DPR - Banana Mango Ripening Chamber

OPERATIONALISING THE AGRIBUSINESS INFRASTRUCTURE DEVELOPMENT INVESTMENT PROGRAM- PHASE II FINAL REPORT
144
DPR:AURANGABADAMRAVATI
INTEGRATEDVALUECHAINPROJECT
DescriptionofHubandSpokes
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:
AggregationPoints FocusCrop
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 FOCUSCROPSANDESTIMATEDTHROUGHPUT
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 PROPOSEDFACILITIES
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,

146
existing facilities, their capacities and utilization has also been taken into account. The
proposed new facilities are as follows:

20.2.1 AmbientOrangePackhouse
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.
OrangeProcessFlow:
Process flow for the orange in the pack house shall be as shown:
Technology/
Facilities
Description
QualityCheck
Qualityofthefarmproducesshallbeassessedatthepackhousebasedoncertaincriteria
suchasmaturitylevel,sizeoffruitsetc.
Sorting and
Grading
Manual sorting and grading is suggested. Sorting and grading tables are proposed in the
packhouse.
Packing
Packagingtableswouldbeprovidedformanualpackingoforange.Plasticcrateswouldbe
usedforpacking.
Transport
Produceshallbetransportedinnormaltrucksof10/15MTcapacity.
AggregationMechanismforthePackhouse
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.

147
PackhouseLogistics
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 DryWarehouse
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 Addon/CommercialFacilities
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 BhusavalNagpur section of Central Railway.
Proposed aggregation points and their distances from the spoke are as follows:
AggregationPoints FocusCrop Distance(inKms)
Pathroth BananaandOrange 10
Pandri BananaandOrange 5
Anjangaon Banana 1
Karla OrangeandBanana 10
Bhandaraj Orange 7
Lokhed Orange 4
NimkhedBajar 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 districts
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
season as follows:
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.


149
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 BananaPackHouse
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.
3
3
3
3
3
5
5
5
5
5
5
5
1
2 4 6 7 8

150
BananaProcessFlow:
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 Postharvesthandlingfacilityforqualitycheckandwash.
Sortingandgradingbasisfingerlength,shape,colour,etc.
Retailpackage(branded)orunitizedtransportunitsareformed.
Ripening Receivedinsmallunitizedretailpacksfrompackhouse.
Ripeningtemperatureis15C20Cwith9095%RH).
Ethyleneisgeneratedintheroomtogiveuniformripening.
Storage Bananastorageisatatempof13C14Cforaperiodof3weeksinethylenefreeair.
CAstorageispracticedforaddedshelflifeupto6weeksat14C.
Transport For domestic purpose, transportation through both modes 80% by rail wagons and rest
of20%isthroughroadinnormaltrucks(89MT).
Forexport,Reefercontainersareusedforseatransportation.
AggregationMechanismforthePackhouse
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.

151
PackHouseLogistics
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 AmbientOrangePackhouse
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.
OrangeProcessFlow:
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
suchasmaturitylevel,sizeoffruitsetc.
Sorting and
Grading
Manual sorting and grading is suggested. Sorting and grading tables are proposed in the
packhouse.
Packing Packaging tables would be provided for manual packing of orange. Plastic crates would be
usedforpacking.
Transport Produceshallbetransportedinnormaltrucksof10/15MTcapacity.
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.


152
21.2.3 BananaRipeningFacility
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.

21.2.4 DryWarehouse
which is abundantly produced in catchment of cluster.

21.2.5 Otherfacilities
There will be other facilities/amenities such as:
Business Centre
Parking Area
Canteen
Weigh Bridge
DG Rooms
Other Amenities

153
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 BengalGram 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
BengalGram
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.


154
22.2.1 DryWarehouse
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 AmbientPackingShed
In the ambient packing shed following infrastructure will be provided:
Cleaning and grading areas
Packaging area and store
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.
ProcessFlow:
The process flow of the produces handled in the pack house is
depicted below:
Technology/
Facilities
Description
Quality
Check
Qualityofthefarmproducesshallbeassessedatthepack
shed mainly based on moisture content. The ideal
moisture content for pulses is 12%. Anything more than
thatwouldrequiredryingbeforefurtherprocessing.
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
impuritiesinamechanizedcleaner/destoner
Grading
Mechanizedgradingwouldbecarriedoutbasedonsizeof
thegrain
Packaging
Manualpackingoftheproducein50/100Kggunnybags
PackShed/WarehouseLogistics
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.


155
22.2.3 BusinessCentre
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
DG Rooms
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


156
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;
AggregationPoints FocusCrop ApproximateDistance(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
season as follows:
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

157
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 PackHouse
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

158
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 Postharvesthandlingfacilityforqualitycheckandwash.
SortingandgradingOnthebasisoffingerlength,shape,colour,etc.
Retailpackage(branded)orunitizedtransportunitsareformed.
Ripening Receivedinsmallunitizedretailpacksfrompackhouse.
Ripeningtemperatureis15C20C(with9095%RH).
Ethyleneisgeneratedintheroomtogiveuniformripening.
Storage Banana storage is at a temperature of 13 C 14 C for a maximum of 3 weeks in ethylene
freeair.
CAstorageispracticedforaddedshelflifeupto6weeksat14C.
Transport For domestic purpose, transportation through both modes 80% by rail wagons and rest
20%isthroughroadinnormaltrucks(89MT).
Forexport,Reefercontainersareusedforseatransportation.
PackHouseLogistics
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.
AggregationMechanism
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


159
23.2.2 BananaRipeningFacility
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.
23.2.3 DryWarehouse
which is abundantly produced in catchment area of spoke.

23.2.4 OtherFacilities
Apart from the above, following facilities are proposed in the pack house;
BusinessCentre
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
DG Room
Water Supply Facility
Parking Area
Utilities

160
24 SPOKE:JALNA
J alna has been identified as the spoke for the Amravati Aurangabad Integrated Value Chain.
It has been identified as spoke because its major production as well as marketing centre of
sweet lime. For sweet lime, J alna has established trade linkages with Delhi, J aipur and other
markets of the country. Apart from the connectivity to the consumption markets, J alna is well
connected with state highway and other link roads to production clusters. The railway station
is at J alna itself.
The aggregation points identified for the spoke at J alna and their approximate distance from
the spoke are:
AggregationPoints DistancefromthespokeinKms
Ghansavangi 80
Ambad 50
Badnapur 20
As evident from above, the aggregation points are located within a radius of 100 km from
J alna. The aggregation points have been identified keeping in view the time required for
evacuation of sweet lime after harvest.

24.1 FOCUSCROPANDESTIMATEDTHROUGHPUT
As mentioned in the previous chapter, Amravati Aurangabad region accounts for 87% of the
total sweet lime production of Maharashtra. Out of this, J alna 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
J alna. 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 ThroughputofSweetlimeinMT
Jalna 12000
The arrival pattern of the focus crop at the spoke will be as follows:
SweetLime
As evident from above, Sweet lime is available for around 8 months; hence the spoke at J alna
will be operational for around 250 days in a year.

The spoke at J alna 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

161
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 AmbientPackHouse
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:
Vehicle parking area.
AmbientPackHouseProcessflow:
The process flow of sweet lime handled in the pack house is depicted below:
Facilities Description
QualityCheck
Qualityassessmentofsweetlimeonthebasisofsize,ripeningstageetc.
Sorting and
Grading
Manualsortingandgradingissuggested,whichiscosteffective.
Sortingandgradingtablesareproposedinthepackshed.
Packing
Packagingtablestobeprovidedinthepacksheds.
Manual packing of sweet lime in crates. The packaging material may change depending
upontherequirementsofthedestinationmarket.
Dispatch
Thesameareawouldbeoffloadedonadailybasis.
Thepackagedproducewouldbestagedontheraisedplatform.
Produceisexpectedtobetransportedintrucksof15MTcapacities.
AggregationMechanism
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

162
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:
Business Centre
Parking Area
Canteen
Weigh Bridge
DG Rooms
Other Amenities


163
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 AggregationPoints Approximate Distance
(Kms)
Paithan Apegaon, Pachod, Gharegaon, Ektuni, Katpur,
Balanagar,Rahatgaon,Dawarwadi,Thergao,Sonwadi
Located in a radius of
3035kms
Sweet
lime
Aurangabad Pimpriraja,Adul,Devgaon,Kachner,Nilajgaon Located in a radius of
6070kms
Mango Paithan Bidkin, Sonwadi, Isarwadi, Logaon, Prabhuwadgaon,
Dhakefal,Dhorkin
Located in a radius of
3035kms
Aurangabad Pimpriraja,Devgaon,Kachner, Located in a radius of
6070kms

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 SweetLime Mango
Paithan 12000 4000
The arrival pattern of the focus crops for the spoke will be as follows:
Mango
SweetLime
The arrival pattern shows that the spoke will be operational for about 8 months in a year.


164
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 PackHouse
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.
Coldchain: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 C temperatures
Staging Area (Ante Room) 24 pallets pending dispatch/transport.
Material handling equipment pallet movers, trolleys.
Vehicle waiting areas.
Crate washing system.

165
MangoProcessFlow:ColdChain
The process flow for mango handled
through cold chain in the pack house is
depicted.

Technology / Facilities Description
Quality Check
Themangothatcomesfromthefieldwillundergoqualitycheck.
De-sapping
Mangoeswillbeplacedondesappingracksforremovaloflatex
Washing and Drying
Thefruitwillbewashedandairdried.
Sorting and Grading
Manualsortingandgradingofmangoisproposed.
MangoestobepackedinCFBboxesofvaryingcapacitiesdependinguponthe
requirementofthedestinationmarkets.Boxeswillthenbepalletized.
Pre-cooling
Precoolingwillbedoneat12
o
Cat90%RHbyforcedairmethod.
Cold Storage
Storageisdoneat1215
o
C,8590%RHfor23weeks.
Transport
Fortransportationoftheproduce,refrigeratedvehicleswillbeused.
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 C for 5 mins,
solar thermal panels with electric heaters as back up can be used.
AmbientSupplyChain: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

166
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.
AggregationMechanism:Mango
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
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 SweetlimeAmbientPackHouse
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:
Vehicle parking area.
AmbientPackHouseProcessflow:
The process flow of sweet lime handled in the pack house is depicted below:
Facilities Description
QualityCheck
Qualityassessmentofsweetlimeonthebasisofsize,ripeningstageetc.
Sorting and
Grading
Manualsortingandgradingissuggested,whichiscosteffective.
Sortingandgradingtablesareproposedinthepackshed.
Packing
Packagingtablestobeprovidedinthepacksheds.
Manual packing of sweet lime in crates. The packaging material may change depending
upontherequirementsofthedestinationmarket.
Dispatch
Thesameareawouldbeoffloadedonadailybasis.
Thepackagedproducewouldbestagedontheraisedplatform.
Produceisexpectedtobetransportedintrucksof15MTcapacities.

167
AggregationMechanism:SweetLime
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:SweetLime
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.

25.2.3 DryWarehouse
A dry warehouse of 2000 MT capacity is proposed, which will be used for storage of pulses.

Apart from the pack shed, other facilities proposed in the spoke are:
Business Centre
Parking Area
Canteen
Weigh Bridge
DG Rooms
Other Amenities


168
26 FINANCIALANALYSIS
26.1 AURANGABADAMRAVATIIVC
26.1.1 ProjectDetails
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
DryWarehouse
2000MT
(920)
2000MT
(920)
2000MT
(920)
5000MT
(2300)
2000MT
(920)
OrangePackhouse
100
MT/Day
(1700)
100
MT/Day
(1700)

BananaPackhouse
40MT/Day
(1350)
40MT/Day
(1350)
RipeningChamber
10MT/Day
(527)
10MT/Day
(527)
Mango PackhouseCold
Chain
15MT/Day
(700)

Mango Packhouse
Ambient
35MT/Day
(603)

Sweet lime Ambient
Packhouse
80
MT/Day
(500)

80
MT/Day
(500)
Grainpackshed
35MT/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
SupportInfrastructure
Unit
Paithan Warud Anjangaon Akola Sangrampur Jalna
Administrative
building/businesscentre
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
PowerSupply KVA 200 130 260 150 210 50
WaterSupply LPD 5550 3550 63050 3550 57950 4450
Total 1160 1160 2020 1160 1210 1160

26.1.2 ProjectCost
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(MnRs) Amount(Mn$)
A 1 Land 0.00 0.00

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2 LandDevelopment 16.00 0.34
3 Buildings 122.61 2.60
4 PlantMachinery&Equipments 96.25 2.04
5 Utilities&otherfixedassets 8.15 0.17
SubTotal(A) 243.01 5.16
B Contingencies 20.78 0.44
C Preoperativeexpenses 12.15 0.26
D MarginMoneyforWorkingcapital 1.14 0.02
TotalProjectCost(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
TotalIVC 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..
LandDevelopment
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
OrangePackhouse 10.20 10.20 20.40
Warehouse 5.98 5.98 5.98 14.95 5.98 38.87
BananaPackhouse 8.10 8.10 16.20
RipeningChamber 2.76 2.76 5.52
MangoPackhouseColdChain 5.60 5.60
MangoPackhouseAmbient 3.60 3.60
PackhouseAmbient 3.00 3.00 6.00
PackshedAmbient 4.50 4.50
BusinessCentre 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
TotalBuildings 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.

170
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
andEquipments 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
GrainsCleaning,
gradingline 1.50 1.50
Weigh Bridge40
MT 2.50 2.50 2.50 2.50 2.50 2.50 15.00
DGsets 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
Refertrucks7mt 6.00 6.00
Normal Pickup
vehicles 0.90 1.50 2.40 1.50 1.20 1.50 9.00
Normal trucks15
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.
MiscellaneousFixedAssets/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
Powersupply
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
ITsystem 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
FixedAssets 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

171
cost of water supply has been distributed among the locations in proportion to their water
requirements.
26.1.3 Preliminary&PreoperativeExpenses
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.
WorkingCapitalRequirement
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
(RsMn)
Contingencies
(Mn$)
Land 0.0% 0.0% 0.00 0.000
LandDevelopment 5.0% 8.3% 1.39 0.030
Buildings 5.0% 8.3% 10.69 0.227
PlantMachinery&Equipments 0.0% 8.3% 7.99 0.170
Utilities&OtherAssets 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 MeansofFinance
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 promoters 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
RsMillion
Amount
Million$
Share
AsianDevelopmentBank 135.77 2.88 49.0%
StateGovernment 58.19 1.23 21.0%
EquityPrivateInvestor 83.12 1.76 30.0%
Total 277.08 5.88 100.0%


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26.1.5 KeyOperatingAssumptions
The key operating assumptions underlying the projects business plan are described below.
OperatingCostAssumptions:
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/SweetlimePackhouse 1KVA/60sqm
Warehouse 1KVA/92sqm
BananaPackhouse 1KVA/45sqm
RipeningChamber 50KVA/40MT
MangoPackhouseColdChain 50KVA/15MT
MangoPackhouseAmbient 1KVA/40sqm
PackshedsGrains(includinggradingline) 75KVA/35MT
BusinessCentre&Miscfacilities 1KVA/30sqm
The table below shows the location wise power requirement:
Locations PowerLoad(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
TechnicalManager 7 20000
Operators 12 10000
Maintenance 12 6000
Account 6 8000
Security 18 4000
SupportStaff 18 3000
TotalEmployeeCost(PerMonth) 79

173
*Increment in salary is assumed at 5% p.a for 1
st
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.
FinancialAssumptions
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:
DepreciationRates BookDepr TaxDepr
Plant&Machinery 10.34% 15.00%
MiscellaneousFixedAssets 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.
RevenueAssumptions
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 UnitofCharge
AmbientPackhousesOrange/Sweetlime 60 Rs/sqm/month

174
BananaPackhouse 1000 Rs/sqm/month
BananaRipeningFacility 1400 Rs/MT
MangoPackhouseColdChain:
Sorting/Grading/Packagingcharges 1000 Rs/MT
ColdStore&Precoolingcharges 600 Rs/MT
MangoPackhouseAmbient 60 Rs/sqm/month
Warehouse 100 Rs/sqm/month
BusinessCentre 100 Rs/sqm/month
Crates 7 Rs/cycle/crate
Weighbridge 2 Rs/MT
Logistics 10 Rs/Km
GrainPackshed
Sorting,grading,cleaning,Packingcharges 500 Rs/MT
The rentals charged for these facilities are comparable to the prevailing market rates.
CapacityUtilization
The estimated capacity utilizations are shown in the table below.
Year Capacityutilization
YearI 40%
YearII 60%
YearIIIandonwards 80%
The capacity utilizations have been assumed conservatively, starting at 40% in the first year.

26.1.6 FinancialPerformance
The estimated financial projections for the project are tabulated below:
Income Statement:
(Rs Million)
Year 1 2 3 8 12 16 20
CapacityUtilization 40% 60% 80% 80% 80% 80% 80%
Revenue
RentalOrange/limePackhouses 0.24 0.37 0.49 0.49 0.49 0.49 0.49
RentalBananaPackhouses 7.20 10.80 14.40 14.40 14.40 14.40 14.40
RentalRipeningchambers 3.12 4.68 6.24 6.24 6.24 6.24 6.24
RentalMangopackhousecoldchain 0.45 0.68 0.90 0.90 0.90 0.90 0.90
RentalMangopackhouseAmbient 0.02 0.03 0.04 0.04 0.04 0.04 0.04
RentalWarehouses 1.72 2.42 3.11 3.44 3.44 3.44 3.44
RentalCrates 7.35 11.03 14.70 14.70 14.70 14.70 14.70
RentalLogistics 16.92 24.75 32.58 33.84 33.84 33.84 33.84
RentalcleaninggradinglineGrains 1.35 1.69 2.03 2.70 2.70 2.70 2.70
RentalBusinesscentre 1.20 1.77 2.33 2.40 2.40 2.40 2.40
RentalPrecooler 0.27 0.41 0.54 0.54 0.54 0.54 0.54
RentalPackshed 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
EmployeeCost 7.51 7.89 8.28 9.59 9.59 9.59 9.59
Watercost 0.66 0.99 1.33 1.33 1.33 1.33 1.33
Maintenancecost 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&SellingOverheads 0.80 1.18 1.55 1.60 1.60 1.60 1.60
TotalExpenses 14.84 16.27 17.78 18.59 18.55 18.71 18.98

175

EBITDA 25.12 42.49 59.79 61.33 61.36 61.21 60.93
InterestLongTermDebt(LTD) 0.00 0.00 0.00 0.00 0.00 0.00 0.00
InterestWorkingCapitalborrowing 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
NetProfit(PAT) 7.76 24.96 31.53 27.24 37.51 36.35 35.62

Cashflowtogovernment 7.99 11.75 15.52 15.98 15.98 15.98 15.98
Netprofittoprivatedeveloper 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).
MajorFinancialPerformanceIndicators:
Year 1 2 3 4 5 6 7
EBITDAMargin 62.87% 72.31% 77.08% 77.08% 77.02% 76.58% 76.67%
PATmargin 19.42% 42.47% 40.65% 38.98% 37.59% 36.01% 34.98%
DebtEquityRatio 0.00 0.00 0.00 0.00 0.00 0.00 0.00
DebttoEBITDAratio 0.14 0.11 0.10 0.10 0.10 0.10 0.10
InterestCoverageRatio 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
AverageDSCR 71.43
ProjectIRR 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 ECONOMICANALYSIS:IVCAMRAVATIAURANGABAD
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 METHODOLOGYANDASSUMPTIONS
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:
BetterPricerealizationduetoqualityimprovementoftheagricultural
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.
WastageReduction
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.

177
EmploymentGeneration
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.
Largeincreaseinrevenueandtaxrealization
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.
Opportunitycostofland
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 QUANTIFICATIONOFBENEFITS
QualityimprovementleadstopremiumPriceofthecommodities
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.
Withou
t
Project WithProject

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Estimated Additional Price
Realization(%)
Crops
Price
(Rs/MT)
Min Max
Weighte
d
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.
WastageReduction
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.
WithoutProject WithProject
WastageReductionRange(%)
Crops Quantitysaved
Min Max Average
Selling
Price
(Rs/MT)
Quantity
Saved(MT)
Total
Incremental
Benefit(MnRs)
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.
EmploymentGeneration
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:
WithoutProject WithProject
Location
No. of
workers
Days/
Annum
Annual
amount
(RsMn)
No. of
workers
Days/
Annum
Annual
amount
(RsMn)
Annual
Incremental
Benefit(RsMn)
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
Largeincreaseinrevenueandtaxrealization
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 QUANTIFICATIONOFCOSTS
EconomicCostofProject
Items Sr.No Particulars
Amount
(MnRs)
Amount
(Mn$)
A 1 Land 25.90 0.55
2 Land&SiteDevelopment 16.00 0.34
3 Buildings 122.61 2.60
4 PlantMachinery&Equipments 96.25 2.04
5 Utilities&otherAssets 8.15 0.17
SubTotal(A) 268.91 5.71
B ProjectImplementationCost@10%ofADBFunds 13.58 0.29
C Preopexpenses 12.15 0.26
D Contingencies 20.78 0.44
E CapacityBuilding 32.21 0.68
TotalProjectCost(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.
RecurringCosts
Opportunity cost of labour
Location No.ofworkers Day/Annum Annualamount(RsMn)
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 COSTBENEFITSTATEMENT
Year 0 1 2 3 4 8 12 16 20
CapacityUtilization
Imp
Period 40% 60% 80% 80% 80% 80% 80% 80%
A.EconomicBenefits
QualityImprovement 143.05 214.57 286.10 286.10 286.10 286.10 286.10 286.10
WastageLoss 121.74 182.61 243.48 243.48 243.48 243.48 243.48 243.48
IncrementalLabour 10.03 15.05 20.07 20.07 20.07 20.07 20.07 20.07
IncrementalIncomeTax 0.00 0.00 10.56 12.29 16.35 18.38 19.38 19.83
TotalEconomicBenefits 274.83 412.24 560.21 561.94 566.00 568.03 569.03 569.48
B.EconomicCosts
Opportunitycostoflabour 4.15 6.22 8.29 8.29 8.29 8.29 8.29 8.29
OpportunitycostofCapital 19.40 19.40 19.40 19.40 19.40 19.40 19.40 19.40
TotalEconomicCost 23.54 25.61 27.69 27.69 27.69 27.69 27.69 27.69
NetEconomicBenefits(AB) 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 CALCULATIONOFECONOMICIRR(EIRR)
Economic IRR (EIRR)
Year
Imp
Period 1 2 3 4 8 12 16 20
EconomicInvestment 347.63
NetEconomicBenefits 0.00
251.2
8
386.6
3
532.5
3
534.2
5
538.3
2
540.3
4
541.3
4
541.8
0
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
EconomicIRR(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 ECONOMICAPPRAISALRESULTS
27.6.1 MajorEconomicIndicators:
The major economic indicators considered to assess the economic viability of the project are
given in the table below:
NPV(RsMillion) 2,989.46
NPV(Million$) 63.45
BenefitCostRatio 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 CostofCapital
ProjectGrant 70.00% 10%
EquityPrivateInvestor 30.00% 16%
WACC 11.80%
BenefitCostRatio(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.
NetPresentValueper$ofInvestment(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.


182
MAHARASHTRA:INTEGRATEDVALUECHAINS
NashikIntegratedValueChain
and
AurangabadAmravatiIntegratedValueChain

Conceptualplansoffacilities
Stakeholderconsultation
MarketAssessment
ImpactAssessment
Capacitybuildingsupport
Policyandregulatoryaspects
Implementationframework
ProjectImplementationStructure

183
28 CONCEPTUALPLANSFORFACILITIES
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 PLANNINGCONCEPT
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.

184
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 MasterPlan
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

185
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 drivers 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 GreenArea
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 LINKINFRASTRUCTURE
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 ApproachandAccessibility

186
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 LinkagesforPower,Water,StormWateretc.
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 DesignConsiderations
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

187
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.
PowerSupplyAndSubStation:
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

188
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

189
f Server/EPABX Earthing

28.2.4 SanitaryInstallation,WaterSupplyandFireFightingSystems
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
FireProtectionSystem
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.

190
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,WasteAndVentPipeSystems
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).
ExternalSewerage
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.
WaterSupplySystem
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.
PotableWater(NonFlushing):
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

191
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).
FlushingWaterSystem(RecycledfromSTP):
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.
DistributionSystem
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.
IrrigationSystem
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).
SewageTreatmentPlant:
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

192
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.
StormWaterDrainageSystem:
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 FireProtectionMeasures
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

193
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 COSTESTIMATESFORIVCSINMAHARASHTRA
28.3.1 NASIKIVC:
LandDevelopment:
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
Pimpal
gaon
Maleg
aon
Sanga
mner
Srira
mpur
China
val
Vivr
a
Kajg
aon
Dan
ora IVC
IVC
(Mn$)
Warehouse 29.90 5.98 35.88 0.76
Cold Store
5000MT 21.60 21.60 0.46
Grape
Packhouse
ColdChain 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
OnionStore 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
Guesthouse 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
Pimpal
gaon
Maleg
aon
Sanga
mner
Srira
mpur
Chin
aval
Viv
ra
Kajg
aon
Dan
ora
Rate/
Unit
inSq.m. Rs
Warehouse 4,600 920 6,500
Cold Store5000
MT 2,700 8,000
GrapePackhouse
ColdChain 2,400 2,400 2,400 8,000
Banana
Packhouse

1,350
1,3
50 1,350
1,35
0 6,000
Ripening
Chamber 540 540
540 540 540 LS

Packshed
Ambient 500 500 500 500 6,000
OnionStore 2,160 540 540 540 6,500
GuestHouse 300 9,000
Knowledgecentre 400 9,000
BusinessCentre 300 300 300 300 300 300
300 300 300 9,000

Misc 550 250 250 250 250 250
250 250 250 8,000

TotalBuildings
14,450 3,990
3,870 1,590 1,590

2,44
0
2,4
40
2,44
0
2,44
0
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
Sanga
mner
Sriram
pur
China
val Vivra
Kajga
on
Dan
ora
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
ITsystem 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 AmravatiAurangabadIVC
The engineering cost estimates of Amravati-Aurangabad IVC, based on the specifications
given earlier, are given below:
LandDevelopment:
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
ColdChain 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
BusinessCentre 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
TotalBuildings 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
inSq.m. Rs
OrangePackhouse 1,700 1,700 6,000
Warehouse 920 920 920 2,300 920 6,500
BananaPackhouse 1,350 1,350 6,000
RipeningChamber 540 540 LS
Mango Packhouse
ColdChain 700 8,000
Mango Packhouse
Ambient 600 6,000
PackshedsAmbient 500 750 500 6,000
BusinessCentre 300 300 300 300 300 300 9,000
Miscs 100 100 210 100 125 80 8,000
TotalBuildings 3,120 3,020 5,020 3,450 3,235 880

196
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
MiscFixedAssets
Paithan Warud Anjangaon Akola Sangrampur Jalna IVC
Powersupplysystem 1.20 0.50 1.50 0.50 1.20 0.20 5.10
Watersupplysystem 0.50 0.15 0.50 0.15 0.50 0.10 1.90
ITsystem 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
TotalMiscFixedAssets 1.95 0.80 2.25 0.80 1.95 0.40 8.15


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29 STAKEHOLDERCONSULTATIONS
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 IVCSINMAHARASHTRA
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.

222
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/Localprocessors/ColdChainOwners
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 IndustryPlayers
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:

223
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 STAKEHOLDERSMEETINGATMUMBAI
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 SuggestionsfromStakeholdersonPolicyIssues:
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

224
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 SuggestionsonProposedInterventions:
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 farmers 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 STAKEHOLDERSMEETINGATRAHEJACENTREPOINT,MUMBAI
A stakeholder consultation was conducted at Raheja Centre Point, Mumbai on 19
th
J anuary,
2010. The participants of the meet included the following:
Organized Retail Chains

225
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 LISTOFPOTENTIALINVESTORS
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

226
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
J ain 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
OtherContacts
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 J alan, Managing Director
Keventer Agro Ltd.
Sri Arvind J hamb, 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.

227
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
Spencers 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 J ain
LMJ International Limited
Mr. Vimal Mody, General Manager
Usha Breco Realty Pvt. Ltd.
Sri Sushil Kumar Agarwal, Director
Haldirams Mega Food Parks Private Limited
Sri Raja Mehta
Indiabulls Real Estate Limited
Mr. Vipin J ain, 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


228
30 ASSESSMENTOFMARKETDEMAND
India is the world 4
th
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. Indias 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 countrys 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 2015
1
. 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 $
621
3
. 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 million
4
. 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 $ 139
5
, 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 ASSESSMENTOFFOODMARKETININDIA
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 worlds total production of
fruits and 90 million MT of vegetables, which accounts for 11 percent of the worlds total
vegetable production. Despite its large size, only 6 percent of the processed foods are traded
across Indias 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
NACERResearch
2
Ernst&YoungResearch,2008
3
Data:200405
4
2001census
5
IBEF

229
The Indian food market in 2007 has been estimated at around US$ 200 billion
6
and is slated
to reach US$ 310 billion
7
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 GROWTHDRIVERSOFVALUEADDEDFOODPRODUCTS
India possesses the advantage of having a large young population. It is estimated that around
35 percent of Indias 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 countrys 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

230
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 2015
10
.
Also, the middle class is estimated to reach a size of 582 million from its current size of 50
million by 2015
11
.
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 ASSESSMENTOFFOODRETAILINDUSTRY
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 countrys 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 62
nd
round
10
E&Y Research, 2008
11
NCAER Research
12
Retail Edelweiss report, 2008

231
The size of Indian retail Industry was estimated at US$ 385 billion
13
in 200708. 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:DataMonitor,2007,SalesinUS$Billion,ExchangeRate:US$1:INR41
Source:KPMG

232
Source: NSSO 5
th
round,
KPMGandCygnusResearch
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:Categorywise
DistributionofRetail
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 MAJORPLAYERSINORGANIZEDFOODANDGROCERYSEGMENT
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:
SlNo. Nameofretailer Foodandgrocerysales($million) Noofstores
1. PantaloonRetail 1593 456
2. RelianceRetail 432 688
3. RPG 427 420
4. AdityaBirlaRetail 251 645
5. DairyFarm 100 67
Source:IGD,excludescashandcarryformats
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 KBs 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.
Nameofretailer Areainsqm Noofstores
FoodBazar 102,752 152
BigBazar 380,695 149
KBsFairprice 17,980 155
Source:IGD
Reliance Retail: Reliance Retail is part of Reliance Industries Limited, which is one of
the Indias 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: Spencers (Supermarket) and Spencers 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 Spencers and 50 stores of
Spencers 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 ASSESSMENTOFMAJORCONSUMPTIONMARKETS
As mentioned earlier, the major consumption markets for fruits and vegetables grown in
Bihar are Patna, neighbouring states of J harkhand, 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:
SlNo Fruits/Vegetables Majorconsumptionmarkets
1. Pomegranate Delhi,Kolkata,Jaipur
2. Grapes Delhi,Kolkata,Hyderabad
3. Banana Delhi,Chandigarh,Amritsar,Lucknow
4. Tomato Delhi,Kolkata,Surat,Ahmedabad
5. Sweetlime Delhi,Jaipur
6 Kesarmango Delhi
Orange Delhi,Kolkata,Bangalore
Lemon Delhi


234
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, J aipur and J alandhar 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.
DemographyDelhi
Population 19.73million
Medianage 22.8years
Percentofworkingwomen 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.
DistributionofIncomeinDelhi
PerCapitaIncome Rs43155
Percentofsalariedhousehold(HH) 53.8%
AverageHHincomefromsalaryinRs000perannum 183
PercentofbusinessandprofessionalHH 32.3%
AverageHHincomefrombusinessinRs000perannum 299
Source:HowIndiaEarns,SpendsandSaves,TheMaxNewYorkLifeNCAERIndiaFinancial
ProtectionSurvey,2007(Estimateddatafor200405)
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.
EstimationofMarketsizeoffoodproductsinDelhi
EstimatedretailspaceinmillionSqft
15
6.5millionsqft

14
NSSreport(200607)

235
Unitretailspace(SqFt/HH) 4
AnnualexpenditureonfoodinRsbillion Rs159.5billion
MonthlypercapitaexpenditureonfoodinRs Rs673.73
The table below shows the distribution of MPCE on broad category of food items.
PercentdistributionofMPCEonFooditemsinUrbanDelhi
Cereals 7%
Milk&milkproducts 10%
Vegetables 5%
Freshfruits 1%
Otherfooditems 14%
Total 37%
Source:NSSreport(200607)
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 NCR16s 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.
DemographyMumbai
Medianage 25.7years
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.

DistributionofIncomeinMumbai
PerCapitaIncome Rs40,768
AverageHHincomefrombusinessinRs000/annum 204
Source:HowIndiaEarns,SpendsandSaves,TheMaxNewYorkLifeNCAERIndiaFinancial
ProtectionSurvey,2007(Estimateddatafor200405)
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
Imagesretail2005
16
NCRmeansDelhi,Noida,Gaziabad,GurgaonandFaridabad

236
EstimationofMarketsizeoffoodproductsinMumbai
EstimatedretailspaceinmillionSqft 6.6millionsqft
Unitretailspace(SqFt/HH) 1.4
MonthlypercapitaexpenditureonfoodinurbanMaharashtra Rs587.95
Source:DES,GovtofMaharashtra
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.
PercentdistributionofMPCEonFooditemsinUrbanMaharashtra
Cereals 7%
Vegetables 4%
Freshfruits 2%
Otheritems 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.
DemographyKolkata
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.
DistributionofIncomeinKolkata
PerCapitaIncome Rs27,868
AverageHHincomefrombusinessinRs000/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.
EstimationofMarketsizeoffoodproductsinKolkata
EstimatedretailspaceinmillionSqft 0.7millionsqft
Unitretailspace(SqFt/HH) 0.4
MonthlypercapitaexpenditureonfoodinRs Rs551.40
Fresh fruits and vegetables constitute around 7% of MPCE.
PercentdistributionofMPCEonFooditemsinUrbanWestBengal
Cereals 10%
Vegetables 6%
Freshfruits 1%
Otheritems 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 IMPACTASSESSMENT
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 INTEGRATEDVALUECHAIN:ENVISAGEDIMPACTS
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 IllustrativeExample:PomegranateValueChain
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.
Preintervention:
Postintervention
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,LoadingatSpoke
Rs42
Rs1.5
Rs6.5
Spokesprofit
Transportation,Unloadingexpenseatdestination
Rs2.5
Rs75
Rs6
RetailersMargin
ConsumersPrice
Farmgateprice
Rs12
Hublevel/WholesalersMargin
Rs5
Losses
Rs.50exspokeprice
Grading, Pack ing
Rs35
Rs
6
Losses
Rs11.5
Rs5
Transport ation,loading, U/L, losses

Commissi oncharges
Rs8
Rs0. 3
Whol esalersmargin
Retai lersmargin
Consumerprice
Farmgateprice
Rs6
Rs80
Contra ctors margin

Rs3
Rs0.6
Rs2.3
Rs1. 5
Ma rketingcess
Losses
Transport
Losses
Rs50(C ontractorsPrice)
Rs60(Wholesal ersPrice)

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 agents fee and still can keep the ex-spoke
price at Rs. 50, which is the traders 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 IllustrativeExample:GrapeValueChain
In the case of fresh grape too, the extant value chain is given below to help compare with the
changed scenario after the interventions.
Preintervention:
Postintervention
As shown in the figure above vis a vis the existing value chain figure, the new value chain
Grading,Packing,LoadingatSpoke
Rs30
Rs2
Rs3
Spokesprofit
Transportation,Unloadingexpenseatdestination
Rs1.25
Rs50.00
Rs4.63
RetailersMargin
ConsumersPrice
Farmgateprice
Rs8.00
Hublevel/WholesalersMargin
Rs1.00
LossesatRetailLevel
Rs.35exspokeprice
Rs35(TradersPrice
Rs40(WholesalersPrice)
Rs25
Rs1.25
Rs2.30
Farmgateprice
Grading,Packing,Loading
C
Transportation,UnloadingatAPMC
Rs3.50
Commission@10%
Rs2.94
TradersMargin
Rs50.00
Rs4.63
RetailersMargin
ConsumersPrice
Rs8.00
WholesalersMargin
Rs0.36
MarketFee@1.05%
Rs2.00
LossesatRetailLevel

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 agents 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 traders 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 IllustrativeExample:BananaValueChain
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
Labourandtransportation
Commission@46%at
AzadpurMandi
Wastages
*
WholesaleMarginat
AzadpurMandi
Secondary
transportationand
ripeningcost
Retailers margin
FarmersPrice
Rs6.45
Rs6.45
Rs2.50
Rs2.50
Rs 2.50
Rs2.50
Rs .1.50
Rs.1.50
Rs.0.30
Rs.0.30
Rs.1.00
Rs.1.00
Rs.2.50
Rs.2.50
Rs0.20
Rs0.20
CommissionofPHC@2%
Rs.14.00
(Wholesalers Price)
Rs.18.00
(RetailersPrice)
Labourandtransportation
Commission@46%at
AzadpurMandi
Wastages
*
WholesaleMarginat
AzadpurMandi
Secondary
transportationand
ripeningcost
Retailers margin
FarmersPrice
Rs6.45
Rs6.45
Rs2.50
Rs2.50
Rs 2.50
Rs2.50
Rs .1.50
Rs.1.50
Rs.0.30
Rs.0.30
Rs.1.00
Rs.1.00
Rs.2.50
Rs.2.50
Rs0.20
Rs0.20
CommissionofPHC@2%
Rs.14.00
(Wholesalers Price)
Rs.18.00
(RetailersPrice)
Preintervention

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 IllustrativeExample:SweetlimeValueChain
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
Postintervention
FarmersPrice
Unloading
TransportationtoDelhi
Commissioncharges
@10%inDelhi
Weightloss@5%
PHCsMargin
Transportationlosses@2%
Harvesting,loading
Sortingandgrading
Packingcharges
WholesalersMargin
Rs0.80
Rs0.80
Rs8.00
Rs 8.00
Rs2.00
Rs2.00
Rs1.60
Rs1.60
Rs0.10
Rs0.10
Rs0.80
Rs0.80
Rs3.50
Rs3.50
Rs 0.50
Rs0.50
Rs 0.08
Rs0.08
Rs0.32
Rs0.32
Rs 2.10
Rs 2.10
Rs0.20
Rs 0.20
Transportation
Rs 3.60
Rs 3.60
Retailers Margin
Rs.19.00
(WholesalersPrice)
Rs.16.00
(PHCs Price)
Rs.23.00
(RetailersPrice)
FarmersPrice
Unloading
Commissioncharges
@10%inDelhi
Weightloss@5%
PHCsMargin
Harvesting,loading
Sortingandgrading
Packingcharges
WholesalersMargin
Rs0.80
Rs0.80
Rs8.00
Rs 8.00
Rs2.00
Rs2.00
Rs1.60
Rs1.60
Rs0.10
Rs0.10
Rs0.80
Rs0.80
Rs3.50
Rs3.50
Rs 0.50
Rs0.50
Rs 0.08
Rs0.08
Rs0.32
Rs0.32
Rs 2.10
Rs 2.10
Rs0.20
Rs 0.20
Transportation
Rs 3.60
Rs 3.60
Retailers Margin
Rs.19.00
(WholesalersPrice)
Rs.16.00
(PHCs Price)
Rs.23.00
(RetailersPrice)
Unloading
Commissioncharges
@10%inDelhi
Weightloss@5%
PHCsMargin
Harvesting,loading
Sortingandgrading
Packingcharges
WholesalersMargin
Rs0.80
Rs0.80
Rs8.00
Rs 8.00
Rs2.00
Rs2.00
Rs1.60
Rs1.60
Rs0.10
Rs0.10
Rs0.80
Rs0.80
Rs3.50
Rs3.50
Rs 0.50
Rs0.50
Rs 0.08
Rs0.08
Rs0.32
Rs0.32
Rs 2.10
Rs 2.10
Rs0.20
Rs 0.20
Transportation
Rs 3.60
Rs 3.60
Retailers Margin
Unloading
Commissioncharges
@10%inDelhi
Weightloss@5%
PHCsMargin
Harvesting,loading
Sortingandgrading
Packingcharges
WholesalersMargin
Rs0.80
Rs0.80
Rs8.00
Rs 8.00
Rs2.00
Rs2.00
Rs1.60
Rs1.60
Rs0.10
Rs0.10
Rs0.80
Rs0.80
Rs3.50
Rs3.50
Rs 0.50
Rs0.50
Rs 0.08
Rs0.08
Rs0.32
Rs0.32
Rs 2.10
Rs 2.10
Rs0.20
Rs 0.20
Transportation
Unloading
Commissioncharges
@10%inDelhi
Weightloss@5%
PHCsMargin
Harvesting,loading
Sortingandgrading
Packingcharges
WholesalersMargin
Rs0.80
Rs0.80
Rs8.00
Rs 8.00
Rs2.00
Rs2.00
Rs1.60
Rs1.60
Rs0.10
Rs0.10
Rs0.80
Rs0.80
Rs3.50
Rs3.50
Rs 0.50
Rs0.50
Rs 0.08
Rs0.08
Rs0.32
Rs0.32
Rs 2.10
Rs 2.10
Rs0.20
Rs 0.20
Transportation
Rs 3.60
Rs 3.60
Retailers Margin
Rs.19.00
(WholesalersPrice)
Rs.16.00
(PHCs Price)
Rs.23.00
(RetailersPrice)
Preintervention

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 IllustrativeExample:MangoValueChain
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,
Postintervention
Rs17
Rs1.8
Rs6
Rs4
Rs3.5
Rs3.5
Rs0.9
Rs1.4
Rs1.6
Harvesting,gradingand
packaging
Farmgateprice
Commission
Wastage
Wholesalersmargin
Losses
Retailersmargin
ConsumerPrice
Rs23(ContractorsPrice)
Wholesalersexpense
Contractorsmargin
Rs40
Rs30(WholesalersPrice)
Preintervention

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 KEYOVERALLIMPACTS
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:
Farmlevelimprovements
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
Rs18.0
Rs0.4
Rs1.20
Rs5.00
Washing,sorting,grading,packing
Rs3.00
Wastage
Consumerprice
Farmgateprice
Rs45.00
Wholesalersmargin
Loadingandtransporttospoke
Rs1.30
Rs5.00
Rs0.8
Rs2.50
SpokeMargin
Transport
RetailersMargin
Rs2.00
TransporttoorganizedRetail
atdistantmarkets
Rs5.00
Organizedretailersmargin
Rs5.00
HubsMargin
PostIntervention

245
Marketdrivenfarming
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.
Marketlevelimprovements:
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.
Pricediscovery
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.
Institutionbuilding:
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.
Contributiontoexports
Improved quality produce from the region over time will contribute to export- based on
improvements in quantity and quality, again bringing greater value realisation.
Sectorimprovement
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.

246
OverallEconomicDevelopment
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 OTHERIMPACTASSESSMENTS
The following impact assessment reports are annexed:
Environmentalassessmentandreviewframework
Socialandpovertyassessmentandmitigation
Poverty and Social Assessment
Public consultation and participation framework
Resettlement framework with entitlement matrix

247
32 CAPACITYBUILDING
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 CAPACITYBUILDING:NEEDSASSESSMENT
32.2 FARM/PRODUCTIONCLUSTERLEVEL
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 womens 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

248
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 CapacityBuildingatProductioncluster/farmlevel
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.
TrainingInput FocusGroup Costs
Rs'000
Farmers,organisedinto
farmergroups(SHGs)
14spokesand1Hub:15x10
groupsx130personspergrp=
19500farmers
5200 1 Formation of Farmer
Groups
SplWomenSHGs 150groupsin6monthsacrossboth
valuechains
2leadersx150groups=300
persons20personspersession=15
trsessionsRs2000/dayx5dysx300
persons
3000 2 FarmerGroupTraining GroupLeaders:2
leaders/group
Onemorerefreshertrainingof2 1500

249
days
3 TrainingofTrainers Keypersonsfrom
NGOs/Govt)
10personsfor2wksatNIRD/IRMA 1000
Awareness Program for
dissemination of
information regarding
the project and good
practises(across3yrs)
Useofmultimediaawarenessin
first6months
1000
About Project
objectives
Valuechainapproach
- Agribussupplychains
Envissues
- Social/gender
sensitisation
4
- Inst linkages, govt
schemes,MFIs
5oofficerschosenfrom
projectareasonlyacross
thestate(fromPRIs,
ULBs,distoffices,state
agridept,
MSAMB,)Representatives
fromFarmer
associations,NGOs,
cooperatives
Tradersawareness
[Coordinatewithdisseminationof
informationfromexposurevisits
seenextpoint]
5 Exposure visits by
identified stakeholder
groups
Selectedfarmersand
officersfromapplicable
cluster
30farmers+10officers6locations
overseasover3yrs
10000
6 Resource strengthening
through trading of
experts/practitioners
Acrossclusters,as
applicable
Asrequired
TOTAL(inRsmn) 21.7

32.3 CAPACITYBUILDINGATHUBSPOKELEVEL
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 CapacityBuildingathubandspokelevel
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.


250

AllFocusCropsNoofDays Foronestdspoke(daily) NooffacilitiesNo
ofdays
Frequencyoftraining(3yrperiod) Costs(perpersonper
day*)
Days of training
Grape 150skilledandunskilled,4supervisors,1
managerperfacility
3 Onefulltrainingfollowedbyannual
refresher/ondemand
3 155 1395 3
8370000
27
Pomegranate 150skilledandunskilled,4supervisors,1
managerperfacility
refresher/ondemand
3 155 465 3
2790000
9
Banana 164workers,4supervisors,1managerper
facility
refresher
7 169 7098 3
42588000
126
Onion 3persons,1supervisor,1manager Aggregationpt4
perspoke,8spokes
Onefulltraining
2 5 320 1
640000
16
Kesarmango 30workers,4supervisors,1managerper
facility
refresher/ondemand
5 35 175 3
1050000
15
Multiproduct(processing) Onlyinthecaseofprocessingfacilitiesbeing
setup
asreq Equipmentspecifictraining
Trainingdays 386000 193
Moduleprep 3000000
TOTAL(inRsmn) 58.824
251
32.4 CAPACITYBUILDINGCOVERAGE
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.
CapacityBuildingInput FocusGroup
1 Productaggregationandpresorting Farmer,unskilledworker
2 Productloadingunloading,transfertofacility Farmer, unskilled worker, (at farm and
aggregationlevel)
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
optimisationenergymanagement,decisionmakingon
productflow,demandsidelink,
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)
Supplychainmanagementtracking,optimisation
Transportteam
Managers/owners
8 Warehouse compliances and std operation, stacking
stowage and ventilation systems, material
management
Supervisor,manager
9 Traceabilityissuesalongvaluechaineg.EuroGAP, Allalongvaluechain

32.5 IMPLEMENTATIONARRANGEMENTS
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 SUMMARYFINANCIALSFORMAHARASHTRA
MAHARASHTRA
Training Coverage Cost(Rsmn)
SoftSkillsandawareness
training
Farmers,officers,NGOs,Cooperativesand
Farmerorganisations
21.70
ProductSpecific(atspoke
andhublevel)
Employees,supervisorsandmanagersatSpokes
andHubs(atAggregationptlevelforOnion)
TrainingModule
PreparationandTrainer
fee
LumpsumRs3mnformoduleprep.Training
days193@Rs2000perday
58.82
TOTAL(InRsmn) 80.52

252
33 POLICYANDREGULATORYASPECTS
33.1 ISSUESRELATINGTOPOLICYAGRIBUSINESSINFRASTRUCTURE
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 RegulatoryIssues
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:
LowLevelofGovernmentFinancialAssistanceforDevelopmentof
AgribusinessInfrastructure
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 multilayered
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
centreslocatedfarofffromeachother.
253
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.
Multiplicityoftaxes
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.
EssentialCommoditiesAct,StockOrderetc.
The Essential Commodities Act (ECA) 1955 was put in place after Indias 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.
FragmentationandLicensing
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.
254
ConvergenceofOperationsandSchemes:
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.
AdministeredPrices
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 TechnologyInduction
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.

255
33.1.4 CapacityBuilding
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 RECENTPOLICYINITIATIVESTAKENBYTHEGOVERNMENT
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
256
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 StateLevelAPMC
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 INITIATIVESTAKENTOPROMOTEAGRIBUSINESSINVESTMENTIN
MAHARASHTRA
The following are some initiatives taken up by Maharashtra in the agri-business area:
257

33.3.1 AmendmenttoAPMCAct
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 GrapesProcessingIndustryPolicy,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
258
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 PackageSchemeofIncentives,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
Ceilingas%ofFixedCapitalInvestment Numberofyears 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
NoIndustry 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%
259
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.

260
33.4 EXISTINGSCHEMESPERTAININGTOAGRIBUSINESSINFRASTRUCTURE
33.4.1 ImpactofSchemesonDevelopmentofAgribusinessInfrastructure
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 states
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 POLICYINITIATIVESCRITICALTOSUCCESSFULIMPLEMENTATIONOFAIDP
33.5.1 ApplyingtheIntegratedValueChainapproach
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.

261
33.5.2 SuggestedPolicyInterventions
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

262
34 IMPLEMENTATIONFRAMEWORK
34.1 PROPOSEDMODELSUNDERPUBLICPRIVATEPARTNERSHIP
34.1.1 ApproachtoPublicPrivatePartnership(PPP)inIndia
The approach to PPPs must remain firmly grounded in principles which ensure that PPPs are
formulatedandexecutedinpublicinterestwithaviewtoachievingadditionalcapacityanddelivery
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
intopublicprojects,notpublicresourcesintoprivateprojects.
11
th
FiveYearPlan(200712),VolumeI,PlanningCommission,GovernmentofIndia
After the unprecedented success of the 10
th
Five Year Plan, which achieved average annual
growth rate of 7.7 per cent, the growth target for 11
th
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
11
th
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 ExperienceofPPPinIndia
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%
Ports
10%
Tourism
6%
Energy
5%
Others
2%
NumberofPPPProjectsinIndia
Sectorwisedistribution
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 2
nd
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 PPPinAgribusinessInfrastructure:
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
Totalinvestmentcommitmentstoinfrastructureprojectswithprivateparticipationin
developingcountries,bysubsector,20002008:USD843.3billion(2008USD)
Roads
45%
Urban Dev
7%
Ports
29%
Airports
9%
Energy
8%
Others
2%
ValueofPPPProjectsinIndia
Sectorwisedistribution
El ectri ci ty
23%
Natural gas
3%
Tel ecoms
54%
Ai rports
3%
Rai l ways
2%
Roads
8%
Seaports
4%
Water treatment
pl ants
1%
Water uti l i ti es
2%
Combined water
and el ectri ci ty
uti l iti es
0%
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 ViabilityGapFundingScheme(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.

265
34.2 CHALLENGESOFVGFMODELFORAGRIBUSINESSINFRASTRUCTUREUNDER
AIDP
34.2.1 UnderVGF,ownershipofprojectassetshastoremainwiththe
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 Privatesectorisgivenacontract/concessionfortheprojecttermto
recoveritsinvestments
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 Userchargesneedtobedeterminedbeforeimplementationofthe
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 NeedforaflexiblePPPstructureforAIDP
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 BOTvsBOTAnnuitymodels
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.
267
34.2.6 SPVModel
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 PREFERREDOPERATIONALMODELFORAIDP
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
VGF
VGF,
Other
schemes
Link Infrastructure
grants/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 ProposedProjectGrant,O&MFrameworkandRecoveryofCharges
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
c. 20 % of the Project Grant after completion of 75 % of Project Construction
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.

272
35 PROJECTIMPLEMENTATIONSTRUCTURE
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
LinkInfrastructure
(Accessroads,power
andwaterlinkages,
wastedisposaletc)
BidProcess
Management
Monitoring
and
Evaluation
CapacityBldgInterventions
Consortium/federations
Training
TechnologyInputs
Exposurevisits
Marketlinkages
InsideBoard
ProgImplementationthroughPMU
ProgManagement
EmpoweredCommitteeonAgriculturalMarketing
HeadedbyPrincipalSecy(AgrMarketing)
ProjectManagement
Unit(PMU)
Design,Build&Operate
Core&AgribusinessInfrastructure
(Renovation/refurbishmentof
shops,ValueaddedInfrastructure)
PrvtDeveloper/Operator
273
35.1 ROLEANDRESPONSIBILITIESOFPROJECTIMPLEMENTINGAGENCY
(MOTHERSPV/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
AgriExtension
Services
Programmanager
(assistedby2supportstaff)
Agri
Marketing
Agribusiness
Infrastructure
Legal&Financial
Management
need based Domain
Experts
PMA
274
SummaryFinancials
The overall project financials are summarised in the table below, for the both Integrated
Value Chains, in Maharashtra:
BudgetHeads Costs(inRsmn)
1 Projectcosts(IntegratedValueChains) 715.35+277.08
2 Implementationandprojectmanagement@10%ADBfunds 35.05+13.58
3 CapacityBuildingcosts 48.31+32.21
GrandTotal 1121.58

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

8.10 8.10 8.10 32.40 0.69

2.00 2.00 2.00 20.40 0.43

103.90 30.41 29.88 11.21 11.21 15.56 15.56

15.56 248.85 5.28

540 540 540 LS

300 300 300 9,000

250 250 250 8,000

3,870 1,590 1,590

Transport ation,loading, U/L, losses

Contra ctors margin

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