Orange

Rajurbazar Orange

Jamgaon Orange

Morshi Orange

All the aggregation points are within a radius of 15 Km from the spoke except Morshi which is at a distance of about 30 Kms.

20.1 FOCUS CROPS AND ESTIMATED THROUGHPUT

The major fruit grown in the catchment of Warud is orange. Warud block in Amravati is the largest orange growing clusters in the district. Focus crop for the proposed facility in Warud are orange and banana.

Throughputs have been estimated based on present production in the catchment area, the present capacities of existing similar infrastructures/facilities, potential for interventions, and stakeholders’ consultations. The spoke and its catchment area produce about 0.2 million MT of oranges annually, which accounts for around 50% of the total production of oranges in the district. The spoke is expected to handle 10,000 MT of the focus crop which is less than 1% of the total production in the catchment areas.

The estimated annual throughput of the pack house in MT is as follows:

Spoke Orange

Warud 10000

The arrival pattern of the focus crops in the proposed facility shall be according to the crop season as follows:

Crops Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Orange

20.2 PROPOSED FACILITIES

Facilities have been designed on the basis of requirement of the focus crops, to induce better and efficient handling practices and faster evacuation of fresh produce to the consumption markets so as to ensure better quality to the consumer. While deciding on the capacities,


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existing facilities, their capacities and utilization has also been taken into account. The proposed new facilities are as follows:

20.2.1 Ambient Orange Pack house

As mentioned earlier, the existing pack houses in the region with pre-cooling and cold store facilities have not been successfully functional mainly due to reasons such as inadequate marketing/export linkages, cheap manual labour, lack of refrigerated vehicles, etc. Hence, considering the present scenario in the region, ambient interventions are proposed keeping in mind the practicality of such interventions. In the ambient packing house for orange following infrastructure will be provided:

Covered Pack shed (open to ambient) with landing area. Requisite weighing equipment and transaction recording arrangement. Sorting and grading areas (with tables). Packaging store and Packing tables. Waste disposal systems. Vehicle Parking areas.

The capacity of the pack house will be 100 MT/day and it would employ for than 60 labourers for the operations.

Orange Process Flow:

Process flow for the orange in the pack house shall be as shown:

Technology /

Facilities

Description

Quality Check Quality of the farm produces shall be assessed at the pack house based on certain criteria such as maturity level, size of fruits etc.

Sorting and

Grading

Manual sorting and grading is suggested. Sorting and grading tables are proposed in the pack house.

Packing Packaging tables would be provided for manual packing of orange. Plastic crates would be used for packing.

Transport Produce shall be transported in normal trucks of 10/15 MT capacity.

Aggregation Mechanism for the Pack house

The pack house shall receive material from various aggregation points as well as directly from the farms. The pack house will develop an aggregation mechanism and send trucks/pick-ups to the aggregation points for collection of produce. It will establish direct relationship with farmers and provide extension and training support to them for best farming practices, better post harvest handling practices, efficient use of inputs and technology transfer etc. Farmers will be encouraged to come together as producer companies and set up and manage aggregation points wherever possible. Pack house may also invest in developing infrastructure at aggregation points such as platforms, sheds, etc.


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Pack house Logistics

The produce will come to the pack house from aggregation points and farms in various modes of transport such as trucks (4 MT), vans, tractor trolleys, etc. Expected peak arrival of vehicles is about 20 per day. The average out-going vehicles at peak of 10/15 MT capacity will be 8-9 per day. Small capacity field vehicles, load 800kgs to 1MT, are incorporated in the project to serve as feeders from local farms or aggregation points as backward integration. These vehicles can be with insulated body deploying pre-cooled chill packs. This is foreseen to increase field reach, hence enhancing catchment range.

20.2.2 Dry Warehouse

A dry warehouse of 2000 MT capacity is also proposed. It will be used for storage of pulses and soyabean which is abundantly produced in catchment of cluster.

The warehouses would plan for sufficient parking and eased traffic flow layout along with waste disposal areas.

20.2.3 Add on/Commercial Facilities

There will be other facilities/amenities:

Business Centre Parking Area Canteen Weigh Bridge Water Supply Facilities DG Rooms Solid Waste Management Area Other amenities


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21 SPOKE: ANJANGAON

Anjangaon has been identified as a spoke due to its proximity to the major orange and banana growing region in Amravati district. It is well connected by road to cities such as Amravati (76 km) and Akola (75 km) which are in turn connected by good road and railway network to big destination markets of Mumbai, Pune, Kolhapur, Nagpur, Indore and also to distant markets such as Rajkot, Delhi, Kolkata and other cities. Anjangaon is also connected to Murtijapur, which is a station on Bhusaval–Nagpur section of Central Railway.

Proposed aggregation points and their distances from the spoke are as follows:

Aggregation Points Focus Crop Distance (in Kms)

Pathroth Banana and Orange 10

Pandri Banana and Orange 5

Anjangaon Banana 1

Karla Orange and Banana 10

Bhandaraj Orange 7

Lokhed Orange 4

Nimkhed Bajar Orange 8

All the aggregation points are within a radius of 15 Km from the spoke.


Major fruits grown in the catchment of Anjangaon are orange and banana. Anjangaon block in Amravati is the largest banana growing cluster in the district having about 80% of the total production of the district. As per the field survey, the spoke and its catchment produces around 60,000 MT of banana annually.

Focus crops for the proposed facility in Anjangaon are orange and banana. Since the spoke is located in the fruit producing belt, a viable volume (that is less than 1% of the district’s production) has been targeted. Estimated throughputs have been identified based on present production in the catchment area, the present capacities of existing similar infrastructures/facilities, potential for interventions, and stakeholders’ consultations.


Spoke Orange Banana

Anjangaon 10000 5000



Orange

Banana

As shown above, the facility would receive year round supply of fresh fruit and hence, capacity utilization of the pack house would be ensured throughout the year.

http://en.wikipedia.org/wiki/Akola_city�


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Facilities have been designed on the basis of requirement of the focus crops, to induce better and efficient handling practices and faster evacuation of fresh produce to the consumption markets so as to ensure better quality to the consumer. While deciding on the capacities, existing facilities, their capacities and utilization has also been taken into account. The proposed new facilities are as follows:

21.2.1 Banana Pack House

A pack house with a capacity of 40 MT per day is proposed at each of the spokes.

1. Receiving De-handing Area

2. Preliminary Wash Tank

3. Secondary Flotation Tank

4. Air Brush, Weighing

5. Retail Packing, Stickers

6. Box inspection 7. Palletisation Area 8. Dispatch – direct or pre-cooler

It is expected that such a facility would employ 165 workers over two shifts.

Banana incoming in bunches or as precut clusters from farms/aggregation points. Bunches are cut into hands and crown flower removed (as required). Water is used as transport mode (pumps with high pressure nozzles on one end are

used). Hands preliminary wash tank; wash eliminates field dirt, latex overruns and pesticide

residue. Before second tanks, each bunch is cut into packing clusters and inspected. Secondary wash tank; fungicide wash is affected. At end of secondary wash, bananas are removed and placed into trays onto roller

conveyors. Each tray is weighed and holds a packing unit load. As it moves down the conveyor, they are air dried (hand held nozzle), and stumps can

be sealed with paraffin wax. Currently stump sealing practice not prevalent for local market in India.

Thereafter the box packing takes place. Carrier trays are returned to weighing table After boxing or loading onto transport crates, the palletisation and subsequent staging

is done. Enough space is provided in this area to allow extension of previous lines in future. The staging area can also later be extended (per need). While optimally, the boxes can travel on conveyors to spread across width of facility

for more packers, to keep cost low, this plan is suggested for initial use. A separate box making room is provided – where boxes are formed from collapsed

cardboard.

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1 2 4 6 7 8


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Banana Process Flow:

Typically banana would be pre-cooled only for exports and that too in transit containers.

Where bananas are for domestic consumption, they would move to destination ripening centres.

Where bananas are for local consumption, they would move directly to ripening chambers at HUB (possibly on conveyors) from here to ripening room on same facility.

As banana pack house utilizes water as transport mode (design pack house uses 50,000 ltrs daily), appropriate water treatment and recharge systems are incorporated. The recycled/treated water can be used for sanitary purposes or stored for field irrigation uses.

To introduce cable conveyor system, the receiving area would incorporate a rotating cable array. Here the hands would be unloaded and suspended from the cable, leading to the de-handing workers. The stake is returned on cable for subsequent disposal. Organic waste can be returned to banana fields to be converted to humus.

A separate passage bypassing the wash tanks is provided, for pre-selected produce that directly leads to weighing and packaging area.

Technology / Facilities

Description

Packaging Post‐harvest handling facility for quality check and wash.

Sorting and grading basis finger length, shape, colour, etc.

Retail package (branded) or unitized transport units are formed.

Ripening Received in small unitized retail packs from pack house.

Ripening temperature is 15 ºC ‐20 ºC with 90‐95% RH).

Ethylene is generated in the room to give uniform ripening.

Storage Banana storage is at a temp of 13 ºC ‐ 14 ºC for a period of 3 weeks in ethylene free air.

CA storage is practiced for added shelf life up to 6 weeks at 14 ºC.

Transport For domestic purpose, transportation through both modes – 80% by rail wagons and rest of 20% is through road in normal trucks (8‐9MT).

For export, Reefer containers are used for sea transportation.

Aggregation Mechanism for the Pack house

The pack house shall receive material from various aggregation points as well as directly from the farms. The pack house will develop an aggregation mechanism and send trucks/pick-ups to the aggregation points for collection of produce. It will establish direct relationship with farmers and provide extension and training support to them for best farming practices, better post harvest handling practices, efficient use of inputs and technology transfer etc. Farmers will be encouraged to come together as producer companies and set up and manage aggregation points wherever possible. Pack house may also invest in developing infrastructure at aggregation points such as platforms, sheds, etc.


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Pack House Logistics

The produce will come to the pack house from aggregation points and farms in various modes of transport such as trucks (4 MT/10 MT), vans, tractor trolleys, etc. Expected peak arrival of vehicles is about 10 per day. The average out-going vehicles at peak of 10/15 MT capacity will be 5-6 per day. Small capacity field vehicles, load 800kgs to 1MT, are incorporated in the project to serve as feeders from local farms or aggregation points as backward integration. These vehicles can be with insulated body deploying pre-cooled chill packs. This is expected to increase field reach, hence enhancing catchment range.

21.2.2 Ambient Orange Pack house

As mentioned earlier, the existing pack houses in the region with pre-cooling and cold store facilities have not been successfully functional mainly due to reasons such as inadequate marketing/export linkages, cheap manual labour, lack of refrigerated vehicles, etc. Hence, considering the present scenario in the region, ambient interventions are proposed keeping in mind the practicality of such interventions. In the ambient packing house for orange following infrastructure will be provided:


The capacity of the pack house will be 100 MT/day and it would employ for than 60 labourers for the operations.

Orange Process Flow:

Process flow for the orange in the pack house shall be as depicted in the diagram:

Technology

/ Facilities

Description

Quality

Check

Quality of the farm produces shall be assessed at the pack house based on certain criteria such as maturity level, size of fruits etc.

Sorting and

Grading

Manual sorting and grading is suggested. Sorting and grading tables are proposed in the pack house.

Packing Packaging tables would be provided for manual packing of orange. Plastic crates would be used for packing.

Transport Produce shall be transported in normal trucks of 10/15 MT capacity.

The ambient pack house will also have aggregation mechanism similar to the banana pack house. Here, the average number of incoming vehicales at peak season would be 20 per day. The average out-going vehicles per day at peak season would be 8-9 per day.


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21.2.3 Banana Ripening Facility

A banana ripening facility is proposed. Capacity of the ripening chamber will be 10 MT per day. The ripening chamber can also be used for other fruits such as mango, if required. Ripening would be done using ethylene as the catalyst (see Annexure for further technical details). Ethylene generators would be utilised for appropriate dosing of the catalyst.

The Banana ripening facility could adjoin a separate receiving and de-handing shed to allow for locally sourced direct farm produce to be input for local ripening requirements. A waste disposal area to cater to ripening room is specially designated.

Material handling pallet mover is provided for the daily operations. The receiving shed is covered to protect from direct sunlight and weather. Though only one chamber will output daily, sufficient space is provided to cater for dispatch staging as well as incoming marshalling of the produce.

The ripening facility is envisaged to output into smaller vehicles for tertiary dispatch and a separate designated parking lot for the same is designed.


A dry warehouse of 2000 MT capacity is also proposed. It will be used for storage of pulses which is abundantly produced in catchment of cluster.


21.2.5 Other facilities

There will be other facilities/amenities such as:

Business Centre Parking Area Canteen Weigh Bridge Water Supply Facilities DG Rooms Solid Waste Management Area Other Amenities


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22 SPOKE: AKOLA

Akola has been identified as a spoke due to its strategic location in the middle of a major pulses and soyabean growing region. It is also well connected by road and railway network to Mumbai, Pune, Kolhapur, Nagpur, Indore and also to distant markets such as Rajkot, Delhi, Kolkata and other cities. The National Highway- 6 which connects Hajira (Surat) to Kolkata runs through Akola. Akola railway junction is situated on Mumbai-Wardha-Nagpur-Howrah railway line.


Akola region is a major producer of pulses such as arhar (pigeon pea), Bengal gram and mung (green gram) and soyabean and it acts as a major trading centre of the same as well. The district produces around 89,000 MT of pulses annually. Since the region does not produce substantial volumes of perishables, pulses and soyabean have been considered as the focus crop for this spoke. The focus crops and estimated throughputs have been identified based on present production in the catchment area, the present capacities of existing similar infrastructures/facilities, potential for interventions, and stakeholders’ consultations. The spoke is targeted to handle less than 1% of the total production in the catchments, which would ensure financial viability of the project. The focus crops and the estimated annual throughput of the spoke in MT are as follows:

Arhar Bengal Gram Moong Soyabean

3500 2500 1000 3000

The arrival pattern of the focus crops for the spoke will be as follows:

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Arhar

Bengal Gram

Moong

Soyabean


The region has a shortage of dry warehouses and the farmers/traders/millers face a shortage of storage facilities during peak season. Moreover, there are almost no modern warehouses in the region with proper de-humidification facilities, ventilation system or vermin proof guards. Also, the existing warehouses are all conventional in nature with no proper de-humidification facilities, ventilation system or vermin proof guards. Most of the buildings observed may not have passed a HACCP certifying process. Moreover, there are very few modern grading and packaging facilities in the region. Considering these aspects, the following facilities are proposed in the spoke.


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A modern dry warehouse of 5000 MT is proposed at the spoke. It will be used for storing of mainly arhar, bengal gram, moong and soyabean depending on the season and demand.

22.2.2 Ambient Packing Shed

In the ambient packing shed following infrastructure will be provided:

Covered Pack shed (open to ambient) with landing area. Requisite weighing equipment and transaction recording arrangement. Cleaning and grading areas Packaging area and store Waste disposal systems. Vehicle Parking areas.

The option of the warehouse facilitating HACCP certification and increasing the value of the product will be explored. To aid operational and process compliances, funds have been allocated towards HACCP certification.

Process Flow:

The process flow of the produces handled in the pack house is depicted below:

Technology /

Facilities

Description

Quality

Check

Quality of the farm produces shall be assessed at the pack

shed mainly based on moisture content. The ideal

moisture content for pulses is 12%. Anything more than

that would require drying before further processing.

Drying (if

required)

Drying of the produce would be done using mechanized

drier

Cleaning/De‐

stoning

Produce will be cleaned of stones, leaves and other

impurities in a mechanized cleaner/de‐stoner

Grading Mechanized grading would be carried out based on size of

the grain

Packaging Manual packing of the produce in 50/100 Kg gunny bags

Pack Shed/Warehouse Logistics

Farmers will bring the produce from pack shed/warehouse in various modes of transport such as trucks (4 MT), vans, tractor trolleys, etc. At peak of operations, about 8-10 incoming tucks/vehicles of an average of 4 M capacity will be coming to the pack shed/warehouse. The outbound trucks would include about 3-4 normal trucks of 10/15 MT.

Inefficient logistics flow also hampers waste removal and other internal services. The master plan caters to such peak traffic flow as it has been observed that bottlenecks in existing infrastructure were largely due to under capacity parking and road network within facilities.


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22.2.3 Business Centre

A Business Centre is proposed in the spoke which will have the administrative rooms. There will also be some rooms/sections which may be rented out to reputed NGOs or local organizations etc as office spaces. Local district level government offices will also ensure utility and regular interaction at location. These could include local passport offices, tax centre, land records office, family planning centre, etc.

There will be also other facilities/amenities such as:

Parking Area Canteen Weigh Bridge Water Supply Facilities DG Rooms Solid Waste Management Area Other Amenities

Given the nature of establishment, appropriate fire hazard proofing in form of CO2 smothering systems, fire alarms and evacuation routes are also proposed


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23 SPOKE: SANGRAMPUR

Sangrampur has been identified as spoke location due to its connectivity to major consumption areas. Sangrampur falls in Buldhana district and is located at about 90 km from district headquarter and is connected to all thirteen talukas by all weather road. It is connected to state capital by road. It is also located close to important consumption markets like Aurangabad, Pune, Amravati and Nagpur. Apart from the connectivity to the consumption markets, Sangrampur is also proximate to the production clusters of Banana and Lemon. Proposed aggregation points for the spoke and their approximate distance is as follows;

Aggregation Points Focus Crop Approximate Distance (Kms)

Kakanwada Banana 6

Nandura Lemon 40

Khamgaon Lemon 50


Major fruits grown in the catchment of Sangrampur are banana and lemon. Sangrampur block in Buldhana is again the largest banana growing cluster in the district and accounts for about 80% of the total production of the district.

Focus crops for the proposed facility in Sangrampur are banana, lemon and pulses. Estimated throughputs have been identified based on production statistics in the catchment area, capacities of existing similar infrastructures/facilities, potential for interventions, and stakeholders’ consultations.


Spoke Banana Lemon

Sangrampur 5000 2000



Banana

Lemon

As shown above, the facility would receive year round supply of fresh fruit and hence, optimum capacity utilization of the pack house would be ensured throughout the year.


It is proposed to set up Banana pack house at the spoke. Facilities have been designed on the basis of requirement of the crop, to induce better and efficient handling practices and faster evacuation of fresh produce to the consumption markets so as to ensure better quality to the


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consumer. While deciding on the capacities, existing facilities, their capacities and utilization has also been taken into account. Details of proposed facilities are as follows:

23.2.1 Pack House

A pack house with a capacity of 40 MT per day is proposed at the spokes. Various components of proposed facilities in the pack house are outlined below.

1. Receiving De-handing Area

2. Preliminary Wash Tank

3. Secondary Flotation Tank

4. Air Brush, Weighing

5. Retail Packing, Stickers

6. Box inspection 7. Palletisation Area 8. Dispatch – direct or mobile pre- cooler

It is expected that such a facility would employ 164 workers over two shifts. The process flow of material handling at the pack house is outlined below.

Banana incoming in bunches or as pre-cut clusters from farms/aggregation points. Bunches are cut into hands and crown flower removed. Treatment of hands in preliminary wash tank to eliminates field dirt, latex overruns

and pesticide residue. Secondary wash tank; fungicide wash is affected- Before treatment in secondary

tanks, each bunch is cut into packing clusters and inspected. At end of secondary wash, bananas shall be placed into trays onto roller conveyors.-

Each tray is weighed and holds a packing unit load. As it moves down the conveyor, material shall be air dried, and stumps can be sealed

with paraffin wax. Thereafter the box packing takes place and palletisation and subsequent staging is

done. A separate box making room is provided – where boxes are formed from collapsed

cardboard.

Diagrammatic representation of process flow is alongside.

As banana pack house utilizes water as transport mode (design pack house uses 50,000 litres daily), appropriate water treatment and recharge systems are incorporated. The recycled/treated water can be used for sanitary purposes or stored for field irrigation uses.

3

3

3

3

3

5

5

5

5

5

5

5

1 2 4 6 7 8


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To introduce cable conveyor system, the receiving area would incorporate a rotating cable array. Here the hands would be unloaded and suspended from the cable, leading to the de-handing workers. The stake is returned on cable for subsequent disposal. Organic waste can be returned to banana fields to be converted to humus.

A separate passage bypassing the wash tanks is provided, for pre-selected produce that directly leads to weighing and packaging area.

Technology

/ Facilities

Description

Packaging Post‐harvest handling facility for quality check and wash.

Sorting and grading – On the basis of finger length, shape, colour, etc.

Retail package (branded) or unitized transport units are formed.

Ripening Received in small unitized retail packs from pack house.

Ripening temperature is 15 ºC ‐20 ºC (with 90‐95% RH).

Ethylene is generated in the room to give uniform ripening.

Storage Banana storage is at a temperature of 13 ºC ‐ 14 ºC for a maximum of 3 weeks in ethylene free air.

CA storage is practiced for added shelf life up to 6 weeks at 14 ºC.

Transport For domestic purpose, transportation through both modes – 80% by rail wagons and rest 20% is through road in normal trucks (8‐9MT).

For export, Reefer containers are used for sea transportation.

Pack House Logistics

The produce will come to the pack house from aggregation points and farms in various modes of transport such as trucks (4 MT), vans, etc except for pulses where produce may also come in trucks of 10 MT capacity. Expected peak arrival of vehicles is about 18-20, which would include following approximate number of vehicles:

Pulses: 7 Lemon: 10 Banana: 2

The above number would translate into 10 out-going vehicles at peak. Small capacity field vehicles, with load capacity of 0.8 MT to 1 MT, are incorporated in the project to serve as feeders from local farms or aggregation points as backward integration. These vehicles can be with insulated body deploying pre-cooled chill packs. This is foreseen to increase field reach, hence enhancing catchment range.

Aggregation Mechanism

The pack house will establish direct relationship with farmers and provide extension and training support to them for best farming practices, better post harvest handling practices, efficient use of inputs and technology transfer etc. The pack house will develop appropriate aggregation mechanism and send trucks/pick-ups to the aggregation points. Farmers will be encouraged to come together as producer companies and set up and manage aggregation points wherever possible. Pack house may also invest in developing infrastructure at aggregation points such as platforms, sheds, etc


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23.2.2 Banana Ripening Facility

A banana ripening facility is proposed. Capacity of the ripening chamber will be 10 MT per day. The ripening chamber can also be used for other fruits such as mango, if required. Ripening would be done using ethylene as the catalyst (see Annexure for further technical details). Ethylene generators would be utilized for appropriate dosing of the catalyst.

Where ripening facility is located adjoining the pack house, conveyor rollers are optioned to carry the crates directly to ripening area.

The Banana ripening facility could adjoin a separate receiving and de-handing shed to allow for locally sourced direct farm produce to be input for local ripening requirements. A waste disposal area to cater to ripening room is specially designated.

Material handling pallet mover is provided for the daily operations. The receiving shed is covered to protect from direct sunlight and weather. Though only one chamber will output daily, sufficient space is provided to cater for dispatch staging as well as incoming marshalling of the produce.

The ripening facility is envisaged to output into smaller vehicles for tertiary dispatch and a separate designated parking lot for the same is designed.


A dry warehouse of 2000 MT capacity is also proposed. It will be used for storage of pulses which is abundantly produced in catchment area of spoke.


23.2.4 Other Facilities

Apart from the above, following facilities are proposed in the pack house;

Business Centre

Business Centre is proposed to house the administrative block for the market. There will also be rooms/sections which may be rented out to reputed NGOs, companies, grass-root level organizations such as microfinance institutions, etc as office spaces.

Other facilities proposed for this location are:

Canteen Solid Waste Management Area DG Room Water Supply Facility Parking Area Utilities


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24 SPOKE: JALNA

Jalna has been identified as the spoke for the Amravati Aurangabad Integrated Value Chain. It has been identified as spoke because it’s major production as well as marketing centre of sweet lime. For sweet lime, Jalna has established trade linkages with Delhi, Jaipur and other markets of the country. Apart from the connectivity to the consumption markets, Jalna is well connected with state highway and other link roads to production clusters. The railway station is at Jalna itself.

The aggregation points identified for the spoke at Jalna and their approximate distance from the spoke are:

Aggregation Points Distance from the spoke in Kms

Ghansavangi 80

Ambad 50

Badnapur 20

As evident from above, the aggregation points are located within a radius of 100 km from Jalna. The aggregation points have been identified keeping in view the time required for evacuation of sweet lime after harvest.

24.1 FOCUS CROP AND ESTIMATED THROUGHPUT

As mentioned in the previous chapter, Amravati Aurangabad region accounts for 87% of the total sweet lime production of Maharashtra. Out of this, Jalna district alone produces 0.26 million MT of sweet lime annually. It accounts for around 40% of the total sweet lime production of the state. Ghansawangi, Ambad and Badnapur are the major taluks under sweet lime cultivation in the district and they are located in a radius of around 80-100 km from Jalna. The estimated throughput of the spoke has been identified based on the present production in the catchment areas, potential for interventions and stakeholders’ consultations. The estimated annual throughput of the spoke in MT will be as follows:

Spoke Throughput of Sweet lime in MT

Jalna 12000

The arrival pattern of the focus crop at the spoke will be as follows:


Sweet Lime

As evident from above, Sweet lime is available for around 8 months; hence the spoke at Jalna will be operational for around 250 days in a year.


The spoke at Jalna has been designed on the basis of requirement of the focus crop. Sweet lime is treated as a bulk horticulture produce in the region and limited sorting/grading is


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carried out at market end. The produce is handled manually throughout the supply chain and there is no facility available for the focus crop in this region.

As the produce is currently handled through the ambient supply chain, hence introduction of cold chain infrastructure will not be viable because of increased cost. The objective is to improve current handling practice and quicker evacuation to the consumption markets. It is also envisaged that the pack house would serve as a pilot for many more such initiatives.

Facility design caters and complies with EHS regulations and provides segregated amenities – by gender and working zones. Following facility has been proposed at the spoke:

24.2.1 Ambient Pack House

An ambient pack house is proposed to be set up for handling of 80 TPD of sweet lime. In the ambient pack house, following infrastructure will be provided:

Covered Pack shed (open to ambient) with landing area. Requisite weighing equipment and transaction recording arrangement. Sorting and grading areas (with tables). Packaging store and Packing tables. Waste disposal systems. Vehicle parking area.

Ambient Pack House Process flow:

The process flow of sweet lime handled in the pack house is depicted below:

Facilities Description

Quality Check Quality assessment of sweet lime on the basis of size, ripening stage etc.

Sorting and Grading

Manual sorting and grading is suggested, which is cost effective.

Sorting and grading tables are proposed in the pack shed.

Packing Packaging tables to be provided in the pack sheds.

Manual packing of sweet lime in crates. The packaging material may change depending upon the requirements of the destination market.

Dispatch The same area would be offloaded on a daily basis.

The packaged produce would be staged on the raised platform.

Produce is expected to be transported in trucks of 15 MT capacities.

Aggregation Mechanism

The spoke will develop an aggregation mechanism for assured supply of produces to the pack house. As 80% of the sweet lime is sold at farm itself, hence the pack house owner will try to establish direct relationship with farmers. To strengthen the aggregation mechanism, the pack house will also concentrate on capacity building and other extension services in the catchment


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areas. Since farmers are unwilling to take marketing risk because of price fluctuation and fewer selling scope for them, setting up of pack house in the region will provide assured market to the sweet lime growers. The pack houseowner may also invest in setting up of basic infrastructure such as shed at the aggregation points. The produces will be collected through pick up vans/trucks from various points of aggregation.

Logistics

At the peak of operations, the daily inbound logistics to the spoke would be 16 and outbound logistics would be 6. Sweet lime will come to the spoke in various modes of transport such vans, tempos, trucks etc. and the onward dispatch to destination markets will be through trucks of 15 MT capacities.


Apart from the pack house, other facilities proposed in the spoke are:



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25 SPOKE: PAITHAN

Paithan has been identified as the spoke for Amravati Aurangabad integrated value chain. Paithan is well connected by road to major consumption markets such as Mumbai, Delhi etc. and it is also proximate to the production clusters of sweet lime and Mango. The nearest airport and railway station is located at Aurangabad, which is around 80 km away from Paithan.

As Paithan is well connected to production areas, mobile collection centres are proposed for aggregation of produces. The identified aggregation points are:

Crops Taluka Aggregation Points Approximate Distance (Kms)

Paithan Apegaon, Pachod, Gharegaon, Ektuni, Katpur, Balanagar, Rahatgaon, Dawarwadi, Thergao, Sonwadi

Located in a radius of 30‐35 kms

Sweet lime

Aurangabad Pimpriraja, Adul, Devgaon, Kachner, Nilajgaon Located in a radius of 60‐70 kms

Mango Paithan Bidkin, Sonwadi, Isarwadi, Logaon, Prabhuwadgaon, Dhakefal, Dhorkin

Located in a radius of 30‐35 kms

Aurangabad Pimpriraja, Devgaon, Kachner, Located in a radius of 60‐70 kms


As mentioned earlier, mango and sweet lime are the major crops grown in the catchments of the proposed spoke. Paithan and Aurangabad talukas account for around 80% of the total mango production of the state. Kesar mango, which is a specialty of this region, is grown in abundance in both the talukas. Paithan is not only a production centre of these crops but also an established marketing hub for domestic market.

As mentioned in the previous chapter, a mango export facility centre, located at around 60kms from Aurangabad, is operational and it has a capacity to pre-cool 5 MT/batch of mango; hence similar capacity has been proposed for the mango pack house and accordingly the pack house is expected to target 4000 MT of mango.

The focus crops and estimated throughputs have been identified based on the present production in the catchment area, the present capacities of existing similar infrastructures/facilities, potential for interventions, and stakeholders’ consultations. The estimated annual throughput of the pack house in MT is as follows:

Spoke Sweet Lime Mango

Paithan 12000 4000

The arrival pattern of the focus crops for the spoke will be as follows:


Mango

Sweet Lime

The arrival pattern shows that the spoke will be operational for about 8 months in a year.


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The spoke at Paithan has been designed on the basis of requirements of the focus crops. The objective is to improve the current handling practices, enhance shelf life and faster evacuation to the consumption markets. The capacity of the proposed facilities has been planned taking into account the existing facilities, their capacities and utilization.

Facility design caters and complies with EHS regulations and provides segregated amenities – by gender and working zones. Following facilities has been proposed at the spoke:

25.2.1 Pack House

The pack house will have cold chain infrastructure as well as space for ambient handling for produce. The cold chain infrastructure will cater to kesar mango, which is regarded as a premium fruit. Keeping synergy with existing ambient supply chain practices, infrastructure space is also provided that will cater to sweet lime and remaining volumes of mango. As sweet lime is treated as a bulk horticultural produce and currently handled through the ambient supply chain, hence introduction of cold chain infrastructure for sweet lime will not be economically viable. Facility design caters and complies with EHS regulations and provides segregated amenities – by gender and working zones.

Cold chain: Mango

The peak arrival of mango has been estimated to be 50 TPD, out of which 30% i.e. 15 MT will pass through the cold chain. The basic sub components of the pack house will be as follows:

Sorting and grading facilities o For mangos – complete mechanized line:

De-sapping racks. Hot water dip/vapor treatment system. Waxing and drying system. Grading system.

Inspection and Packaging area – tables standard stainless steel type. Weighing and unitization area – certified weighing machines and palletisation

equipment. Buffer Store (Ante room) – holding area for 24 pallets pending cold application. Pre-cooler – Forced Air Pre-coolers: capacity 5 MT, each running 3 batches in 18

hour period. In peak season, more than 15 MT will be pre-cooled daily through these pre-coolers.

Cold Store - 25MT capacity (daily output plus 50% stock overrun to cater for transport delays). The pre-coolers can also be used to supplement contingency storage.

Both pre-cooler and cold store refrigeration will cater to 2 to 12 ºC temperatures Staging Area (Ante Room) – 24 pallets pending dispatch/transport. Material handling equipment – pallet movers, trolleys. Waste disposal systems. Vehicle waiting areas. Crate washing system.


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Mango Process Flow: Cold Chain

The process flow for mango handled through cold chain in the pack house is depicted.

Technology / Facilities Description

Quality Check The mango that comes from the field will undergo quality check.

De-sapping Mangoes will be placed on de‐sapping racks for removal of latex

Washing and Drying The fruit will be washed and air dried.

Sorting and Grading Manual sorting and grading of mango is proposed.

Mangoes to be packed in CFB boxes of varying capacities depending upon the requirement of the destination markets. Boxes will then be palletized.

Pre-cooling Pre cooling will be done at 12oC at 90% RH by forced air method.

Cold Storage Storage is done at 12‐15oC, 85‐90% RH for 2‐3 weeks.

Transport For transportation of the produce, refrigerated vehicles will be used.

In the long run, farmers may be educated to reduce pre cooling time and to carry out de-sapping at field level itself. This can be done by keeping mangoes in water troughs (bore well water, which is 10-15 degree below ambient) at farm itself, pending transport and thus removing field heat (reducing pre-cooling time) and washing off latex which minimizes chances of latex burns.

Where hot dip or vapour treatment is needed (recommended for mango) 52 ºC for 5 mins, solar thermal panels with electric heaters as back up can be used.

Ambient Supply Chain: Mango

The remaining volumes of mango that does not pass through the cold chain will be handled in ambient handling yard and only sorting, grading and packing will be carried out. In the pack house adjoining the cold chain facility, following infrastructure will be provided:


In season, about 35 MT of mango will be handled in ambient temperature in the pack house. For ambient handling, a separate space will be provided in the pack house. Here, after


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receiving the produce from field they will be sorted, graded and packed in CFB boxes manually and dispatched to markets in normal trucks of 9-10 MT capacities.

Aggregation Mechanism: Mango

The spoke will develop an aggregation mechanism for assured supply of produces to the pack house. The produces will be collected through pick up vans/trucks from various points of aggregation. To strengthen the aggregation mechanism, the pack house will also concentrate on capacity building and other extension services in the catchment areas.

Logistics: Mango

The produce will come to the pack house from aggregation points and farms in various modes of transport such as trucks (4 MT), vans, etc. At the peak of operations, around 10 vehicles are expected to arrive at the spoke on daily basis. The total number of outgoing vehicles would be 5, out of this 2 would be refrigerated and 3 would be normal trucks.

25.2.2 Sweet lime Ambient Pack House

An ambient pack house is proposed to be set up for handling of 80 TPD of sweet lime. In the ambient pack house, following infrastructure will be provided:

Covered Pack shed (open to ambient) with landing area. Requisite weighing equipment and transaction recording arrangement. Sorting and grading areas (with tables). Packaging store and Packing tables. Waste disposal systems. Vehicle parking area.

Ambient Pack House Process flow:

The process flow of sweet lime handled in the pack house is depicted below:

Facilities Description

Quality Check Quality assessment of sweet lime on the basis of size, ripening stage etc.

Sorting and Grading

Manual sorting and grading is suggested, which is cost effective.

Sorting and grading tables are proposed in the pack shed.

Packing Packaging tables to be provided in the pack sheds.

Manual packing of sweet lime in crates. The packaging material may change depending upon the requirements of the destination market.

Dispatch The same area would be offloaded on a daily basis.

The packaged produce would be staged on the raised platform.

Produce is expected to be transported in trucks of 15 MT capacities.


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Aggregation Mechanism: Sweet Lime

The spoke will develop an aggregation mechanism for assured supply of produces to the pack house. As 80% of the sweet lime is sold at farm itself, hence the pack house owner will try to establish direct relationship with farmers. To strengthen the aggregation mechanism, the pack house will also concentrate on capacity building and other extension services in the catchment areas. Since farmers are unwilling to take marketing risk because of price fluctuation and fewer selling scope for them, setting up of pack house in the region will provide assured market to the sweet lime growers. The pack house owner may also invest in setting up of basic infrastructure such as shed at the aggregation points. The produces will be collected through pick up vans/trucks from various points of aggregation.

Logistics: Sweet Lime

At the peak of operations, the daily inbound logistics to the spoke would be 16 and outbound logistics would be 6. Sweet lime will come to the spoke in various modes of transport such vans, tempos, trucks etc. and the onward dispatch to destination markets will be through trucks of 15 MT capacities.


A dry warehouse of 2000 MT capacity is proposed, which will be used for storage of pulses. The warehouses would plan for sufficient parking and eased traffic flow layout along with waste disposal areas.


Apart from the pack shed, other facilities proposed in the spoke are:



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26 FINANCIAL ANALYSIS

26.1 AURANGABAD‐AMRAVATI IVC

26.1.1 Project Details

The facilities/infrastructure proposed in the spokes for the IVC and its handling capacities as well as area (in sq meters) are summarized below:

Facilities Paithan Warud Anjangaon Akola Sangrampur Jalna

Dry Warehouse 2000 MT (920)

2000 MT (920)

2000 MT (920)

5000 MT (2300)

2000 MT (920)

‐

Orange Packhouse ‐ 100 MT/Day (1700)

100 MT/Day (1700)

‐ ‐ ‐

Banana Packhouse ‐ ‐ 40 MT/Day (1350)

‐ 40 MT/Day (1350)

‐

Ripening Chamber ‐ ‐ 10 MT/Day (527)

‐ 10 MT/Day (527)

‐

Mango Packhouse‐Cold Chain

15 MT/Day (700)

‐ ‐ ‐ ‐ ‐

Mango Packhouse‐Ambient

35 MT/Day (603)

‐ ‐ ‐ ‐ ‐

Sweet lime Ambient Packhouse

80 MT/Day (500)

‐ ‐ ‐ 80 MT/Day (500)

Grain pack shed 35 MT/Day (750)

To support the operations of above facilities, the spokes will also have adequate basic infrastructure and other support infrastructure like power and water supply systems, ETP, solid waste disposal facility, administration block/business centre, canteen, parking space, etc. A list of these basic and support infrastructure facilities (spoke wise) is given below:

Basic and Other Support Infrastructure

Unit Paithan Warud Anjangaon Akola Sangrampur Jalna

Administrative building/business centre

Sq. m 300 300 300 300 300 300

Parking Sq. m 810 810 1620 810 810 810

Canteen Sq. m 50 50 100 50 100 50

Power Supply KVA 200 130 260 150 210 50

Water Supply LPD 5550 3550 63050 3550 57950 4450

Total 1160 1160 2020 1160 1210 1160

26.1.2 Project Cost

The cost estimates of plant and machinery are based on the information obtained from equipment suppliers including quotations given by them for similar facilities. The civil work and basic infrastructure costs have been worked out by architects/engineers based on layout plans and as per the industry standards. Finally, the costs of land and land development have been assessed mainly based on interactions with industry/stakeholders in the identified locations. The component wise costs of the project are given below:

Item Sr. No. Description Amount (Mn Rs) Amount (Mn $)

A 1 Land 0.00 0.00


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2 Land Development 16.00 0.34

3 Buildings 122.61 2.60

4 Plant Machinery & Equipments 96.25 2.04

5 Utilities & other fixed assets 8.15 0.17

Sub Total (A) 243.01 5.16

B Contingencies 20.78 0.44

C Pre‐operative expenses 12.15 0.26

D Margin Money for Working capital 1.14 0.02

Total Project Cost (A+B+C+D) 277.08 5.88

Land

Keeping in view the maximum built up area of about 60% and open area of about 40%, the total land requirement for the project is estimated to be about 6.4 Ha. The breakup of land requirement for the spokes is given below.

Location Area (Ha)

Paithan 1.0

Warud 1.0

Anjangaon 1.7

Akola 1.1

Sangrampur 1.1

Jalna 0.5

Total IVC 6.4

The land cost has not been considered as part of project cost because according to the implementation framework suggested the land will be given by the state government..

Land Development

Cost of land development includes boundary wall, road, water drainage, parking etc. The cost of development is taken as Rs 2.5 mn/Ha.

Buildings

The estimated costs of construction for various buildings in the projects are given below:

Amount in Rs millions

Facility Paithan Warud Anjangaon Akola Sangrampur Jalna IVC

Orange Packhouse ‐ 10.20 10.20 ‐ ‐ ‐ 20.40

Warehouse 5.98 5.98 5.98 14.95 5.98 ‐ 38.87

Banana Packhouse ‐ ‐ 8.10 ‐ 8.10 ‐ 16.20

Ripening Chamber ‐ ‐ 2.76 ‐ 2.76 ‐ 5.52

Mango Packhouse‐Cold Chain 5.60 ‐ ‐ ‐ ‐ ‐ 5.60

Mango Packhouse‐Ambient 3.60 ‐ ‐ ‐ ‐ ‐ 3.60

Packhouse‐Ambient 3.00 ‐ ‐ ‐ 3.00 6.00

Packshed‐ Ambient 4.50 4.50

Business Centre 2.70 2.70 2.70 2.70 2.70 2.70 16.20

Miscs 0.80 0.80 1.68 0.80 1.00 0.64 5.72

Total Buildings 21.68 19.68 31.42 22.95 20.54 6.34 122.61

The building construction rate for mango packhouse (cold chain) has been estimated to be Rs. 8000/sq. m. Rate for ambient packhouse for orange and sweet lime and ambient packshed for grains has been estimated to be Rs. 6000/sq. m. The construction rate for banana packhouse and dry warehouse have been assumed at Rs. 6000/sq. m and Rs. 6500/sq. m respectively. The lumpsum cost of pre-fabricated banana ripening chamber of 40 MT capacity (which is equivalent to 10 MT/day ripening capacity) having an area of 280 sq.m has been taken as Rs. 2.76 million. The rates are in tune to the industry standards and have been verified against quotations received from different industry players.


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In case of non technical infrastructure, the construction rate has been estimated between Rs. 8000 to Rs. 9000 per sq. m for facilities such as administrative building/business centre, canteen etc.

Equipments

The break-up of the estimated costs of major machineries is provided below:

Table: Machinery Cost

Amount in Rs millions

Plant Machinery and Equipments Paithan Warud Anjangaon Akola Sangrampur Jalna IVC

Ripening equipments ‐ ‐ 4.20 ‐ 4.20 ‐ 8.40

Banana Packhouse equipments ‐ ‐ 3.00 ‐ 3.00 ‐ 6.00

Refrigeration equipments 2.50 ‐ ‐ ‐ ‐ ‐ 2.50

Mango Grading line 8.00 ‐ ‐ ‐ ‐ ‐ 8.00

Grains‐Cleaning, grading line ‐ ‐ ‐ 1.50 ‐ ‐ 1.50

Weigh Bridge‐40 MT 2.50 2.50 2.50 2.50 2.50 2.50 15.00

DG sets 0.90 0.50 1.20 0.50 1.00 0.20 4.30

Crates 1.88 3.75 5.63 ‐ 1.88 ‐ 13.13

Pallets 1.13 ‐ 3.38 ‐ 1.13 ‐ 5.63

Refer trucks‐7 mt 6.00 ‐ ‐ ‐ ‐ ‐ 6.00

Normal Pickup vehicles 0.90 1.50 2.40 1.50 1.20 1.50 9.00

Normal trucks‐15 MT 2.40 2.40 4.80 2.40 2.40 2.40 16.80

Total Plant Machinery & Equipments 26.20 10.65 27.10 8.40 17.30 6.60 96.25

The cost wise major components of the project are normal pickup vehicles and trucks (Rs. 25.80 mn), weigh bridges (Rs. 15 mn) and crates and pallets (Rs. 18.46 mn). The rates for plant, machinery and equipments are comparable to the industry standards and have been verified with the quotations from different suppliers.

Miscellaneous Fixed Assets / Utilities

The breakup of the estimated cost of the miscellaneous fixed assets and utilities is provided below: Amounts in Rs millions

Misc Fixed Assets Paithan Warud Anjangaon Akola Sangrampur Jalna IVC

Power supply system 1.20 0.50 1.50 0.50 1.20 0.20 5.10

Water supply system 0.50 0.15 0.50 0.15 0.50 0.10 1.90

IT system 0.20 0.10 0.20 0.10 0.20 0.05 0.85

Furniture 0.05 0.05 0.05 0.05 0.05 0.05 0.30

Total Misc Fixed Assets 1.95 0.80 2.25 0.80 1.95 0.40 8.15

The power load for the total project has been estimated to be 1000 KVA. DG sets have been taken for each spoke and the capacities vary from 50 KVA to 250 KVA depending on the requirement. The project would require 0.14 million LPD of water for the operations. The


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cost of water supply has been distributed among the locations in proportion to their water requirements.

26.1.3 Preliminary & Pre‐operative Expenses

The provision towards preliminary & pre-operative expenses includes expenditure towards preliminary expenses like salaries & administrative expenses, travel expenses, market development expenses, interest during construction period etc. It is also assumed that the project will be commissioned over a period of one year. The interest during construction period is capitalized in the project cost. Pre-operative expenses other than interest during construction period are assumed to be 5% of cost of fixed assets.

Working Capital Requirement

As the project is meant to create facilities and offer them to various users on rental basis, the WC requirement is assumed to be operating costs like management, maintenance, insurance, power and water. As most of these expenses and the rent receipts are monthly in nature, so to cover these expenses the requirement of working capital is calculated by considering the fund requirement for 30 days.

Contingencies

The contingencies related to project implementation are calculated as below:

Contingencies Physical Contingencies

Price Contingencies

Contingencies (Rs Mn)

Contingencies (Mn $)

Land 0.0% 0.0% 0.00 0.000

Land Development 5.0% 8.3% 1.39 0.030

Buildings 5.0% 8.3% 10.69 0.227

Plant Machinery & Equipments 0.0% 8.3% 7.99 0.170

Utilities & Other Assets 5.0% 8.3% 0.71 0.015

Total 20.78 0.441

The price contingencies are based on the whole sale price index for FY 2009.

26.1.4 Means of Finance

The cost of the project is proposed to be financed through a mix of equity and project grant from State government including ADB funds.

As mentioned in the implementation framework the promoter’s equity has been taken at 30% of the project cost and the remaining funds required will be contributed by state government as project grant. The table below shows the funding pattern for the project:

Particulars Amount Rs Million

Amount Million $

Share

Asian Development Bank 135.77 2.88 49.0%

State Government 58.19 1.23 21.0%

Equity‐Private Investor 83.12 1.76 30.0%

Total 277.08 5.88 100.0%


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26.1.5 Key Operating Assumptions

The key operating assumptions underlying the project’s business plan are described below.

Operating Cost Assumptions:

300 working days per annum are assumed for operations.

Power & Fuel Costs

The total connected load of the facilities for all locations is estimated at 1000 KVA. The power tariff has been assumed at the prevailing rate of Rs 1.30 per unit for agro based industry in Maharashtra. Average daily requirement of power would be about 3600 KWH. The details of power load assumptions for the facility are given below:

Facilities Assumption

Orange/ Sweetlime Packhouse 1 KVA/ 60 sqm

Warehouse 1 KVA/ 92 sqm

Banana Packhouse 1 KVA/ 45 sqm

Ripening Chamber 50 KVA/ 40 MT

Mango Packhouse‐Cold Chain 50 KVA/ 15 MT

Mango Packhouse‐Ambient 1 KVA/ 40 sqm

Packsheds‐Grains (including grading line) 75 KVA/ 35 MT

Business Centre & Misc facilities 1 KVA/ 30 sqm

The table below shows the location wise power requirement:

Locations Power Load (KVA)

Warud 130

Anjangaon 260

Akola 150

Sangrampur 210

Jalna 50

Paithan 200

Total 1000

Taking into account the current power supply scenario in the state it has been assumed that the facilities would run on DG sets for about 2 hrs/day. The average fuel cost for DG set is assumed to be Rs. 35/Lt.

Water Cost

Daily requirement of water is estimated to be 140 KL/day for all the locations combined. The charges are assumed to be Rs 40/KL.

Employee Cost

The employee cost has been estimated by considering the man power requirement for managing the facility. The project will be managed by the developer/SPV, who will maintain and operate the facilities in the project. This includes management and 24 hour maintenance of the plant and machineries, management of the canteen, business centre, security, etc. So, a team of technical engineers, support staffs and security personals will be required. The details of manpower and their average costs are given in the following table:

Grade/ Employee Number Salary/ month (Rs)

Managers 6 20000

Technical Manager 7 20000

Operators 12 10000

Maintenance 12 6000

Account 6 8000

Security 18 4000

Support Staff 18 3000

Total Employee Cost (Per Month) 79


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*Increment in salary is assumed at 5% p.a for 1st five years of operations.

Cost of Maintenance

The cost of maintenance has been assumed as 1.0% of value of plant & machinery and miscellaneous fixed assets. The maintenance cost will increase by 2.5% every year due to aging of assets.

Cost of Insurance

The cost of insurance has been assumed as 1.0% of value of plant & machinery and miscellaneous fixed assets.

Admin & Marketing Overheads

The developer will be responsible for only the management and maintenance of the facilities without any own operations. However, initial tie ups are needed for better capacity utilization of the facilities. Most of the promotional/marketing expenses will be incurred up front with only small recurring expenses afterwards. Hence during operations, marketing and business development expenses will not be significant for the project. The major overheads for the project will be traveling costs, statutory (like audit etc.) costs and communication expenses etc. So, the admin & selling overhead costs have been assumed @ 2.0% of revenue in line with the industry norms for such facilities.

Financial Assumptions

Taxes

Income Tax rate is assumed to be 33.99% flat (Prevailing Corporate Tax Rate). Income tax is calculated on PBT after adjusting for the difference between the depreciations calculated according to Companies Act, 1956 and Income Tax Act, 1961.

Depreciation Rates

Depreciation has been calculated by straight-line method, as per the Companies Act, 1956, for book purpose, whereas for tax purpose (As per Rule-5 of Income Tax Act, 1961), written down value method is employed. The rates of depreciation are in tune to the rates that are used in cold storage and warehousing industry. The depreciation rates used for different assets are given below:

Depreciation Rates Book Depr Tax Depr

Plant & Machinery 10.34% 15.00%

Miscellaneous Fixed Assets 10.34% 15.00%

Buildings 3.34% 5.00%

The plant & machinery includes refrigeration and cooling systems used for operation of facility, sorting-grading equipments, crates, pallets etc. The noncore equipments like water supply system, transformers etc are included in miscellaneous fixed assets. Buildings include, building for ripening facility, ambient and cold pack-houses, dry warehouse storages, business center, canteen etc.

Revenue Assumptions

Rental assumptions

Based on the discussion with market players (service providers, food processors, users, traders and wholesalers) the rental charged for various facilities is tabulated below:

Facilities Charges/ Unit Unit of Charge

Ambient Packhouses‐Orange/Sweetlime 60 Rs/sqm/month


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Banana Packhouse 1000 Rs/sqm/month

Banana Ripening Facility 1400 Rs/MT

Mango Packhouse‐Cold Chain:‐

Sorting/Grading/Packaging charges 1000 Rs/MT

Cold Store & Pre‐cooling charges 600 Rs/MT

Mango Packhouse‐Ambient 60 Rs/sqm/month

Warehouse 100 Rs/sqm/month

Business Centre 100 Rs/sqm/month

Crates 7 Rs/cycle/crate

Weighbridge 2 Rs/MT

Logistics 10 Rs/Km

Grain Packshed

Sorting, grading, cleaning, Packing charges 500 Rs/MT

The rentals charged for these facilities are comparable to the prevailing market rates.

Capacity Utilization

The estimated capacity utilizations are shown in the table below.

Year Capacity utilization

Year I 40%

Year II 60%

Year III and onwards 80%

The capacity utilizations have been assumed conservatively, starting at 40% in the first year.

26.1.6 Financial Performance

The estimated financial projections for the project are tabulated below:

Income Statement:

(Rs Million)

Year 1 2 3 8 12 16 20

Capacity Utilization 40% 60% 80% 80% 80% 80% 80%

Revenue

Rental‐Orange/lime Pack houses 0.24 0.37 0.49 0.49 0.49 0.49 0.49

Rental‐Banana Pack houses 7.20 10.80 14.40 14.40 14.40 14.40 14.40

Rental‐Ripening chambers 3.12 4.68 6.24 6.24 6.24 6.24 6.24

Rental‐Mango pack house‐cold chain 0.45 0.68 0.90 0.90 0.90 0.90 0.90

Rental‐Mango pack house‐Ambient 0.02 0.03 0.04 0.04 0.04 0.04 0.04

Rental‐Warehouses 1.72 2.42 3.11 3.44 3.44 3.44 3.44

Rental‐Crates 7.35 11.03 14.70 14.70 14.70 14.70 14.70

Rental‐ Logistics 16.92 24.75 32.58 33.84 33.84 33.84 33.84

Rental‐cleaning grading line ‐ Grains 1.35 1.69 2.03 2.70 2.70 2.70 2.70

Rental‐ Business centre 1.20 1.77 2.33 2.40 2.40 2.40 2.40

Rental‐Pre‐cooler 0.27 0.41 0.54 0.54 0.54 0.54 0.54

Rental Pack shed 0.04 0.05 0.07 0.07 0.07 0.07 0.07

Weighbridge 0.07 0.11 0.15 0.15 0.15 0.15 0.15

Revenue 39.96 58.77 77.58 79.91 79.91 79.91 79.91

Expenses

Power & Fuel 1.24 1.86 2.49 2.49 2.49 2.49 2.49

Employee Cost 7.51 7.89 8.28 9.59 9.59 9.59 9.59

Water cost 0.66 0.99 1.33 1.33 1.33 1.33 1.33

Maintenance cost 2.43 2.49 2.55 2.89 3.19 3.52 3.88

Insurance 2.19 1.86 1.58 0.70 0.37 0.19 0.10

Admin & Selling Overheads 0.80 1.18 1.55 1.60 1.60 1.60 1.60

Total Expenses 14.84 16.27 17.78 18.59 18.55 18.71 18.98


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EBITDA 25.12 42.49 59.79 61.33 61.36 61.21 60.93

Interest Long Term Debt (LTD) 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Interest Working Capital borrowing 0.46 0.63 0.80 0.83 0.83 0.83 0.83

Depreciation 16.90 16.90 16.90 16.90 4.65 4.65 4.65

PBT 7.76 24.96 42.09 43.60 55.88 55.73 55.45

Tax 0.00 0.00 10.56 16.35 18.38 19.37 19.83

Net Profit (PAT) 7.76 24.96 31.53 27.24 37.51 36.35 35.62

Cash flow to government 7.99 11.75 15.52 15.98 15.98 15.98 15.98

Net profit to private developer ‐0.23 13.21 16.02 11.26 21.52 20.37 19.64

In the above table, it is seen that in the first year of operations with 40% capacity utilization, the revenue from the project is Rs. 39.96 millions which increases to Rs. 77.58 millions at capacity utilization of 80% from sixth year onwards. The net income from the project during 1st year of operation is expected to be Rs. 7.76 millions (at 40% capacity utilization).

Major Financial Performance Indicators:

Year 1 2 3 4 5 6 7

EBITDA Margin 62.87% 72.31% 77.08% 77.08% 77.02% 76.58% 76.67%

PAT margin 19.42% 42.47% 40.65% 38.98% 37.59% 36.01% 34.98%

Debt‐Equity Ratio 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Debt to EBITDA ratio 0.14 0.11 0.10 0.10 0.10 0.10 0.10

Interest Coverage Ratio 54.33 67.11 74.32 74.33 74.22 73.53 73.68

DSCR 54.33 67.11 74.32 74.33 74.22 73.53 73.68

Average DSCR 71.43

Project IRR 16.55%

The above table shows the operational and financial efficiencies of the project. The project is able to achieve an operating margin (EBITDA Margin) of about 62% from the first year of operations itself. From fourth year onwards, the project is able to convert about 35% of its revenue into net profit. The project IRR is coming around 16.55%, which seems attractive from investor point of view.


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27 ECONOMIC ANALYSIS: IVC AMRAVATI‐AURANGABAD

The need for economic analysis of any project is to assess various intangible costs and benefits which are normally not captured in the financial analysis. Any decision on desirability or otherwise of a project would therefore require to take into consideration such costs and benefits and then arrive at a net impact of the project on the economy as a whole. This is more relevant for projects which have a bearing on large segments of the society such as farmers.

The IVCs have been proposed mainly to plug the gaps and deficiencies along the agricultural value chains and the aim is to enlarge the size of the value chains in terms of greater revenue and ensuring a larger share to farmers. The major benefits therefore expected would be in terms of better price realization, wastage reduction and employment generation. The major costs considered are opportunity cost of factors of production viz. land, capital and labour.

The above costs and benefits have not been captured in the financial analysis as major assumptions there include all facilities being developed by private developers for leasing out to actual users. Thus, financial analysis has taken revenue in form of rentals only which do not truly reflect above gains. Also, as land for all facilities is to be provided by state governments on BOT model, financial analysis does not include cost of land even as these land parcels may have large opportunity cost to the economy as a whole.

27.1 METHODOLOGY AND ASSUMPTIONS

The economic analysis is aimed at calculating EIRR which has been done by identifying the benefits arising due to the proposed practices and infrastructure/facilities and are evaluated by comparing ‘With Project’ and ‘Without Project’ scenarios.

The major benefits considered for calculation of EIRR are those which are easily quantifiable and are as follows:

Better Price realization due to quality improvement of the agricultural

produces

A major impact expected is significant improvement in produces through modern methods of handling, packaging, storage and transportation which would lead to better price realization.

Wastage Reduction

The interventions in technological infrastructure such as packaging, storage, temperature controlled transportation and better post harvest management practices will help in increasing the shelf life of the perishable commodities. The improved shelf life will lead to low wastage level even during transportation and marketing to distant places in the country.


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Employment Generation

Considering the high unemployment rate in India and the seasonal availability of work for agricultural labour the project will provide good opportunity to work throughout the year for the people of surrounding areas.

Large increase in revenue and tax realization

The project envisages large investments in agribusiness infrastructure which are likely to generate sufficient revenues and lead to incremental tax realization by the government.

Similarly, the major quantifiable costs considered for calculation of EIRR are given below. While opportunity cost of land has been treated as a capital cost for the purpose, opportunity cost of capital (project grant) and labour has been treated as recurring cost.

Opportunity cost of land

The land for the IVCs is to be provided by state governments on BOT model. Thus, the cost of land has been taken as the rates prevalent for industrial land in the surrounding areas. The opportunity cost of land is broadly in line with Maharashtra Industrial Development Corporation (MIDC) land rates in the region.

Opportunity cost of capital/ project grant

The project provides for large amount of capital grant to private developers, which may range from 90% of project cost in Bihar to 70% of the project cost in Maharashtra. For the purpose of EIRR calculation, the opportunity cost of project grant amount has been considered which was not captured by the financial analysis. Opportunity cost of capital contributed as project grant is assumed at 10% per annum. The assumption is based on the fact that the money invested as grant can be invested elsewhere and a minimum return of 10% per annum has been assumed conservatively.

Opportunity cost of labour

The project assumes large employment generation for agricultural labourers and limited employment opportunities for management professionals. For the calculation of EIRR, the opportunity cost of agricultural labourers has been taken assuming that they had options to work on other projects such as National Rural Employment Guarantee Scheme (NREGS).

The detailed calculation for above mentioned benefits and costs has been done at IVC level and is given below:

27.2 QUANTIFICATION OF BENEFITS

Quality improvement leads to premium Price of the commodities

The incremental price realization is calculated based on the price range available in the market for different grades (firmness, color, size etc.) of the produce. The table below compares the ‘Without Project’ and ‘With Project’ cases to estimate the incremental benefits due to improved quality of the produce.

Without Project With Project


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Estimated Additional Price Realization (%)

Crops Price (Rs/MT)

Min Max Weighted Average

Price (Rs/MT)

Incremental Benefit (Rs/MT)

Quantity (MT)

Total Incremental Benefit (Mn Rs)

Fruits 23000 10% 20% 12.0% 25760 2760 32400 89.42

Banana 16000 10% 15% 11.0% 17760 1760 30000 52.80

Mango 40000 15% 20% 16.0% 46400 6400 3750 24.00

Grains/ pulses 40000 10% 15% 11.0% 44400 4400 43500 191.40

Total 109650 357.62

The incremental benefit due to quality improvement is estimated to be Rs 357.62 million per annum at 100% capacity utilization.

Wastage Reduction

The range of wastage reduction depends on the grade of produce and the distance of final market from source of production. The table below shows the assumptions made and calculations of the benefit due to reduction in wastage.


Wastage Reduction Range (%)

Crops Quantity saved Min Max Average

Selling Price (Rs/MT)

Quantity Saved (MT)

Total Incremental Benefit (Mn Rs)

Fruits 0 10% 15% 11.0% 25760 3564 91.81

Banana 0 15% 20% 16.0% 17760 4800 85.25

Mango 0 10% 15% 11.0% 46400 413 19.14

Grains 0 5% 8% 5.6% 44400 2436 108.16

Onion 0 10% 15% 11.0% 0 0 0.00

Total 11212.5 304.36

The project help in saving of estimated quantity of agricultural produce of about 11000 MT valued at Rs 304.36 million.

Employment Generation

The spoke wise number of workers and for how many days in year the labour will be employed has been estimated based on the capacity of the facilities and the seasonality of crops handled. The wage rate for the labour is taken at prevailing market rate of Rs 120 per day. Being a green field project, the entire labour for the project is incremental in nature and the monetary value of income to the labour is given as below:


Location No. of workers

Days/ Annum

Annual amount (Rs Mn)

No. of workers

Days/ Annum

Annual amount (Rs Mn)

Annual Incremental Benefit (Rs Mn)

Warud 0 0 0.00 94 180 2.03 2.03

Anjangaon 0 0 0.00 280 300 10.08 10.08

Akola 0 0 0.00 40 180 0.86 0.86

Sangrampur 0 0 0.00 196 300 7.06 7.06

Jalna 0 0 0.00 84 180 1.81 1.81

Paithan 0 0 0.00 135 200 3.24 3.24


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Total 0 0.00 829 25.08 25.08

Large increase in revenue and tax realization

The income tax calculated for the project is also incremental in nature when compared to the without project scenario hence, considered as an economic benefit. The likely increase in revenue collection has been captured in the projected cost benefit statement for EIRR.

27.3 QUANTIFICATION OF COSTS

Economic Cost of Project

Items Sr. No Particulars

Amount

(Mn Rs)

Amount

(Mn $)

A 1 Land 25.90 0.55

2 Land & Site Development 16.00 0.34

3 Buildings 122.61 2.60

4 Plant Machinery & Equipments 96.25 2.04

5 Utilities & other Assets 8.15 0.17

Sub Total (A) 268.91 5.71

B Project Implementation Cost @10% of ADB Funds 13.58 0.29

C Pre‐op expenses 12.15 0.26

D Contingencies 20.78 0.44

E Capacity Building 32.21 0.68

Total Project Cost (A+B+C+D+E) 347.63 7.38

All the capital expenses such as land &site development, buildings, plant machinery & equipments, utilities & other assets are incremental in nature and thus considered as various components of economic cost of the project. The opportunity cost of land is assumed to be paid upfront and is therefore treated as capital cost.

The project implementation cost (technical assistance etc.) is assumed as 10% of funds contributed by ADB. The pre-op expenses and contingencies related to project implementation are also taken as economic cost of the project. Further, the cost related to environmental impact has also been treated as one time expenditure in terms of equipments and facilities provided under the project. The environmental assessment for the project has not indicated any long term impact which would have significant cost implications. Finally, the social cost also would be mainly towards capacity building efforts and does not envisage any other cost like resettlement etc.

Based on the above assumptions the estimated economic cost of the project is Rs 347.63 million or 7.38 million $. The exchange rate of 47.114998 Rs per Dollar is considered for calculation of cost of project in Dollar value.

Recurring Costs

Opportunity cost of labour

Location No. of workers Day/Annum Annual amount (Rs Mn)

Warud 94 100 1.18


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Anjangaon 280 100 3.50

Akola 40 100 0.50

Sangrampur 196 100 2.45

Jalna 84 100 1.05

Paithan 135 100 1.69

Total 829 10.36

As mentioned earlier the estimates are based on NREGS. According to the scheme the government will provide minimum 100 days of employment to rural families with daily wage of Rs 125 per worker.

Opportunity cost of capital

Opportunity cost of capital contributed as project grant is assumed at 10% per annum. The assumption is based on the fact that the money invested as grant can be invested elsewhere and a minimum return of 10% per annum has been assumed conservatively.

Opportunity cost of other factors

Opportunity cost of other factors such as power, water, fuel etc. is not incremental in nature as these factors are available already and will be used from existing sources.

27.4 COST‐BENEFIT STATEMENT

Year 0 1 2 3 4 8 12 16 20

Capacity Utilization Imp Period 40% 60% 80% 80% 80% 80% 80% 80%

A. Economic Benefits

Quality Improvement 143.05 214.57 286.10 286.10 286.10 286.10 286.10 286.10

Wastage Loss 121.74 182.61 243.48 243.48 243.48 243.48 243.48 243.48

Incremental Labour 10.03 15.05 20.07 20.07 20.07 20.07 20.07 20.07

Incremental Income Tax 0.00 0.00 10.56 12.29 16.35 18.38 19.38 19.83

Total Economic Benefits 274.83 412.24 560.21 561.94 566.00 568.03 569.03 569.48

B. Economic Costs

Opportunity cost of labour 4.15 6.22 8.29 8.29 8.29 8.29 8.29 8.29

Opportunity cost of Capital 19.40 19.40 19.40 19.40 19.40 19.40 19.40 19.40

Total Economic Cost 23.54 25.61 27.69 27.69 27.69 27.69 27.69 27.69

Net Economic Benefits (A‐B) 251.28 386.63 532.53 534.25 538.32 540.34 541.34 541.80

The table above shows the annual cost and benefits arising from the project.

27.5 CALCULATION OF ECONOMIC IRR (EIRR)

Economic IRR (EIRR)

Year Imp Period 1 2 3 4 8 12 16 20

Economic Investment 347.63

Net Economic Benefits 0.00 251.28

386.63

532.53

534.25

538.32

540.34

541.34

541.80

Net Economic Cash ‐347.63 251.2 386.6 532.5 534.2 538.3 540.3 541.3 541.8


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Flow 8 3 3 5 2 4 4 0

Economic IRR (EIRR) 102%

The economic IRR for the project is estimated to be 102% which appears to be high. This high level of IRR is due to the high investment in productive assets and most of the facilities proposed will directly be used for value addition.

27.6 ECONOMIC APPRAISAL RESULTS

27.6.1 Major Economic Indicators:

The major economic indicators considered to assess the economic viability of the project are given in the table below:

NPV (Rs Million) 2,989.46

NPV (Million $) 63.45

Benefit‐Cost Ratio 19.89

NPVI 8.60

NPV:

The positive NPV for the project indicates the viability of the project. The NPV is calculated considering the economic life/ concession period of project as 20 years. The discounting rate for calculation of NPV is the Weighted Average Cost of Capital (WACC). The WACC is calculated by assuming the capital cost of 16% for the private investor and 10% for project grant. The calculation of WACC is shown in the below table:

Details Share Cost of Capital

Project Grant 70.00% 10%

Equity‐Private Investor 30.00% 16%

WACC 11.80%

Benefit‐Cost Ratio (BCR):

The average BCR over the project life is estimated to be 19.89. The ratio indicates that for every one $ of expense it will generate about twenty times of expense over the life of project. Hence, the project is highly economic viable.

Net Present Value per $ of Investment (NPVI):

The NPVI of more than zero is always considered as a good indicator of the economic viability of the project. The estimated NPVI for Aurangabad-Amravati IVC is 8.60 which is quite high.


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MAHARASHTRA: INTEGRATED VALUE CHAINS

Nashik Integrated Value Chain

and

Aurangabad‐Amravati Integrated Value Chain

Conceptual plans of facilities

Stakeholder consultation

Market Assessment

Impact Assessment

Capacity building support

Policy and regulatory aspects

Implementation framework Project Implementation Structure


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28 CONCEPTUAL PLANS FOR FACILITIES

In Maharashtra the sites for the proposed facilities have not been identified. The planning for the proposed facilities has been carried out conceptually for different locations of the IVCs based on the sizes and numbers of the proposed facilities as per the requirements envisaged as well as essential support infrastructure such as business centre, canteen and parking etc. A Greenfield development approach has been considered and the Master Plans have been evolved accordingly. Conceptual Master Plans for 4 representative locations viz. Nashik Road, Anjangaon, Paithan and Vivra (two from each IVC) have been prepared. Nashik Road has been identified as the Hub location for Nashik IVC and the facilities include cold chain infrastructure such as grape pack house and cold store and ambient facilities such as dry warehouse, onion store. Banana ripening facility is also envisaged in the hub. Hence, the location gives a representation of most of the envisaged facilities/infrastructure in the IVC. The Master Plan of the Vivra has also been prepared which is also in the same IVC. Vivra spoke is expected to focus mainly on banana crop and hence the facilities are mostly focused towards handling of banana such as packhouse and ripening facility. This represents a spoke which mostly focuses on one fruit crop. Paithan which is in Aurangabad-Amravati IVC is another spoke which is expected to cater to multi crops such as mango and sweet lime. Both cold and ambient facilities are envisaged for the spoke and hence may be taken as a representative spoke. Master Plan of Anjangaon has also been prepared. Anjangaon would handle products such as orange and banana having facilities catering to both the products. The four locations, which have been selected for the Master Plan preparation, hence cover a wide range of crops and corresponding facilities which are fairly representative for both the IVCs.

Adequate provision of basic infrastructure such as access roads, water supply facilities for domestic industrial and fire fighting, effluents carriage and treatment, solid waste management, internal electrical distribution and communication lines has been kept in mind at the proposed facilities. Concepts of proper green areas for aesthetics and a pleasant ambience have been used besides adequate and efficient vehicular traffic access and parking to create a modern facility in an eco-friendly manner. .

Broad planning concepts for the master planning and the design of the main components, are as follows:

28.1 PLANNING CONCEPT

The concept of the proposed Facilities is derived based on the requirements of the functions with self contained facilities. The proposed facilities shall be environment friendly facility comprising of physical and common infrastructure components interwoven with green spaces.

The concept is guided by the applicable development guidelines of the Site Planning, Spatial Planning norms and principals and prudent practices. The design philosophy revolves around prioritizing various aspects viz., circulation, land suitability, environmental sustainability.


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The master plan is based on modern planning concepts of providing good and efficient internal movement, efficient layout of services with supporting infrastructure and facilities in an aesthetic environment.

Considering the Greenfield approach has been considered to provide fresh, modern, eco-friendly places of conducting business replete with all necessary infrastructure facilities that provide a sanitized and pleasant ambience.

28.1.1 Master Plan

The guiding principle of the master plans is to incorporate the principles of an eco-industrial facility by maximizing green space and open spaces, and provision of green belts. The design envisages functional and accessible work places by incorporating prudent and scientific planning principles and includes the following:

1. Provision of Basic Infrastructure to the proposed facility adequate for the proposed usage with anticipated vehicular traffic and other service requirements

2. Location of process and non-process activities

3. Location of process activities with requirement of mechanical services

4. Providing efficient access to the main road from all buildings

5. A central common facility center interwoven with green spaces

6. Provision of services area with ease of connecting with main service lines.

28.1.2 Buildings

1. Shed building are planned with dimensions optimized for economic structure.

2. Building are placed at the longer axis to provide long loading / unloading dock

3. All building are provided with proper parking and circulation area for heavy vehicles

4. Building which require mechanical services cold storage are clustered together

5. The structural design shall cater to the usage for the proposed life with wind and earthquake resistance

28.1.3 Services

1. Adequate space has been provided to cater to the proposed usage of the facilities such as water supply, sewerage/effluent carriage and treatment, power and telecom distribution

2. Water supply and Electrical Room are provided near the main road to provide easy access to operation and maintenance also provides provision connect with main external infrastructure

3. Sewerage, Storm water drainage are planned considering the outlet towards the entrance to facilitate easy connection with external storm water drainage system.

28.1.4 Road & Parking

1. The proposed internal roads are of sufficient width and adequate parking as per requirements along with pedestrian paved path

2. The proper signage system is adopted to make sure the smooth traffic movement


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inside the market complex

3. The main access to the facility center is taken from at least 15mt wide road.

4. The proposed access to the facility shall connect with the existing access roads with a well-defined access to the development

5. No road shall be less than 6 meters in width of paved top

6. The secondary roads within the markets, where the movement of HMV is not required and the transportation can be done by LMV only, the proposed road widths are 4.5 M.

7. The pedestrian walkway 2.0 m wide is also provided from Main entrance to different blocks of markets.

8. Adequate parking spaces are provided for weigh-bridge, covered Platform, shops, Godown etc.

9. A centralized parking is proposed along with driver’s rest room, toilets and canteen

10. Every Building is proposed with an apron of paved area where the vehicle can park away from main road and loading/unloading can be done

11. Signage systems are proposed to clearly indicate Vehicular and pedestrian movement along with buildings, parking space and other utilities

28.1.5 Green Area

1. The green areas planned as centralized open space to provide access from all around which provide visual relief.

2. The extent of open space shall not be less than 10 percent of the total area of the facility

3. Conceptual Master Plans along with sectional drawings for 2 market complexes, one in each zone, have been provided based on the facilities proposed as per the specific requirements.

28.2 LINK INFRASTRUCTURE

The proposals for the various locations have been framed considering the requirements of the specific location. The basic support infrastructure like roads, power, telecom, water supply, sewerage system, storm water drainage, solid waste management has been provisioned considering the planning norms and the specific business requirements. But the proposed market complexes with modern infrastructure facilities cannot function in isolation. Efforts have been made and possibility has been explored to propose self contained facilities where possible such as solid waste management and water supply and waste water disposal. With regards to the large quantum of agricultural waste expected to be generated composting centers have been proposed which may function even without the corresponding external solid waste collection and disposal arrangements. Irrespective of the standalone facilities planned the internal infrastructure has to be matched with adequate infrastructure outside the proposed complexes and linked by suitable means for smooth functioning as planned.

28.2.1 Approach and Accessibility


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1. Approach and accessibility play a vital role in proper functioning of the proposed complexes.

2. There are expected a significant number of HMV and LMV traffic coming and going out to the markets along with pedestrian movement.

3. The approach roads to the market complexes are required be of sufficient width along with proper signage.

4. The main approach road should be of minimum 9m Width with proper turning radius to the Complex along with some buffer space between main road and Entrance Gate so that if required one or two HMV could wait for some time.

5. The external approach roads has been considered to be wide enough. A ‘slip road’ has to be proposed so that entry/exit to and from the markets do not lead to congestion of general traffic, as would be the case in the present condition.

6. Proper Signages are proposed and recommended regarding the Entry/Exits of Markets along with the approach lane to follow.

28.2.2 Linkages for Power, Water, Storm Water etc.

A detailed study of the available infrastructure outside the proposed marketing complexes has not been undertaken in the scope of work of the present study. However, generally there is a need to augment the external infrastructure in all fields such as roads, water and waste water, storm water drainage, power and telecom etc. The basic infrastructure facilities are generally lacking even in bigger cities. For smaller locations it becomes all the more important that suitable basic infrastructure be provided which can integrate in itself the internal provisions at the proposed locations. For e.g. the storm water drain outside of the proposed location shall be adequate to take in the expected storm water flow from the market without causing water logging or flooding.

28.2.3 Design Considerations

The proposals have been drafted considering the prudent engineering practices in provision of the various infrastructure as well building facilities. The proposals for 4 locations in Maharashtra have been formed in detail considering the requirements and provisioning of the required facilities. The master plans have been drawn and the cost estimates have been prepared accordingly. The cost estimates of the remaining facilities in Maharashtra have been prepared according to the requirements and prevalent costing norms as done for similar proposals.

The major technical considerations are as follows:

Electricals

Electrical services are one of the most important services of any complex. Various Electrical facilities for the building have been envisaged considering the usage of area, patterns of electrical load and relevant Indian Standards / Codes.

Power supply for the complex shall be catered at 11 KV from the State Electricity Board and stepped down to 415 V using distribution transformers for further distribution. This report gives the brief design criterion proposed to be adopted on the various facilities of the


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Electrical System. The design shall be based on Indian Standards, IE rules, NBC and NEC, CPWD Specifications and all the statutory requirements shall be complied with.

Power Supply And Sub‐Station :

D.G. SETS:

1. Considering the chronic power shortage in the country it is essential to have alternative power source to meet electrical requirements under power failure / break down conditions. DG Sets of adequate capacity shall be provided to meet all the requirements of the building in non-availability of power grid

2. Considering 80% loading on DG Sets, 90% load of Cold storage various sizes of DG Sets with AMF facilities are proposed as an emergency power supply for the complex.

3. The Transformers and DG Sets shall be connected in parallel so that operational flexibility shall be available in case of break down in Transformer or DG Sets.

L.T. Panels:

The LT Panels shall be provided with sufficient number of ACBs/ MCCBs, through which required number of feeders shall be catered for various purposes. The panel shall be in compartmentalized design and it shall be totally enclosed floor standing and cubical type, accessible from front preferably with cable entry from top/as per site condition. The bus bar of the panel shall be made of High Electrolytic Conductivity Aluminum strips. The transformer and the panel shall be connected through adequate sized 415 V, 3 phase, 4 wire cables.

Power Correction System:

1. As per the condition of supply of Electricity Board, consumers are advised to improve and maintain the power factor of their installation 0.9 or above because of various advantages. Improvement in the power factor would affect savings in the energy bill. Also the life of individual apparatus can be increased considerably by high power factor. For the improvement of power factor, suitable size of capacitor panel banks shall be provided. The Capacitor Banks shall be a part of LT Panel.

2. Automatic power factor correction relay of reputed make shall be provided to sense the power factor of the system and switch on the capacitors depending on the system requirements. The power factor shall be maintained around 0.95 to 0.98 through this system.

Lighting:

1. Lighting shall be designed according to the required illumination levels as per Indian Standard / NBC Code. Generally, energy efficient CFL light fixtures matching with the internal layout have been proposed for the each building. Special emphasis shall be given on low energy consumption light fittings especially in the Corridors and in Walk-ways where suitable make light fitting with compact fluorescent 26/18/14W lamps are proposed to be provided. Light fixtures shall be used with electronic ballast for energy savings.

2. Similarly, energy efficient CFL Lamps fitting shall be provided for External Lighting. All the light fittings shall be provided with energy saving devices. The final selection


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of the light fittings shall be made in consultation with Architect / Client/ Consultant.

3. The number of light points and socket shall be based on the accepted norms usually followed for this type of Building. The Illumination levels or Lux levels of different areas have been based on the NBC Code and are as follows:

S.No. Description Lux Level

1. Common Areas 250 – 350 lux

2. Office Areas 350 – 400 lux

3. Pump Rooms / Sub Station 200 lux

4. Parking Areas 70 – 100 lux

5. Lobbies / Corridors 200 lux

6. Staircase Landings 200 lux

7. Cold Storage 350 – 400 lux

8. Covered platform in Mandi Area 200 lux

Cabling:

All MV Power Cables provided for power distribution shall be armoured PVC sheathed and XLPE insulated Aluminium Conductor, 1.1 KV grade, conforming to IS:1554. Appropriate Screened Copper cables / wires shall be used for all special purposed and Communication Systems.

Earthing System:

Considering the hazardous nature of electrical energy, safety measures in using this energy is of paramount importance. Earthing System is one of such safety systems. It is proposed to provide effective Earthing System conforming to IS : 3043 – 1987. All non current carrying metal parts forming the Electrical System shall be connected to the Earthing System as per the requirements of Indian Electricity Rules and local Statutory requirements. The Earthing System shall be so designed that the resistance of the Earthing Network shall be less than 1.0 ohm at any point of the system.

The Earthing System is proposed as follows:

Sub - Station Equipments:

a. Transformer Neutral Earthing Copper (600x 600 x 3.15mm) Plate Earthing

b. Transformer Body Earthing G.I. (600 x 600 x 6mm) Plate Earthing

c. H.T. Switch-Gear Earthing Copper (600 x 600 x 3.15mm) Plate Earthing

d. D. G. Set Neutral Earthing Copper (600 x 600 x 3.15mm) Plate Earthing

e, D.G. Set Body Earthing G.I. (600 x 600 x 6mm) Plate Earthing

Panel Earthing:

a. L.T. Panels Earthing G.I. Plate Earthing

b. Distribution Boards Earthing PVC Insulated Copper wire with sub mains.

c. Equipment Earthing G.I. Plate Earthing

d. Lighting / Power Point Circuits 1.5/2/4.0/6.0 Sq mm PVC insulated Single Core Green Wire

e. Laboratory Equipment/UPS/ Copper Plate Earthing


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f Server/EPABX Earthing

28.2.4 Sanitary Installation, Water Supply and Fire Fighting Systems

The objective of the design is to achieve the most efficient and high quality system to meet the required standards. It is therefore essential to spell out and understand the basic objectives of design of all the services. This would assist in the detailed engineering and preparation of final working drawings for execution.

The sanitary engineering services covered in this project for which detailed engineering handled are :

Plumbing

Sanitary fixtures, chromium plated fixtures and accessories.

Soil, waste and vent pipe systems.

Cold water supply.

Rainwater pipes and disposal ,Rain water harvesting.

External sewerage disposal including connection up to existing manhole.

Municipal water connection, storage tanks and overhead tanks.

Construction of tubewell, pumps and accessories.

Garden irrigation system.

Sewage treatment plant

Fire Protection System

1. External Fire hydrant system.

2. Under ground and overhead fire reserves.

3. Fire pumps and ancillaries.

In the planning of all the above services following objectives have been kept in view.

1. Effective and efficient disposal of all wastes from the building quickly.

2. Prevention of back flow of waste waters from external sewer or other sources and minimizing the possibility of encroachment of rats, insects from main sewers or manholes by adequate trapping of all fixtures.

3. Easy access to all services for proper maintenance with adequate number of cleanouts, door bends and access points.

4. Protection of pipe lines from corrosion and accidental damage.

5. Prevention of pollution of surrounding environment.

6. Supply of water in adequate quantity and pressures in all areas on 24 hour basis.

7. Selection of materials and equipment of best indigenous makes requiring minimum maintenance and repairs.

8. Piping system to be so designed as to prevent, as far as possible and practical, any obstruction to normal movement of men and materials and be generally aesthetically pleasing.


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9. Statutory requirements of all the services

10. All sanitary services shall be designed as per Indian Standard code of practice relevant to the service and the services are modified to suit local conditions, architectural and structural considerations of this particular project.

Soil, Waste And Vent Pipe Systems

The system shall be designed on “TWO PIPE SYSTEM” as recommended in code of practice for soil and waste pipes above ground (IS: 5329 -1969).

External Sewerage

Sewerage from the building will be collected by means of underground sewerage system and connected to the Sewage Treatment plant. Manholes would be provided at all junctions and turning points and generally not exceeding 30 mt. in distance.

Material

a. All soil, waste and vent pipes shall be CI spun Iron pipes with drip seal/lead joints.

b. The waste pipes used for wash basins and sinks shall be GI /uPVC of designated class.

c. Pipes used for external sewerage system shall be CILA pipe due to uneven and rocky soil.

Disposal

All the rain water from the building roof and area around the building shall be connected separately taken up to open surface drain with grating and gully grating chambers and covered peripheral drains. These drains shall be further connected to rain water re-charge pits and the overflow shall be connected to the municipal storm water disposal system/Nallah.

Material

1. Pipes used for rain water inside the building shall be uPVC 6kg/cm2 pipes with drip seal joints.

2. Pipes used for storm water drainage shall be RCC.

Water Supply System

a. Owing to shortage of Municipal water supply, it would be necessary to augment the same by providing tubewells within the site.

b. Untreated tubewell water shall be utilized for garden supply.

c. The estimated total population, requirement of water supply and the proposed storage capacity for the project is given in separate Annexures.

Potable Water (Non‐Flushing):

a. The water supply from City Water Supply (Municipal Main), Borewells & Truck fill point shall be brought to underground fire storage tank and overflow from fire storage tank shall be taken to raw water storage tank in order to


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replenish the fire storage water.

b. The water from Raw Water Storage Tank shall be pumped through dual media pressure sand filter, activated carbon filter Softener Cum brine tank & taken into underground Treated water storage tank (Soft).

Flushing Water System (Recycled from STP):

Recycled water from Flushing cum Irrigation Water Storage Tank located at Sewage Treatment Plant (STP) shall be pumped through battery of two pumps (One working & one Standby) to over head Flushing Water Storage Tank.

Distribution System

Water from the tubewell and Municipal supply are connected to a fire reserve. The overflow is collected in to raw water tank. Water from this raw water will then be passed through filter and polishing softener as required and stored in domestic treated water tank. The entire site is divided into two wings for easy running and maintenance.

Irrigation System

The premises comprises of irrigable area such as planter, lawns etc, hydrant system is proposed as per Landscape/ plantation design.

Source of Water: The irrigation water shall be made available from treated effluent of sewage treatment plant (STP).

Sewerage:

Drainage system for soil & waste is based on the most efficient, functional design, minimum maintenance after installation and available side topography to minimize the excavation work in laying the pipes; two pipe system (soil and waste) is proposed to carry soil and waste separately from the building under gravity.

Waste pipes are connected to manhole through gully trap and soil pipes are to be directly connected to the manhole.

The main drainage is carried through a battery of manholes and finally discharged into Sewage Treatment Plant (STP).

Sewage Treatment Plant:

Sewage Treatment Plant of capacity shall be provided in the final requirement of 80% domestic water. The Waste Water Treatment System will be treated using an extended aeration activated sludge type system consisting of following system:-

Component – I [Pre Treatment]:

Screen Chambers

Collection cum Equalization Tank

Solids handling sewage transfer pumps.

Bypass pump from equalization tank to municipal sewe

Component – II [Secondary / Biological Treatment] :

Aeration Tank


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Clarifier Tank (Secondary settling tank)

Chlorine Contact Tank\

Chlorine Dosing System

Aerobic Sludge Digester cum Thickener Tank

Sludge Disposal Pump

Sludge Recirculation Pump

Component – III [Tertiary Treatment] :

Filter Feed/Backwash Pumps

Pressure Sand Filter

Activated Carbon Filter

Softener cum brine tank

Soft Water Storage Tank

Soft Water Transfer Pumps

Irrigation cum Flushing Tank

Irrigation Water Transfer pump

Flushing Water Transfer Pump.

Storm Water Drainage System :

Storm water drainage systems will be designed based on a rainfall intensity of 70 mm per hour. Rainwater harvesting pit of size 3m dia x 3.5m effective depth shall be provided. Storm water drainage system will be provided for the building roof drainage and the site drainage. The Storm water will be collected by gravity through catch basin, storm water manhole and RCC pipe and finally discharge to the Rainwater Harvesting Pit. Overflow of rainwater harvesting pit shall be discharged to city storm water drain/storm water sump.

28.2.5 Fire Protection Measures

1 Type Of Risk

1.1. Since the project is mainly used as Mandi, the type of risk can be categorized as under NBC / TAC.

2. Proposals

2.1 It is proposed to have a total protection system best suited for this Project and also as per the directives of NBC/ TAC Fire Service. These shall include the following.

a. External Fire Hydrant system

b. Automatic pumping set for the systems.

c. 2,00,000 ltrs underground fire reserve in one compartment accessible for hydrant systems.

d. Fire fighting hand appliances of various categories to be located throughout the Campus.

3. Fire Reserve


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3.1 It is proposed to have an underground storage tank of 2,00,000 ltrs, in one compartment exclusively for firefighting purposes. The tank is located in such a way that it is readily accessible to fire appliances. Necessary manholes shall be provided in this tank to enable the fire brigade to draw water from the tank in case of necessity. A three way fire service inlet shall be provided for the underground storage tank.

4. Source Of Water Supply

a. For underground tank: From Municipal mains with additional supply from tubewells at site.

5. External Hydrant System

5.1 It is proposed to have External hydrant system throughout the Campus. Yard fire hydrant shall be provided on the main fire line The minimum outlet pressure at the top most hydrant would be 6.5 kg/sqcm.

5.2 The system would be permanently connected to the fire pump outlets by a common header of 200 mm dia.

5.3 External hydrants connected to the fire line have been proposed in the proposed complex.

28.3 COST ESTIMATES FOR IVCS IN MAHARASHTRA

28.3.1 NASIK IVC:

Land Development:

Cost of land development includes boundary wall, internal roads, drainage system, parking facilities etc. The cost of development is taken as Rs 2.5 mn/Ha. It is based on the prevailing market norms and rates.

Buildings:

The cost of proposed buildings of all spokes in Nasik IVC is given below:

In Rupees Mn.

Facility Nasik Road

Pimpalgaon

Malegaon

Sangamner

Srirampur

Chinaval

Vivra

Kajgaon

Danora IVC

IVC (Mn $)

Warehouse 29.90 ‐ 5.98 ‐ ‐ ‐ ‐ ‐ ‐ 35.88 0.76

Cold Store‐5000 MT 21.60 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 21.60 0.46

Grape Packhouse‐Cold Chain 19.20 19.20 19.20 ‐ ‐ ‐ ‐ ‐ ‐ 57.60 1.22

Banana Packhouse ‐ ‐ ‐ ‐ ‐ 8.10

8.10 8.10 8.10 32.40 0.69

Ripening Chamber 2.76 ‐ ‐ ‐ ‐ 2.76 2.76 2.76 2.76 13.80 0.29

Packshed‐Ambient 3.00 3.00 ‐ 3.00 3.00 ‐ ‐ ‐ ‐ 12.00 0.25

Onion Store 14.04 3.51 ‐ 3.51 3.51 ‐ ‐ ‐ ‐ 24.57 0.52

Knowledge centre 3.60 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 3.60 0.08

Business 2.70 2.70 2.70 2.70 2.70 2.70 2.70 2.70 2.70 24.30 0.52


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centre

Guest house 2.70 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 2.70 0.06

Misc. 4.40 2.00 2.00 2.00 2.00 2.00

2.00 2.00 2.00 20.40 0.43

Total Buildings

103.90 30.41 29.88 11.21 11.21 15.56 15.56

15.56

15.56 248.85 5.28

The above costs have been calculated based on the conceptual master plan and drawings prepared by industrial infrastructure and cold chain experts. The total construction areas required for various facilities in each spoke of the IVC and rates of construction are given below:

Facility Nasik Road

Pimpalgaon

Malegaon

Sangamner

Srirampur

Chinaval

Vivra

Kajgaon

Danora

Rate/Unit

in Sq. m. Rs

Warehouse 4,600 ‐ 920 ‐ ‐ ‐ ‐ ‐ ‐ 6,500

Cold Store‐5000 MT 2,700 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 8,000

Grape Packhouse‐Cold Chain 2,400 2,400 2,400 ‐ ‐ ‐ ‐ ‐ ‐ 8,000

Banana Packhouse

‐ ‐ ‐ ‐ ‐

1,350

1,350 1,350

1,350 6,000

Ripening Chamber 540 ‐ ‐ ‐ ‐ 540

540 540 540 LS

Packshed‐Ambient 500 500 ‐ 500 500 ‐ ‐ ‐ ‐ 6,000

Onion Store 2,160 540 ‐ 540 540 ‐ ‐ ‐ ‐ 6,500

Guest House 300 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 9,000

Knowledge centre 400 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 9,000

Business Centre 300 300 300 300 300 300

300 300 300 9,000

Misc 550 250 250 250 250 250

250 250 250 8,000

Total Buildings 14,450 3,990

3,870 1,590 1,590

2,440

2,440

2,440

2,440


The requirements of power and water have been estimated based on industry norms. The estimates have been prepared based on market rates and similar projects costing norms. The breakup of the estimated cost of the miscellaneous fixed assets and utilities at each spoke is provided below:

Amounts in Rs millions

Facility Nasik Road

Pimpal gaon

Male gaon

Sangamner

Sriram pur

Chinaval Vivra

Kajgaon

Danora

IVC Mn. Rs

IVC Mn. $

Power supply system 25.00 2.00 2.00 0.50 0.50 1.20 1.20 1.20 1.20 34.80 0.74

Water supply system 2.00 0.50 0.50 0.20 0.20 0.50 0.50 0.50 0.50 5.40 0.11

IT system 0.30 0.20 0.20 0.05 0.05 0.20 0.20 0.20 0.20 1.60 0.03

Furniture 0.10 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.50 0.01

Total Misc Fixed Assets 27.40 2.75 2.75 0.80 0.80 1.95 1.95 1.95 1.95 42.30 0.90


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28.3.2 Amravati‐Aurangabad IVC

The engineering cost estimates of Amravati-Aurangabad IVC, based on the specifications given earlier, are given below:

Land Development:

Cost of land development includes boundary wall, internal roads, drainage system, parking facilities etc. The cost of development is taken as Rs 2.5 mn/Ha. It is based on the prevailing market norms and rates.

Buildings:

The cost of proposed buildings of all spokes in Amravati-Aurangabadad IVC is given as below:

In Rupees Mn.

Facility Paithan Warud Anjangaon Akola Sangrampur Jalna IVC IVC(Mn $)

Orange Packhouse ‐ 10.20 10.20 ‐ ‐ ‐ 20.40 0.43

Warehouse 5.98 5.98 5.98 14.95 5.98 ‐ 38.87 0.83

Banana Packhouse ‐ ‐ 8.10 ‐ 8.10 ‐ 16.20 0.34

Ripening Chamber ‐ ‐ 2.76 ‐ 2.76 ‐ 5.52 0.12

Mango Packhouse‐Cold Chain 5.60 ‐ ‐ ‐ ‐ ‐ 5.60 0.12

Mango Packhouse‐Ambient 3.60 ‐ ‐ ‐ ‐ ‐ 3.60 0.08

Packsheds‐Ambient 3.00 ‐ ‐ 4.50 ‐ 3.00 10.50 0.22

Business Centre 2.70 2.70 2.70 2.70 2.70 2.70 16.20 0.34

Miscs 0.80 0.80 1.68 0.80 1.00 0.64 5.72 0.12

Total Buildings 21.68 19.68 31.42 22.95 20.54 6.34 122.61 2.60

The above costs have been calculated based on the conceptual master plan and drawings prepared by industrial infrastructure and cold chain experts. The total construction areas required for various facilities in each spoke of the IVC and rates of construction are given below:

Facility Paithan Warud Anjangaon Akola Sangrampur Jalna Rate/ Sqm

in Sq. m. Rs

Orange Packhouse ‐ 1,700 1,700 ‐ ‐ ‐ 6,000

Warehouse 920 920 920 2,300 920 ‐ 6,500

Banana Packhouse ‐ ‐ 1,350 ‐ 1,350 ‐ 6,000

Ripening Chamber ‐ ‐ 540 ‐ 540 ‐ LS

Mango Packhouse‐Cold Chain 700 ‐ ‐ ‐ ‐ ‐ 8,000

Mango Packhouse‐Ambient 600 ‐ ‐ ‐ ‐ ‐ 6,000

Packsheds‐Ambient 500 ‐ ‐ 750 ‐ 500 6,000

Business Centre 300 300 300 300 300 300 9,000

Miscs 100 100 210 100 125 80 8,000

Total Buildings 3,120 3,020 5,020 3,450 3,235 880


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The requirements of power and water have been estimated based on industry norms. The estimates have been prepared based on market rates and similar projects costing norms.

The breakup of the estimated cost of the miscellaneous fixed assets and utilities at each spoke is provided below:

Amounts in Rs million

Misc Fixed Assets Paithan Warud Anjangaon Akola Sangrampur Jalna IVC

Power supply system 1.20 0.50 1.50 0.50 1.20 0.20 5.10

Water supply system 0.50 0.15 0.50 0.15 0.50 0.10 1.90

IT system 0.20 0.10 0.20 0.10 0.20 0.05 0.85

Furniture 0.05 0.05 0.05 0.05 0.05 0.05 0.30

Total Misc Fixed Assets 1.95 0.80 2.25 0.80 1.95 0.40 8.15


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198


199


200


201


202


203


204


205


206


207


208


209


210


211


212


213


214


215


216


217


218


219


220


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29 STAKEHOLDER CONSULTATIONS

During the course of the preparation of the Detailed Project Reports, various stakeholder consultations were carried out in both the states of Maharashtra and Bihar. Consultations with various stakeholders were conducted mainly during the phases II (during detailed field surveys and analysis and consultations were held mainly with farmers, traders, cold store/warehouse/packhouse owners and other intermediaries in the value chains) and III (which mainly consisted of stakeholders’ consultations with food processors, organized retailers, exporters, and others) of the study.

During the field surveys, in-depth interviews and Focus Group Discussions (FGDs) with farmers, traders/wholesalers, cold store/warehouse/packhouse owners etc were held in most of the important locations of the value chains. The stakeholders were asked about the details of the value/supply chains of the identified crops in the regions, trade practices, constraints faced by them as crucial members of the chains, gaps and market dynamics. Through such meetings and discussions, validation of data was also done at all major locations along with identifications of major clusters in the regions.

In case of the consultations with food processing and agri-business industries, exporters, organized retail chains, potential investors, government representatives, etc, interviews, group meetings and brain storming sessions were held in Delhi, Mumbai, Patna and some other major cities in the states of Maharashtra and Bihar.

29.1 IVCS IN MAHARASHTRA

In case of Maharashtra, the focus of the project will be development of agricultural infrastructure with higher involvement of private sector. The IVCs in Maharashtra will be green-field projects with development of brand new infrastructure which would boost the agriculture sector growth in the state. The role of private players/investors will be very important and higher association of the private players is envisaged. Accordingly, due importance has been given to the private sector during the stakeholder consultations. The summary of the stakeholder consultations (per major stakeholder groups) in Maharashtra are given below:

29.1.1 Farmers

Several interviews and FGDs were conducted in the course of the field surveys in all the selected districts of Maharashtra. Issues related to farming and trading practices, availability of primary processing facilities and post harvest infrastructure, marketing and other aspects of the value chains were discussed in details. Here also, both orchard owners/cultivators and farm owners/cultivators have been covered during the consultations to get an understanding of the value chain dynamics of fruits, vegetables and grains in the indentified regions.

The Post Harvest Contractors (PHCs) were also consulted at different stages of the study with the objective of understanding their role in the value chain along with their modes of operations. Their relationship with the farmers and traders were also studied.


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The main concerned raised by the farmers and PHCs during those meetings and discussions are as follows:

Lack of irrigation and dependence on rains for cultivation

In case of perishables, high wastages/distress sale due to lack of post harvest infrastructure

Non-availability of quality tissue cultures leads to lower quality plant/produce

Lack of access to formal credit leads to dependency on traders/wholesalers/cold store owners which reduces the profit margin of the farmers in many cases due to high interest rates (many times which are hidden as lower than market rates offered to farmers, etc.)

Asymmetry in market intelligence about price and demand of produce in the markets which does not allow the farmers/PHCs to gain on temporal/locational arbitrage.

29.1.2 Traders/Wholesalers/Local processors/Cold Chain Owners

Several in-depth interviews and meetings with traders/local processors/cold chain and packhouse owners were in the course of the study. Various aspects of the project were discussed with them and their views and opinion were received. The discussions provided a good understanding of the market perspective of the identified focus crops and existing trade practices. The current status of food processing sector, cold infrastructure and warehouses in the identified districts was also discussed. The main feedbacks received are as follows:

Many of the traders/wholesalers/processors are willing to invest in post harvest infrastructure such as sorting, grading and storage, ripening facilities, pack houses, etc provided there are good subsidies/government support

Non-availability of labour is a constraint faced by local processors in many parts of the identified districts

Limited knowledge about modern cold technologies available

Limited access to finance

Lack of awareness about different government schemes, subsidies, etc.

29.1.3 Industry Players

Interviews and meetings with large food processors, organized retail chains, exporters, banks and agri-business houses were conducted for explaining the project and getting their feedback. Several pertaining issues were discussed such as issues related to utilization of existing facilities, experiences of conducting business in the sector, challenges faced and expectations from the project. The discussions helped in getting a detailed understanding of the potential investors and financers of the project. Also, detailed consultations were held with the potential private investors about their roles in the development in the project. The ownership, viability, operation and & management issues were discussed with them for considering in the project design and implementation framework. Some of the major issues which came up during the discussions are as follows:


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Requirement of a single window approval system for the entire state for procurement and storage

Allowing dovetailing of different appropriate schemes (both central and state schemes) in a project

Lack of awareness about available government assistance and incentives

Long gestation periods of projects in agri-sector

Upper cap on subsidies acts as a disincentive to the promoters for making large investments

Capacity building at the grass root level is required to reduce losses and for production of higher quality produces which would adhere by the specifications given by the procuring companies

Requirement of portable packhouses at the farm/collection centre level which would facilitate quick evacuation of the produces. The locations of the spokes should also be close to the farms. Some Major Stakeholder Consultations in Maharashtra:

29.2 STAKEHOLDERS’ MEETING AT MUMBAI

A stakeholder consultation was conducted at Mumbai Cricket Club and Recreation Centre, BKC on 5th December, 2009. The participants of the meet included the following:

Representatives of the Department of Marketing and Cooperation, Government of Maharashtra

Representatives of Maharashtra State Agricultural Marketing Board

Food Processors Agri-business Companies

Organized Retail Chains

Infrastructure Developers and Supply Chain Companies

IL&FS Clusters representatives

The discussion focused on policy related and other issues faced by the stakeholders and potential investors. Feedbacks from the stakeholders about the proposed interventions were also received during the meeting.

29.2.1 Suggestions from Stakeholders on Policy Issues:

1. Single unified license should be issued to corporate to operate in agri trade

2. Private markets should be allowed to set up collection centres

3. Private markets should be given parity with APMCs in terms of notified area etc.

4. Power cost for agro/food processing should be charged at agricultural rates and not at industrial rates, as it comprises of a huge portion of operational cost

5. Limits on storage quantity of agri produce should be waived

6. Single window approval for the entire state should be given for procurement and storage, which at present has to be taken at every Taluka level

7. Waiver of market fee on direct procurement from farmers


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8. Subsidies should not be essentially credit linked

9. Information products should also be subsidized so that more information could be made available to farmers

10. An investor should be allowed to dovetailing of the schemes in one project and should be made eligible to get both central as well as state assistance

11. Upper cap on subsidies discourages investors for making large investments and hence should be removed

12. Information on available government assistance and incentives should be widely publicized

13. Investments in agri sector has relatively long gestation period and hence tax subsidies/holidays etc. are required

29.2.2 Suggestions on Proposed Interventions:

1. Credit should be made more easily accessible to the farmers so that they do not have to take credit from the traders, who in turn try to control the price of produce.

2. More on-farm facilities and farmer’s own retail centres should be promoted

3. Portable pack houses should be set up at farm level and produce packed at farm should come to spokes for storage or dispatch to consumption markets

4. Location of spokes should be at a minimum possible distance from the production areas to reduce losses

5. More investment should go into procurement infrastructure, which should be small scale and more in numbers

6. Education and awareness on pre-harvest activities is equally important particularly in crops like banana, as it determines the quality of the produce

7. Farmers should be trained in better pre-harvest and post harvest practices to cultivate good quality produce

8. More emphasis should be given on capacity building at grass root level

9. Developing long term relationship between farmer and the corporate is very important

10. An assessment of losses should be done at different levels in value chain and identification of areas of maximum loss as potential area for development

11. Spokes should be set up in partnership between farmers groups and corporate

12. Corporate should work on profit sharing model with farmers

13. Stakeholders, particularly farmers should be made aware and sensitized about the benefits of proposed interventions

29.3 STAKEHOLDER’S MEETING AT RAHEJA CENTRE POINT, MUMBAI

A stakeholder consultation was conducted at Raheja Centre Point, Mumbai on 19th January, 2010. The participants of the meet included the following:

Organized Retail Chains


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Food Processors

Financial Institution

Representatives of Asian Development Bank (ADB)

IL&FS Clusters representatives

The project was discussed and feedback of the stakeholders about the project and the sector in general were received; key issues are mentioned below:

1. Some unorganized retail chains have reduced their packhouses because of less demand of value added agri products (although demand for such products is increasing).

2. Large organized retailers are not willing invest in infrastructure at farm level/collection centres or even at spoke level. Instead they would prefer to have those facilities operated for them by private operators initially. They may make investments and take up operations in these kinds of facilities in future.

3. Large food processors are of the opinion that more incentives from the government is required for the sector. They also had a similar view as organized retailers about investment and operations of farm level/spoke level infrastructure.

4. The financial institutions stated that programs such AIDP give them a higher comfort level for lending to the projects.

5. Bigger players who own most of the facilities in the IVCs are preferable to FIs for lending instead of many small players owning individual facilities.

6. First Loss Default Guarantee (FLDG) offered to the banks would increase their comfort level for lending in the discussed projects

29.4 LIST OF POTENTIAL INVESTORS

In AIDP model the potential investors may be the organized retail chain companies, 3PL companies and large food processors.. The lists of potential investors for Maharashtra are given below:

The potential investors who have been contacted/ consulted during the AIDP study are given below:

Mr. Dnyandeo G Mahajan, President,

Maha Banana Mr. T T Pathrikar Secretary

Mango Growers Association, Aurangabad Mr. V Kiran Kumar, CEO

HALCON, Nashik Dr. J S Yadav, COO

Premium Farm Fresh Produce Ltd. Mr. Santosh Dadheech, Sr. Vice President

NBHC Ltd. Mr. Ajay Kumar Prusty, Director

Frutech Agro Industries Pvt. Ltd. Mr. Madhukar B Chobe, Director


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Akruti City Ltd. Mr. Vinit Kumar, Chairman and Mr. Shyam Mahale

Temptation Foods Ltd. Mr. Arvind Jhamb, CEO

Ruchi Infrastructure Ltd. Mr. Rajnikant Rai, Executive Vice President (Operations)

ITC Ltd. (Agri Business Division) Mr. Deepak Mundra, Vice President Finance

Jain Irrigation Systems Ltd. Managing Director,

Godrej Agrovet Mr. Ashok Motiani, Managing Director

Freshtrop Fruits Ltd. Mr. Rajeev Bhanawat, Asst. Vice President

Aditya Birla Retail Limited Mr. Prem Saboo, CFO

Reuter's Market Light Mr. Pravin,

Utsav Banana Mr. A. Srinivasa Ramanujam, AVP - Operations Adani Agrifresh Ltd. Chairman,

Pomegranate growers association (Nashik division) MALTA Grape Growers Association

Other Contacts

Apart from the above list, the organizations with whom IL&FS Clusters have been in touch for other projects such as Modern Terminal Market, Mega Food Park, etc and who may also considered as potential investors for the AIDP projects in both the states are:

Mr. A. Srinivasa Ramanujam, AVP - Operations

Adani Agrifresh Ltd. Mr. B.B. Pattanaik, Chairman & Managing Director

Central Warehousing Corporation Mr. M C Goyal, Chief Executive Officer

Deepak Fertilisers & Petrochemicals Corp. Ltd. Mr. Kishore Biyani, Chairman

Future Group Mr. Mayank Jalan, Managing Director

Keventer Agro Ltd. Sri Arvind Jhamb, CEO

Ruchi Infrastructure Ltd Mr. Vinit Kumar, Chairman

Temptation Foods Ltd. Mr. Arun Uppal, Head – New Businesses

Hariyali Kisaan Bazaar Mr. Mike Cockrell, Chief Merchandising Officer

Bharti Wal-Mart Pvt. Ltd.


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Mr. Thomas Varghese, CEO

Aditya Birla Centre Mr. R. Sreeram, Vice President-Manufacturing

Dabur India Ltd. Mr. Shrijeet Mishra, Hindustan Unilever Ltd.

Hindustan Unilever House Mr. S Sivakumar, Chief Executive-Agri Businesses

ITC Limited Mr. Sumantra Banerjee, President

Spencer’s Retail Ltd Mr. Anil K Choudhary, Managing Director & CEO

National Bulk Handling Corporation Mr. Sanjeev Asthana, President & CE, Agri Business & Food Supply Chain

Reliance Industries Limited Dr. J. S. Yadav

Premium Farm Fresh Produce Ltd. Sri S K Jain

LMJ International Limited Mr. Vimal Mody, General Manager

Usha Breco Realty Pvt. Ltd.

Sri Sushil Kumar Agarwal, Director

Haldiram’s Mega Food Parks Private Limited Sri Raja Mehta

Indiabulls Real Estate Limited Mr. Vipin Jain, Vice President (Finance)

Negolice India Ltd

Mr. Makarand Khanolkar, Vice President

Unity Infra Projects Limited

Mr. Avinash Rangnekar,

Ace Agro Industries Private Limited Mr. Malamma B Bidari, Chairman & Managing Director

FOREMMS Industries Limited Director

Bengal Salarpuria Eden Infrastructure Development Company (P) Limited Pantaloon Retail (India) Limited

Ruchi Soya Industries Limited


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30 ASSESSMENT OF MARKET DEMAND

India is the world 4th largest economy on purchasing power parity basis. India is also the second fastest growing major economy in the world, with a GDP growth rate of 6.7 percent in 2008-09. India’s economic growth has accelerated significantly over the past two decades. Real average household disposable income has almost doubled since 1985. With rising income levels, household consumption has increased manifold with the emergence of a re-defined middle class. The country is on the brink of becoming an economic powerhouse and it is gaining huge attention from global players as an excellent investment destination.

Indians with an ability to spend over US$ 30, 000 per annum on PPP basis account for around 3 percent of the country’s total population. With a population base of 1.07 billion, this segment amounts to 20 million people. High economic growth has led to increased disposable income for the booming Indian middle class, which is estimated to reach a size of 582 million from its current size of 50 million by 20151. Accordingly, the disposable incomes are set to rise at an average rate of 8.5 percent by 2015.2

Maharashtra is the largest economy in the country with a high per capita income of US $ 6213. It is also among the most industrialized states, which is coupled with availability of skilled manpower, enabling infrastructure and a strong institutional framework. Maharashtra is the second most populous state in the country with a population of 96.9 million4. It is also the second most urbanized state in the country, with 42 per cent of the people living in urban areas.

Bihar, on the other hand, has a per capita income of US $ 1395, which is much below the national average of US $512. The total population of Bihar is 82.88 million. Unregistered units dominate the industrial sector of the state and the major industries are Tea and dairy.

30.1 ASSESSMENT OF FOOD MARKET IN INDIA

The size of the Global Food Industry is estimated at around US $3.6 trillion and India accounts for less than 1.5 percent of the international food trade. India currently produces about 50 million MT of fruits, which is about 9 percent of the world’s total production of fruits and 90 million MT of vegetables, which accounts for 11 percent of the world’s total vegetable production. Despite its large size, only 6 percent of the processed foods are traded across India’s borders as compared to 16 percent of major bulk commodities. Hence there is huge scope for export of value added food products in the international market.

1 NACER Research 2 Ernst & Young Research, 2008

3 Data: 2004‐05 4 2001 census

5 IBEF


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The Indian food market in 2007 has been estimated at around US$ 200 billion6 and is slated to reach US$ 310 billion7 in 2015. Food products are the single largest component of household consumption expenditure. Food and beverages (including tobacco) accounts for one third of the household expenditure. A survey done by NCAER reveals that food and beverages accounts for 35 percent and 32 percent of household expenditure in mega cities and boomtowns. It is estimated that by 2025, food and beverages segment will still be the biggest category in terms of consumer spends, though its share would drop from existing 35-40% to 25%. Food and Grocery contributes to around 41 percent of private consumption expenditure and about 74 percent of total retail revenue. Broad category-wise expenditure for each category of cities is shown in the table below.

It is evident from above that more than one third of the monthly household expenditure is on Food and beverages segment. There is also an increasing shift from price consideration to quality, branded and hygienic products. The number of working women, as a percentage of the total female population, has risen from 15 percent in 1991 to close to 25 percent in 2005. This has resulted in growing disposable income, which in turn, leads to increasing spend on convenience food, value added food products and grocery items.

30.2 GROWTH DRIVERS OF VALUE ADDED FOOD PRODUCTS

India possesses the advantage of having a large young population. It is estimated that around 35 percent of India’s population is under 14 years of age and more than 50 percent of the population is estimated to constitute the working age group. The large population of working age group forms a wide consumer base. Rapidly changing demographic profiles and increased disposable income are changing the face of Indian consumers. The swelling middle class is redefining the consuming pattern with a shift towards branded and value added food products. With the country’s income pyramid changing rapidly, a definite shift is observed from saving to spending attitude. Discretionary spending has seen 16 percent rise for the urban upper and middle classes and the number of high income households has grown by 20 percent year-on-

6 Food Processing: Market and opportunities by KPMG 7 McKinsey & Company

Source: NCAER Research, 2008


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year since 1995-96.8 The self employed segment of the population has also grown significantly.

Growth drivers for emerging markets of value added food products are summarized below:

Food and grocery dominates total retail spend: While rural consumers spend around 53%9 of their total consumption expenditure on food, urban India spends 40% of their retail spend on food items thus offering huge opportunity for value added food products.

Higher disposable income: High economic growth has led to increased disposable income for the Indian middle class, which is switching over to healthy and value added food products. It is estimated that disposable income is set to rise at an average rate of 8.5 % by 201510. Also, the middle class is estimated to reach a size of 582 million from its current size of 50 million by 201511.

Shift in demographic profile: The median age of Indian population is 24 years and approximately 65% of Indian population is below 35 years of age. The large population of working age group forms a wider consumer base for food products.

Emergence of organized food retail: It is estimated that the total food and grocery retail space will grow at a CAGR of 6% over 2006-2011, with the organized share likely to increase from less than 1% currently to 6-6.5%12. This will translate into more business opportunity for value added food products.

30.3 ASSESSMENT OF FOOD RETAIL INDUSTRY

Traditionally, the Indian retail sector has been dominated by large number of small and medium sized retailers, who account for more than 95 percent of the total retail business. In categories like food & grocery, fresh fruits and vegetables, their share is as high as 98 percent. Over twelve million small and medium retail outlets exist in India, the highest across the world. More than eighty percent of them are run as family owned businesses and the exemplary mom-and-pop retail outlets constitute a major part of country’s retail store formats. Modern retailing in India is evolving rapidly, with consumer spending growing by unprecedented rates and with increasing number of domestic and global companies investing in this sector.

8 Ernst & Young Research, 2008 9 NSS 62nd round 10 E&Y Research, 2008 11 NCAER Research 12 Retail Edelweiss report, 2008


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The size of Indian retail Industry was estimated at US$ 385 billion13 in 2007–08. In 2006-07,

the retail market size was US$ 337.3 billion. In 2007, organized retail stood at US$ 16.5 billion, implying a share of 4% of the total retail revenue. Organized retail revenues are expected to increase from US$ 12.9 billion in 2005-06 to more than US$ 43.8 billion by 2010-11. Today, top eight cities (four metros, Pune, Ahmedabad, Bangalore and Hyderabad) together account for almost 80 percent of the total organized retail.

Food retail, dominated by around 5 million retail outlets in India, is currently estimated at US$ 160 billion. Within this, organized food retail grew from US$ 391 million in 2002 to US$ 1624 million in 2007 with a CAGR of about 33 percent.

India tops the AT Kearney's annual Global Retail Development Index (GRDI) for the third consecutive year, maintaining its position as the most attractive market for retail investment. Furthermore, a report by Price Waterhouse Coopers foresees India and China to continue as the top sourcing hubs in retail and consumer sector in the coming years.

Driven by the huge potential in the sector a number of large corporations, both domestic and global, have forayed in to the market recently. It includes Reliance, AV Birla, RPG, Bharti-Walmart, Future Group, Big Apple, Godrej, Heritage and Wadhan Group (Spinach) to name a few. A few more global players like TESCO, Carrefour and Landmark are also expected to enter in the market.

The growth in organized retail sector has been spearheaded by the food & beverages segment and they are also likely to see a higher growth rate in future. The figure below depicts the responses of retailers about the fastest growing retail segments in India. This clearly shows that food and grocery is by far the

13 IBEF

311.7

337.3

460.6

12.9

16.5

43.8

0 50 100 150 200 250 300 350 400 450 500

2005-06

2006-07

2010-11

Org. Retail

Total Retail

Source: Data Monitor, 2007, Sales in US $ Billion, Exchange Rate: US $ 1: INR 41

Source: KPMG


232

Source: NSSO 5th round,KPMG and Cygnus Research

fastest growing segment in the Indian retail sector.

India has one of the largest numbers of retail outlets in the world. Of the 12 million retail outlets, nearly 5 million sell food and related products. Nearly two third of the food retail outlets in India are located in rural areas, which is also being reflected in the graph below:

Figure: Category wise

Distribution of Retail

Outlets

The retail sector in India is primarily characterized by different SKUs rather than different retail formats in operation. It is envisaged that modern retail will adapt and absorb some of the traditional retail formats in subsequent years. Also, with the rural retail constituting the largest share of total retail revenues, the existing players are now looking at rural markets to tap the opportunity. A few players like ITC Limited, Godrej and DSCL have already started the venture under the brand name of Choupal Sagaar, Aadhaar and Hariyali Kisaan Bazaar respectively.

30.4 MAJOR PLAYERS IN ORGANIZED FOOD AND GROCERY SEGMENT

Major players in organized food and grocery segment are Pantaloon Retail, Reliance Retail, RPG, Aditya Birla Retail etc. None of the organized retailers have presence in Bihar. However, Maharashtra is one of the leading states in terms of growth of retail space. Besides Mumbai, organized retailers are also present in tier I and tier II cities of Maharashtra.

The table below shows the food and grocery sales (2008) as well as no of stores of major players in organized retail segment:

Sl No. Name of retailer Food and grocery sales ($ million) No of stores

1. Pantaloon Retail 1593 456

2. Reliance Retail 432 688

3. RPG 427 420

4. Aditya Birla Retail 251 645

5. Dairy Farm 100 67

Source: IGD, excludes cash and carry formats

A brief profile of the major retailers is given below:

Pantaloon Retail (India) Limited: Pantaloon has established strong presence across multiple consumption categories in a bid to capture maximum consumer wallet share. It has widened its format offerings from a single format to over 15 formats, which captures almost 75% of the consumption basket. Food Bazar, Big Bazar and KB’s Fairprice are the various banners under which Pantaloon Retail operates in the food and grocery segment. Out of these three, Food Bazar mainly caters to fruit and vegetable, staples, dairy


233

products etc. Pantaloon often combines its Food Bazaar (food supermarket) and Big Bazaar (Grocery and other items) formats to create a hypermarket format.

Name of retailer Area in sqm No of stores

Food Bazar 102,752 152

Big Bazar 380,695 149

KB’s Fairprice 17,980 155

Source: IGD

Reliance Retail: Reliance Retail is part of Reliance Industries Limited, which is one of the India’s largest conglomerates. It ventured into organized retailing in November 2006. Reliance Fresh (Supermarket) and Reliance Mart (Hypermarket) are the two banners under which reliance operates in retailing business. The company invested heavily to build a nationwide network of procurement centers, cold storages and distribution hubs to improve supply chain efficiency of perishables. In 2008, 678 stores of Reliance Fresh and 10 stores of Reliance Mart were operating in the country.

RPG: Spencer’s (Supermarket) and Spencer’s Hyper (Hypermarket) are the two formats of RPG group involved into food and grocery retailing. Around 60% items in a RPG store comprises of fresh and dry groceries. Around 370 stores of Spencer’s and 50 stores of Spencer’s Hyper are functional in the country.

Aditya Birla retail: It is part of Aditya Birla group. The company forayed into retailing business in 2006 via the acquisition of Trinethra Super Retail. more. for you and more. MEGASTORES are the two banners. more. for you is a superstore format and the other one is hypermarket format. Both of them together account for presence of around 645 stores in the country. Out of this, 639 stores are in superstore format. The company focuses on private labels with presence of around 350 labels in food and non-food category.

30.5 ASSESSMENT OF MAJOR CONSUMPTION MARKETS

As mentioned earlier, the major consumption markets for fruits and vegetables grown in Bihar are Patna, neighbouring states of Jharkhand, Orissa and West Bengal. For certain fruit crops such as Litchi and Mango, the state has established linkages with major metros like New Delhi, Mumbai, Hyderabad, Bangalore, Lucknow and Nagpur.

In case of Maharashtra, Mumbai itself is a huge consumption market for fresh fruits and vegetables. The table below shows the crop wise major consumption markets of fruits and vegetables grown in Maharashtra:

Sl No Fruits/Vegetables Major consumption markets

1. Pomegranate Delhi, Kolkata, Jaipur

2. Grapes Delhi, Kolkata, Hyderabad

3. Banana Delhi, Chandigarh, Amritsar, Lucknow

4. Tomato Delhi, Kolkata, Surat, Ahmedabad

5. Sweet lime Delhi, Jaipur

6 Kesar mango Delhi

Orange Delhi, Kolkata, Bangalore

Lemon Delhi


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As evident from table above, Delhi, Kolkata and Mumbai are the major consumption markets for fresh fruit and vegetables grown in Maharashtra; however, in case of Bihar, Delhi, Kolkata and Patna are the major consumption markets.

Azadpur APMC, which is located in Delhi, is one of the largest fresh produce wholesale markets in South East Asia Region. It is also an important distribution hub for various markets of North India such as Chandigarh, Jaipur and Jalandhar etc. It witnesses huge arrivals from various parts of country on a daily basis. Azadpur Mandi is spread over in an area of around 40 hectares, which includes both fruit and vegetable market yards.

A detailed analysis of the above mentioned cities (Delhi, Kolkata, Mumbai and Patna) have been undertaken to assess the consumer demand. Various parameters such as demography, income and expenditure pattern, penetration of organized retail, economic indices of respective cities have been taken into account to understand the market demand of food products.

30.5.1 Delhi

With a population base of 19.73 million and median age of 22.8 years, Delhi has a young population with a high propensity to consume. Around 15% of the female population is working, which means a higher number of double income families, which have higher income and propensity to spend.

Demography ‐ Delhi

Population 19.73 million

Median age 22.8 years

Per cent of working women 14.7 %

Per capita income of Delhi has been estimated to be Rs 43,155. Around 54% of the households generate income from monthly salaries and the average HH income is Rs 183,000, which is higher than any other metros except Mumbai.

Distribution of Income in Delhi

Per Capita Income Rs 43155

Per cent of salaried household (HH) 53.8 %

Average HH income from salary in Rs ‘000 per annum 183

Per cent of business and professional HH 32.3 %

Average HH income from business in Rs ‘000 per annum 299 Source: How India Earns, Spends and Saves, The Max New York Life‐ NCAER India Financial Protection Survey, 2007 (Estimated data for 2004‐05)

As there is no detailed data on the market size (especially of the food and beverages segment) of different cities, hence market size has been estimated using data from different sources. In terms of growth of organized retail, Delhi has an estimated retail space of 6.5 million sq ft which shows that retail boom has come up in big way in Delhi among all the Indian cities.

The average monthly per capita expenditure (MPCE) in Delhi is Rs 1803.8614. Out of this, Rs 673.73 is spent on food items i.e. around 37% of the consumer spending is on food products and around 6% is spent on perishables.

Estimation of Market size of food products in Delhi

Estimated retail space in million Sq ft15 6.5 million sq ft

14 NSS report (2006‐07)


235

Unit retail space (Sq Ft/HH) 4

Annual expenditure on food in Rs billion Rs 159.5 billion

Monthly per capita expenditure on food in Rs Rs 673.73

The table below shows the distribution of MPCE on broad category of food items.

Per cent distribution of MPCE on Food items in Urban Delhi

Cereals 7%

Milk & milk products 10%

Vegetables 5%

Fresh fruits 1%

Other food items 14%

Total 37% Source: NSS report (2006‐07)

For the purpose of estimating the market size of food in Delhi, estimation of the total annual expenditure on food items was done using data on per capita expenditures on food items. It was found that NCR16’s annual expenditure on food is about Rs. 159.5 billion. As 6 % of monthly per capita consumption expenditure (MPCE) is spent on fruits and vegetables, the estimated annual expenditure on fruits and vegetables in Delhi comes out to Rs 9.6 billion. This clearly shows that Delhi is a large consumer market of food products.

30.5.2 Mumbai

The total population of Mumbai is 19.23 million and the median age of population is 25.7 years, which clearly shows that city has a relatively young population that falls in the working age group.

Demography ‐ Mumbai

Population 19.23 million

Median age 25.7 years


Per capita income of Mumbai is Rs 40,768 and the monthly per capita consumption expenditure of urban Maharashtra is Rs 1673.48. Out of this, Rs 587.95 is spent on food items, which constitutes 35% of MPCE.

Distribution of Income in Mumbai

Per Capita Income Rs 40,768

Per cent of salaried household (HH) 57.8%


Per cent of business and professional HH 31.7%

Average HH income from business in Rs ‘000 / annum 204 Source: How India Earns, Spends and Saves, The Max New York Life‐ NCAER India Financial Protection Survey, 2007 (Estimated data for 2004‐05)

Mumbai is leading the retail revolution in the country with an estimated retail space of 6.6 million sq ft. All the major food and grocery retailers of the country such as Pantaloon, Reliance and AV Birla are present in the city. The annual expenditure on food is around Rs 135.6 billion.

15 Images retail 2005

16 NCR means Delhi, Noida, Gaziabad, Gurgaon and Faridabad


236

Estimation of Market size of food products in Mumbai

Estimated retail space in million Sq ft 6.6 million sq ft

Unit retail space (Sq Ft/HH) 1.4


Monthly per capita expenditure on food in urban Maharashtra Rs 587.95 Source: DES, Govt of Maharashtra

Out of 35% of MPCE spent on food products, cereals and milk products constitute 13% of the total consumer spending. Fresh fruits and vegetables constitute around 6% of MPCE, which is almost similar to Delhi.

Per cent distribution of MPCE on Food items in Urban Maharashtra

Cereals 7%


Vegetables 4%

Fresh fruits 2%

Other items 16.%

Total 35%

The estimated annual expenditure on fresh fruits and vegetables in Mumbai comes to around Rs 8.1 billion. In comparison to Delhi, Mumbai is a smaller market for perishables.

30.5.3 Kolkata

Kolkata is a major market of eastern India and a large market for fruits and vegetables of Bihar. The total population of the city is 13.1 million. Around 10.6% of the female population is working and hence contribute in household income.

Demography ‐ Kolkata

Population 13.1million


Per capita income of urban west Bengal has been estimated to be Rs 27,868 and the monthly per capita consumption expenditure of urban West Bengal is Rs 1371.26. Out of this, Rs 551.40 is spent on food items, which constitutes 40% of MPCE.

Distribution of Income in Kolkata

Per Capita Income Rs 27,868

Per cent of salaried household (HH) 37.7 %


Per cent of business and professional HH 41.6 %

Average HH income from business in Rs ‘000 / annum 146

As per images retail report, Kolkata has an estimated retail space of 0.7 million sq ft. It is much less in comparison to Delhi and Mumbai.

Estimation of Market size of food products in Kolkata

Estimated retail space in million Sq ft 0.7 million sq ft

Unit retail space (Sq Ft/HH) 0.4


Monthly per capita expenditure on food in Rs Rs 551.40

Fresh fruits and vegetables constitute around 7% of MPCE.

Per cent distribution of MPCE on Food items in Urban West Bengal

Cereals 10%


Vegetables 6%

Fresh fruits 1%

Other items 19%

Total 40%


237

The annual expenditure on food in Kolkata is around Rs 86.6 billion. Hence the annual expenditure on fresh fruits and vegetables in Kolkata comes to around Rs 6 billion. Though the market size is relatively less in comparison to Mumbai and Delhi markets, still if offers huge scope for fruits and vegetables grown in Bihar and Maharashtra.

30.5.4 Patna

Patna is the largest town and capital of Bihar. Total population of the district is 47.18 Lakh as per 2001 census with an urban population of approximately 30 lakhs. Patna, being the capital of the state and the largest town, offers a big market for fresh vegetable and fruits. Per capita income of Patna is Rs 6958, which is highest in the state. As per NSS report 2006-07, monthly per capita expenditure of urban areas in Bihar is Rs 864.96, which is lowest in the country. Out of this, Rs 435.56 is spent on food items, which constitutes 50% of the total consumer spending. The share of vegetables and fruits in total consumer expenditure of urban consumers of Bihar is around 7.8%.

On the basis of above facts and figures, the estimated annual market size for fresh fruits and vegetables in Patna (urban) is estimated to be 2.5 Lakh MT.

It can be assumed based on the overall assessment here that the market size of fruits and vegetables, as also milk, milk products and cereals, in the metro cities, is a growing one and has scope for greater absobtion from organised supply centres. Other large metros and tier two metro cities are also markets ripe for tapping, given the needed organisation at the supply side.


238

31 IMPACT ASSESSMENT

The proposed components in the program are designed to achieve accelerated investment in agriculture and to support related infrastructure, all along the Integrated Value Chains. The proposed interventions include:

• Aggregation facilities

• Sorting, grading, packaging

• Storage (ambient and controlled temperature)

• Value addition and market intelligence

• Distribution facilities including logistics

• Value chains for end-to-end linkages

These have been envisaged to come together to have a range of impacts all along the value chain. The major direct benefits expected would be in terms of better price realization, with the benefit being transferred to the farmer as well, reduction in waste and employment generation (direct and indirect). Direct impacts accruing from the interventions are discussed in this section and are illustrated through selected examples. Envisaged price and margin related impacts are quantified for the illustrative examples, and would differ, based on produce, location and ultimate market. Overall project impacts are also discussed. Detailed social and environmental impact assessment studies are included in the annexure to this section and cover management strategies where such a need has been assessed.

31.1 INTEGRATED VALUE CHAIN: ENVISAGED IMPACTS

Illustrative value chains have been included here to compare pre and post intervention scenarios and key impacts are discussed. Some impacts may be more universal over the different product value chains where some are more pronounced in particular chains. The key emerging impacts resulting from the proposed interventions are expected to include but not be limited to the following: Shortening of the existing value chain through the reduced number of intermediaries

thereby reducing the margins earlier appropriated at those levels Systems, effeciencies and infrastructure (at spoke and hub, and transport related) to

effectively reduce wastages up to more than 50% (in several cases) and ensure greater value realisation. This would also contribute to an overall reduction in moisture loss, thus minimising quality(and value) loss.

Farmers could eventually get up to 20% higher farm gate-prices resulting from the above cumulative impacts: shortening the value chain, fewer players, pre-harvest contractors replaced by spokes, improved infrastructure, reduced wastages and improved awareness and enhanced capacities/skills

Further along the value chain, reduced losses add to the margins at wholesale and retail levels and ensure better quality

Higher price realisation all along the value chain due to improved handling packaging and storing.


239

31.1.1 Illustrative Example: Pomegranate Value Chain

Value chains for pomegranate both as it exists today and the proposed value chain, after the interventions have been shown below to highlight the impacts envisaged.

Pre‐intervention :

Post intervention

After the suggested interventions, pomegranate value chain will have reduced level of intermediaries. If we compare the existing and proposed value chains, there is a possibility of reducing wastages up to more than 50%. Since pomegranate has a hard outer rind, most of the

losses are on account of moisture loss during transit. Better packaging and faster evacuation will ensure reduction in moisture loss to a large extent. The new value chain of pomegranate after the proposed interventions will be as shown in the figure.

Grading, Packing, Loading at Spoke

Rs 42

Rs 1.5

Rs 6.5

Spoke’s profit

Transportation, Unloading expense at destination

Rs 2.5

Rs 75

Rs 6

Retailer’s Margin

Consumer’s Price

Farm gate price

Rs 12

Hub level / Wholesaler’s Margin Rs 5

Losses

Rs. 50 ex‐spoke price

Grading, Pack ing

Rs 35

Rs 6

Losse s

Rs 11 .5

Rs 5

Transport ation , loading, U/L, losse s

Commissi on charges

Rs 8

Rs 0.3

Whol esale r’s margin

Re tai ler’s margin

Consumer price

Farm gate price

Rs 6

Rs 80

Contra ctor’s margin Rs 3

Rs 0.6

Rs 2.3

Rs 1.5

Ma rke ting ce ss

Losses

Transport

Losse s

Rs 50 (C ontractor’s P rice )

Rs 60 (Wholesal er’s P rice )


240

The new value chain can offer the farmers a 20% higher farm gate price for their produce on account of savings on mandi tax and commission agent’s fee and still can keep the ex-spoke price at Rs. 50, which is the trader’s price in the existing value chain. Reduced losses would indirectly add to the margins at wholesale and retail levels. If we keep the wholesaler and retailer price at same levels as the existing one, 5-10 % discounts can be offered to the consumer from the current price apart from delivering a better quality produce.

31.1.2 Illustrative Example: Grape Value Chain

In the case of fresh grape too, the extant value chain is given below to help compare with the changed scenario after the interventions.

Pre‐intervention :

Post intervention

As shown in the figure above vis a vis the existing value chain figure, the new value chain

Grading, Packing, Loading at Spoke

Rs 30

Rs 2

Rs 3

Spoke’s profit

Transportation, Unloading expense at destination

Rs 1.25

Rs 50.00

Rs 4.63

Retailer’s Margin

Consumer’s Price

Farm gate price

Rs 8.00

Hub level / Wholesaler’s Margin Rs 1.00

Losses at Retail Level

Rs. 35 ex‐spoke price

Rs 35 (Trader’s Price

Rs40 (Wholesaler’s Price)

Rs 25

Rs 1.25

Rs 2.30

Farm gate price

Grading, Packing, Loading C

Transportation, Unloading at APMC

Rs 3.50

Commission @ 10% Rs 2.94

Trader’s Margin

Rs 50.00

Rs 4.63

Retailer’s Margin

Consumer’s Price

Rs 8.00

Wholesaler’s Margin

Rs 0.36

Market Fee @ 1.05%

Rs 2.00

Losses at Retail Level


241

can offer the farmers a 20% higher farm gate price for their produce. This increased price to the farmer will be mainly on account of savings on mandi tax, commission agent’s fee and slightly reduced (10-15% lesser) grading packing charges due to greater efficiency. Pre-harvest contractors in the proposed value chain will be replaced by the spokes. These spokes would also have greater margins than the contractor due to the proposed backward linkages and capacity building of farmers for better farm practices and post harvest handling practices resulting in reduced losses. With these interventions, spokes would still be able to competitive and supply the produce at ex-spoke price of Rs. 35, which is the trader’s price in the existing chain. Spokes will supply either to the distribution hub or to the wholesalers in distant markets or directly to the organized retail chains. If the produce from spoke follows the distribution hub / wholesaler and retail route, consumer can get a better quality produce at same price. However, if the organized retail chains directly procure from the spokes, they will have an additional margin of Rs. 4.63 per kg of grape (wholesalers margin), which can be passed on fully or partly to the consumer to remain competitive. Since the new value chain is based on reduced levels of handling and faster evacuation mechanism, it is assumed that the losses at each level would be reduced to more than 50% and would add up to the margins at distributor level. The consumer would still get the produce within the same price with better quality. There will be no impact on export value chain or value chain for processing varieties of grape as these chains are already the shortest possible and have no intermediaries between the grape growers and exporters or wineries.

31.1.3 Illustrative Example: Banana Value Chain

The pre-intervention value chain for banana in Nashik region is shown in the diagram.

The diagram depicts the future value chain of banana after the implementation of the suggested interventions.

The future value chain would include hub and spoke facilities as suggested in the earlier chapters. The proposed interventions would create higher value at all levels, reduce wastages and enhance of produce along the value chain. In this value chain the produce, after harvest, will be transported to the spoke where it will be sorted, de-handed, washed, treated with fungicide, graded and packed. The spoke will replace the Pre-harvest Contractor in the value chain. The spoke will supply either to the distribution hub or to the wholesalers in distant markets or directly to the organized retail chains. The interventions at the spoke would fetch a

Labour and transportation

Commission @4‐6% at

Azadpur Mandi

Wastages*

Wholesale Margin at Azadpur Mandi

Secondary

transportation and ripening cost

Retailer’s margin

Farmer’s Price

Rs 6.45Rs 6.45

Rs 2.50Rs 2.50

Rs 2.50Rs 2.50

Rs . 1.50Rs . 1.50

Rs.0.30 Rs.0.30

Rs. 1.00 Rs. 1.00

Rs. 2.50Rs. 2.50

Rs 0.20Rs 0.20

Commission of PHC @ 2%Rs. 14.00 (Wholesaler’s Price)

Rs. 18.00(Retailer’s Price)

Labour and transportation

Commission @4‐6% at

Azadpur Mandi

Wastages*

Wholesale Margin at Azadpur Mandi

Secondary

transportation and ripening cost

Retailer’s margin

Farmer’s Price

Rs 6.45Rs 6.45

Rs 2.50Rs 2.50

Rs 2.50Rs 2.50

Rs . 1.50Rs . 1.50

Rs.0.30 Rs.0.30

Rs. 1.00 Rs. 1.00

Rs. 2.50Rs. 2.50

Rs 0.20Rs 0.20

Commission of PHC @ 2%Rs. 14.00 (Wholesaler’s Price)

Rs. 18.00(Retailer’s Price)

Pre‐intervention


242

higher consumer price (about 35% higher) due to better quality and improved packaging. Also, proper handling and better packaging/transportation will reduce wastages by more than 50% and would be able to fetch better price in retail markets. The higher value realization would then is expected to be distributed among the different players in the value chain. The farmer will get a better price (more than 15% of the present price) and an assured market as the forward linkages of the spoke will ensure a steady demand.

31.1.4 Illustrative Example: Sweet lime Value Chain

Compared with the existing value chain, the future value chain shows higher value realization at all levels, reduced wastages and better quality of produce along the value chain. In this value chain the produce, after harvest, will be transported to the spoke where it will be sorted, graded and packed. From there, the produce will either go to the organized retail chains or will be sent to wholesalers in distant markets. Pre-harvest contractors in the proposed value

Post‐intervention

Farmer’s Price

Unloading

Transportation to Delhi

Commission charges

@ 10% in Delhi

Weight loss@ 5%

PHC’s Margin

Transportation losses @2%

Harvesting, loading

Sorting and grading

Packing charges


Rs 0.80Rs 0.80

Rs 8.00Rs 8.00

Rs 2.00Rs 2.00

Rs 1.60Rs 1.60

Rs 0.10Rs 0.10

Rs 0.80Rs 0.80

Rs 3.50Rs 3.50

Rs 0.50Rs 0.50

Rs 0.08Rs 0.08

Rs 0.32Rs 0.32

Rs 2.10Rs 2.10

Rs 0.20Rs 0.20

Transportation

Rs 3.60Rs 3.60

Retailer’s Margin

Rs. 19.00 (Wholesaler’s Price)

Rs. 16.00 (PHC’s Price)

Rs. 23.00 (Retailer’s Price)

Farmer’s Price

Unloading


Commission charges

@ 10% in Delhi

Weight loss@ 5%

PHC’s Margin


Harvesting, loading

Sorting and grading

Packing charges


Rs 0.80Rs 0.80

Rs 8.00Rs 8.00

Rs 2.00Rs 2.00

Rs 1.60Rs 1.60

Rs 0.10Rs 0.10

Rs 0.80Rs 0.80

Rs 3.50Rs 3.50

Rs 0.50Rs 0.50

Rs 0.08Rs 0.08

Rs 0.32Rs 0.32

Rs 2.10Rs 2.10

Rs 0.20Rs 0.20

Transportation

Rs 3.60Rs 3.60

Retailer’s Margin




Unloading


Commission charges

@ 10% in Delhi

Weight loss@ 5%

PHC’s Margin


Harvesting, loading

Sorting and grading

Packing charges


Rs 0.80Rs 0.80

Rs 8.00Rs 8.00

Rs 2.00Rs 2.00

Rs 1.60Rs 1.60

Rs 0.10Rs 0.10

Rs 0.80Rs 0.80

Rs 3.50Rs 3.50

Rs 0.50Rs 0.50

Rs 0.08Rs 0.08

Rs 0.32Rs 0.32

Rs 2.10Rs 2.10

Rs 0.20Rs 0.20

Transportation

Rs 3.60Rs 3.60

Retailer’s Margin

Unloading


Commission charges

@ 10% in Delhi

Weight loss@ 5%

PHC’s Margin


Harvesting, loading

Sorting and grading

Packing charges


Rs 0.80Rs 0.80

Rs 8.00Rs 8.00

Rs 2.00Rs 2.00

Rs 1.60Rs 1.60

Rs 0.10Rs 0.10

Rs 0.80Rs 0.80

Rs 3.50Rs 3.50

Rs 0.50Rs 0.50

Rs 0.08Rs 0.08

Rs 0.32Rs 0.32

Rs 2.10Rs 2.10

Rs 0.20Rs 0.20

Transportation

Unloading


Commission charges

@ 10% in Delhi

Weight loss@ 5%

PHC’s Margin


Harvesting, loading

Sorting and grading

Packing charges


Rs 0.80Rs 0.80

Rs 8.00Rs 8.00

Rs 2.00Rs 2.00

Rs 1.60Rs 1.60

Rs 0.10Rs 0.10

Rs 0.80Rs 0.80

Rs 3.50Rs 3.50

Rs 0.50Rs 0.50

Rs 0.08Rs 0.08

Rs 0.32Rs 0.32

Rs 2.10Rs 2.10

Rs 0.20Rs 0.20

Transportation

Rs 3.60Rs 3.60

Retailer’s Margin




Pre‐intervention


243

chain will be replaced by the spokes. These spokes would also have greater margins than the contractor due to the proposed backward linkages and capacity building of farmers for better farm practices and post harvest handling practices resulting in reduced losses. The proper handling and better packaging/transportation will reduce wastages by more than 50% and would be able to fetch better price in retail markets. Thus, the higher value realization will increase the margins of each stakeholder of the value chain by at least 10% to 20%.

31.1.5 Illustrative Example: Mango Value Chain

The diagram depicts the future value chain of Mango after the implementation of the suggested interventions.

After the suggested interventions, mango value chain will a have reduced number of intermediaries. The future value chain has possibility of reducing wastages to more than 50%. Reduced losses would indirectly add to the margins at wholesale and retail levels. The new value chain can offer the farmers 20% higher farm gate price for their produce. In this value chain the produce, after harvest, will be transported to the spoke where it will be sorted,

Post intervention

Rs 17

Rs 1.8

Rs 6

Rs 4

Rs 3.5

Rs 3.5

Rs 0.9

Rs 1.4

Rs 1.6

Harvesting, grading and packaging

Farm gate price

Commission

Wastage

Wholesaler’s margin

Losses

Retailer’s margin

Consumer Price

Rs 23 (Contractor’s Price)

Wholesaler’s expense

Contractor’s margin

Rs 40

Rs 30 (Wholesaler’s Price)

Pre‐intervention


244

graded and packed. The spoke will replace the present contractors in the value chain. From the spoke the produce will either go to the wholesalers or to the Hub for further distribution.

Some volume would also be sent directly to the organized retailers at distant markets. These spokes would also have greater margins than the contractor due to the proposed backward linkages and capacity building of farmers for better farm practices and post harvest handling practices resulting in reduced losses. Thus, the higher value realization will increase the margins of each stakeholder of the value chain by at least 10% to 30%.

31.2 KEY OVERALL IMPACTS

In addition to the specific impacts discussed through the illustrative examples, the following are also envisaged, as spin-offs of the project and its direct benefits:

Farm level improvements

It is envisaged that there is likely to be an increase in productivity as a result of adoption of better technology, facilitated by better monetary margins and, increased awareness of farmers through capacity building, as also through an improved understanding of the market demand. This will be aided by improvement in farm level infrastructure and improved farmer skill levels. The capacity building initiative will, under the project train 19,500 farmers on aspects relating to this project simultaneously putting into place systems to carry on the training process beyond the project period and forming linkages with relevant resource persons and groups.

Harvesting

Rs 18.0

Rs 0.4

Rs 1.20

Rs 5.00

Washing, sorting, grading, packing

Rs 3.00

Wastage

Consumer price

Farm gate price

Rs 45.00

Wholesaler’s margin

Loading and transport to spoke

Rs 1.30

Rs 5.00

Rs 0.8

Rs 2.50

Spoke Margin

Transport

Retailer’s Margin

Rs 2.00

Transport to organized Retail at distant markets

Rs 5.00

Organized retailer’s margin

Rs 5.00

Hub’s Margin

Post Intervention


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Market driven farming

Over the years, farming is likely to become even more market-driven as stakeholders along the value chain get better integrated and farmers are more in tune with market demands. This will also lead to more diversification which is responsive to market demand. In turn, this will contribute to better price realisations for the farmer as well as players along the value chain.

Market level improvements:

Improvements at market level are also envisaged along with improved systems and effeciencies. Even as farmers will have better negotiating powers to through the proposed system of spokes and collection centres, this will also induce more competition and have a spin-off effect on other markets in the wider region. This system would have helped in the creation of another channel for marketing agri-produce leading to a healthy competition and improvements in the sector.

Price discovery

Connected to the aspect of market level improvements and greater responsiveness of farmers, it is the price discovery mechanism that will be the catalyst in bringing about greater transparency in information flow and transactions with improved systems, keeping the farmers better informed. This is an essential impact that will have a much larger spin off in terms of decision making, responsiveness and eventually overall effeciencies.

Institution building:

This project is envisaged to contribute directly to institution building, starting with farmers groups and ultimately leading to producer companies which in turn lead to better market access and need-based improvements in the sector, greater stakeholder participation in the sector and development processes overall. Institution building has other ramifications as well which will lead to contractual or more formal agreements between players, in turn helping to form a stronger supply chain.

Special women-farmer groups are also proposed for group formation and capacity building. With adequate support and response from stakeholders, this has the opportunity to be mainstreamed and come to represent them as an interest group.

In the longer term, greater professionalization of the sector through its institutions will also lead to risk reduction on both sides- farmers and market end.

Contribution to exports

Improved quality produce from the region over time will contribute to export- based on improvements in quantity and quality, again bringing greater value realisation.

Sector improvement

The cumulative effect of the impacts discussed here is likely to catalyse investment in the agri-infrastructure sector over the longer term and make it more financially sustainable.


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Overall Economic Development

Overall economic development better human development indicators are envisaged for the project area in the long run.

As a result of the project, and as discussed in the section on economic analysis of the project, incremental economic benefits including savings from wastage reduction and employment generation have been estimated.

For the Nashik Integrated Value Chain, the estimated incremental benefit due to quality improvement is pegged at Rs 469.65 million per annum at 100% capacity utilization. The interventions in the IVC would help in reduction in wastage of about Rs 589.73 million per annum with annual saving of about 26500 MT of fruits, vegetables, grains, pulses etc. at 100% capacity utilization.

Over 1500 persons are estimated to get direct full-time employment and the estimated income from this incremental employment will be about Rs 41.74 million.

In the Aurangabad- Amravati Integrated Value Chain, around 850 persons are envisaged to get full time employment at the prevailing wage rate, which, for labour is taken at the market rate of Rs 120 per day.

The incremental benefit due to quality improvement is estimated to be Rs 357.62 million per annum at 100% capacity utilization of facilities.

31.3 OTHER IMPACT ASSESSMENTS

The following impact assessment reports are annexed:

Environmental assessment and review framework

Social and poverty assessment and mitigation

Poverty and Social Assessment

Public consultation and participation framework

Resettlement framework with entitlement matrix


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32 CAPACITY BUILDING

Capacity building inputs are envisaged to be an integral part of the implementation strategy for the Agri-business Infrastructure Development Investment Program in Maharashtra. As mentioned in the approach, an assessment of the need for building capacity and raising awareness levels regarding the issues involved were woven into the analysis stage at the grassroots and implementation levels. As a result, the details regarding these aspects emerge from this assessment and have been developed to the appropriate scale, keeping in mind their viability and appropriateness to the local context.

32.1 CAPACITY BUILDING: NEEDS ASSESSMENT

32.2 FARM/PRODUCTION CLUSTER LEVEL

The need for building existing capacities at farm level, was brought out in the early stages of the value chain analysis of focus crops in the identified regions: Nashik region and Aurangabad-Amravati region.

The weaknesses in the system included lack of proper aggregation, absence of efficient and scientific systems of farming. Small/medium holding sizes, traditional farming practises and lack of field level organisation were among the reasons identified for the weaknesses.

In addition, several issues pertaining to lack of awareness at the level of the farm and production cluster, lack of farmer-organisation, no interventions to build soft/technical skills, limited or no exposure to new and efficient techniques and systems and other good practices etc.. The social assessment has flagged the problems faced by women farmers in particular.

Given the interventions envisaged under AIDP, these gaps are required to be addressed for the successful implementation of the projects.

The focus of this level of capacity building will address the following aspects:

Farmer organisation: This is the first step towards facilitating extension services at farm level; this may be undertaken by strengthening existing channels and putting into place alternate services. Capacity building of farmers will be the necessary first step for these and further interventions. Formation of farmer groups as Self Help Groups (including micro-finance activities) with special women’s groups is proposed. These groups will be further linked to various institutions and systems for further development and support activities. Group Leaders will be provided special trainings to become Trainers themselves, to ensure continuity and scaling up the activities, over the years. Farmer Groups may, over the years, become federated along the value chain to form producer companies.

Awareness building: Once the organisation is in place at the farmer level, awareness building activities will be undertaken to address all involved groups: farmers, functionaries from concerned government departments (state agri department, MSAMB) and institutions, traders, elected representatives (at PRI/ULB level). This


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will include subjects like understanding the Integrated Value Chain approach, good farm-level practises, the Agri-infrastructure Development Project, institutional linkages and available schemes, aspects pertaining to environment, economics, and social issues including gender sensitisation. Exposure visits to good examples by selected groups and further dissemination of learnings will also be undertaken.

Resource strengthening: Identification of relevant resources for each production cluster and linking them is also included

These proposed interventions are detailed in the following sub-section.

Further to the ones proposed, other interventions may also be included as the project progresses:

Input and farm-machinery modernisation

Scientific management of resources (inputs)

Farm mechanisation as a process to link to the value chain to ensure improved productivity and value realisation. This will lead to increased farm-level incomes and also help farmers become more responsive to market needs

32.2.1 Capacity Building at Production cluster/farm‐level

It is envisaged that this initiative, in its 4-5 years of running, will cover about 19,500 farmers (including focusing on women farmers as well), through the formation and support of Self Help Groups to spread awareness, build capacity and disseminate information.

The number of farmers to be covered is based on an estimation that takes into account the following:

Average land holding size in the project districts

Reported productivity per unit of land (also, based on focus crops)

Designed capacity for the Integrated value chains and the associated hub and spokes

Taking these into account, it was assessed that during the project implementation period (4-5 yrs) , about 19,500 farmers would be targeted to be covered for capacity building inputs.

Based on this assessment, workable/viable sizes of SHGs and farmer groups have been estimated. It is also envisaged that in time and with experience, some of these groups would become more professional and may transform into producer companies or cooperatives.

The train-the-trainer approach has also been included with the trainer being selected from within the farmer groups to ensure greater outreach, local inclusion and the training exercise being embedded in the area for continuity beyond the project implementation period.

The outline is described below, along with envisaged costs.

Training Input Focus Group Costs

Rs '000

Farmers, organised into farmer groups (SHGs)

14 spokes and 1 Hub: 15 x 10 groups x 130 persons per grp = 19500 farmers

5200 1 Formation of Farmer Groups

Spl Women SHGs 150 groups in 6 months across both value chains

2leaders x 150 groups= 300 persons20 persons per session= 15 tr sessions Rs2000/day x 5 dys x 300 persons

3000 2 Farmer Group Training Group Leaders: 2 leaders/group

One more refresher training of 2 1500


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days

3 Training of Trainers Key persons from NGOs/Govt)

10 persons for 2 wks at NIRD/IRMA 1000

Awareness Program for dissemination of information regarding the project and good practises (across 3 yrs)

Use of multimedia awareness in first 6 months

1000

‐ About Project objectives

‐Value chain approach

- Agri‐bus supply chains

‐Env issues

- Social/gender sensitisation

4

- Inst linkages, govt schemes, MFIs

5o officers chosen from project areas only across the state (from PRIs, ULBs, dist offices, state agri dept, MSAMB,)Representatives from Farmer associations, NGOs, cooperatives Traders awareness

[Coordinate with dissemination of information from exposure visits‐ see next point]

5 Exposure visits by identified stakeholder groups

Selected farmers and officers from applicable cluster

30 farmers +10 officers 6 locations overseas over 3 yrs

10000

6 Resource strengthening through trading of experts/practitioners

Across clusters, as applicable

As required

TOTAL (in Rs mn) 21.7

32.3 CAPACITY BUILDING AT HUB‐SPOKE LEVEL

Even as the proposed capacity building initiative seeks to address farm level capacity building, it also includes another essential facet: technical training at the level of the proposed facilities. Indeed, without the appropriate capacity building inputs the program will not be able to realise its objectives.

32.3.1 Capacity Building at hub and spoke‐level

Thorough training support, of a more technical nature, is envisaged at the facility level to handle the produce passing through and adhere to the strict quality standards demanded by the process, according to each produce type.

The facility level training will start with preparation of training modules specific to each product type. The training will cater to different target groups, focussing more on skills development and exposure to working with new technologies, including material handling systems. It is envisaged that workers at the facilities will not only be trained once but will require to be trained periodically to keep up quality standards, update technologies, remain current and efficient.

This applies more specifically to all players along the cold chain as it has highly specialised needs and standards, to maintain and deliver quality. Variations by product type will b addressed through the specialised and different training modules proposed.

The following table captures the details of the training support by product category, over a 3-4yr period. It is assumed that the facilities will become functional in the second year.


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All Focus CropsNo of Days For one std spoke (daily) No of facilitiesNo of days

Frequency of training (3 yr period) Costs (per person per day*)

Days of training

Grape 150 skilled and unskilled, 4 supervisors, 1 manager per facility

3 One full training followed by annual refresher/on demand

3 155 1395 3

8370000

27

Pomegranate 150 skilled and unskilled, 4 supervisors, 1 manager per facility


3 155 465 3

2790000

9

Banana 164 workers, 4 supervisors, 1 manager per facility

6 One full training followed by annual refresher

7 169 7098 3

42588000

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Onion 3 persons, 1 supervisor, 1 manager Aggregation pt 4 per spoke, 8 spokes

One full training

2 5 320 1

640000

16

Kesar mango 30 workers, 4 supervisors, 1 manager per facility


5 35 175 3

1050000

15

Multi product (processing) Only in the case of processing facilities being set up

as req Equipment specific training

Training days 386000 193

Module prep 3000000

TOTAL (in Rs mn) 58.824


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32.4 CAPACITY BUILDING COVERAGE

Through the formed farmer groups and facilities set up, the following aspects are envisaged to be covered, in terms of issues over the project period, across the entire integrated value chain.

Capacity Building Input Focus Group

1 Product aggregation and pre‐sorting Farmer, unskilled worker

2 Product loading –unloading, transfer to facility Farmer, unskilled worker, (at farm and aggregation level)

3 Receipt, sorting, grading (QA/QC) Facility level‐ Unskilled labour, skilled labour, supervisor, manager

4 Packaging Facility level‐ skilled labour‐‐(packaging team), supervisor, manager

5 Cold Chain Operations: operations, resource optimisation‐energy management, decision‐making on product flow, demand‐side link,

Facility level‐ skilled labour‐‐(packaging team), supervisor, manager

6 Compliances‐ HACCP,EHS, other regulatory compliances

Facility and logistics teams‐ all levels, as applicable

7 Logistics (transport, ventilation) Supply chain management‐ tracking, optimisation

Transport team Managers/owners

8 Warehouse‐ compliances and std operation, stacking stowage and ventilation systems, material management

Supervisor, manager

9 Traceability issues along value chain‐eg. EuroGAP, All along value chain

32.5 IMPLEMENTATION ARRANGEMENTS

The proposed capacity building initiative may be undertaken at the State level in Maharashtra to cover both Integrated Value Chains: Nashik and Aurangabad-Amravati, by the PMU.

The PMU may have a separate cell internally to focus on Capacity Building. This cell may:

outsource this aspect, based on competitive selection of a qualified entity, with relevant experience and expertise-- this may be an institute or NGO

identify and appoint internally, through the relevant government department, a cell to undertake the tasks.

32.6 SUMMARY FINANCIALS FOR MAHARASHTRA

MAHARASHTRA

Training Coverage Cost (Rs mn)

Soft Skills and awareness training

Farmers, officers, NGOs, Cooperatives and Farmer organisations

21.70

Product Specific (at spoke and hub level)

Employees, supervisors and managers at Spokes and Hubs (at Aggregation pt level for Onion)

Training Module Preparation and Trainer fee

Lump sum Rs3mn for module prep. Training days 193@Rs 2000 per day

58.82

TOTAL (In Rs mn) 80.52


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33 POLICY AND REGULATORY ASPECTS

33.1 ISSUES RELATING TO POLICY‐ AGRI‐BUSINESS INFRASTRUCTURE

Investments in agri-business marketing infrastructure in the country continue to be public sector driven, and have resulted in a large network of markets created across the country. New developments have not kept pace with the rate of growth in production of agricultural commodities, especially perishables like horticulture and floricultural commodities.

As a result, most of these markets do not have adequate infrastructure provision, capacities and capabilities to handle perishables. The lack of appropriate post-harvest management facilities including storage and effective evacuation mechanism- well developed and organized distribution systems; this has negated the advantages gained in production resulting in high wastage of fresh produce in India. Wastage is estimated to be around 35-40 per cent of the production equivalent to Rs 350-400 billion in value terms.

The lack of private investment in agribusiness infrastructure and post harvest handling infrastructure are due to several reasons, but significant among these is existing policies and regulatory frameworks for agricultural marketing. This is long standing legacy is set to change slowly as in recent years, the government has noted these drawbacks and taken steps to bring about positive changes. These are discussed later in this section.

33.1.1 Regulatory Issues

In addition to the overarching policy, specific regulatory issues affecting the development of agri-business and post harvest infrastructure in the country are outlined below:

Low Level of Government Financial Assistance for Development of

Agribusiness Infrastructure

Multiple schemes exist under various departments and ministries which support the development of agribusiness infrastructure in the country (Details in Annexure). The Ministry of Agriculture provides for financial assistance in the form of back-ended credit linked subsidy for establishment if packhouses, cold storages, Controlled Atmosphere Storage, refrigerated vans, mobile processing units, wholesale markets, rural markets, functional infrastructure for collection and grading etc., through the schemes of the NHM, NHB, DMI and APEDA for export related infrastructure. However, the levels of assistance and calculation of project cost needs thorough revamping.

The Working Group of the Planning Commission (agricultural marketing infrastructure for the XI Plan) has observed “that though the various schemes differ in-terms of scale of subsidy, mode of administration, and channel of fund flow, most of the schemes are back

The Task Force on Cold Chain

development in India notes that “high

wastages occur due to a multi‐layered

marketing channel, lack of infrastructure,

absence of suitable cold stores and

associated logistics as well as the lack of

an organized distribution system. These

are further aggravated by the poor road

connectivity and lack of proper storage,

handling and transportation between

production areas and consumption

centres located far‐off from each other”.


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ended subsidy schemes and are credit linked with 25 percent grant”. The Working Group further mentions that agriculture being a disadvantaged area for private investment, (as has been observed in practice), for promoting infrastructure in this sector, the scale of grant/incentives has to be much more attractive. Business in agriculture is risky due to small holdings, resource-poor farmers, technological backwardness, weather dependence, and the dispersed nature of raw-material sourcing. To provide adequate protection for meeting these risk factors, the incentives for investment have to be much more attractive in this sector. The present level of subsidy of 25 percent covers primarily the interest cost and hardly subsidizes the capital cost of the project, even though the incentive is called “capital subsidy”. If an enterprise has set up a project of Rs 1 million, he is eligible for Rs 0.25 million back-ended subsidy which exactly equals the interest cost. There is virtually no capital subsidy.”

Multiplicity of taxes

Indirect Taxes

Multiple taxes affect all aspects of marketing – starting from the levy of VAT (which even today varies among states) on even basic agriculture produce or elements of minimal value addition like rudimentary milling etc, Central Sales Tax, entry tax, octroi, purchase tax, excise tax etc. if further value addition including processing is undertaken. It is also ironic that in most of the states, while there is exemption or no VAT levied on liquor, large number of food items continue to be taxed at varying categories of rates of 1%, 4% and 12.5% (mainly on processed and packaged food products).

With the recent rulings of the many high courts that entry tax levied by states are not constitutional, it still continues to be in effect in many states thereby reducing the competitiveness of the industry.

Direct Taxes

Unlike other infrastructure sectors, investments in agribusiness/post harvest infrastructure are not considered as “Infrastructure” and hence no incentives are provided under the Income Tax Act.

Essential Commodities Act, Stock Order etc.

The Essential Commodities Act (ECA) 1955 was put in place after India’s Independence to control production, supply and distribution of essential agricultural commodities and to ensure availability of food products. In the current context of liberalizations, controlling the movement of products by licensing of dealers, limits on stocks and control on movements only hamper the growth of the agricultural sector and curtails promotion of food processing industries.

Fragmentation and Licensing

The vast Indian market is broken up into smaller local /regional markets resulting in high costs involved in transporting agricultural commodities and processed food from one part of the country to another. Secondly, even within the states, a trader /operator has to take multiple licenses for operating in more than one APMC regulated markets, which is a deterrent and in many cases acts like a trade/entry barrier.


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Convergence of Operations and Schemes:

A World Bank study has found that multiple government agencies are involved in the agricultural marketing system. Functions and schemes overlap significantly. To quote the study “at least 39 central government agencies promote agricultural marketing development, either broadly or with respect to specific commodities. Most of these agencies offer investment grants to the private sector, but weak coordination o f these efforts prevents greater synergies in development impact and in some instances leads to duplication. For example, three government ministries offer grants to invest in cold storage facilities; each grant scheme has different terms and conditions. Clearly, these schemes should be rationalized. Greater coordination should be fostered among the agencies that implement them to promote greater consistency, minimize duplication, more effectively track the level of support, and document the impact of these investments.

Administered Prices

The country has administered prices for the major food grains including cereals, oilseeds, cotton and sugarcane. These at times severely limit the private investors.

Apart from these, the National Horticulture Mission has provision for buy back intervention for the state governments which can put the private players at a disadvantage.

33.1.2 Credit

While Agriculture has been classified by the Government as priority sector for lending, investments in agribusiness remain a grey area. Given the intensive capital nature of some of the investments particularly in cold chain infrastructure, availability of credit, particularly for greenfield projects or for first generation investors become a stumbling block many a times. Secondly availability of venture capital funds in the country for agriculture and agribusiness investments is almost non-existent.

33.1.3 Technology Induction

While some efforts have been made by the APMC markets to induct mechanised equipments for sorting, grading etc, the technology in use needs a revisit. Similar is the case with storages – both ambient and controlled environment. A Study by Directorate of Marketing & Inspection (DMI), GoI mentions that only two percent of the cold storages had PUF insulation and about 18 percent of the cold storages offered deep freeze facilities. Very few cold stores (about 9 percent) had some mechanized handling systems. About 54 per cent of cold storages offered manual grading facilities.

Negligible cold storages had advanced facilities like humidity control or controlled atmosphere. Only a few cold store units in the consumption centres with capacities in the range of 2,000 to 4,000 MT have installed modified and controlled atmosphere systems

The structure of the presently applicable schemes to such infrastructure have promoted traditional technologies and not the modern technologies that are better suited to the needs and cover connected functions and operations.


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33.1.4 Capacity Building

At the current levels of operations itself, there is shortage of skilled manpower at various levels right from the farm to processing. A survey by FICCI on estimating the skill shortage in Indian Industry, estimates that shortage of refrigeration mechanics, electricians and fitters exists to the tune of 65%. In addition, shortage of agricultural scientists exists to the tune of 60% and shortage of food safety professionals exists to the tune of 70%17. There are no specialized institutes for R&D and for imparting specialized skills in bakery and confectionery. Besides CFTRI, there are very few institutions, which provide qualified manpower for food processing sector.

Similar is the case at the farm level. There is pressing need to undertake precision farming and train farmers in harvest and post harvest management of crops, especially perishable. The extension delivery mechanism is traditional and fully driven by the government. Considering the large number of small and marginal farmers in the production chain, attention paid to human resource development including development of grass root level institutions with a view to mainstreaming these farmers has received less attention. The public extension delivery system was never market oriented allowing private sector to play any significant role.

Govt policies/schemes do not provide adequate assistance to support this essential aspect to operationalise new technology use through private initiatives. Private investors are also reluctant to invest in capacity building on their own.

33.2 RECENT POLICY INITIATIVES TAKEN BY THE GOVERNMENT

Policymakers in India have taken cognizance of the changing requirement of agricultural business infrastructure as well as the importance of well-functioning markets to agricultural growth, food security, and broad-based rural development. In this regard, the Prime Minister of India, Dr. Manmohan Singh, noted during the Agriculture Summit 2005 in New Delhi that “an important commitment of the government is to integrate the domestic market to all goods and services. The time has come for us to consider the entire country as a common or single market for agricultural products. We have to systematically remove all controls and restrictions.”18

Recognising the need, there have been several policy changes that have taken place in the country, even though much needs to be still done. The Government has developed a model APMC Act 2003 and is vigorously promoting it. The modifications allow the direct marketing, establishment of private markets, single license for operating in the entire state, contract farming etc. even though there are still limitations that will need to be overcome. However, it is understood that these are the first steps and will evolve with time and experience gained from implementation.

Some additional initiatives that have been taken up are:

17 Source: FICCI Industry Survey 18 India: Taking Agriculture to the Market – World Bank


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Removal of restrictions on investments in bulk handling and storage by domestic and foreign investors (up to 100%).

Repeal of the Cold Storage Order, 1980 (promulgated under Section 3 of the Essential Commodity Act 1995) with a view to remove administrative control in licensing, rent control and requisitioning cold store space. However, the Government of West Bengal has not yet amended it and the Government of Uttar Pradesh has partially amended the same.

In 2002, GoI lifted licensing requirements, stocking limits and movement restrictions for wheat, paddy/ rice, coarse grains, edible oilseeds, edible oils and removed restrictions on access to credit under the selective credit control policy.

Enactment of plant variety protection legislation protecting intellectual property rights with respect to crop research and development

Removal of ban on future trading of 54 commodities in 2003.

Liberalised norms for Foreign Direct Investment (FDI) through automatic route by including agriculture and allied activities like horticulture, and setting up infrastructure such as cold storage and warehousing facilities

33.2.1 State Level APMC

Agriculture marketing, till recently was governed by the Agriculture Produce Marketing Committee (Act), 1963 enacted by different states. There are 2,170 Agricultural Produce Marketing Committees (APMCs) at present in the country with about 7,500 markets being regulated under the respective State APMC Acts. This was enacted to facilitate the establishment of an efficient system of buying and selling of agricultural commodities as well as regulate trade practices detrimental to farmers’ interest. The basic objective of setting up of network of physical markets was to ensure farmers obtaining fair and reasonable price for their produce by creating environment in markets for fair play of supply and demand forces, regulate market practices and attain transparency in transactions.

Under this Act, a state was divided in various marketing zones and declared as a market area wherein the markets are managed by the Market Committees constituted by the State Governments. Under the Act, once a particular area is declared a market area and falls under the jurisdiction of a Market Committee, no person or agency is allowed freely to carry on wholesale marketing activities. However, due to the State monopoly, no private markets and large scale supply chains could come up in the past and these regulated markets typically suffered from inadequate infrastructure and trade practices inimical to farmers’ interest. The monopoly of Government regulated wholesale markets has prevented development of a competitive marketing system in the country, providing no help to farmers in direct marketing, organizing retailing, a smooth raw material supply to agro-processing industries and adoption of innovative marketing system and technologies.

33.3 INITIATIVES TAKEN TO PROMOTE AGRIBUSINESS INVESTMENT IN

MAHARASHTRA

The following are some initiatives taken up by Maharashtra in the agri-business area:


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33.3.1 Amendment to APMC Act

The Maharashtra Govt has amended the Maharashtra Agricultural Produce Marketing (Regulation) Act 1963 in 2005. While regulation of markets including licensing continues to remain an integral function of the state under the amended Act, it has several enabling provisions such as:

Allowing direct marketing - direct marketing licence holder shall pay the market fee as per section 31 to the Maharashtra State Agricultural Marketing Board. License fee for direct marketing in the state as a whole is Rs 50,000 per year and for operating in division is Rs 15,000 per year. Direct marketing license holder cannot operate a private market or farm-consumer market

Establishment of private market - Private market cannot be operated in marketing area of Bombay APMC. In other places the private market has to be located at a minimum of 10 km from main market and 5 km from sub market yard. The new Private market has to be spread over a minimum of 10 acres in district areas with a minimum investment of Rs 5 crore and 5 acres with a minimum investment of Rs 2 crore in other places.

License fee to operate a private market is Rs 50,000 in district area and Rs 25,000 in other places; Bank Guarantee of Rs 2 million and Rs 0.5 million have to be provided respectively for these locations.

Farmer market – can be established but over a minimum of 1 acre of land with minimum investment Rs 1 million. The annual license fee for operating such markets is Rs 10,000 and the operator has to provide a Bank Guarantee of Rs 100,000. However, there is restriction in the sale of produce by individual farmers in these markets with a maximum of 10 kg per day in case of fruits and vegetables and 50 kg per day for food grains.

Single License for operating in the state – The amendment allows for single license to operate in more markets than one. However, in actual practice, there are still lot of hurdles and permission to be taken to operate in each of the markets.

The amendment exempts the payment of market fee in case produce is procured directly from farmers in case of exports or used for processing.

The direct marketer or private market developer/operate has in addition to the license fee pay market supervision fee to the State Government.

33.3.2 Grapes Processing Industry Policy, 2001

Declaration as a Preferential Area:

The state has declared the winery industry as preferential area to avail easy loans

from financial institutions like NABARD.

Declaration as a Small Scale Industry:

Concessions in Excise Duty:

For those wine industries whose production has been started before 19th September, 2001, the excise duty will be charged at the rate of 50 per cent of the production


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expenditure incurred by such units instead of present 100 per cent rate. For those wine industries whose production has been started or would be started on or after 19th September, 2001, the excise duty will be charged at the rate of 25 per cent of the production expenditure incurred by such units. Such concessions will be admissible

for period of 5 years.

Concessions in Sales Tax

The state is working towards getting wine manufactured in the country to get a concessional rate of Sales Tax.

Exemption from Excise Duty

The state has provided 100% exemption from payment of excise duty to wines manufactured in the state

Wine Sales License Fee:

Exemption for 10 years on wine sale license fee (Rs 5,000 per year)

33.3.3 Package Scheme of Incentives, 2007

Covers cold storage and agro industries

New projects to be eligible for Industrial Promotion Subsidy (IPS). Payment of IPS every year will be equal to 25% of any Relevant Taxes paid by the eligible unit to the State or to any of its departments or agencies as under

Ceiling as % of Fixed Capital Investment Number of years Taluka / Area Classification Micro & Small

Manufacturing Enterprises

Medium Manufacturing Enterprises / LSI

Micro & Small Manufacturing Enterprises

Medium Manufacturing Enterprises / LSI

A ‐ ‐ ‐ ‐

B 20 ‐ 6 ‐

C 30 20 7 5

D 40 25 8 6

D+ 50 30 9 7

No Industry 60 35 10 8

District

Units under expansion will get 75% of benefits eligible for new units as above

Zero VAT Units also eligible for getting employment based incentive as proposed for low HDI districts in the form of 75% reimbursement of expenditure on account of contribution towards Employees State Insurance (ESI) and Employees Provident Fund (EPF) Scheme for a period of 5 years However the quantum of incentives for these units will be limited to 20%, 30%, 40%, 50%, 60% of FCI in “B”, “C”, “D”, “D+”, No Industry District respectively.

Exemption from Electricity Duty - Eligible new units in C, D, and D+ areas and No-Industry District(s) will be exempted from payment of Electricity Duty for a period of 15 years

Waiver of Stamp Duty- New as well as units undertaking Expansion/ Diversification will be exempted from payment of Stamp duty up to 31st March 2011 in “C, D, D+ Talukas and No Industry Districts. However, in A and B areas, stamp duty exemption would be available as given below:

o BT and IT units in public Parks : 100%


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o BT and IT units in private Parks : 75%

o Mega Projects : 50%

Refund of Octroi / Entry Tax in lieu of Octroi - An eligible unit, after it goes into commercial production, will be entitled to refund of Octroi duty / Entry Tax (in lieu of Octroi), account based cess or other levy charged instead of or in lieu of Octroi payable and paid to the local authority on import of all items required by the eligible unit. This incentive will be admissible in the form of a grant restricted to 100% of the admissible fixed capital investment of the eligible unit for a period 5 / 7 / 9/ 12 years respectively in the B / C / D / D+ areas. In respect of No Industry District areas, however, the period will be 15 years.

Strengthening the Micro, Small and Medium Manufacturing Enterprises to promote quality competitiveness, research and development and technology upgradation:

o 5% subsidy on capital equipment for technology up gradation subject to maximum of Rs.2.5 million

o 50% subsidy on the expenses incurred for quality certification limited to Rs.100,000.

o 25% subsidy on cleaner production measures limited to Rs.500,000.

o 50% subsidy on the expenses incurred for patent registration limited to Rs. 5 Lakh

Special Incentives for Units coming up in the low Human Development Index Districts:- New units setting up facilities in notified districts (Annexure-II) and employing at least 75% local persons as defined in the Employment of Local Persons Policy will be offered 75% reimbursement of expenditure on account of contribution towards Employees State Insurance (ESI) and Employees Provident Fund (EPF) Scheme for a period of 5 years. However these benefits will be limited to 25% of FCI.

33.3.4 Others

Subsidy for constructing onion storage @ 25% of the project cost estimated at Rs 6,000 per MT conforming to the specifications laid by the MSAMB

Subsidy for erecting grain handling unit - subsidy of 10 %of the cost of the machine or Rs 200,000 whichever in less to the beneficiary APMC

Subsidy @ 25 % of the total project cost with maximum limit of Rs 250,000 per project for constructing cold storage with a capacity of 100MT.

Subsidy for putting up stall at fruit festivals to cooperative societies/APMC/SHGs @ Rs 1000/- for stalls in grade 1 cities and Rs 700/- per stall in other cities and towns.


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33.4 EXISTING SCHEMES PERTAINING TO AGRI‐BUSINESS INFRASTRUCTURE

33.4.1 Impact of Schemes on Development of Agribusiness Infrastructure

Nearly all the currently operational schemes do not promote convergence. Firstly, this has resulted in investors or infrastructure developers not being able to take advantage of dovetailing/convergence of scheme funds and provisions.

Second, the quantum of assistance and the level of assistance (in terms of percentage and project cost) do not reflect the current prices and need. For example, the project cost of cold stores taken by all the schemes of the Ministry of Agriculture are based on the cost of the projects around 1999 or 2001 and for the creation of RCC infrastructure with glass wool insulation and the like, not in accordance with more recent developments like PUF panels thereby restricting the induction/adoption of advancements in technology.

Third, the administered prices or the provision for market intervention within the state’s ambit of functioning further restricts actual players and promotes intermediation.

Fourth, the schemes actually support the fragmentation of the value chain as they support one or the other individual components and not the complete chain.

Fifth, most of the Schemes do not promote creation of backward linkages in terms of development of grassroots institution framework by private investors as also don not support the investor undertaking market driven farming.

The level of assistance (in terms of % of project cost) has been captured well by the Working Group of the Planning Commission (agricultural marketing infrastructure for the XI Plan). However, nearly two thirds of the eleventh plan period has already passed and no developments have taken place (Except 1-2 schemes of the Ministry of Food Processing Industries)

33.5 POLICY INITIATIVES CRITICAL TO SUCCESSFUL IMPLEMENTATION OF AIDP

33.5.1 Applying the Integrated Value Chain approach

The limited and inadequate facilities of existing markets are major constraints to efficient operations in terms of agri-business infrastructure and services.

However, fragmented and component wise development (as observed from past experiences) are not going to be effective. Efforts over the longer term, however, have to be framed within a holistic agricultural market development strategy integrating all components and elements.

The current initiative promotes the Integrated Value Chain approach for Agri-business infrastructure and services. This approach is envisaged to address the discussed infirmities and create awareness along the chain on the value erosion due to different actions taken at different points of supply chain. It is also expected that the support to be provided under the proposed project, will address the presently low level of assistance available and attract larger investments. This will allow improving the operations and facilities and address the criticality of ensuring that more resources are used to improve agribusiness infrastructure development and link farm to the market effectively.


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33.5.2 Suggested Policy Interventions

In the context of Integrated value chains and the existing issues in this area, the following set of suggestions are presented for consideration and coordinated action towards the operational climate for the project:

Single uniform license to enable procurement in any district or market without hindrance or , single unified license for buying, procuring, selling of inputs, storage, and processing of all agriculture commodities for the State as whole be introduced.

Abolition of mandi market fees charged by APMCs on private market developers and investors

Relaxation of restriction on storage

Including agri infrastructure legible for viability gap funding

Investment in agri infrastructure to be considered for tax exemptions – Investment in agri business infrastructure to be accorded 100% depreciation in first year similar to that for cold storages to be carried forward for at least three years of operations


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34 IMPLEMENTATION FRAME WORK

34.1 PROPOSED MODELS UNDER PUBLIC‐PRIVATE PARTNERSHIP

34.1.1 Approach to Public–Private Partnership (PPP) in India

“The approach to PPPs must remain firmly grounded in principles which ensure that PPPs are

formulated and executed in public interest with a view to achieving additional capacity and delivery

of public services at reasonable cost. These partnerships must ensure the supplementing of scarce

public resources for investment in infrastructure sectors, while improving efficiencies and reducing

costs. As noted in the Approach to the Eleventh Plan, PPPs must aim at bringing private resources

into public projects, not public resources into private projects.”

‐11th Five Year Plan (2007‐12), Volume I, Planning Commission, Government of India

After the unprecedented success of the 10th Five Year Plan, which achieved average annual growth rate of 7.7 per cent, the growth target for 11th Five Year Plan has been further enhanced to 9 per cent with acceleration projected to reach 10 per cent by the end of the Plan. To achieve these growth targets, it is believed that India needs to step up its infrastructure investments from the present level of around 5 per cent to about 8 per cent of GDP which may amount to almost USD 400 billion of investments.

While acknowledging the dominant role of the public sector in building infrastructure, the 11th Plan also appreciates limitations of the public sector in mobilizing the total requisite resources. The share of the private sector in infrastructure investment is, therefore, projected to rise substantially from about 20% estimated in the Tenth Plan to around 30% in the Eleventh Plan. It has, therefore, suggested attracting private investment through “appropriate forms” of public private partnerships to meet the overall investment requirements.

34.1.2 Experience of PPP in India

PPP approach in India, as elsewhere in the world, has been guided by the belief that it not only brings much needed financial resources from private sector but also ensures greater efficiency in provision of public services. The database of PPP in India, prepared by Department of Economic Affairs, Ministry of Finance, reveals that as on November 15, 2009, there have been around 450 PPP projects in focus sectors where a contract has been awarded and projects are under implementation/near implementation. The total project cost is estimated to be about Rs. 225,000 Crore or USD 48 billion.

The road sector clearly dominates PPP experience in India and accounts for about 60 per cent of total number of PPP projects so far. Other significant sectors, in terms of numbers, are urban development (16 per cent), ports (10 per cent), tourism (6 per cent) and energy (5 per cent).

Roads

61%Urban Dev

16%

Por ts

1 0%

T ourism6%

Energy5%

Others2%

Number of PPP Projects in India – Sector‐ wise distribution


263

In terms of value, though, while road remains leading sector, accounting for 45 per cent of total value of projects, port and airport sectors are next accounting for 30 per cent and 9 per cent of total value of PPP projects in the country so far.

Further, Karnataka, Andhra Pradesh and Rajasthan are leading states and National Highway Authority of India is the leading central agency involved in PPP projects in the country. Finally, in terms of main types of PPP contracts, almost all contracts have been of the BOT/BOOT type (either toll or annuity payment models) or close variants.

A study of World Bank regarding experience of developing countries reveals that Telecom (54 per cent) and Electricity (23 per cent) together account for more than 75 per cent of investment commitments to infrastructure projects with private participation. Also, cumulative investment in PPP projects near/under implementation in India at around USD 48 billion accounts for merely 5 % of investment commitments in such projects in developing countries during 2000-2008. Of course, it may not be entirely fair to compare investment “commitments” to projects near/under implementation where contract has already been awarded. More so, as PPP projects have truly gained momentum in India only during last 4-5 years.

This is also corroborated by another set of data which has put India at 2nd position behind Brazil amongst top 10 countries by investment commitments in infrastructure with private sector participation. In fact, India accounted for as much as USD 110.2 billion (13.1 per cent) of such investment commitments, marginally behind Brazil which attracted USD 111.9 billion.

34.1.3 PPP in Agribusiness Infrastructure:

AIDP has envisaged PPP model for implementation of proposed integrated value chains. The key rationale for introduction of PPP model in infrastructure projects has been a combination of private sector efficiency and public budget constraint. It is being argued similarly here that scale of investment needs for agribusiness infrastructure are too huge to be adequately met by public sector alone. Moreover, it is agreed that most of the projects in agribusiness suffer from large inefficiencies and a PPP structure may therefore bring in much needed efficiency in both construction and operation ofproposed agribusiness infrastructure.

However, the proposed financial structure for AIDP would be one of the first such efforts in the country to create Agribusiness infrastructure under PPP model. As can be seen from sector-wise distribution of PPP projects in the country, Agribusiness has not yet been covered as a sector under PPP projects under/near implementation. To be sure, this would be true of PPP experience worldwide too as this model has been preferred mostly for creation of public

Total investment commitments to infrastructure projects with private participation in developing countries, by subsector, 2000–2008 : USD 843.3 billion (2008 USD)

Roads45%

Urban Dev7%

Ports29%

Airpo rts9%

Energy8%

Others2%

Value of PPP Projects in India – Sector‐ wise distribution

Electricity23%

Natural gas3%

Telecoms54%

Airports3%

Railways2%

Roads8%

Seaports4%

Water treatment plants

1%

Water utilities2%

Combined water and electricity

utilities0%


264

utilities and basic infrastructure, specially for projects which involve large scale upfront investments even as natural ownership of assets may lie with the Government.

34.1.4 Viability Gap Funding Scheme (VGF)

It was earlier envisaged to provide funding to proposed projects for integrated value chains under Viability Gap Funding Scheme. The financial assistance available under VGF of Ministry of Finance, Government of India is normally in the form of a capital grant at the stage of project construction. The financial assistance is equivalent to the lowest bid for capital subsidy, but subject to a maximum of 20 per cent of the total project cost. In addition, the sponsoring Ministry/ State Government/ statutory entity may propose to provide assistance up to a further 20 per cent of the total project cost.

To be eligible for consideration under VGF, a project needs to be a PPP project and should meet the following criteria:

1. The PPP project has to be implemented, i.e. developed, financed, constructed, maintained and operated for the project term by a private sector company to be selected by the Government or a statutory entity through a transparent and open competitive bidding process.

2. The criterion for bidding shall be the amount of viability gap funding required by the private sector company for implementing the project where all other parameters are comparable.

3. The PPP project should be from one of the following sectors: Roads and bridges, railways, seaports, airports, inland waterways, power, urban transport, water supply, sewerage, solid waste management and other physical infrastructure in urban areas, infrastructure projects in Special Economic Zones, international convention centers and other tourism infrastructure projects. However, it has been provided that the Empowered Committee may, with approval of the Finance Minister, add or delete sectors/sub-sectors from the aforesaid list.

4. The project should provide a service against payment of a pre-determined tariff or user charge.

5. The concerned sponsoring entity has to certify with reasons the following: The tariff /user charge cannot be increased to eliminate or reduce the viability gap of the PPP project. The project term cannot be increased for reducing the viability gap. The capital costs are reasonable and are based on standards and specifications normally applicable to such projects where the capital cost cannot be further restricted for reducing the viability gap.

6. Finally, the Scheme will apply only if the contract/concession is awarded in favour of a private sector company in which 51 percent or more of the subscribed and paid up equity is owned and controlled by a private entity.


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34.2 CHALLENGES OF VGF MODEL FOR AGRIBUSINESS INFRASTRUCTURE UNDER

AIDP

34.2.1 Under VGF, ownership of project assets has to remain with the

Government

To satisfy this core condition of VGF, land would need to be arranged by the concerned state governments. In case of AIDP, this would require a relatively large parcel of land (say, around 25-30 acres) to be provided for building Hubs and smaller parcels of land (say, around 5-10 acres) to be provided for setting up various Spokes of each Integrated Value Chain. Also, such land need to be at locations suitable for setting up such facilities in terms of basic infrastructure and market connectivity.

The detailed field surveys done in Maharashtra for proposed value chains have brought out difficulties in this regard. There are no such land parcels available with the Government of Maharashtra which can be offered for proposed value chains. The State Government representatives have also expressed their inability to provide land for setting up these value chains and have clearly advised their preference for a model which allows private entrepreneurs to bring in their own land for the projects. However, such an arrangement may not then quality the projects for positioning under VGF.

34.2.2 Private sector is given a contract/concession for the project term to

recover its investments

It may be appreciated here that typically PPP projects like roads, ports, airports etc. provide certain captive market to interested developers and therefore may not require large efforts at market development. In fact, many PPP facilities evolve as monopolies which ensure certain traffic (market) to private sector bidder selected for building and operating these facilities. In case of roads and bridges under PPP, most of these projects have little competition and get assured traffic. In case of modernisation of airports under PPP in India, no new or existing airport is permitted by Government of India to be developed as, or improved or upgraded into, an International/Domestic Airport within an aerial distance of 150 kilometers of the Airport before the twenty-fifth anniversary of the airport opening date. Thus, the project operators in all these cases are assured a captive market and “market risk” to a large extent is taken care of under PPP model. The only market risk in such cases is accuracy of traffic projections.

This may though not be applicable to proposed integrated value chains under AIDP. The facilities created under these projects, though need based, would require to compete with similar existing and future facilities both in the public and private sector. Considering the effort/investment required in building forward and backward linkages for proposed projects, the condition of transferring ownership of the projects back to the government/sponsoring entitymay discourage promoters/private enterprises from bidding for these projects under VGF.


266

34.2.3 User charges need to be determined before implementation of the

project

This would be another challenge for integrated value chain projects. User charges need to be determined in advance for projecting “viability gap” for these projects, which may be a difficult exercise in agribusiness projects. This is due to greater market uncertainties in this sector. While user-charges at the level of Hubs (large storage, trading and value added facilities) may be possible to be determined, this may not be practical at the level of Spokes (Agri-business centres) considering the range and scale of services. Moreover, any private enterprise operating in dynamic market conditions needs to have flexibility in pricing its services. The absence of such flexibility may come in the way of success of these projects.

Thus, the above requirements of VGF viz. state ownership of land, transfer of assets, pre-determination of tariff may come in the way of smooth implementation of the integrated value chain projects. These requirements would be mostly alien to agribusiness entrepreneurs in the country and may not therefore attract sufficient interest from private investors. Moreover, as mentioned above, even in case of investor interest, it would be extremely difficult to ensure compliance of the IVC projects with eligibility conditions of VGF.

34.2.4 Need for a flexible PPP structure for AIDP

The above challenges, however, may be met by providing the required flexibility in project structure. It needs to be appreciated that the PPP offers a range of options and is much more than a BOT model. The PPP options range from concessions and joint ventures to service contracts and O&M contracts. In fact, service contracts and O&M contracts are considered to be first steps in involving private sector as these may be implemented quickly. In a sector like Agribusiness, where PPP models have not been tried earlier, flexibility in choosing an appropriate model may be essential to success of the program.

34.2.5 BOT vs BOT –Annuity models

BOT model has got two main approaches to handle traffic/market risk. Under the toll-based Build-Operate-Transfer (BOT) projects, traffic/market risk is borne by the private operators. Under this model, capital subsidy may be provided to selected bidder for meeting the projected “viability gap” during construction phase. An important variant of this approach is “shadow tolling”, wherein private partners do not collect tolls from the road users but are exposed totraffic risks, as they are paid on the basis of the volume of actual traffic. This model has been found attractive due to provision of subsidy during construction phase. In fact, as mentioned earlier, VGF which is the main scheme providing government support to PPP projects has provision for providing capital subsidy normally during construction phase. On the other hand, the private bidder remains exposed to traffic/market risk under this model which may make it unattractive for projects which are seen to have large market risks.

Under BOT- Annuity Model though, the sponsoring entity (government or its agency) absorbs the traffic risk and the private operator is paid for making the specified level of road service available regardless of the extent of traffic, these are also known as “availability-based” projects. This model has thus been found acceptable for NHAI projects for highways which assures private operators regular “annuity” payments over project period. Of course, in this case, private operators may need to arrange for large capital funds for completing the project which has its own cost implications.


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34.2.6 SPV Model

Large sized and complex PPP projects are often developed through an SPV route, wherein a project SPV is incorporated and it takes the responsibilities of acquiring land and other statutory and environmental clearances. The SPV – along with the project – is then bid out through a transparent process.

There are other variants possible of this model which may though vary from traditional PPP approach. For example, it may be envisaged to invite private operators for participation in the equity structure of the SPV along with the government agency. The equity being offered to private operator may be either majority share (51 % or more) or minority share (49 % or less), depending on the nature of the project and decision of the concerned government agency in this regard. The selected private operator shall also be given responsibility of O&M of the project under this model.

34.3 PREFERRED OPERATIONAL MODEL FOR AIDP

It may be noted here that the draft Detailed Project Report had given three operational models as options for project implementation. It would be useful to mention suggested options once again.

Option 1 assumed entire value chain to be funded under existing guidelines of Viability Gap Funding Scheme which therefore assumed a BOT model with maximum 40 % of project cost as grant support, as mentioned above.

Option 2 suggested unbundling of value chain components in such a manner that some components (in particular “Hubs” ) may be eligible for funding by VGF even as rest of the components would be required to be funded by other grant support schemes like NHM, RKVY etc.

Finally, Option 3 provided for a separate scheme to be launched by state governments (particularly by Government of Maharashtra) which would provide for maximum 40 % of the project cost as grant support to private entrepreneurs setting up value chain projects.

The provision of alternative options revolved around a major concern: Whether State ownership of assets and thus provision of land by the government should be a pre-requisite for PPP approach as suggested by BOT Model It also emanated from the uncertainty surrounding the willingness and ability for state governments to provide suitable land for the value chain projects.

All the above models were discussed in detail and it was finally decided to recommend an operational model which would adhere to the essentials of PPP approach in terms of public ownership of proposed agribusiness infrastructure so as to ensure benefits to all stakeholders in a transparent manner. The model selected for implementation of AIDP is based on a series of discussions with representatives of Asian Development Bank, Department of Economic Affairs, Government of India and State Governments of Bihar and Maharashtra.

The recommended model requires the concerned state governments to provide land for Hub and Spokes so that project meets the requirement of ownership by a government or statutory entity. Thus, a large land parcel close to a large market centre which is owned by government needs to be identified for creating the Hub (Distribution Centre). Further, smaller land


268

parcels, close to producing areas, which are owned by government, may need to be identified for setting up various spokes (Agri Business Centres etc.) for the Hub. Based on availability of land, proposals would be invited from investors for creating infrastructure along the value chain at these project sites on Build--Operate-Transfer model. The recommended concession period under this model is 20 years.

While the essential operational structure of the model remain same for both Bihar and Maharashtra, it has been recommended that project grant support available may be different in case of these two states. Thus, minimum equity contribution required from a private operator, as percentage of project cost,may be 30 % in case of Maharashtra compared to 10 % in case of Bihar. This has been recommended based largely on two counts. First, as argued earlier, too, Maharashtra and Bihar are atdifferent stages of development process at present and therefore it is believed that in Maharashtra, potential bidders may be willing to put in larger equity contributions considering larger market size. Second, while projects in Bihar would require renovation of erstwhile market yards and rather limited value chain infrastructure, those in Maharashtra would be entirely value add infrastructure providing greater revenue options for a private operator.

However, as the private operators would be selected through a bidding process, actual project grant required maydepend on the response of the potential bidders.

The salient points of the selected operational model are as follows:

1. A state promoted mother Special Purpose Vehicle (SPV) would be the main implementing agency for the project which would facilitate core infrastructure convergence and provisioning for the IVC. The mother SPV will be 100% owned by the state government and will channel the funds for the IVC investments to the private sector developer and for the link infrastructure to the government departments as needed.

2. This government-led mother SPV would act as the concessioning authority and will invite bids from private developers to design, construct, operate and maintain (O&M) the IVCs and will contract them on Build-Operate-Transfer [BOT] basis at value chain level.

3. AIDP will be designed as a State level scheme. ADB funds can be used for the development of link infrastructure deemed necessary for the success of the IVC project, for meeting the need for public funding as capital expenditure through the private sector for the IVC project and also for the grant component to be disbursed as viability gap funding (which is not to be treated as subsidy in view of the fact that it is a grant to the project to build infrastructure that will be transferred back to the government after the concession period is over, as per the BOT model).

4. The IVC will include mandatory infrastructure, i.e. the basic (such as internal roads, power and water supply system, waste management etc.) and Agribusiness (such as trading platforms and shops, CA chambers, warehouses etc. ) infrastructure within the project sites as suggested in Detailed Project Reports (DPRs). On top of the mandatory infrastructure, the private developer can also invest in more commercial/add on infrastructure using its own funds as applicable on a case by case, subject to approval by the state government. The link infrastructure, also part of the program, would include linking public services such as bulk water, power and connecting external roads from the existing supply points to the market yards, as needed.


269

5. The works for link infrastructure would though not be a precondition for the IVC investments to start but they could be run in parallel.

6. The private developer will invest at least 10% of the total project cost of the mandatory components of the IVC in Bihar which would be 30% in case of Maharashtra.

7. The grant for the IVC mandatory infrastructure will be released to the private developer into installments based on the achievement of predefined milestones. The grant will be the bidding parameter, while the technical parameters will be the eligibility parameters.

8. The concession period could be increased up to 20 years to make it more attractive to the private developer.

9. The service charges for the market yards infrastructure will be capped and indexed to inflation to be determined by a committee .appointed by the state governments and subject to regular revision.

10. For the infrastructure, standards incorporating both the quality and the quantity of outcomes will be fixed. Also for the O&M, service level standards will be fixed and private developer will have to meet them throughout the concession period. There would be provision for the oversight and periodic certification by an independent engineer throughout the concession period.

11. The revenue collection will be done by the private operator and shall be shared with the mother SPV as per contract conditions given in the Model Concession Agreement. (See Annex).

A diagram of the model is shown below:

12. Finally, in the case of Maharashtra, it is recommended to allow additional flexibility in view of foreseen difficulties in providing land for projects by the state government. As the state government may not be in a position to provide land for the entire IVC and the private sector is willing to bring its own land for some components, such

Gov-led SPV

Pvt. SPV

Commercial/other

facilities(business centers,

cantines, etc)

On site and Marketing facilities

(warehouse, cold chain, waste management, etc)

GOB / GOI / ADB

Services to users

• Overall management of IVC components• Provide funds for the IVC components• Aggregate the unbundled IVC components• Bid out to private developers for design, construct, O&M• Manage capacity development activities

•Provide funds for the link infrastructure to Gov Depts

User charges(capped)

grants/GOB budget

design, finance, construct, and O&M

Leverage of private sector funds

design, construct and O&M

VGFVGF, Other

schemes

Link Infrastructuregrants/GOB budget

User charges (market based)


270

components of IVC may be owned and operated by private sector with the support of existing schemes and government funding.

13. Further, a Project Management Unit (PMU) or a state level SPV could be authorized to purchase the land for the IVC's hubs/spokes for other IVCs if government land is not available. Once the land is owned by the government, the above mentioned model can be applied in Maharashtra as well.

34.3.1 Proposed Project Grant, O&M Framework and Recovery of Charges

1. The private developer and operator, selected through a bidding process, would be responsible for detailed design, engineering, building and O &M of the project assets including the common infrastructure and facilities.

2. The mother SPV (the Concessioning Authority) would, as consideration for design, building and managing the project assets and facilities, pay to the private developer and operator (the Concessionaire) project grant as specified in the bid documents submitted by the successful bidder. Such Project Grant amount shall be paid by the Concessioning Authority based on milestones on progress of the Project as per following schedule:

a. 20 % of the Project Grant after completion of 25 % of Project Construction as per the project requirements and so certified by the Independent Engineer

b. 20 % of the Project Grant after completion of 50 % of Project Construction as per the project requirements and so certified by the Independent Engineer

c. 20 % of the Project Grant after completion of 75 % of Project Construction as per the project requirements and so certified by the Independent Engineer

d. 20 % of the Project Grant after issue of Completion Certificate by the Independent Engineer as per the project agreement

e. Balance 20 % of the Project Grant after satisfactory operation of Project Services and Facilities for one year as to be decided by the Concessioning Authority

3. Further, the private developer and operator, after commencement of operations, may be required to pay the Concessioning Authority Royalty per Month equivalent to 30 per cent of the Gross Revenue chargeable by the Concessionaire .

4. Private developer and operator may recover the O & M charges from the traders and other entrepreneurs by way of following monthly charges:

a. Charge I - Monthly Fixed Lease Charges apportioned to all traders on the basis of allocable area (shops) to each of them

b. Charge II - Monthly Variable Utility Charges will be based on monthly consumption of utilities such as power, water, effluent treatment and other O & M cost apportioned on the basis of allocable area to each of the traders

c. Charge III - User Fee would be charged for use of warehouses, sorting/grading lines, CA chambers and other value added facilities which may be aligned with existing market rates


271

5. Private developer may enter into a Lease Agreement with the traders. The Lease Agreement shall provide rights to the traders for carrying out trading operations and also using common facilities in the Market yards. The Lease Agreement shall also contractually bind the traders to pay all such charges as may be levied by SPV for the allotment, development and maintenance of infrastructure assets and provide recourse by way of right to replace traders who have defaulted in respect of payments to the private operator SPV or follow practices which inhibit project operations.


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35 PROJECT IMPLEMENTATION STRUCTURE

In the case of Maharashtra, implementation arrangements will be slightly different from Bihar as the State Government is keen to implement the project through existing State Agricultural Marketing Board. This is being done to create necessary synergy between existing marketing yards (under APMC) and proposed value chain infrastructure under AIDP.

However, the essential structure in terms of Empowered Committee may be required in this case, as with Bihar. The Empowered Committee may be headed by Principal Secretary (Agricultural Marketing) in Maharashtra and may have representatives of state government departments like planning, finance, co-operatives and agriculture. The roles and responsibilities of Empowered Committee may be the same as suggested for Bihar.

Further, it would be required to constitute a Project Management Unit (PMU) inside the Marketing Board which would be responsible for overall implementation of the project. It is recommended that PMU should have an organisational structure which enables it to make decisions quickly. As the Government of Maharashtra is not keen on incorporating a mother SPV for this purpose, PMU may be required to be given requisite financial autonomy. PMU may be headed by a dedicated Chief Executive Officer and may include experts from both inside and outside the Board. The experts may be drawn from diversified areas like agriculture-extension, agriculture marketing, agribusiness Infrastructure development, legal documentation and financial management. The external experts may be hired on long term contracts (at least 3 yrs) from market on need-based contracts through a transparent process.

It may further be required by PMU to appoint a Project Consultant or Project Management Agency to assist it in project implementation. The role of PMA may be similar to that envisaged in Bihar as project would require bid process management as well as effective monitoring of the project during both construction and operation. Further, PMA may also be given responsibility of assisting PMU on “soft” issues i.e. strengthening of existing farmers’ co-operatives, imparting training and providing requisite institutional linkages along the value chains.

The diagram presents the recommended implementation structure for AIDP in Maharashtra

PMA

Link Infrastructure (Access roads, power

and water linkages, waste disposal etc)

Bid Process Management Monitoring

and Evaluation

Capacity Bldg Interventions

‐Consortium/federations ‐Training ‐Technology Inputs‐Exposure visits ‐Market linkages

Inside Board

Prog Implementation through PMU

Prog Management

Empowered Committee on Agricultural Marketing Headed by Principal Secy (Agr Marketing)

Project Management Unit (PMU)

Design, Build & Operate Core & Agribusiness Infrastructure

(Renovation/refurbishment of shops, Value added Infrastructure)

Prvt Developer/Operator


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35.1 ROLE AND RESPONSIBILITIES OF PROJECT IMPLEMENTING AGENCY

(MOTHER SPV/PMU)

In Maharashtra, the PMU is required to be sufficiently empowered to undertake implementation of AIDP.

Responsibilities of Implementing Agency will include:

Implementation of AIDP as approved by DEA/ADB in consultation with the State Government

Mobilising requisite state government contribution (30 %) and receiving Project Funds from ADB as required for the programme

Reporting progress regularly to the State Level Committee/Board

Make and ensure approval of all follow-up plans required as part of the programme roll out and implement them

Co-ordinate with other departments of state government for getting requisite clearances (power and water connections, access roads etc.) and ensuring link infrastructure development including social infrastructure

The suggested organisational structure of the Implementing Agency is shown in the following diagram.

MD/CEO

Agri Extension Services

Program manager (assisted by 2 support staff)

Agri Marketing

Agribusiness Infrastructure

Legal & Financial Management

need based Domain Experts

PMA


274

Summary Financials

The overall project financials are summarised in the table below, for the both Integrated Value Chains, in Maharashtra:

Budget Heads Costs (in Rs mn)

1 Project costs (Integrated Value Chains) 715.35+277.08

2 Implementation and project management @10% ADB funds 35.05+13.58

3 Capacity Building costs 48.31+32.21

Grand Total 1121.58

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