Detailed Project Report for Nekkanti Mega Food Park

DETAILED PROJECT REPORT
VOLUME – I - DPR
NEKKANTI MEGA FOOD PARK PRIVATE LIMITED

Kothapatnam Village, SPSR Nellore District, Andhra Pradesh
October 2016
Detailed Project Report for Nekkanti Mega Food Park
Table of Contents
1 Introduction ............................................................................................................................. 1
1.1 Preamble ........................................................................................................................... 1
1.2 The Indian Food Processing Industry - Status and Significance ...................................... 2
1.3 Background ...................................................................................................................... 3
1.4 Mega Food Parks Scheme (MFPS) .................................................................................. 3
1.5 Project............................................................................................................................... 4
1.6 Project Objectives ............................................................................................................ 5
1.7 Brief Outline of the Project .............................................................................................. 6
2 Promoters’ Profile.................................................................................................................... 7
2.1 Nekkanti Sea Foods Limited (NSFL)............................................................................... 7
2.1.1 Credentials ................................................................................................................ 8
2.1.2 Management .............................................................................................................. 9
2.1.3 Communication Details ............................................................................................ 9
2.2 RVR Projects Private Limited ........................................................................................ 10
2.2.1 Experience............................................................................................................... 10
2.2.2 Management of the Company ................................................................................. 12
2.2.3 Communication Details .......................................................................................... 13
2.3 Proposed Shareholding Structure and Sectoral Experience of the Promoters ............... 13
2.4 Project Vision ................................................................................................................. 13
3 Demand Assessment .............................................................................................................. 15
3.1 Defining the Market Size ............................................................................................... 15
3.1.1 India ........................................................................................................................ 15
3.1.2 Andhra Pradesh ....................................................................................................... 16
3.2 Dividing Demand into Component Parts ....................................................................... 16
3.2.1 Marine Products ...................................................................................................... 17
3.2.2 Cereals and Grains .................................................................................................. 20
3.2.3 Fruits and Vegetables .............................................................................................. 24
3.3 Forecasting the Drivers of Demand/Growth Drivers ..................................................... 27
3.4 Determining an Appropriate Effort ................................................................................ 29
3.4.1 Present Status of Food Processing .......................................................................... 30
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3.4.2 Tactical Advantages for Food Processing Industry in Andhra Pradesh ................. 30
4 Policy Review ........................................................................................................................ 33
4.1 Andhra Pradesh Food Processing Society ...................................................................... 33
4.2 State Policy Framework related to Food Processing ...................................................... 33
5 Project Zone/Cluster Details .................................................................................................. 36
5.1 Defining the Zone of Influence ...................................................................................... 36
5.2 Rationale for Selection of Cluster .................................................................................. 36
5.3 Details of Districts in the Project Zone .......................................................................... 37
5.4 Identification of CPC and PPC....................................................................................... 38
5.4.1 Rationale for Selection of CPC Location................................................................ 39
5.4.2 Rationale for Selection of PPCs Location .............................................................. 40
5.5 Availability of Raw Material.......................................................................................... 41
5.5.1 Marine Products ...................................................................................................... 41
5.5.2 Cereals and Grains .................................................................................................. 43
5.5.3 Fruits and Vegetables .............................................................................................. 44
5.6 Seasonality of Selected Crops ........................................................................................ 46
5.7 Assessment of Processable Surplus................................................................................ 46
5.8 Linking Raw Material Arrivals with Units Proposed in the Park .................................. 49
5.9 Existing Marketing System in the Zone of Influence .................................................... 50
5.10 Existing Supply Chain Mechanism ................................................................................ 50
5.11 SWOT Analysis of the Zone of Influence ...................................................................... 52
6 Core Processing Facilities & Food Processing Units ............................................................ 53
6.1 Core Infrastructure at CPC ............................................................................................. 53
6.1.1 Pre-Processing......................................................................................................... 53
6.1.2 Processing ............................................................................................................... 53
6.1.3 Cold Storage............................................................................................................ 56
6.1.4 IQF (Fruits & Vegetables) ...................................................................................... 57
6.1.5 Multi Grain Sorting & Grading Facility ................................................................. 57
6.1.6 Warehouse............................................................................................................... 58
6.1.7 Other Infrastructure at CPC .................................................................................... 58
6.2 Core Infrastructure at PPCs ............................................................................................ 59
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6.2.1 Reefer Vans/Insulated Trucks ................................................................................. 59

6.2.2 Sorting Area/Grading Machine ............................................................................... 60
6.3 Area requirements and Cost Estimates for Civil Works in Core Processing Facilities . 60
6.4 Summary of Costs for CPC and PPC Infrastructure ...................................................... 61
6.5 Anchor Unit .................................................................................................................... 62
6.6 Standard Design Factories (SDF) For MSEs at CPC ..................................................... 62
7 Land and Site Analysis .......................................................................................................... 63
7.1 Land Ownership, Cost Conversion and Other Statutory Approvals .............................. 64
7.2 Connectivity ................................................................................................................... 65
7.3 Site Configuration, Topography, Land Use and Ground Profile ................................... 66
7.4 District Profile ................................................................................................................ 68
7.4.1 Geomorphology ...................................................................................................... 69
7.4.2 Drainage .................................................................................................................. 69
7.4.3 Relief and Slope ...................................................................................................... 70
7.4.4 Geological Profile ................................................................................................... 70
7.4.5 Hydrogeology ......................................................................................................... 70
7.4.6 Soils......................................................................................................................... 70
7.4.7 Land Use/Land Cover ............................................................................................. 70
7.4.8 Meteorology ............................................................................................................ 71
7.4.9 Cyclone ................................................................................................................... 74
8 Marketing Strategy and Business Plan .................................................................................. 75
8.1 Marketing Strategies ...................................................................................................... 75
8.1.1 Marketing among Farmers ...................................................................................... 75
8.1.2 Marketing Strategy for Setting up of Food Processing Units ................................. 75
8.1.3 Proposed Backward & Forward Integration Mechanism........................................ 76
8.1.4 Corporate Farming .................................................................................................. 78
8.2 Business Plan.................................................................................................................. 79
9 Proposed Master Plan ............................................................................................................ 81
9.1 Planning Concept ........................................................................................................... 81
9.2 Land Use Plan ................................................................................................................ 82
10 Enabling Physical Infrastructure & Non-core Infrastructure ............................................. 84
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10.1 Site Development & Boundary Wall ............................................................................. 84

10.2 Road Network ................................................................................................................ 84
10.2.1 Types of Internal Roads .......................................................................................... 84
10.2.2 Right of Way (RoW) ............................................................................................... 84
10.2.3 Design Parameters .................................................................................................. 85
10.2.4 Pavement Structure ................................................................................................. 85
10.2.5 Junction Details....................................................................................................... 86
10.2.6 Service Lines ........................................................................................................... 86
10.2.7 Block Cost Estimates .............................................................................................. 86
10.3 Storm Water Drainage System ....................................................................................... 86
10.3.1 Design Considerations ............................................................................................ 86
10.3.2 Design Parameters .................................................................................................. 87
10.3.3 Proposed Drainage System ..................................................................................... 87
10.3.4 Estimated Cost ........................................................................................................ 87
10.4 Water Supply System& Fire fighting ............................................................................. 88
10.4.1 Estimation of Water Demand.................................................................................. 88
10.4.2 Water Management System .................................................................................... 88
10.4.3 Pump House, Pumps and Transmission Mains ....................................................... 88
10.4.4 Raw Water Sump (Ground Level) .......................................................................... 89
10.4.5 Water Softening Unit (WSU).................................................................................. 89
10.4.6 GLSR & ELSR – Clear water ................................................................................. 89
10.4.7 Choice of Pipe Material .......................................................................................... 90
10.4.8 Distribution Lines ................................................................................................... 90
10.4.9 Fire Hydrants .......................................................................................................... 90
10.5 Sewerage Collection & Treatment System .................................................................... 91
10.5.1 Sewage Flows, Pipes and Manholes ....................................................................... 91
10.5.2 Sewage Treatment System ...................................................................................... 92
10.5.3 Estimated Cost ........................................................................................................ 93
10.6 Effluent Collection & Treatment System ....................................................................... 93
10.7 Integrated Waste Management System .......................................................................... 93
10.8 Power Transmission System .......................................................................................... 95
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10.8.1 Power Demand ........................................................................................................ 95

10.8.2 Transmission of Power ........................................................................................... 95
10.8.3 Primary Distribution ............................................................................................... 95
10.8.4 Street Lighting ........................................................................................................ 96
10.8.5 Estimated Cost ........................................................................................................ 96
10.9 Landscaping, Communication Network, Entry/Exit Gates ............................................ 97
10.10 Generators and Truck Parking .................................................................................... 97
10.11 IT & Telecom Infrastructure....................................................................................... 97
10.12 Enabling Basic Infrastructure at PPCs........................................................................ 97
10.13 Aggregate Estimated Infrastructure Cost ................................................................... 97
10.14 Proposed Non-core Infrastructure .............................................................................. 98
10.14.1 Administration Complex ..................................................................................... 98
10.14.2 Training cum Design Centre ............................................................................... 98
10.14.3 Workers’ Hostel & Managers Residential facilities ............................................ 98
10.14.4 Estimated Cost for Non-Core Infrastructure ....................................................... 99
11 Cost Estimates.................................................................................................................. 100
11.1 Project Cost .................................................................................................................. 100
11.1.1 Means of Finance .................................................................................................. 101
11.2 Financial Projections and Viability .............................................................................. 101
11.2.1 Key Operational and Financial Assumptions ....................................................... 101
11.2.2 Revenue Assessment ............................................................................................. 102
11.2.3 Expenditure Assumptions ..................................................................................... 104
11.2.4 Other Assumptions................................................................................................ 106
11.2.5 Financial Projections ............................................................................................. 107
12 Project Implementation Framework and O&M ............................................................... 112
12.1 Role of Project Management Consultant (PMC) ......................................................... 112
12.2 Proposed Contractual Framework ................................................................................ 112
12.3 Proposed Framework for Operation and Maintenance ................................................ 112
12.4 Proposed Framework for Recovery of Charges ........................................................... 112
12.5 Project Implementation Schedule................................................................................. 113
13 Risk Analysis and Mitigation Framework ....................................................................... 115
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13.1 Project Development/Construction Risk ...................................................................... 115

13.2 Operating Period Risk .................................................................................................. 117
14 Project Impact .................................................................................................................. 118
15 Conclusion ....................................................................................................................... 120
List of Figures
Figure 1-1: Segments in the Indian Food Processing Industry ....................................................... 1
Figure 3-1: World Fish Utilization and Supply ............................................................................ 18
Figure 3-2: Yield of Food Grains – India and the World ............................................................. 22
Figure 3-3: Leading Fruit-producing States .................................................................................. 26
Figure 3-4: Production Share of Leading Vegetable-producing States ........................................ 27
Figure 3-5: Shares of Segments in the Indian Food Processing Industry ..................................... 27
Figure 3-6: Agro-Climatic Map of Andhra Pradesh ..................................................................... 32
Figure 5-1: Location of Identified CPC and PPCs........................................................................ 39
Figure 5-2: Marine Production...................................................................................................... 42
Figure 5-3: Fish Production .......................................................................................................... 43
Figure 5-4: Production of Different Crops (‘000 Tonnes) ............................................................ 44
Figure 6-1: Grading and Sorting ................................................................................................... 60
Figure 7-1: Project Location Map ................................................................................................. 63
Figure 7-2: Proposed Project Site Location on Toposheet ........................................................... 64
Figure 7-3: Proposed Project Site ................................................................................................. 65
Figure 7-4: Regional Connectivity................................................................................................ 66
Figure 7-5: Google Imagery of the Site with Project Boundary ................................................... 67
Figure 7-6: Site Images ................................................................................................................. 68
Figure 7-7: Land Use/Land Cover - Nellore ................................................................................. 71
Figure 7-8: Variations in Temperature ......................................................................................... 72
Figure 7-9: Annual Rainfall .......................................................................................................... 73
Figure 7-10: Variations in Mean Wind Speed .............................................................................. 73
Figure 7-11: Variations in Relative Humidity .............................................................................. 74
Figure 8-1: Proposed Procurement Channels to be adopted by the Mega Food Park .................. 76
Figure 9-1: Conceptual Master Plan for the CPC ......................................................................... 83
Figure 10-1: RoW Plan of the MFP .............................................................................................. 85
Figure 10-2: Proposed Sewage Treatment System ....................................................................... 92
Figure 10-3: View of HT Pole and Schematic Distribution Network .......................................... 96
Figure 12-1: Project Implementation Schedule .......................................................................... 114
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List of Tables
Table 2-1: Profile of Current Business Operations of NSFL .......................................................... 8
Table 2-2: Experience of NSFL to Food Processing Industry ........................................................ 8
Table 2-3: Communication Details of NSFL .................................................................................. 9
Table 2-4: Profile of Current Business Operations of RVR Projects P Ltd.................................. 10
Table 2-5: Experience of RVR Projects P Ltd. to Food Processing Industry ............................... 12
Table 2-6: Communication Details of RVR Projects P Ltd. ......................................................... 13
Table 2-7: SPV Shareholding Pattern ........................................................................................... 13
Table 3-1: Estimation of Expenditure on Food Items ................................................................... 16
Table 3-2: Fish Production in Tonnes in Andhra Pradesh (13 Districts) ...................................... 20
Table 3-3: Andhra Pradesh - India’s Leading Producer ............................................................... 23
Table 3-4: Relative Strengths of Agricultural & Horticultural Produce of Andhra Pradesh vis-a-
vis India ......................................................................................................................................... 23
Table 3-5: Crop Production Statistics of Andhra Pradesh- 2012-13 ............................................ 23
Table 3-6: Worlds Fruits and Vegetable Production .................................................................... 24
Table 5-1: Details of Cluster Districts .......................................................................................... 37
Table 5-2: Marine Production in Tonnes (Andhra Pradesh) ......................................................... 41
Table 5-3: Major Contributors of Marine Production in Andhra Pradesh .................................... 42
Table 5-4: Andhra Pradesh Major Seaports Handling .................................................................. 43
Table 5-5: District Wise Production of Different Crops (‘000 Tonnes) ....................................... 44
Table 5-6: Potential Horticultural Commodities in Major Regions.............................................. 45
Table 5-7: District Wise Horticulture Production (‘000 Tonnes) ................................................. 45
Table 5-8: Seasonality of Crops Grown in the State..................................................................... 46
Table 5-9: Production Strengths of the Catchment District .......................................................... 47
Table 5-10: Details of Marketable Surplus/Availability of Crops ................................................ 48
Table 5-11: Types of Food Processing Units Being Targeted ...................................................... 49
Table 6-1: Pre-Processing Equipment Tentative Costs and Suppliers.......................................... 53
Table 6-2: Processing Equipment Tentative Costs and Suppliers ................................................ 54
Table 6-3: Cold Storage Equipment Tentative Costs and Suppliers............................................. 56
Table 6-4: Other Infrastructure Plant and Machinery Costs ......................................................... 58
Table 6-5: Equipment/Machinery Costs for Infrastructure in the PPCs ....................................... 59
Table 6-6: Cost Estimates for Civil Works in Core Processing Facilities at CPC and PPCs ....... 61
Table 6-7: Summary of Costs for CPC and PPC Infrastructure ................................................... 61
Table 6-8: Details of Anchor Units ............................................................................................... 62
Table 6-9: Block Cost Estimates for Standard Design Factories for MSEs ................................. 62
Table 7-1: Climatological Summary – Nellore Region ................................................................ 71
Table 9-1: Infrastructure Components .......................................................................................... 82
Table 9-2: CPC – Land Use Distribution ...................................................................................... 83
Table 10-1: Estimated Cost for Site Development ....................................................................... 84
Table 10-2: Proposed Pavement Structure Data of 24 m & 12 m Road ....................................... 86
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Table 10-3: Estimated Cost for Road Network............................................................................. 86

Table 10-4: Estimated Cost for Storm Water Drain Network ...................................................... 88
Table 10-5: Calculation of Water Demand ................................................................................... 88
Table 10-6: Distribution Network Design Parameters.................................................................. 90
Table 10-7: Line Distribution Design Parameters ........................................................................ 90
Table 10-8: Estimated Cost for Water Supply Network ............................................................... 91
Table 10-9: Sewage Network Design Parameters ........................................................................ 92
Table 10-10: Estimated Cost for Sewage & Effluent Collection System .................................... 93
Table 10-11: Estimated Cost of Sewerage & Effluent Management System ............................... 93
Table 10-12: Estimated Quantity of Solid Waste Generated ........................................................ 94
Table 10-13: Estimated Cost of Integrated Waste Management System ..................................... 94
Table 10-14: Estimated Cost for Power Distribution Network .................................................... 96
Table 10-15: Estimated Cost for Infrastructure Development ...................................................... 98
Table 10-16: Estimated Cost for Non Core Infrastructure at CPC & PPCs ................................. 99
Table 11-1: Project Cost ............................................................................................................. 100
Table 11-2: Means of Finance .................................................................................................... 101
Table 11-3: Revenue Assumptions for CPC and PPCs .............................................................. 102
Table 11-4: Total Revenues at Full Capacity Utilisation............................................................ 103
Table 11-5: Manpower/ Employee Costs for the SPV................................................................ 104
Table 11-6: Total Expenditure at Full Capacity Utilisation........................................................ 106
Table 11-7: Rates of Depreciation .............................................................................................. 106
Table 11-8: Profit & Loss Statement for the SPV Operations .................................................... 108
Table 11-9: Cash Flow Statement for the SPV Operations ........................................................ 109
Table 11-10: Balance Sheet for the SPV Operations .................................................................. 110
Table 11-11: Project IRR Calculations for the SPV Operations................................................. 110
Table 11-12: Key Financial Indicators for the SPV Operations ................................................. 111
Table 11-13: Pay-back Period Calculations ................................................................................ 111
Table 13-1: Project Development/Construction Risk ................................................................. 115
Table 13-2: Operating Period Risk ............................................................................................. 117
Table 14-1: Employment Opportunities in the MFP .................................................................. 118
List of Annexures
Annexure 1: In-Principle Approval for the Project from APFPS, GoAP
Annexure 2: Appointment of PMC (MoU)
Annexure 3: Cin, Memorandum and Articles of Association of Nekkanti MFP
Annexure 4: Share Subscription Agreement
Annexure 5: Quotations for Plant & Machinery Proposed in Core Processing Facilities
Annexure 6: Certification of the Cost Estimates for Civil Works
Annexure 7: Land Ownership/Land Details; Proof of Land Allotment
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Annexure 8: Contour Survey Map

Annexure 9: Soil & Water Analysis at CPC
Annexure 10: Backward and Forward Linkages
Annexure 11: Drawings
Annexure 12: Final Bank Approval Letter and Appraisal Note
List of Acronyms
ACC Appointments Committee of the Cabinet
AMSL Above Mean Sea Level
AP Andhra Pradesh
APIIC Andhra Pradesh Industrial Infrastructure Corporation
APFPS Andhra Pradesh Food Processing Society
APSPDCL Andhra Pradesh Southern Power Distribution Company Limited
AVM Anti Vibration Mount
BRC British Retail Consortium
CAGR Compound Annual Growth Rate
CBR California Bearing Ratio
CC Collection Centre
CETP Common Effluent Treatment Plant
CI Cast Iron
CPC Central Processing Centre
CPCB Central Pollution Control Board
CPWD Central Public Works Department
CST Central Sales Tax
CWR Clean Water Reservoir
DG Diesel Generator
DI Ductile Iron
DPR Detailed Project Report
DSCR Debt Service Coverage Ratio
EG East Godavari
ELSR Elevated Level Storage Reservoir
EMP Environmental Management Plan
EoI Expression of Interest
ESR Elevated Service Reservoir
ETP Effluent Treatment Plant
EU European Union
F&V Fruits and Vegetables
FPI Food Processing Industry
FY Financial Year
GDP Gross Domestic Product
GLSR Ground Level Storage Reservoir
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GoAP Government of Andhra Pradesh

GoI Government of India
GSDP Gross State Domestic Product
GST Goods and Services Tax
Ha Hectare
HACCP Hazard Analysis and Critical Control Points
HDPE High-Density Polyethylene
HT High Tension
HVAC Heating, Ventilation and Air Conditioning
IALA Industrial Area Local Authority
IDC Interest During Construction
IL&FS Infrastructure Leasing & Financial Services
IMD Indian Meteorological Department
INR Indian Rupee
IQF Individual Quick Freezing
IRC Indian Road Congress
IRR Internal Rate of Return
ISO International Organization for Standardization
IST India Standard Time
IWAI Inland Waterways Authority of India
Kg Kilogram
Km Kilometre
KPCL Krishnapatnam Port Company Limited
KV Kilovolt
KVA Kilovolt Amps
LDPE Low-Density Polyethylene
LED Light Emitting Diode
M Metre
MAP Modified Atmosphere Packaging
MAT Minimum Alternate Tax
MBA Master of Business Administration
MFP Mega Food Park
MFPS Mega Food Park Scheme
ML Million Litres
MLD Million Litres per Day
Mm Millimetre
MMT Million Metric Tonnes
MoEF Ministry of Environment and Forests
MoRTH Ministry of Road Transport and Highways
MPEDA Marine Products Export Development Authority
MSA Million Standard Axles
MSL Mean Sea Level
MSME Micro, Small and Medium Enterprise
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MT Metric Tonnes
MW Megawatt
NABL National Accreditation Board for Testing and Calibration Laboratories
NH National Highway
NSFL Nekkanti Seafood Ltd
NW National Waterway
O&M Operations & Maintenance
ODC Over Dimensional Cargo
PAT Profit After Tax
PBIDT Profit Before Interest, Depreciation & Taxes
PCC Primary Collection Centre
PCC Plain Cement Concrete
PE Polyethylene
PN Pressure Number
PPC Primary Processing Centre
Ppm Parts Per Million
PSC Prestressed Concrete Pipes
PUF Poly Urethane Foam
PVC Polyvinyl Chloride
PZ Project Zone
RCC Reinforced Cement Concrete
Rmt Running Metre
RoW Right of Way
Rs. Rupees
RWS Raw Water Sumps
SFT Square Feet
SMS Subject Matter Specialist
SoR Schedule of Rates
SPSR Sri Potti Sri Ramulu
SPV Special Purpose Vehicle
STP Sewage Treatment Plant
TPD Tonnes per Day
TPH Tonnes per Hour
TSDF Treatment, Storage & Disposal Facilitie
US United States
VAT Value Added Tax
WG West Godavari
WSU Water Softening Unit
WTP Water Treatment Plant
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1 Introduction
1.1 Preamble
Agriculture and allied activities form the core of the Indian economy. Approximately two-thirds
of the country’s population is dependent on agriculture either directly or indirectly. This strong
agricultural base coupled with economic growth holds significant potential for the Indian food
processing industry; an industry that provides a strong link between agricultural produce and end
consumers.
Globally, as well as in India, there is a mismatch between food demand and food supply. Given
the large amount of wastage and inefficiencies across the food production value chain in India,
there is a significant opportunity to bridge the supply-demand gap through investments in food
processing.
Food processing is the set of methods and techniques used to transform raw ingredients by
physical or chemical means into food, or of food into other forms, or to transform food into other
forms for consumption by humans or animals either at home or by the food processing industry.
Food processing combines raw food ingredients to produce marketable food products that can be
easily prepared and served to the consumer.
The Food processing sector covers activities such as agriculture, horticulture, plantation, animal
husbandry and fisheries. The food processing industry constitutes three kinds of processors:
 Primary Processors: Primary industries process raw foods (example wheat into flour)
 Secondary processors: Use primary products to manufacture other foods (example flour into
bread)
 Tertiary Processors: Prepare convenience foods such as frozen dinners and canned food
The broad categories which are included in Food Processing are as below:
Figure 1-1: Segments in the Indian Food Processing Industry

Source: Industry Reports
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1.2 The Indian Food Processing Industry - Status and Significance

India is the world’s second largest producer of food next to China, and has the potential of being
the biggest. The food processing industry is one of the largest industries in India and is a
significant part of the Indian economy (with food & beverages constituting about 36% and 54%
of the consumer price index in urban and rural areas respectively); it is ranked fifth in terms of
production, consumption, export and expected growth. Fuelled by what can be termed as a
perfect ingredient for any industry - large disposable incomes - the food sector has been
witnessing a marked change in consumption patterns, especially in terms of food. Increasing
incomes are always accompanied by a change in the food basket.
India is both a large producer and consumer of food. With a vast and growing consumer base and
strong production base, the food processing sector presents large and exciting business
opportunity for both domestic and international players. With agriculture at the core of Indian
economy and more than two-thirds of the population dependent on farming, a developed Food
Processing sector can be a strong link between agriculture and the consumers. Government's
high priority to the sector coupled with a growing consumption-led demand is leading to a fast
pace growth in the sector. It also includes other industries that use agriculture inputs for
manufacturing of edible products.
The food processing industry in India has the potential to contribute to the country’s agricultural
growth and employment, alleviate rural poverty, guarantee food and nutritional security and
contain food inflation. The Indian food industry is poised for huge growth, increasing its
contribution to world food trade every year. In India, the food sector has emerged as a high-
growth and high-profit sector due to its immense potential for value addition, particularly within
the food processing industry.
India has an advantage in terms of food processing due to a host of reasons: large share in the
world’s agricultural output, diverse agro-climatic regions and soil types, changing demographic
patterns, living conditions & food habits and increasing incomes are a few reasons which make
for promising growth of the industry.
Policy intervention and programs sharply focused on developing the food processing industry in
India with a 10 year perspective can encourage diversification of crop pattern in agriculture and
substantially reduce wastage of farm produce. It can also increase farm gate prices, add value,
enhance domestic consumption and export earnings.
According to the Vision 2015-2020 Document, prepared by the Ministry of Food Processing
Industries (MoFPI), Government of India (GoI), the food processing industry envisages to
increase processing of perishables from 6% to 20%, value addition from 20% to 35% and
increase in share of global food trade from 1.5% to 3.0%.
In order to capitalize on the available opportunities it is necessary to create an enabling
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environment for healthy growth of the food processing industry and formulate a strategic action
plan to accomplish the Vision 2015 by end of the Twelfth Plan by focusing on food processing.
Source: http://www.ibef.org/industry/indian-food-industry.aspx
1.3 Background
Government of Andhra Pradesh (GoAP) has aligned its food processing policy with Vision
2015-2020 to harness the potential of food processing sector in the state. It has created a separate
Department for Food Processing Industries to bring a focused attention to the Food Processing
sector by coordinating the efforts of various departments related to the sector. As a first step, the
Andhra Pradesh Food Processing Policy 2015 – 2020 (APFPP) was launched by GoAP in 2015
with an aim to attract new investments in the Food Processing industry, create employment
opportunities in the State and develop commodity based clusters for developing the Food
Processing industry, along with other objectives
Further, in order to provide the organizational back up to the efforts of the Department of Food
Processing Industries, GoAP under the Andhra Pradesh Societies Act in November 2012 has
established a dedicated organization viz. Andhra Pradesh Food Processing Society (APFPS),
which acts as the nodal agency for the implementation of various food processing related
schemes and programs. As part of the Policy, GoAP envisages setting up Integrated Food Parks
across all districts of Andhra Pradesh. These Integrated Food Parks will be setup in 3 categories
as follows:
 Integrated Food Park: The Minimum area of each Food Park will be 30 acres, with a
minimum of 10 food processing units in each. GoAP will provide a grant of 50% of project
cost for setting up these food parks, with a limit of Rs. 20 crore.
 Mega Food Park (MFP): Minimum area of each Food Park will be 50 acres, with a
minimum of 20 food processing units in each. GoAP will provide a grant of 50% of
project cost for setting up these food parks, with limit of Rs. 50 crore.
 Ultra Mega Food Park: GoAP will strive to develop an Ultra Mega Food Park in Kuppam
with State of Art infrastructure. Customized incentives would be offered for the same
APFPS shall act as the nodal agency for implementation of the above Integrated Food Parks, for
which specific schemes have been announced in the Policy, including the Mega Food Parks
Scheme (MFPS).
1.4 Mega Food Parks Scheme (MFPS)

The primary objective of the MFPS is to provide modern infrastructure facilities for the food
processing along the value chain from the farm to the market. It will include creation of
processing infrastructure near the farm, transportation, logistics and centralized processing
centres. The main feature of the Scheme is a cluster based approach.
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The expected outcome is increased income realization for farmers, creation of high quality
processing infrastructure, reduction in wastage, capacity building of producers and processors
and creation of an efficient supply chain along with significant direct and indirect employment
generation.
The scheme aims to facilitate the establishment of a strong food processing industry backed by
an efficient supply chain, which would include Central Processing Centre (CPC) and Primary
Processing Centres (PPC)/Collection Centres (CC). The scheme will be demand driven, pre-
marketed and will facilitate food processing units to meet environmental, safety and social
standards.
The extent of land required for establishing the CPC is minimum of 50 acres, though the actual
requirement of land would depend upon the business plan of investor(s), which may vary from
region to region. The CPC would be supported by PPCs in identified locations based on a
techno-feasibility study, adequate to meet the raw material requirements of the CPC. The land
required for setting up of PPCs at various locations would be in addition to land required for
setting up the CPC.
It is expected that on an average, each project may have around 20 food processing units with a
collective investment of around Rs. 250 crores that would eventually lead to an annual turnover
of about Rs. 500 crores and creation of direct and indirect employment of about 30,000 persons.
The aggregate investment in CPC and PPCs should be proportionate and commensurate to the
size of the total project keeping in view the economies of scale.
The MFPS is for setting up of only food processing industries With packaging facilities of food
products as ancillary to the food processing industries also allowed to be set up in the Mega Food
Parks.
1.5 Project
In order to benefit from the MFPS and exploit the other incentives under the APFPP, Nekkanti
Sea Foods Limited (NFSL), a large seafood exporter, and RVR Projects Private Limited (RVR),
which is engaged in infrastructure and construction, have come forward to promote a new
company Nekkanti Mega Food Park Private Limited (“NMFPL” or “SPV”) to set up a MFP.
The MFP (also referred to as “Project”) is proposed to be established at Kothapatnam Village,
Kota Mandal falling under Gudur Taluka in Nellore District (now renamed as Sri Potti Sriramulu
Nellore [SPSR] district), Andhra Pradesh. NMPFL had submitted an Expression of Interest (EoI)
in March 2016 seeking In-Principle Approval for setting up a MFP. The Project was appraised at
the State Level Screening Committee Meeting on May 21, 2016 and subsequently at the State
Level Empowered Committee Meeting on May 31, 2016. In-Principle Approval for the Project
was received vide Sanction of Schemes/16-17 dated 04.06.2016 (Annexure 1) from APFPS.
Nekkanti MFP is a Special Purpose Vehicle (SPV) formed by the two promoters of the project;
4
namely: Nekkanti Sea Foods Pvt. Ltd (NSFL) (owning 60% shares) and RVR Projects P Ltd
(owning 40% shares).
NMFPL has appointed IL&FS Cluster Development Initiative Limited (IL&FS Clusters), an
APFPS empanelled agency as its Project Management Consultant (PMC) for the Project. A copy
of the agreement of which is given as Annexure 2. NMFPL now seeks final approval for the
Project is submitting this Detailed Project Report (DPR) along with necessary details as
mandated under the MFPS.
1.6 Project Objectives

NSFL is the key strategic partner in NMFPL and is in the business of production, processing and
export of sea foods. The other key promoter of the SPV, RVR, is in business of infrastructure
and technical projects involving Civil, Mechanical and Electrical engineering services for last
four decades. With a view to meet the growing demand of processed foods; the promoters have
planned to enter into the marine and other food processing domain strategically and on a larger
scale. The proposed MFP will cater to the infrastructural needs of the food processing entities of
the region, apart from that it will also augment the promoters’ own growth and diversification
strategy as they are willing to leverage investments in food processing units in the CPC. The
Project will also help the SPV in providing world class facilities in food processing domain to
minimize the existing supply chain gaps in food processing sector.
Key Objectives of the project include:
 To create an infrastructure that establishes an ecosystem to facilitate efficient food processing

activity, thus encouraging entrepreneurship in the processed food domain
 To create and optimize use of support infrastructure for processing and supply chain, through
spatial clustering, for number of processors, vendors and distributors thus building scale
 To provide the requisite backward integration support for organized retailers, exporters and
other food distribution networks in the region
 To provide the requisite backward integration support for food processors so as to reduce raw
material availability risk
 To provide the requisite forward integration support to processors so as to reduce marketing
and off-take risk
 To collaborate with growers and facilitate improvement in their farm management practices
thereby leading to productivity improvements
 Provide Value Added Quality Products to national and international consumers
 Contribution to the national and international trade
 Provide a conducive socio-economic platform that generates gainful employment and
contributes to the economic development of the region as a whole
In tune with the aforesaid goals and objectives, NMFPL aims to meet the growing demand for
5
quality food by consumers and provide infrastructure facilities for food processing units (along
the food value chain from the farm to market) with sustainable rural and agricultural
development as the guiding principle.
NMFPL envisages supporting the industry in processing, value addition, post harvest facilities
and technical assistance to farmers and entrepreneurs. The expected outcomes are improved
realization to growers, creation of high quality food processing infrastructure, reduction in
wastage, capacity building of the producers and processors and creation of an efficient supply
chain along with significant direct and indirect employment generation.
1.7 Brief Outline of the Project

The MFP is proposed to be set up in 52.22 acres in Kothapatnam Village of Kota Mandal, Gudur
Taluka, SPSR Nellore District, Andhra Pradesh, India. The MFP will be based on the hub and
spoke model with provisions of strong backward and forward linkages. The SPV has acquired
the land on lease for 30 years to establish the Project.
The raw materials to feed the processing industries established in the CPC will be collected from
the PPCs. The cluster which is being considered and finalized to serve as source of raw materials
for MFP includes 8 districts surrounding the CPC and is rich in diverse varieties of marine and
seafood, cereals, pulses, cash crops, fruits & vegetables, etc. These locations are rich in agri-horti
and marine strengths.
There will be 3 PPCs around the CPC - Nellore (Nellore), Ongole (Prakasham) and
Machlipatnam (Krishna). They will form the major supply bowl for most of the food processing
units envisaged to be established in the proposed MFP. These will facilitate the collection of
perishables like shrimps and other sea foods, fruits and vegetables, etc. to be fed in food
processing industries in the MFP.
Based on the estimates for the various facilities proposed in the MFP, the eligible project cost
under the MFPS is Rs. 101.22 crores. The aggregate cost of the project after including land cost,
other pre-operative expenses is Rs.105.85 crores.
6
2 Promoters’ Profile
2.1 Nekkanti Sea Foods Limited (NSFL)
Nekkanti Sea Foods Limited (NSFL) is one of the largest exporters of seafood from India and
has been in this business for over three decades. It started its operations in 1985 by taking up a
leased processing facility in Kakinada. Later in 1989, NSFL setup its own processing facility in
Visakhapatnam. Gradually, NFSL undertook backward integration by venturing into deep sea
trawling and seafood processing
NSFL had commissioned a second, modern state-of-the-art processing plant at Ravulapalem,
which is strategically located in the aquaculture heartland of India to augment its processing
capacity. The second plant conforms to European Union Standards and produces value added
Individual Quick Freeze (IQF) Products. The company Nekkanti has also been awarded as the
best Exporter by Marine Products Export Development Authority more than 10 times in its 30
year history
NFSL has been exporting substantial quantities of Fresh Water Shrimps, Black Tigers and Wild
Caught Shrimps in various product forms: raw, cooked and blanched; especially PD Tail-on &
Off, Butterfly, Scampi Easy Peel, Head-on & Head Less in block and IQF packs to various
markets for the last several years. The exports of frozen shrimp are mainly to the European
Countries & United States of America. Besides, the company exports to other countries such as
South Africa, Canada, Japan, U.A.E. Thailand, Egypt & Fiji Islands. The company has well
established brands like “Nekkanti”, “Akasaka Star” & “Akasaka Special” which are well-known
in the international markets for several years.
NSFL has well established procurement centres spread all over the eastern coast of Andhra
Pradesh from Srikakulam, Palasa in the North, to Nellore in the South. The other centres include
fishing villages around Visakhapatnam, Tuni, Kakinada, Amalapuram, Bhimavaram,
Narasapuram, Machlipatnam, Repalle, Karlapalem and Ongole. All these centres have well
trained supervisors along with infrastructure facilities like cold stores, ice plants, etc. NSFL has a
fleet of insulated trucks and refrigerated vehicles to transport the raw material from various
procurement centres to their own processing plants to retain the freshness and quality of product
during transportation. The finished products are normally transported in reefer containers either
to Visakhapatnam Port or to Chennai Port depending upon the vessel schedule. Raw material
procurement and handling, along with logistics, are the key factors in this industry and NSFL has
developed sufficient in-house expertise and experience in these aspects.
The present net worth of the company is Rs. 145.71 crore. The profile of current business
operations of NSFL is given in Table 2-1.
7
Table 2-1: Profile of Current Business Operations of NSFL
Form of Unit Company

No. of years in 30 Product/ Aqua and marine Capacity 45 MT/ day
Business Sector processing
Present
Unit 1 Visakhapatnam Unit 2 Ravulapalem Unit 3 J Thimmapuram
Operations
Plate Freezers 2 No's 500 kg/hr/charge 2 No's 540 kg/hr/charge 2 x 750 kg/hr
Blast Freezers 5 MT / Day NIL NIL
IQF Freezer 1 No. 500 kg/hr (With 2 No's 500 kg/hr (Raw 1 MT/hr & 0.75 MT/hr
Cooking) IQF)
Cold Storage 1000 MT 450 MT 2000 MT
2.1.1 Credentials
Nekkanti is one of the most respected shrimp exporting and processing companies from India,
and its credentials can be summarized as follows:
 Proven track record, experience and ability for associating with farmers for production to
ensure abundant and sustained availability of raw material for uninterrupted production over
the year
 Experience in reefer supply chain, cold chain, processing and exports around the developed
markets of the world
 Established networking ability with the major shrimp importers in USA, EU and Japan
 Established supply chain practices both for the procurement of raw material and forward
linkages with global retailers
 Quality and certifications:
o BRC Food Certified
o Dutch HACCP
o NSF-CMI Certification
o Global G.A.P.
o FDA Approved
o EU Approved
o Best Aquaculture Practice Certified among others
Experience of NSFL with respect to Food Processing Industry and related infrastructure
development is given in Table 2-2
Table 2-2: Experience of NSFL to Food Processing Industry
Experience in Food Processing Experience in sea food - supply chain, processing and exports
Industry/Agri-business including (30 years)
agri infrastructure (No. of years)
8
Reason for interest in MFP NSFLs intention to invest in the project is influenced by the
increasingly encouraging outlook for the processed foods sector
in the domestic and export markets as well. The company is
already in the processing of aquaculture domain and is very well
versed with dynamics of the processing of other horti crops. This
would further streamline the operations of MFP and would help
to eliminate supply chain gap
Specific strength of NSFL which NSFL is in business of processing and export of seafood
would help smooth execution of products and also commissioned a 2nd modern State-of-the-Art
proposed project processing plant at Ravulapalem to augment its processing
capacity. This plant conforms to European Union Standards and
produces value added IQF Products. The wide experience of
NSFL in handling large projects will ensure the successful
execution of the MFP. The company has established strong
relationship with all the stakeholders across the value chain and
also has very good linkages with major food processing
companies both globally and domestically. This will further help
the company to bring these processors on board and lease the
plots to establish processing units in the park. NSFL has very
well utilized the raw material availability, backward and forward
linkage, etc. and developed PPCs at strategic locations which
will further augment the operation of proposed MFP
2.1.2 Management
Mr. N.S.R. Murty is the founder Director of NSFL and presently he is the Chairman & Managing
Director of the company. He started this business at a very young age and developed the business
gradually and achieved growth; aided by his business acumen and prior experience in this line of
activity, he took the company on the growth path to new heights, year after year. He has
developed a strong rapport with the shrimp farming community along the entire coast of Andhra
Pradesh and spearheads all raw material purchasing activities for the company, a critical aspect
of the business. He oversees the entire operations of the company and has also been inducted as
National Committee Member of the Seafood Exporters Association of India.
2.1.3 Communication Details

Communication details of NSFL are given in Table 2-3.
Table 2-3: Communication Details of NSFL
Name Nekkanti Sea Foods Ltd. (NSFL)

Address for Registered Address and Contact Address
Communication Ground Floor, Jayaprada Apartments, Maharanipet, Visakapatnam-530002
and 91-891-2701039/ 91-891-2567767
Contact nos. nagesh@nekkanti.net
9
2.2 RVR Projects Private Limited

RVR Projects Private Limited (RVR) is engaged in design and construction of civil and
infrastructure projects. It undertakes a range of technical projects involving civil, mechanical and
electrical engineering services. RVR was set up in 1976 and has implemented a diverse project
portfolio ranging from technical, industrial, residential and commercial & infrastructure projects
The present net worth of the company is Rs. 299.73 crores. The profile of current business
operations of RVR Projects P Ltd. is given in Table 2-4.
Table 2-4: Profile of Current Business Operations of RVR Projects P Ltd.
Form of Unit Company

No. of years in 40 Product/ Technical projects involving Civil, Capacity NA
Business Sector Mechanical and Electrical
engineering services
2.2.1 Experience
The major areas of work of RVR include:
 Buildings: Technical/Industrial/Residential/Pre-Engineered
 Roads and Bridges
 Tunnels
 Marine works: Pile foundations, Jetties, Dry dock works, Dredging and Shore protection
 Power: Electrical sub-stations, transmission lines and Solar power
 Air-conditioning: HVAC and Ventilation
 Mechanical works: Pressure vessels, Heat exchangers, Heavy structural fabrication, Heavy
structural erection and installation works.
 Water storage, water supply, fire fighting, Building Management Systems (BMS), Sewage
Treatment Plants (STP) and Water Treatment Plants (WTP)
Some of the major projects implemented by RVR are detailed below:

Industrial Structures
Building works for substation and control room, civil and structural works for NIU & FCC-NHT
unit, underground piping works for non-licensed units for Visakha Refinery (Clean Fuel Project).
 Civil and structural work for LLDPE /HDPE unit, C2+ recovery and gas sweetening unit
(GSU) and electrical and architectural works for product ware house at Lepetkata, Assam of
Brahmaputra Petrochemical Complex of M/s BCPL
 Civil and structural work including site grading and piling work for NALCO's 4th stream up
gradation project, Alumina Refinery, Damanjodi, Odisha
10
Technical Buildings
 Provision of technical facility, Visakhapatnam
 Provision of civil work and allied services for institutional and technical building, Hyderabad
 Provision of automation and electronic shop for SBC at Visakhapatnam
 Building works for substation and control room for Visakha Refinery (Clean Fuel Project) of
HPCL at Visakhapatnam
 Provision of civil works for sea keeping and manoeuvring basin for NSTL, Visakhapatnam
Residential Buildings
 Provision of sailors accommodation (15 storied) for Indian Navy at Navsenabaugh,
Visakhapatnam
 Residential accommodation for officers of Indian Navy at Dolphin Hills, Visakhapatnam
Structural works
 Coal conveyor system of about 1.5 km length for Gangavaram Port facilities project
 Fabrication and supply of structural work for fertilizer terminal and coal conveyor system
 Coal Conveyor Project at Krishnapatnam Port
Other Projects
 Construction of flyover bridge on NH-5 at Atmakur bus stand Nellore
 Construction of R.O.B.(PSC) in subsection of NH-5, Tada–Nellore BOT project
 Improvements and formation of double lane road on Krishna left flood bank, Krishna district
 Construction of rigid pavements of lateral road in Orissa
 Tunnelling work for Single Point Mooring project for HPCL at Visakhapatnam
 Piling works for licensed units, non-licensed units and FCC NHT unit for VRCFP project for
HPCL at Visakhapatnam
 Piling and pile cap works for crude oil tanks for HPCL at Visakhapatnam
 Piling works for Metro rail station on Kirti Nagar-Mundka metro rail corridor of phase-II and
for Karkarduma elevated metro station of Delhi MRTS project
 Piling works at Hines project in Gurgaon
 Integrated utilities and off sites packages for Dahej Petrochemical Complex at Dahej, Gujarat
of ONGC Petro Additions Ltd.
 Provision of jetties at mainland and Outer Wheeler Island, Dhamra, Odisha
 Dredging at outer wheeler Island, Dhamra, Odisha
 Pile foundation for package for 400 KV DYC Mundra-Jetpur transmission line
 Shore protection work at Outer Wheeler Island, Dhamra, Odisha
 External electrification for ordinance factory in Uttar Pradesh
 External electrification for technical facility at site in Rajasthan
11
 External electrification for married and OTM accommodation in Rajasthan

 Provision of 33 KV main receiving station and augmentation of 11 KV supply in
Maharashtra
 Provision of 11 KV VCBS Lf panel, 11 KV 433 V transformers, capacitators bunk panels,
battery chargers in Assam
 Grid connected solar power plant, Rajasthan
Experience of RVR Projects P Ltd. with respect to Food Processing Industry and related
infrastructure development is given in Table 2-5.
Table 2-5: Experience of RVR Projects P Ltd. to Food Processing Industry
Experience in Food Processing Experience in technical projects involving Civil, Mechanical

Industry /Agri-business including agri and Electrical engineering services- 40 years
infrastructure (No. of years)
Experience/Interest in other business Industrial structures, Technical buildings, Residential
(other than food processing buildings, Structural works, etc.
industry/agri-business)
Reason for interest in MFP Wide experience in the field of technical projects involving
civil, mechanical and electrical engineering services. The area
of work includes buildings, road and bridges, tunnel, shore
protection, power, air-conditioning, mechanical works, water
storage, WTP, STP etc. The intention to invest in the project
is influenced by the increasingly encouraging outlook for the
processed foods sector in the domestic and export markets as
well. There are visible supply chain gaps in the Indian food
industry which warrant Public-Private Partnerships to
strengthen the post harvest handling, processing, quality
assurance and food safety environment has also prompted the
promoter to explore the emerging opportunities in the food
processing sector.
Specific strength of RVR Projects P Wide experience in civil and structural work and has ability
Ltd. which would help smooth to manage large infra projects. The extensive experience of
execution of proposed project the promoter in large scale infra projects domain will
definitely help in better project execution of MFP in a
smoother way and make the project viable.
2.2.2 Management of the Company

Mr. Raghu Rayala is the chief promoter of RVR. He is an MBA from the Andhra University and
a civil engineer from RV College of Engineering. Currently, he is Executive Director of the
company and looks after business development and operations.
12
2.2.3 Communication Details

Communication details of RVR Projects P Ltd. are given in Table 2-6.
Table 2-6: Communication Details of RVR Projects P Ltd.
Name RVR Projects P Ltd.

Address for 9-16-29, C.B.M Compound
Communication and Vishakhapatnam- 530003
Contact nos. Andhra Pradesh
Tel: 9848198789, 91-891-2551967, 2573023
Fax: 91-891-2551974
Email: raghu@rvrprojects.com/mail@rvrprojects.com
2.3 Proposed Shareholding Structure and Sectoral Experience of the Promoters

The combined net worth of the promoters of the SPV is Rs 445.44 Crores. The SPV was
incorporated on March 9, 2016. The proposed shareholding of the SPV is given in Table 2-7.
The CIN, Memorandum and Articles of Association of the SPV - Nekkanti MFP are given at
Annexure 3 and Share Subscription Agreement is given at Annexure 4.
Table 2-7: SPV Shareholding Pattern

S. No. Name of the Firm Proposed% Shareholding
1 Nekkanti Sea Foods Ltd. (NSFL) 60%
2 RVR Projects P Ltd. 40%
2.4 Project Vision

The promoters of the SPV are planning to set MFP under APFPS scheme with a vision to
provide unparalleled and excellent infrastructure to the Food Processing Industry in the state.
The vision to provide unique infrastructure is also backed by the advantages associated with it to
all its stakeholders associated with the MFP. Empowerment and strengthening of farmers in the
region, diverse opportunities available to food processors and varied options available to
consumers are some of the key benefits which can be fulfilled by MFP
The promoters are well versed with the project region and surrounding areas. Setting up such a
facility will lead to the economic development of the region as a whole, besides generating
significant employment opportunity both directly and indirectly
NSFL is a key strategic partner in the SPV and is in the business of production, processing and
export of sea foods in India. The other key promoter of the SPV, RVR, is in business of
infrastructure and technical projects involving Civil, Mechanical and Electrical engineering
services for last four decades. Both the promoters in the SPV are well-established in their
respective fields and have grown their businesses at a healthy rate since inception. With a view
to continue the growth and also meet the growing demand of processed foods; the promoters
13
have planned to strategically enter into the marine and other food processing domain
strategically and on a much larger scale. The promoters would lead the endeavour of developing
state-of-the art food processing industries which will also strengthen the realization of their
vision to be leaders in providing quality food with presence in domestic as well as global food
palate. The proposed MFP will cater to the infrastructural needs of the food processing entities of
the region, apart from that it will also augment the promoters’ own growth and diversification
strategy as they are willing to leverage investments in food processing units in the CPC. Thus,
the MFP is in line with long term vision of the promoters of SPV and it will surely help to
fulfilling their goal of providing world class facilities in food processing domain to minimize the
existing supply chain gaps in food processing sector.
14
3 Demand Assessment
3.1 Defining the Market Size
3.1.1 India
India is the second largest food producer in the world, yet barely 2.2% of it is processed. The
Indian food and grocery market is the world’s sixth largest, with retail contributing 70% of the
sales. Food has also been one of the largest segments in India's retail sector, which was valued at
USD 490 billion in 2013. The Indian food retail market is expected to reach Rs. 61 lakh crore
(USD 894.98 billion) by 2020.
The Indian food processing industry accounts for 32% of the country’s total food market, one of
the largest industries in India and is ranked fifth in terms of production, consumption, export and
expected growth. As per the latest data available, food processing sector is expected to reach
USD 258 billion in FY15. In FY15, food processing industry constituted 14% to India’s GDP
through manufacturing, 13% of India’s exports and 6% of total industrial investment. Indian
food service industry is expected to reach USD 78 billion by 2018.
India is ranked first in world in production of banana, mango, papaya, chickpea, garlic, ginger,
okra. India ranks second in the world in production of sugarcane, rice, potatoes, wheat, garlic,
groundnut (with shells), dry onion, green pea, pumpkin, gourds, cauliflower, tea, tomatoes,
lentils, wheat and cow milk.
India’s food processing sector ranks fifth in the world in exports, production and consumption.
The food processing industry is highly fragmented and is dominated by unorganized sector.
About 42% of the output comes from unorganized sector, 25% from organized sector and rest
from small players.
Food processing industry in India has gained prominence in recent years. Availability of raw
materials, changing lifestyles and appropriate fiscal policies have given a considerable thrust to
industry’s growth. This sector serves as a vital link between agriculture and industrial segments
of the economy. Strengthening this link is of critical importance to reduce wastage of agricultural
raw materials, improve the value of agricultural produce by increasing shelf-life, fortify the
nutritive capacity of food products and ensure remunerative prices to farmers as well as
affordable prices to consumers.
Though the unorganized segment varies across categories, approximately 75% of the market is
still in this segment. The organized sector is relatively bigger in the secondary processing
segment than the primary processing segment.
According to the data provided by the Department of Industrial Policies and Promotion (DIPP),
the food processing sector in India has received around USD 6.70 billion worth of Foreign Direct
15
Investment (FDI) during the period April 2000-December 2015. The Confederation of Indian
Industry (CII) estimates that the food processing sectors have the potential to attract as much as
USD 33 billion of investment over the next 10 years and also generate employment of nine
million person-days.
3.1.2 Andhra Pradesh

Andhra Pradesh has a total population of 4.94 crore as per 2011 census, with 29.6% living in
urban regions and 70.4% in rural areas
The per capita income of Andhra Pradesh as per the advanced estimates of 2015-16 at current
prices has increased to Rs. 1,07,532 (Source: Socio-Economic Survey 2015-16). The per-capita
income of Andhra Pradesh is higher than the national per-capita income of Rs. 93,293. With
increase in income, per capita expenditure has also increased. The average monthly per capita
expenditure in the erstwhile State of Andhra Pradesh for the year 2012 was Rs. 1563.21 in rural
and Rs. 2559.30 in urban areas. The monthly per capita expenditure on food items in the
erstwhile State of Andhra Pradesh in 2009-10 was Rs. 717 in rural areas and Rs. 1002 in urban
areas.
Table 3-1: Estimation of Expenditure on Food Items
Total
Monthly
Population Total Monthly Food Monthly
Per Capital
Particular (as per Census Expenditure Share Expenditure
Expenditure
2001) (Rs. Crore) (Rs.) on Food
(Rs.)
(Rs. Crore)
Rural 55,401,067 1,563.21 8,660.35 797.23 3,972.26
Urban 20,808,940 2,559.30 5,325.63 1082.58 2,085.06
Total 4122.51 13,985.98 1879.82 6,057.31
Source: NSS KI(66/1.0): Key Indicators of Household Consumer Expenditure in India, 2011-12.
The table indicates that the average expenditure on food by the population in erstwhile Andhra
Pradesh to its total monthly expenditure is 46% which is increasing with the increase in per
capita income of the population. The contribution of food items in the total expenditure of the
rural population is approximately 51% while an urban consumer spends 42.3% of the total
expenditure in the food items.
3.2 Dividing Demand into Component Parts

The demand assessment relating to the proposed Project is divided into three parts, concentrating
on the following categories of food processing:
 Marine Products
o Andhra Pradesh being the largest producer of fish in the country with estimated fish
production of 1.9 MT during 2014-2015
16
 Cereals and Grains

o India produces more than 200 MT of different food grains every year. Total food grains
production reached 252.68 MT in FY15
 Fruits and Vegetables
o India is the world’s 2nd largest producer of fruits and vegetables, and produced 86.283
MT of fruits, 167.058 MT of vegetables during 2014 - 15; the government expects the
processing in this sector to grow by 25% of the total produce by 2025
3.2.1 Marine Products
3.2.1.1 Global Scenario

Fisheries and aquaculture remain important sources of food, nutrition, income and livelihoods for
hundreds of millions of people around the world. Worlds per capita fish supply reached a new
record high of 20 kg in 2014, thanks to vigorous growth in aquaculture, which now provides half
of all fish for human consumption, and to a slight improvement in the state of certain fish stocks
due to improved fisheries management. Moreover, fish continues to be one of the most-traded
food commodities worldwide with more than half of fish exports by value originating in
developing countries. Recent reports by high-level experts, international organizations, industry
and civil society representatives all highlight the tremendous potential of the oceans and inland
waters now, and even more so in the future, to contribute significantly to food security and
adequate nutrition for a global population expected to reach 9.7 billion by 2050.
Growth in the global supply of fish for human consumption has outpaced population growth in
the past five decades, increasing at an average annual rate of 3.2% in the period 1961– 2013,
double that of population growth, resulting in increasing average per capita availability (Figure
3-1). World per capita apparent fish consumption increased from an average of 9.9 kg in the
1960s to 14.4 kg in the 1990s and 19.7 kg in 2013, with preliminary estimates for 2014 and 2015
pointing towards further growth beyond 20 kg. In addition to the increase in production, other
factors that have contributed to rising consumption include reductions in wastage, better
utilization, improved distribution channels, and growing demand linked to population growth,
rising incomes and urbanization. International trade has also played an important role in
providing wider choices to consumers.
17
Source: www.fao.org/3/a-i5555e.pdf
Figure 3-1: World Fish Utilization and Supply

Although annual per capita consumption of fish has grown steadily in developing regions (from
5.2 kg in 1961 to 18.8 kg in 2013) and in low income food-deficit countries (from 3.5 to 7.6 kg),
it is still considerably lower than that in more developed regions, even though the gap is
narrowing. In 2013, per capita apparent fish consumption in industrialized countries was 26.8 kg.
A sizeable and growing share of fish consumed in developed countries consists of imports,
owing to steady demand and static or declining domestic fishery production. In developing
countries, where fish consumption tends to be based on locally available products, consumption
is driven more by supply than demand. However, fuelled by rising domestic income, consumers
in emerging economies are experiencing a diversification of the types of available fish through
an increase in fishery imports.
Global total capture fishery production in 2014 was 93.4 MT, of which 81.5 MT from marine
waters and 11.9 MT from inland waters. China remained the major producer followed by India,
Indonesia, the United States of America and the Russian Federation.
3.2.1.2 Indian Scenario

India is the second largest producer of fish in the world contributing to 5.68% of global fish
production. India is also a major producer of fish through aquaculture and ranks second in the
world after China. Fisheries are next to agriculture in terms of providing employment and food
supply. Fisheries sector occupies a very important place in the socio-economic development of
the country. It has been recognized as a powerful income and employment generator as it
stimulates growth of a number of subsidiary industries, and is a source of cheap and nutritious
18
food besides being a foreign exchange earner. Most importantly, it is the source of livelihood for
a large section of economically backward population of the country.
The fisheries sector is a source of livelihood for over 14.49 million people engaged fully,
partially or in subsidiary activities pertaining to the sector. Besides, an equal number are engaged
in ancillary activities in fisheries and aquaculture. Development of fisheries can ensure food
security as well as tackle unemployment in these regions that are predominately inhabited by
rural populace.
The vast resources of both inland and marine are indicative of the immense growth potential of
sector. The country has a long coastline of about 8118 km (3,827 fishing villages, and 1,914
traditional fish landing centres) and an exclusive economic zone of 2.02 million sq.km. Fishing
is a major industry and source of livelihood in the coastal states. India's fresh water resources
consist of 195,210 km of rivers and canals, 2.9 million hectares of minor and major reservoirs,
2.4 million hectares of ponds and lakes, and about 0.8 million hectares of flood plain wetlands
and water bodies.
Fish is an important source of quality protein and cheaper in cost compared to other source of
animal protein. About 35% of Indian population consumes fish and the per capita consumption is
9.8 kg. Fisheries provide employment and sustenance to sizeable sections of the society in rural
India, especially weaker sections. Domestic fish market in India is growing at the rate of 30%
and so the prices of Indian seafood are on the rise. The demand, which was largely metro-centric
only a few years ago, is now spreading to tier-II and tier-III cities. This sudden spurt in demand
is pushing up prices. India is a major supplier of fish in the world and shrimps are one of the
major varieties exported. Farmed shrimp accounted for about 60% of shrimp exported
from the country.
Marine and freshwater catch fishing combined with aquaculture fish farming is a rapidly
growing industry in India. In FY 2013-14 India was the sixth largest producer of marine and
freshwater capture fisheries, and the second largest aquaculture farmed fish producer in the
world contributing to 5.68% of global fish production. Fish as food—both from fish farms and
catch fisheries—offers India one of the easiest and fastest way to address malnutrition and food
security.
The total fish production during 2013-14 is at 9.58 million metric tonnes with a contribution of
6.14 million metric tonnes from inland sector and 3.44 million metric tonnes from marine sector
respectively. The overall growth in fish production in 2013-14 has been 5.9%, which has been
mainly due to 7.3% growth in inland fish production. The growth in marine fish production has
been 3.7%. There has been steady growth in the export of fish and fish products over the period.
Efforts are being made to boost the export potential through diversification of products for
export. During 2013-14 the volume of fish and fish products exported was 9,83,756 tonnes worth
Rs. 30213.26 crore.
19
Despite rapid growth in total fish production, a fish farmers’ average annual production in India
is only 2 tonnes per person, compared to 172 tonnes in Norway, 72 tonnes in Chile, and 6 tonnes
per fisherman in China. Higher productivity, knowledge transfer for sustainable fishing,
continued growth in fish production with increase in fish exports have the potential for
increasing the living standards of Indian fishermen. Fish harvest distribution was difficult within
India because of poor rural road infrastructure, lack of cold storage and absence of organized
retail in most parts of the country.
3.2.1.3 Andhra Pradesh

The State of Andhra Pradesh dominated the fishery sector with over 73% of the total production
in India followed by West Bengal. Andhra Pradesh has topped the chart in shrimp exports
enabling the country to register an impressive growth rate of 10% (monetary value) in marine
products exports in 2014-15 fiscal and touch USD 5.5 billion mark. Andhra Pradesh is the
largest producer of shrimp in the country, with 70% of the production from the state itself.
The geographical location of the state allows marine fishing as well as inland fish production.
Cyclones may do less damage to aquaculture than to crop production. Hence, farmers are getting
attracted towards this industry. It grew from Rs.3.46 billion (USD 51 million) to Rs.5.61 billion
(USD83 million). The Waterbase Limited is an aquaculture unit located at Nellore, it encourages
scientific shrimp farming. Most exported marine exports include Vannamei shrimp.
According to the Marine Products Export Development Authority (MPEDA), during 2014-15 the
exports growth in Andhra Pradesh was 10.67% as compared to 7.33% in the previous fiscal..
Table 3-2: Fish Production in Tonnes in Andhra Pradesh (13 Districts)
Brackish
Marine Marine Fresh Water
Year Water Inland Fish Total
Fish Shrimp Prawn
Shrimp
2012-13 351585 62764 69871 1022497 81733 1588450
2013-14 373338 64908 88036 1139708 102793 1768783
2014-15 406249 69152 105162 1276817 121198 1978578
Source: Department of Fisheries, Government of Andhra Pradesh
3.2.2 Cereals and Grains

Cereal grains have been the principal component of human diet for thousands of years and have
played a major role in shaping human civilization. Around the world, rice, wheat, and maize, and
to a lesser extent, sorghum and millets, are important staples critical to daily survival of billions
of people. More than 50% of world daily caloric intake is derived directly from cereal grain
consumption. Most of the grain used for human food is milled to remove the bran (pericarp) and
germ, primarily to meet sensory expectations of consumers. The milling process strips the grains
20
of important nutrients beneficial to health, including dietary fiber, phenolics, vitamins and
minerals. Thus, even though ample evidence exists on the health benefits of whole grain
consumption, challenges remain to developing food products that contain significant quantities
of whole grain components and meet consumer expectations.
FAO’s current forecast for 2016 world cereal production stands at nearly 2,566 MT, 40 MT
(1.6%) higher than in 2015. The buoyant outlook mainly reflects improved prospects for the
coarse grain output, now put at 1,329 MT, 1.0% above the July forecast and 2.1% higher than in
2015. The bulk of this increase rests on a significant, 18 MT, upward revision to the maize crop
in the United States, where beneficial weather conditions are expected to boost yields. Maize
output forecasts are also raised in Ethiopia, Mexico and the Sudan. These increases were partly
offset by cuts in maize and barley production in the EU and of maize in Brazil due to much
lower yields.
The outlook for wheat also improved (by 1.2%), putting this year’s world production forecast
above the 2015 record, at 741 MT. Large revisions for wheat production in Australia, Canada,
India, the Russian Federation, Ukraine and the United States account for much of this month’s
upturn, which more than offset a significant cutback in the EU wheat crop forecast, mostly due to
wet-weather damage in France. The 2016 rice production forecast now stands at almost 496
million tonnes, up 700000 tonnes from previous expectations and reaching a new record. The
upward adjustment is the result of larger planting estimates than previously envisaged in Asia,
owing to favourable weather conditions, and in the United States, chiefly on account of less
attractive prices for competing crops. Rice output forecasts were, however, lowered somewhat
for China, Brazil and Sri Lanka since July, in all cases mirroring the negative impact of excess
precipitation.

India has moved rapidly from being an importer of food grains to becoming an exporter. Today,
it is the second largest rice producer after China, with a share of 20% of world in production, and
is ranked tenth amongst the world’s wheat growers. Currently India is one of the largest
producers of cereals and grains, with the long grained Basmati rice leading the rest. Major
Products: Flour, Biscuits, and other baked items, Starch, Glucose, Cornflakes, Malted Foods,
Vermicelli, Pasta Foods, Beer and Malted extracts, Grain based Alcohol. India produced about
200 MT of different food grains every year. All major grains – paddy, wheat, maize, barley,
millets like jowar (great millet), bajra (pearl millet) & ragi (finger millet) are produced in the
country. The country is self sufficient in grain production. Grain processing is the biggest
component in the food sector, sharing over 40% of the total value.
The basic feature of the sector is the predominance of primary processing sector sharing of 96%
of the total value with secondary and tertiary sectors contributing about 4% of the total value
addition. Grains can emerge as a major foreign exchange earner for India in the coming years.
21
India’s food grains production is now at around 225-230 MT. These include rice, jowar, bajra,
maize, wheat, gram and pulses. Indian basmati rice enjoys command over the international
market. Besides growing Middle East market for basmati rice, many other countries are showing
interest for this food grain.
Primary milling of rice, wheat and pulses is the most important activity in food grains. There are
over 91,000 rice hullers and 2,60,000 small flour mills engaged in primary milling. Moreover,
there are about 43,000 modernised rice mills/huller-cum shellers. Also there are 10,000 pulse
mills milling about 75% of pulse production of 14 MT in the country. Branded rice is becoming
popular in the country and significant corporate presence is there in the domestic as well as
export markets. Some quantity of wheat and wheat products has also been exported.
Source: Grains and Cereals - DSIR; www.dsir.gov.in/reports/ittp_tedo/agro/AF_Farm_Grains_Cereals_Intro.pdf
Figure 3-2: Yield of Food Grains – India and the World

Among the various states of the country, Andhra Pradesh is an agriculturally important state in
India. It is the third largest producer of rice and groundnuts while it is second in cotton and
sunflower. It has been one of the front-runners in reaping the benefits of green revolution.
Andhra Pradesh is also an important producer of horticulture crops.
Due to presence of different variants of soils and micro environments, Andhra Pradesh is
favourable for the production of most of the prime crops in India. Andhra Pradesh, the fifth
largest state in the country, is an agrarian state with bountiful of natural resources and forward
looking farming community. The State occupies premier position in the country’s agribusiness
industry with major contribution in agriculture, horticulture and fisheries. The state has
witnessed high productivity in some of the crops and even topped the chart in terms of
production and productivity.
22
Table 3-3: Andhra Pradesh - India’s Leading Producer

Ranks 1st Ranks 2nd Ranks 3rd
Mango Cashew Milk
Papaya Brinjal Banana
Lime/Lemon Ground nut Coconut
Tomato Paddy Millets
Chillies Maize
Turmeric Aqua
Okra
Source: http://foodprocessingindia.co.in/state_pdf/AndhraPradesh/AP_FP_policy_Abstract_2015.pdf
Table 3-4 depicts some of the key field and horti crops in which Andhra Pradesh has a dominant
production.
Table 3-4: Relative Strengths of Agricultural & Horticultural Produce of Andhra Pradesh
vis-a-vis India
Rank in India
Productivity
Crop Production (MT) (in terms of
(MT/ Ha)
production)
Mango 9 2.73 1
Papaya 80 1.55 1
Lime/ Lemon 15 0.35 1
Oil Palm 12 1.61 1
Tomato 20 3.36 1
Chillies 3 0.73 1
Turmeric 7 0.25 1
Okra 15 0.67 1
Cashew 0.68 0.56 2
Ground nut 0.9 3 2
Paddy 3.3 13.91 2
Maize 6 5.3 2
Brinjal 20 1.16 2
Millets 0.8 0.5 3
Coconut 15000 (nuts/ ha) 1829 (million nuts) 3
Banana 35 3.16 3
Sugarcane 78 15.57 5
Onion 18 1 6
Source: http://foodprocessingindia.co.in/state_pdf/AndhraPradesh/AP_FP_policy_Abstract_2015.pdf
Andhra Pradesh has been historically called as the "Rice Bowl of India" and continues to be the
largest producer of rice in the country. Table 3-5 illustrates the current area, productivity and
production statistics of major crops in Andhra Pradesh.
Table 3-5: Crop Production Statistics of Andhra Pradesh- 2012-13
Parameters Area (‘000 Ha) Production (‘000 Tonnes) Productivity (Kg/Ha)

Rice 3628 11510 3173
23
Parameters Area (‘000 Ha) Production (‘000 Tonnes) Productivity (Kg/Ha)

Wheat 8 10 1250
Maize 972 4855 4995
Cereals 5041 17039 3380
Gram 681 762 1119
Pulses 1949 1623 833
Food Grains 6990 18662.5 2670
Oilseeds 1945 1651.1 849
Sugarcane 196 15567 79423
Cotton 2400 7350 521
Source: http://sap.ipni.net/article/andhra-pradesh
3.2.3 Fruits and Vegetables

The Global Fruit and Vegetables Processing industry has experienced consistent demand over
the five years to 2016, as economies of every size continue to consume processed fruits and
vegetable products and consumer spending increases. Demand has grown particularly faster in
developing economies as industrial growth has translated into greater urbanization, higher per
capita incomes and expansion in the size of the middle class. As the global middle class has
grown, it has demanded larger quantities of higher quality and more-diverse food. Increased
consumption of fruits and vegetables can be attributed to more households becoming health
centered. While competition from fresh produce poses a threat, demand for industry staples such
as juice and tomato-based products continues to grow across the global market. Consequently,
industry operators have increased their output to meet this growth in global demand. As a result,
Global fruit and vegetables processing industry is expected to grow at an annualized rate of 2.0%
over the five years to 2016. In 2016, industry revenue is forecast to grow 1.5% to USD 274.0
billion.
Industry revenue is expected to expand at an annualized rate of 3.0% over the five years to 2021,
reaching USD 317.1 billion. Industry demand is expected to increase as producers focus on
nutritious ingredients and less invasive processing techniques in order to keep products as
organic as possible. In addition, while the bulk of fruit and vegetable processing is currently
done in North America and Europe, industry production is expected to steadily shift to other
parts of the globe, particularly India and China.
Table 3-6: Worlds Fruits and Vegetable Production
Fruits Production Vegetables Production

Country Country
(MT) (MT)
China 154.364 China 583.32
India 82.632 India 121.02
Brazil 37.774 USA 34.28
24
Fruits Production Vegetables Production

Country Country
(MT) (MT)
USA 26.986 Mexico 13.24
Spain 17.699 Italy 13.05
Mexico 17.553 Spain 12.7
Italy 16.371 Turkey 28.28
Indonesia 16.003 Iran 23.65
Philippines 15.887 Russian Federation 15.49
Turkey 15.341 Egypt 19.59
Others 276.06 Others 271.07
World Total 676.67 World Total 1135.69
Source: Global Fruit & Vegetables Processing - IBISWorld, www.ibisworld.com
China, India, and Brazil account for almost 30% of the world’s fruit supply, but since most of
this production is destined for domestic consumption its impact on world trade is minimal.

The total production of fruits and vegetables in the world is around 370 MT. India ranks first in
the world with an annual output of 32 MT fruits, about 8% of the world’s fruit production; also is
the second largest producer of vegetables (ranks next to China) and accounts for about 15% of
the world’s production of vegetables. The current production level is over 71 MT and the total
area under vegetable cultivation is around 6.2 million hectares which is about 3% of the total
area under cultivation in the country. The diverse agro-climatic zones in the country make it
possible to grow almost all varieties of fresh fruits and vegetables in India.
According to National Horticulture Board the main fruits grown in India are apple, banana,
lime/lemon, mosambi, orange (mandarin), grapes, mango and papaya. In case of vegetables,
potato, tomato, onion, cabbage and cauliflower account for around 60% of the total vegetable
production in the country. Vegetables are typically grown in India in field conditions; unlike in
green houses as practiced in developed countries for high yields.
Only 2% of these crops are processed into value-added products. Hence, there is a need for
maximum commercial utilization of fruits and vegetables and to adapt production and marketing
activities to the requirements of the world market and to cater to domestic demand which, over
the past few years, has been increasing because of various socio-economic factors. If the
nutritive value of the processed food products could be maintained, this sector would emerge as a
major value-added food industry.
There are over 4000 fruit processing units in India with an aggregate capacity of more than 12
lakh MT (less than 4% of total fruits produced). It is estimated that around 20% of the production
of processed fruits is meant for exports, the rest caters to the defence, institutional sectors and
household consumption. Mango and mango-based products constitute 50% of exports.
25
The fruits and vegetables considered important by the Horticulture Board of India are mostly
grown in the areas of Jammu & Kashmir, Himachal Pradesh, hilly regions of North Uttar
Pradesh, Tamil Nadu, Maharashtra, Karnataka, Gujarat, Andhra Pradesh, Assam, Madhya
Pradesh, Rajasthan, Punjab, Tripura, West Bengal and Orissa.

Andhra Pradesh is a major fruit and vegetable producing States of India. A variety of tropical
and subtropical fruits and vegetables are grown in the state.
Being a largest producer of some of the fruits like Papaya, Mango, lime, etc. and largest producer
of tomato and significant producer in other fruits and vegetables, Andhra offers wide gamut of
opportunities in processing of fruits and vegetables into different category of products. The state
occupies a distinct place in the national scenario in respect of some fruits and vegetables as
indicated in the figures below:
Source: Ministry of Agriculture & Farmers Welfare, Government of India 2016
Figure 3-3: Leading Fruit-producing States
26
Source: Ministry of Agriculture & Farmers Welfare, Government of India 2016
Figure 3-4: Production Share of Leading Vegetable-producing States
3.3 Forecasting the Drivers of Demand/Growth Drivers

The exhibit below shows some of the key growth drivers.
Figure 3-5: Shares of Segments in the Indian Food Processing Industry
27
Growth drivers of processed food products are summarized below:
 Food and grocery dominates total spending: The total expenditure on food items by both
rural and urban population is high and both the categories spends more than 40% of their
expenditure on food items in fruits, vegetables, cereals, etc. A large part of remaining
expense is dominated by expenditure on value added products such as beverages thus it
creates ample opportunities for establishment of processing units and other infrastructure in
the MFP.
 With a population size of 1.22 billion of which 604 million were under the age of 24 in 2011,
this rising youth population is likely to increase India’s overall food consumption.
 Higher disposable incomes and a growing middle-class: With continuous increase in per
capita income, middle class is encouraged to switch over to healthy and value added
products. There will be an increasing desire for branded food as well as increased spending
power. Large distinct consumer segments to support customised offerings/ new categories
and brands within each segment. Consumption in India is driven towards packaged and
ready-to-eat foods.
 Favourable economic & cultural transformation, shift in attitudes & lifestyles, consumers are
experimenting with different cuisines, tastes and new brands. There is an increase in
awareness and concern for wellness and health, high protein, low fat, wholegrain and organic
food.
 Exports of food items have been rising steadily, the main export destinations being Middle
East and South East Asia
 Shift in demographic profile: The increase in income is followed by shift of rural population
towards urban areas. One-third of the population will be living in urban areas by 2020. With
increase in education status of women, working class which is increasing the demands of
ready to eat and ready to serve food products.
 Emergence of organized food retail: It is estimated that the total food and grocery retail
industry has been grown at a CAGR of 6% over the last decade. Food and groceries retail is
the largest segment of the retail market accounting for 69% of the overall market. However,
the market penetration of organized food retail is just 2%, providing a huge opportunity.
 There are a host of other factors like changing lifestyles, more nuclear families (with all
members working) and increased health consciousness which are driving the demand for
processed foods.
Considering the increasing spending on food items and demand for quality and processed food,
infrastructure for processing, storage and distribution of food items will be required. The
proposed project will mainly target untouched areas, weaknesses and backwardness of
processing, up-gradation of storage and transportation facilities in the field of agriculture,
horticulture and animal husbandry in Andhra Pradesh.
28
The identified cluster of the MFP produces significant quantities of food grains, pulses,
vegetables, fruits and fisheries which are necessary raw materials required to support various
food processing activities at the CPC in the MFP. The facilities discussed below are in the
context of raw material availability, processability, marketable & processable surplus, existence
of markets and scheme guidelines and most importantly based on the prospective/ potential for
units under food grain, pulses, fruits, vegetables and fisheries that are expected to be established
in the Park. Apart from the above favourable factors the following are some of the growth
drivers:
 Government Initiatives:
o Supply Chain infrastructure development
 Post-harvest losses are very high in India attributed to inadequate infrastructure
facilities
 Government’s focus and launch of various schemes to provide excellent infrastructure
facility in food processing sector opens up various opportunities for private investors
 GoAPs Mega Food Parks Scheme
o Facilitating support for increasing processing levels
o Foreign Direct Investment
 Liberalisation and the growth of organised retail has made the Indian market more
attractive for global players; with a large agricultural resource base, abundant
livestock and cost competitiveness, India is fast emerging as a sourcing hub of
processed foods
 Growth of Organized Retail
o Liberalization and the growth of organized retail has made the Indian market more
attractive for global players
o With a large agricultural sector, abundant livestock and cost competitiveness, India is fast
emerging as a sourcing hub of processed food
 Andhra Pradesh as a potential global outsourcing hub
o Andhra Pradesh enjoys favorable supply-side fundamentals (abundant raw materials
supply, cost advantages) and global supermarket majors are looking at Andhra Pradesh as
a major outsourcing hub
3.4 Determining an Appropriate Effort

Food is the first and the foremost requirement of the people for their survival. It provides
nutrients like proteins, carbohydrates, fats minerals and vitamins. It involves cultivation of field
crops, horticulture, animal raising and aquaculture. Agriculture is practiced in two phases:
 Production agriculture and the goal is to get maximum productivity.

 Post production agriculture where the major targets are prevention of loss and value addition.
Agriculture is practiced for self and/or trade.
29
An appropriate effort in this case is the food processing which operations includes many methods
that are used to add value to the raw food materials (including cereals and marine products, fruits
and vegetables and) which can be consumed by human beings or animals. This provides
employments to rural people including women and prevents capital drain from rural to urban
areas and thereby helps in narrowing down the economic disparity between rural & urban
population. All the raw food materials are processed to improve their palatability, nutritional
value and shelf-life. Generally, the first - preservation for later consumption or sale – is the
primary reason for food processing. Foods are processed for five major reasons:
1) Preservation for later consumption or sale to fetch better price

2) Removal of inedible portions
3) Destruction or removal of harmful substances
4) Conversion to forms desired by the consumer
5) Subdivision into food ingredients
3.4.1 Present Status of Food Processing

To meet the current demand of food materials, the industrial food processing sector has emerged.
The food processing sector in the country is mainly handled by the unorganized sectors. About,
42% of the output comes from the unorganized sector, 25% comes from the organized sector and
the rest of it comes from the small scale players. The small-scale food processing sector is a
major source of employment and adds value to crops by processing. It is a major source of food
in the human diet.
The small-scale food processing sector is, however, under increasing threat and competition from
the large manufacturers who, through economies of scale and better presentation and marketing.
Good packaging lies at the very heart of presentation and thus customer appeal. It is an area of
vital importance for small and medium food manufacturers if they are going to continue to
compete and expand. With food processing, it is possible to maintain a nutritious and safe food
supply for the millions of people that inhabit both urban and rural areas. Improvement in
processing efficiency, by increased yield of usable product, is a tangible means of reducing food
loss and increasing food supply. Demand for increased convenience of food preparation in the
home, institution and restaurant has created a need from processing industries for food
ingredients as well as new food forms.
3.4.2 Tactical Advantages for Food Processing Industry in Andhra Pradesh

 Conducive climatic conditions and diverse raw material base
o Andhra Pradesh enjoys a diverse agro climate (6 agro climatic zones) with 8.45 million
hectares of net cultivable area and an extensive irrigation network. The prominent agro-
climatic zones of Andhra Pradesh are given in Figure 3-6
o The State has a large and diverse raw material base suitable for food processing industry.
 Fertile River systems
30
o The State’s fertile river systems like Godavari, Krishna, Tungabhadra, Vamsadhara and
Penna can easily meet needs of Agriculture and Food Processing Industry
o The State is a pioneer in use of water saving technology like drip/sprinkler irrigation
 Excellent Logistics
o Andhra Pradesh has a road network of over 146,954 km, with 42,511 km of State
Highways, 3,144 km of National Highways and 101,484 km of District Roads. National
Highway 5 acts as spine of Andhra Pradesh with over 1,000 km running through the state
o Andhra Pradesh has a railway network of 4,403 km with many express trains and
passengers serving the state population.
o Andhra Pradesh has 4 major and intermediate container ports (Visakhapatnam, Kakinada,
Krishnapatnam and Gangavaram) and over 10 minor, deep water ports. This
infrastructure provides ample opportunity to industries to develop trade relations with
various countries across the globe.
o Andhra Pradesh is developing a network of inland waterways. National Waterway-4
stretches from Kakinada to Puducherry over 1095 km. This would connect ports, cities
and industrial townships and the estimated cargo traffic on this waterway would be 10
metric ton by 2029. Rajahmundry-Bhadrachalam inland waterway connectivity over the
Godavari River is also an important waterway for cargo transport.
o Andhra Pradesh is home to 6 airports. Additionally, 8 new airports are being developed in
the state, including a Greenfield international airport at Bhogapuram (near
Visakhapatnam) and 7 no-frills airports.
 Large Land Bank: The state of Andhra Pradesh has an identified land bank of 3 lakh acres
and is further in the process of consolidating an additional industrial land bank of
approximately 7 lakh acres. This land bank of 10 lakh acres would give the state a strategic
edge in attracting investments. This land would be administered in accordance with the
Industrial Development Policy 2015-20.
 Reliable Infrastructure
o GoAP is committed to supplying 24x7 reliable, quality power to industry. While the state
is currently power surplus, it has embarked on an ambitious plan to add another 16,484
MW of power generation capacity by 2019-20.
o The state is also committed to invest in and ensure adequate and world class
infrastructure and common facilities across food parks.
 Abundant availability of skilled manpower
o The State has good scientific and research talent pool with a 70% literacy rate, 58
Agricultural Research stations and one sugar cane research station
 The State is also home to various centres of excellence such as Agricultural College in
Bapatla, Horticulture University in West Godavari district and Sri Venkateswara Veterinary
University
31
Figure 3-6: Agro-Climatic Map of Andhra Pradesh

Source: Economic Survey 2015-16
Andhra Pradesh, the eighth largest state in the country, is an agrarian state with bountiful natural
resources and a forward looking farming community. Andhra Pradesh occupies a premier
position in the country’s agribusiness industry with major contribution in agriculture, horticulture
fisheries and marine production Agriculture sector in Andhra Pradesh contributes to around
23.3% to state's GSDP (constant prices) in 2013-14. Around 60% of the state’s population is
employed in agriculture and related activities, which makes Food Processing one of the major
thrust areas for the state.
32
4 Policy Review
4.1 Andhra Pradesh Food Processing Society
APFPS has been established by the GoAP under The Andhra Pradesh Societies Act to act as a
nodal agency for development of Food Processing Sector in the State. Main objectives of APFPS
are:
 Enhancing and stabilizing the income level of the farmers

 Achieving integration of the food processing infrastructure from farm to market
 Enhancing the competitiveness of food processing industry in both domestic as well as
international markets
 Making the food processing sector attractive for both domestic and foreign investors
 Reduction of Agricultural waste
 Providing Marketing assistance to producers
 Providing Quality check facility
 Undertaking Capacity building & Promotional activities
 Making food processing an all season activity
 Administration/ implementation of the Food Processing Policy 2015-2020
4.2 State Policy Framework related to Food Processing

As the Food Processing Policy 2010-15 expired, the GoAP decided to formulate a fresh Food
Processing Policy duly keeping in view of the tactical advantages like conductive climatic
conditions, diverse raw material base, excellent infrastructure, large Land bank and abundant
availability of skilled manpower etc., has accorded top priority to industrial growth as a means to
mitigate poverty and unemployment. Accordingly, the AP Food Processing Policy 2015 – 2020
(APFPP) was announced by GoAP
The aim of the APFPP is to make the State the most preferred destination for Food Processing
Industry. The Policy aims to capitalize on the rich and diverse food production base of Andhra
Pradesh to provide fillip to the sector. The proposed policy targets are as follows:
 Make Andhra Pradesh one of the most preferred destinations for food processing sector
 Attract new investments worth Rs. 5,000 crore by 2020
 Create additional employment opportunity for 50,000 personnel by 2020
The Policy Objectives are:
 Develop commodity-based clusters to enable a focused and planned approach to developing

the food processing industry through a coordinated approach between government
departments.
 Identify and bridge existing infrastructure gaps affecting the food processing industry.
33
 Promote innovation, research & development in the industry and ensure continuous
technology up gradation.
 Undertake capacity building and enhance competitiveness of food processing industry in
both domestic and international markets.
Following are the major initiatives covered under the APFPP:
 Establishment of Integrated Food Parks across all districts of Andhra Pradesh. These
Integrated Food Parks will be setup in 3 categories as follows:
o Integrated Food Park: The Minimum area of each Food Park will be 30 acres, with a
project cost for setting up these food parks, with a limit of Rs. 20 crore
o Mega Food Park: Minimum area of each Food Park will be 50 acres, with a
project cost for setting up these food parks, with limit of Rs. 50 crore
o Ultra Mega Food Park: GoAP will strive to develop an Ultra Mega Food Park in Kuppam
with State of Art infrastructure. Customized incentives would be offered for the same
 GoAP to provide VAT/CST/GST reimbursement for Integrated Food Parks during the
construction period for a period of 2 years limited to a maximum Rs.2 crore.
 Facilities set up in identified clusters for processing of waste produced in food processing
units will be provided grant of 50% of project cost up to a maximum of Rs.2 crore.
 GoAP will encourage setting up of training centres in commodity-based cluster development
initiatives of the state. Additionally, GoAP will reimburse 50% of cost involved in skill up
gradation and training local manpower limited to Rs. 5,000 per person in such training
centres.
 GoAP will provide assistance to food processing industries for research work approved by
government undertaken by reputed research institutions, up to 50% of the cost with a ceiling
of Rs.25 lakh. This would be a one-time grant for a food processing unit.
 Maximum 50% grant of the project cost of setting up of NABL approved food testing lab for
common usage by food processing units up to a limit of Rs.5 crore.
 Power tariff subsidy will be at Rs.1.50 per unit for food processing units including cold
chains, cold storage units, ripening units for 5 years from date of commencement of
commercial production.
 Food processing industry will continue to be a “seasonal industry” under the regulations of
APERC, and shall get relief from minimum electricity demand charges during the closure
period.
 Capital Subsidy
o Subsidy to an extent of 25% of project cost for setting up new food processing units
limited to Rs.5 crore.
o Subsidy to an extent of 50% for setting up PPCs and Primary Collection Centres (PCCs)
34
limited to Rs.2.50 crore.

o Subsidy to an extent of 35% for setting up of cold chain for agriculture / horticulture
/dairy /meat produce, limited to Rs.5 crore.
 Interest Subsidy
o Interest subsidy of 7% on the term loan taken for fixed capital investment for food
processing units and cold chain infrastructure for a period of 5 years from
commencement of commercial operations limited to Rs.2 crore.
o Interest subsidy of 7% on the term loan taken for PPCs and PCCs for a period of 5 years
from commencement of commercial operations limited to Rs. 1 crore.
 Net VAT/CST/SGST reimbursements for MSME and large food processing units shall be as
per the MSME Policy 2015-20 and Industrial Development Policy 2015-20 of GoAP
respectively.
 100% reimbursement of stamp duty and transfer duty paid by the industry on purchase or
lease of land meant for industrial use.
 GoAP will provide 100% exemption of APMC cess/ fees in respect of procurement of
agriculture/horticulture produce directly from farmers by new/existing food processing units.
 Marketing Assistance
o Reimbursement of 50% of cost of participation to maximum of 10 MSME units per year
for participating in international food processing related trade fairs, with a ceiling of Rs. 5
lakh per unit per annum.
o Reimbursement of reimburse 75% of the space rent with a ceiling of Rs. 2 lakh per year
for maximum of 10 MSME units for setting up stalls to extend their business interests in
national/international exhibitions and conferences.
 Quality certification/Patent registration
o Reimbursement of 50% of the cost of certifications such as HACCP, GMP, ISO 9000,
ISO 22000, GLP and TQM for food processing units, up to a limit of Rs. 5 lakh per unit.
o Reimbursement of expenditure incurred in obtaining patents to the extent of Rs. 10 lakh
per patent.
 Subsidy of 50% for the purchase of reefer vehicles to food processing units up to a
maximum limit of Rs. 10 lakh.
 Reimbursement of 30% of road transport charges till inland container depot (ICD) / port for
export of perishable goods by food processing units with a ceiling of Rs. 5 lakh per annum
per unit for a period of 3 years from the date of commercial production.
35
5 Project Zone/Cluster Details

This chapter presents a detailed study of the potential to supply raw materials to processing units
in proposed MFP. It also maps the cluster and identifies tentative PPC locations, analyses the
existing marketing system and value chains to identify the flow of agricultural produce and
identify critical gaps so as to identify key interventions that would be taken up to build an
efficient supply chain for various units in the MFP.
5.1 Defining the Zone of Influence

The MFP zone may be defined as a geographic region where identified crops/commodities are
sourced, processed and transformed into finished products for marketing. From sourcing to
finished product, a region without any physical boundary would be required, which would
consist of PPCs for sourcing of raw produce and a CPC where produce is not only transformed to
finished products but are also stored for marketing during off season. The entire zone can be
termed as the Project Zone (PZ).
The zone would typically include similar business units operating in similar industrial sectors.
They will be located near each other and will compete among themselves only if catering to the
same end-product category, in similar markets, and they will also share common inputs such as
raw materials, labour with specific skills sets. Thus, it can be said that clusters can encompass
the entire value chain of a broadly defined sector from raw produce to end products. Based on
the availability of produce within the zone and the processing opportunities, a number of focus
crops have been identified for the MFP.
5.2 Rationale for Selection of Cluster

Development of MFP needs a diverse and sustainable agricultural raw material supply region
serving as a catchment area for sourcing of agricultural produce. Based on the supply strengths
of the zone, it is important to identify primary processing centres and collection centres within
the catchment area so as to secure raw material for the processing units in the MFP.
The geographical limit of the identified zone has been delineated based on the diversity and
quantity of raw material available and contiguity of the potential area for future expansion. Also,
comparative advantage of crops in terms of processing ability, marketing opportunities, seasonal
advantage, local consumption, export/import substitution, scope for intensification and
productivity improvement has been duly taken into consideration.
Since the MFP would require continuous supply of large volume of raw material, this would
necessitate investment in food processing infrastructure, strengthening of supply chain to reduce
wastage, prevent quality deterioration and ensure timely availability of various focus crops.
Appropriate product mix has been chosen based on raw material available in the project zone and
their scope for processing and value addition. The project zone produces significant quantities of
36
food grains and sufficient volume of vegetables & fruits which are necessary raw materials
required to undertake various food processing activities in the MFP. The cluster also enjoys
relatively better infrastructure in terms of connectivity, power supply, etc., which will enable in
attracting prospective entrepreneurs for setting up of their units in the proposed MFP.
5.3 Details of Districts in the Project Zone

The proposed MFP of NMFPL is proposed to come up in Kothapatnam Village, Nellore district
of Andhra Pradesh. Raw materials to feed the processing industries established in CPC location
will be collected from the PPCs. The cluster which is being considered and finalized to serve as
source of raw materials for MFP is rich in diverse varieties of marine and seafood, cereals,
pulses, cash crops, fruits & vegetables, etc. includes 8 districts surrounding the CPC location.
These locations are rich in agri, horti, and marine strengths. The proposed cluster districts for the
aforementioned location are given in Table 5-1.
Table 5-1: Details of Cluster Districts

S. Distance from
District Major Agri Crops Major Horti Crops
No. Nellore (km)
1 Nellore - Rice, Jowar, Bengal gram, Orange & Batavia, Lime/
Black gram, Groundnut, lemon, Guava, Cucumber,
Sesamum, Tobacco, Sugarcane Betelvine, Coriander, Garlic
2 Prakasham 140-150 Rice, Jowar, Bajra, Ragi, Orange & Batavia, Guava,
Coarse grain, Red gram, Bengal Papaya, Sapota, Cucumber,
gram, Black gram, Sesamum, Brinjal, Okra, Onion, Beans,
Castor, Sunflower, Cotton, Bottle gourds, Coriander,
Tobacco Ajwain, Chillies
3 Kadapa 170-180 Bajra, Coarse grain, Red gram, Mango, Orange & Batavia,
Bengal Gram, Horse Gram, Lime & Lemon, Banana,
Ground nut, Sesamum, Papaya, Sapota, Carrot,
Sunflower Tomato, Brinjal, Okra, Onion,
Turmeric
4 Chittoor 210-215 Rice, Bajra, Ragi, Horse gram, Mango, Grapes, Papaya,
Groundnut, Sugarcane Banana, Potato, Sweet Potato,
Tomato, Brinjal, Okra, Onion,
Beans, Betelvine, Tamarind,
Ajwain
5 Guntur 240-250 Rice, Maize, Coarse grain, Red Banana, Sapota, Cucumber,
gram, Bengal gram, Green Peas, Carrot, Tomato, Brinjal,
gram, Black gram, Sesamum, Okra, Onion, Chillies,
Castor, Cotton, Tobacco Turmeric, Betelvine,
Coriander, Garlic
6 Krishna 320-340 Rice, Maize, Coarse grain, Red Mango, Coconut, Oil palm,
gram, Green gram, Black gram, Cucumber, Peas, Tomato,
Cotton, Tobacco, Sugarcane Brinjal, Okra, Chillies,
Turmeric, Betelvine, Arecanut,
Cocoa, Pepper
7 West 375-380 Rice, maize, Coarse grain, Mango, Banana, Sapota,
37
S. Distance from
District Major Agri Crops Major Horti Crops
No. Nellore (km)
Godavari Green gram, Black gram, Coconut, Oil Palm, Cucumber,
Tobacco, Sugarcane Cabbage & Knol Khol, Peas,
Tomato, Brinjal, Coriander,
Arecanut, Cocoa, Pepper
8 East 380-390 Rice, Green gram, Tobacco, Banana, Custard apple,
Godavari Sugarcane Cashew, Coconut, Oil palm,
Tapioca, Sweet potato,
Cabbage & Knol Khol, Peas,
Brinjal, Okra, Betelvine,
Garlic, Arecanut, Cocoa,
Pepper
5.4 Identification of CPC and PPC

The CPC is proposed to be set up in 52.22 acres land at Kothapatnam Village, Kota Mandal,
Gudur Taluka, SPSR Nellore District; the southernmost coastal district in the state of Andhra
Pradesh, India.
There will be 3 PPCs around CPC location - Nellore (Nellore), Ongole (Prakasham) and
Machlipatnam (Krishna). They will form the major supply bowl for most of the food processing
units envisaged to be established in the MFP at Nellore district. These will facilitate the
collection of perishables like shrimps and other seafood, fruits and vegetables, etc. to be fed in
food processing industries in the MFP.
38
Figure 5-1: Location of Identified CPC and PPCs

The cumulative land requirement for the PPCs is 1.26 acres (Nellore - 0.26 acres, Ongole - 0.5
acres, Machlipatnam - 0.5 acres). The acquisition of land for PPCs is under process and it will be
taken as lease.
5.4.1 Rationale for Selection of CPC Location

The location of the CPC is well connected with basic and enabling infrastructure such as:
 Road Connectivity:
o National highway is 30 km away from the site
o Krishnapatnam port is at 12 km away from the site
39
 Air Connectivity: Nearest airport is Tirupati airport

 Rail Connectivity: Nearest railway station at Gudur
 Berthing facility at Krishnapatnam port is 10 km from the site
 Site has also a waste water drain facility
 Power: Nearest power line is 33 KVA near the land and it is 1-2 km from the proposed
location of CPC at MFP
 Ample water availability
The vicinity of CPC to the Krishnapatnam port shall be an added advantage from logistics point
of view and shall facilitate transit of products from the MFP. The port currently facilitates the
export of around 648,000 Tonnes of agri produce including rice, wheat, maize, processed food,
fresh fruits and vegetables, flowers, etc. Krishnapatnam port is a privately built and owned, all
weather, deep water port. As of 2014, Krishnapatnam Port was capable of handling 75 MT of
cargo per annum and is the one of the deepest port in India with a draft of 18.5 m. The port is
linked to the Chennai-Kolkata rail line through a 19 km long line and is also connected with the
NH16 which is being upgraded from a 4 lane to a 6 lane highway.
5.4.2 Rationale for Selection of PPCs Location

The locations of PPCs and for the proposed MFP have been proposed which is based on the
analysis of the proximity to the proposed CPC, production potential/availability of raw material,
processing potential and market arrivals.
PPCs for the aforementioned MFP are shortlisted based on the four dimensional analysis of the
primary catchment districts:
 Production potential of agri and horti crops

 Proximity and reach to the proposed CPC
 Processing potential
 Market arrivals in these locations
The target potential for procurement of raw materials for the various food processing industries
in the CPC is calculated as a definite percentage of the marketable surplus of the commodities.
Marketable surplus is expressed as a proportion of production which is available for sale by the
producers after meeting their personal needs, seed requirement for next cropping season, storage
etc. Marketable surplus are generally high in case of fruits and vegetables (above 90% of the
total production) and cash crops (80-100%) which form the major raw materials for the
processing industries while, in case of cereals and pulses the marketable surplus fall in the range
of 40-70% of the total production. Percentage of production used to calculate marketable surplus
and targeted percentage of marketable surplus for procurement of various agricultural and allied
commodities are derived from sources such as Directorate of Marketing and Inspection (DMI)
and market arrival analysis.
40
5.5 Availability of Raw Material

Given below are few facts that demonstrate the strong agriculture and horticulture and marine
production in the targeted districts (cluster).
5.5.1 Marine Products

Andhra Pradesh is strategically located and has abundant supply of aquaculture shrimp round the
year assuring more than 300 days of operation. The entire coastal Andhra Pradesh has shrimp
farms, from where the MFP units would source the raw material for their units in MFP. The
company will also source the raw material from other neighbouring states to keep assured supply
of raw material in the proposed CPC.
As shown in Table 5-2, the cluster contributes to almost 89% of the marine production of the
state of Andhra Pradesh; this includes Marine Fish (61%), Marine Shrimp (80%), Brackish
Water Shrimp (96%), Inland Fish (97%) and Fresh Water Prawn (92%).
Table 5-2: Marine Production in Tonnes (Andhra Pradesh)

Brackish Fresh
S. Marine Inland
Districts Marine Fish Water Water Total
No. Shrimp Fish
Shrimp Prawn
1. Srikakulam 55517 1446 821 10255 1657 69696
2. Vizianagaram 15607 900 138 10300 1210 28155
3. Visakhapatnam 85620 11700 3265 8461 7130 116176
4. East Godavari 85078 16651 11373 30771 15528 159401
5. West Godavari 10583 1222 31550 548807 20454 612616
6. Krishna 28037 11906 13801 535542 24585 613871
7. Guntur 31460 7454 7594 30381 3326 80215
8. Prakasham 22789 6820 10301 17924 7050 64884
9. Nellore 71558 11053 26319 46259 40081 195270
10. Kurnool - - - 24123 130 24253
11. Kadappa - - - 3269 0 3269
12. Anantapur - - - 6600 47 6647
13. Chittoor - - - 4125 0 4125
Total 406249 69152 105162 1276817 121198 1978578
% of Cluster to State 61% 80% 96% 97% 92% 89%
Highlighted Districts are the Cluster Districts
The two neighbouring districts West Godavari and Krishna contribute to nearly 66% of the total
shrimp production in the state, which also highlights the strategic importance of the MFP
location.
41

Figure 5-2: Marine Production
Table 5-3: Major Contributors of Marine Production in Andhra Pradesh
Production
Categories (million MT) Major Contributors in Andhra Pradesh
in 2014-15
Inland fish production 1.28 West Godavari, Krishna and Nellore
Marine fish 0.41 Visakhapatnam, East Godavari and Nellore
Brackish water shrimp 0.11 West Godavari, Krishna and Nellore
Marine shrimp 0.07 Visakhapatnam, East Godavari and Krishna
Fresh water prawn 0.12 West Godavari, Krishna and Nellore
A fishery policy has also been formulated to provide incentives to the processing units,
aquaculture ponds, feed manufacturing units; fishery related manufacturing equipment units and
disease diagnosis labs for fisheries development. The government has earmarked Rs. 339 Crores
to the fisheries department for the year 2016-171.
1
Budget speech 2016-17 (Andhra Pradesh)
42
Source: Andhra Pradesh Fact File - MSME; msmehyd.ap.nic.in/PROFILE%20-AP.pdf
Figure 5-3: Fish Production

Andhra Pradesh is bestowed with six sea ports which are Krishnapatnam, Machlipatnam, Rawa,
Kakinada, Gangavaram, and Visakhapatnam seaports. The port wise export of marine products
for the year 2013-14 and 2014-15 is mentioned in Table 5-4.
Table 5-4: Andhra Pradesh Major Seaports Handling

Year 2013-14 Year 2014-15
Name of the Port Value Value
Quantity (MT) Quantity (MT)
(Rs. Cr) (Rs. Cr)
Vizag (Visakhapatnam) 102146 6825.64 115672 7578.27
Kakinada 62 3.74 0 0
Krishnapatnam 19594 1525.62 30690 2066.14
Source: www.aponline.gov.in/apportal/Downloads/Socio_Economic_Survey_Book_let.pdf
5.5.2 Cereals and Grains

In the food grains group, rice is the major crop in the cluster followed by Maize. Other major
crops include jowar and millets. From the Table 5-5 and Figure 5-4 the following observations
are inferred:
 Cluster contributes to about 82% of the total food grain production of Andhra Pradesh
 About 82% of total rice production, about 83% of the state’s cereals and millet production
and 84% of pulses
 Cluster accounts for 93% of cotton production of the state
 Cluster is also known for oil seeds production accounting for 68% of oilseed production of
the state
43
Table 5-5: District Wise Production of Different Crops (‘000 Tonnes)

Total
S. Cereals &
Districts Rice Pulses Oilseeds Cotton Food
No. Millets
Grains
1. Srikakulam 529 586 44 31 34 1224
2. Vizianagaram 321 422 21 72 29 865
3. Visakhapatnam 152 207 16 50 10 435
4. East Godavari 1102 1177 21 173 33 2506
5. West Godavari 1289 1606 12 700 22 3629
6. Krishna 951 1128 175 111 209 2574
7. Guntur 638 1459 142 21 709 2969
8. Prakasham 190 431 273 49 208 1151
9. Nellore 1026 1051 38 56 19 2190
10. Kurnool 337 768 266 183 176 1730
11. Kadappa 81 130 28 67 59 365
12. Anantapur 76 207 88 348 36 755
13. Chittoor 171 191 8 127 1 498
Total 6863 9363 1133 1988 1543 20890
% of Cluster to State 82% 83% 84% 68% 93% 82%
Source: Statistical Abstract 2012-2013
Highlighted Districts are the Cluster Districts
Figure 5-4: Production of Different Crops (‘000 Tonnes)

5.5.3 Fruits and Vegetables
Being the largest producer of some of the fruits and significant producer in vegetables, Andhra
offers wide gamut of opportunities in processing of fruits and vegetables into different category
44
of products. Major fruits that are produced in the cluster are Mangoes, Banana, Papaya, Batavia,
acid lime and Guava. Some of the key opportunities here are given in Table 5-6.
Table 5-6: Potential Horticultural Commodities in Major Regions

Commodity Major Production Zone Processing Opportunities
Mango Krishna, Chittoor, Vizianagram, Anantapur, Pulp, Juices, Pickles, Dehydrated
Kadapa fruits, powder, Jam, Jelly, Candy
Banana Kadapa, Chittoor, East Godavari, Anantapur, Chips, Juice, Jam, Flour, Jelly, Puree,
West Godavari, Vizianagaram Wine, Banana Cheese
Lime & Other Anantapur, Kadapa, Nellore, Kurnool, Pickles, Juice, Dried Lime Peel
Citrus Chittoor
Tomato Krishna, Chittoor, Kadapa, Kurnool, Puree, Ketchup, Sauce, Jam, Paste,
Anantapur, Dried powder
Onion Anantapur, Kurnool, Kadapa, Chittoor, Flakes, Paste, Powder
Source: www.nhm.nic.in/ActionPlan/ActionPlan_AP.pdf
Table 5-7: District Wise Horticulture Production (‘000 Tonnes)
Papaya Citrus
Onion Okra Brinjal Mango Guava
District
Production (in MT)
Anantapur 560880 888512 96534 39825 71840 169146 31500
Chittoor 88000 8601 174600 81255 74000 605700 1800
Kadapa 412160 164030 92196 70650 73440 210303 3345
Prakasham 121040 230261 27054 53625 91000 62694 2700
Krishna 11200 1491 19116 40230 68920 538533 23070
Nellore - 101640 900 - 7000 103185 9510
Kurnool 24000 76395 288900 61320 86500 110475 3678
Guntur 22400 28667 33696 31620 38640 7893 3675
East Godavari 24000 1226 32400 37140 265280 64458 4785
West Godavari 11200 15 7200 30900 74220 160812 885
Vizianagaram 28000 1738 26424 44820 64420 428652 10.485
Visakhapatnam 24800 1500 23184 42750 68600 145800 2265
Srikakulam 16000 4163 82800 38820 61660 83808 1305
Total 1343680 1508239 905004 572955 1045520 2691459 88528
% of Cluster to State 47% 40% 55% 57% 67% 47% 58%
Source: www.nhm.nic.in/ActionPlan/ActionPlan_AP.pdf
On the fruits & vegetables front, the cluster contributes to 47% of mango production, 40% of
lime and other citrus fruits, 47% of papaya, 55% of onions, 57% of okra and 67% of brinjal
production of the State. The cluster districts are also known for production of significant
volumes of other fruits and vegetables.
45
5.6 Seasonality of Selected Crops

The seasonality table in the report indicates that crops like banana, guava and papaya are
available throughout the year in the State (based on the harvesting season). The availability of
other agricultural and horticultural crops is also high for an assured supply of raw material to the
proposed MFP (Table 5-8). Produce may be procured during the peak season at lower cost. ‘A’
grade material could be picked up by retailers from the proposed PPCs to cater the fresh demand
and the remaining could go to CPC for processing.
Table 5-8: Seasonality of Crops Grown in the State

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Rice
Jowar
Bajra
Maize
Ragi
Horse Gram
Green Gram
Black Gram
Red Gram
Bengal Gram
Cowpea
Groundnut
Sunflower
Sesamum
Dry Chilli
Coriander
Turmeric
Tamarind
Ginger
Ajwain
Grapes
Mango
Banana
Lime
Guava
Papaya
Sapota
Water melon
Pomegranate
Peak season Lean season
5.7 Assessment of Processable Surplus

The proposed catchment area offers abundant supply for raw materials including perishables
such as mango, lime & lemon, oranges, banana, guava, onion, tomato, okra, brinjal and food
46
grains such as rice, jowar, maize, coarse grains, red gram, green gram and black gram. Oilseeds
such as groundnut, sunflower and soybean are also grown in substantial quantities. Details of
production strengths of the catchment district are given in Table 5-9.
Table 5-9: Production Strengths of the Catchment District
Total Marketable Target

Crop name Production (MT)
Surplus Procurement
Cereals and Pulses (in MT)
Rice 6,402,861 3,457,544 691,508
Coarse grain 1,522,784 822,303 164,461
Maize 1,215,749 656,505 78,780
Black Gram 281,927 188,890 37,780
Bengal Gram 256,186 122,971 24,596
Jowar 158,525 58,654 11,731
Red Gram 52,634 28,949 2,316
Green Gram 51,449 28,811 5,762
Bajra 38,582 20,065 4,014
Ragi 11,005 1,980 393
Horse Gram 4,808 2,644 529
Oilseeds and Cash Crops (in MT)
Cotton 1,993,125 1,973,042 394,613
Groundnut 270,254 256,741 51,349
Tobacco 215,410 213,239 42,648
Sunflower 62,269 61,646 12,329
Sugarcane 8,947 8,857 1,771
Castor 7,914 7,834 1,567
Sesamum 7,347 6,979 1,396
Soybean 729 722 144
Vegetables (in MT)
Tomato 1,537,320 1,460,454 146,046
Brinjal 692,500 657,875 65,788
Onion 387,162 367,804 36,780
Okra 345,420 328,149 32,815
Tapioca 320,460 304,438 30,444
Cucumber 116,220 110,409 11,041
Beans 49,212 46,750 4,675
Potato 40,000 38,000 3,800
Carrot 27,718 26,331 2,633
Cabbage & Knol Khol 24,600 23,370 2,337
Bottle Gourds 16,071 15,267 1,527
Peas 13,960 13,262 1,326
Sweet potato 4,060 3,857 386
Other vegetables 212,244 201,632 20,163
Total Vegetables 3,786,947 3,597,598 359,761
47
Total Marketable Target

Crop name Production (MT)
Surplus Procurement
Fruits (in MT)
Mango 1,753,578 1,665,901 166,592
Banana 1,731,030 1,644,481 164,450
Papaya 690,000 655,500 65,551
Orange & Batavia 449,577 427,097 42,710
Lime & Lemon 351,975 334,377 33,438
Other fruits 130,510 123,985 12,399
Sapota 68,180 64,771 6,477
Guava 44,995 42,746 4,275
Pomegranate 23,880 22,686 2,269
Custard Apple 7,194 6,835 684
Grapes 1,575 1,496 150
Total 5,252,495 4,989,875 498,993
The MFP would require continuous supply of large volume of raw material to ensure working of
the park. This would necessitate investment in food processing infrastructure, strengthening of
supply chain to reduce wastages, prevent quality deterioration and ensure timely availability of
focus crops. Appropriate product mix would be chosen based on raw material available in the
cluster and their scope for value addition.
The Cluster has the distinct advantage of wide raw material base inclusive of fruit, vegetables,
cereals and dairy products and agricultural community to adapt new varieties/crops. The cluster
grows significant quantity of vegetable and grains. It also grows adequate amount of fruits.
Table 5-10 gives the details of marketable surplus/availability of crops.
Table 5-10: Details of Marketable Surplus/Availability of Crops
Marketable
Commodity Available months Number of Days
Surplus/Availability
Rice 3,457,544 Nov-June 240
Mango 1,665,901 Jan-May 150
Banana 1,644,481 Jan-Dec 360
Tomato 1,460,454 Jan-Dec 360
Brinjal 657,875 Jan-Dec 360
Maize 656,505 Jan-May, Oct-Nov 210
Papaya 655,500 Jan-Dec 360
Dry Chilli 550,551 Jan-May 150
Onion 367,804 Jun-Dec, Mar-Apr 270
Lime & Lemon 334,377 Aug-Jan 180
Okra 328,149 Mar-Dec 300
Groundnut 256,741 Jan-May 150
Black gram 188,890 Jan-Apr, June 150
Turmeric 153,784 Jan-July 210
48
Marketable
Commodity Available months Number of Days
Surplus/Availability
Bengal gram 122,971 Jan-Apr, Aug-Sept 180
Cucumber 110,409 Jan-Dec 360
Sapota 64,771 Feb-Jun, Oct-Nov 180
Sunflower 61,646 Jan-Apr 120
Jowar 58,654 Dec-Apr 150
Beans 46,750 Jan-Apr, Jul-Aug 180
Guava 42,746 Jan-Dec 360
Potato 38,000 March-Aug, Nov-Dec 240
Red gram 28,949 Dec-May 180
Green gram 28,811 Jan-Mar, Aug-Nov 210
Carrot 26,331 Nov-Apr 180
Cabbage 23,370 Nov-Feb 120
Pomegranate 22,686 Mar-Jun 120
Bajra 20,065 Jan, Mar-Jul 180
Tamarind 19,643 Jan-May 150
Peas 13,262 Nov-Feb 120
Sesamum 6,979 Sept-Dec 120
Coriander 4,073 Jan-May, July 180
Ragi 1,980 Dec-May 180
Grapes 1,496 Jan-Apr 120
Ajwain 554 Jan-May, Oct 180
5.8 Linking Raw Material Arrivals with Units Proposed in the Park
The availability of raw material will play a key role in determining not only the facilities
proposed as core infrastructure but also the nature of units that shall be set up in the MFP.
Table 5-11: Types of Food Processing Units Being Targeted
S. No. Type of Food Processing Units Product Mix

1. Beverages Fruit based beverages, health drinks
Tomato, chilly, soya sauces, ketchup, Tomato purees,
2. Sauces, Ketchup, Purees, Pulps
mango, papaya, orange
Ginger/ garlic/ tamarind paste/
3. Ginger, Garlic, Tamarind, Chillies
masala mixes
4. Pickles Mango, lime, Ginger, Chilli, carrot, Mixed
5. Sea food based units Shrimps, fishes and other sea food
6. Jams, Jellies and Squash Mango, papaya, guava and other fruits
7. Corn based products Corn flour/ flakes
8. RTE & Instant mixes Upma, Idli, Dosa mix, gulab jamun mix
Cereals/ Pulses based Milled & Jowar/ bajra flour, other coarse grain flour, flakes,
9.
Packaged Products Rawa, maida etc
10. Pulse based Savories Bhujia, Mixtures etc
49
S. No. Type of Food Processing Units Product Mix

11. Soups Tomato, corn, mixed veg, etc
12. Packaging Units Rice, pulses
Onions, cucumber, garlic powder/ flakes, potatoes,
13. Dehydrated Vegetables
gram, sweet corns, Mushrooms, carrot, cabbage
14. Extruded snacks RTE Snacks, Breakfast snacks
15. Citrus fruit processing plant Juices
16. Dal Milling Pulses
17. Rice Milling Rice
18. Fruit canning Unit Fruits & vegetables
5.9 Existing Marketing System in the Zone of Influence

At present, the agriculture markets all over the country are regulated under respective State
Agricultural Produce Marketing Committee Act. In Andhra Pradesh state too, comprehensive
market legislation namely Andhra Pradesh (Agricultural Produce and Livestock), Markets Act, is
followed. The key features of the Act include provisions for setting up private mandis, direct
procurement/sale from farmers’ fields, contract farming, setting up and promoting agricultural
marketing extension units etc.
The marketing committee charges 1% ad valorem on levy and market fee on the sale and
purchase of notified agricultural produce that is to be paid by the purchasers. The marketing
department of the State has also installed computers at market yards for regular flow of
information on prices of the produce. Under help the farmer program, the farmers get fair price,
accurate weighment and prompt payment of their produce. There are 37 Rythu Bazaars in the
cluster that links the farmers and consumers and majorly Krishna district had maximum of 15
Rythu bazaars. The farmers of the FPOs are directly selling their produce to Rythu bazaars which
has minimized transportation cost and waiting time.
5.10 Existing Supply Chain Mechanism

The supply chain for agricultural produce typically comprises of 5-7 participants each of whom
adds a different value, bears a different risk and makes a different level of profit. It has been
observed that the length of the supply chain is a key factor of value of the crop- high value crops
like fruits have a shorter supply chain when compared to low value crops. A brief description of
each of the supply chain participant is provided below:
Farmer
The Cluster is characterized by a large population of small and marginal farmers (More than
80% of total farming community) whose role is generally limited to cultivation. They are usually
not involved in the marketing and selling of the produce. However, in case of fruits, the average
land holding sizes have been found in the range of 3-5 Ha.
50
In vegetables, farmers mostly sell the produce to a village aggregator. In a few cases, farmer has
trade relation with commission agent in destination markets or in nearby mandis. When the farm
size is large (as in the case of fruits), the farmer sells a significant portion of their crops to pre-
harvest contractors well before harvesting. While selling to a contractor, the farmer transfers the
production risk to the contractor and the risk premium is adjusted in the price offered to the
farmer. Such patterns are quite prevalent in trade of orchard crops like Mango.
Village aggregator/Commission Agent (CA)
Village aggregator provides the link between the farmer and the market agents. They are mostly
entrepreneurs, whose income depend on matching the supply of produce with the demand of the
market. Their primary role is to deliver the farmer’s produce to wholesale market. Modus
operandi of aggregator and commission agent is almost same with only difference being a
commission agent operates in a larger catchment as compared to an aggregator. At no time
during this process is the title to the goods held by the agent who is only involved as a facilitator
and hence does not suffer risks such as losses, wastages etc. The value offered by the
commission agent to trader is the assurance of supply of produce as per demand, against which
he charges a commission from them. Commission agents typically charge 5% to 8% of value of
produce depending upon the produce. Potatoes and vegetables are sold at a commission of 4%-
5%, while fruits are sold at 6%-8% commission.
Most commission agents are traditionally from the families who have been into this business
from generations. They operate mainly on the basis of relationships developed over a long period
of time. It is their relationship with village commission agents/farmers, which enables them to
compete with other commission agents for their business. Since credit sales are common in trade,
commission agent also needs to establish relationships with wholesaler.
Wholesaler/Semi Wholesaler
Wholesalers are similar to commission agents; they also procure large quantities of produce for
sale. However, unlike the commission agents, they actually possess the title of the goods and
thus have to absorb the cost of storage, sorting, grading, transportation, quantity losses, etc.
Premium against all such risks is built into the price at which he sells the produce to retailer.
Semi-wholesalers are typically smaller wholesalers or large retailers who supply to the smaller
retailers.
Retailer
They are typically small and independent operators in the value chain- a combination of
pushcarts, stalls and small shops. Retailers buy produce from the wholesale market on a daily
basis on account of lack of storage facilities and shortage of working capital. Street vendors are
present even in municipal markets in addition to being present in almost every locality in major
consumption markets. Organized retailers buy the produce from commission agents or the
51
wholesaler on prevailing market rates or on a pre-contracted price.
On an average, the retailer sells 60%-70% of his produce at market rate and rest 30%-40% at
competitive market rates. The reason behind this is the short shelf life of the produce and retailer
is compelled to sell the second grade/perished quality at a lower rate. Since he has the
compulsion to sell the produce same day, such kind of selling pattern is quite prevalent in fruit
and vegetable retail.
5.11 SWOT Analysis of the Zone of Influence

Strengths Weakness’
 One of the major agriculture and  Market size for processed foods is still
horticulture belts in the State emerging
 Diverse crop potential with around the year  Influence of commission agents
availability of raw material (fruit and  Lack of technological knowhow in
vegetable and food grains) agricultural practices
 Good investment climate  Insufficient use of modern technology
 Availability of sector specific policy and  Lack of supply chain management and
incentives for food processing post-harvest infrastructure
 Proximity to consumption/ trade centers  Inadequate credit linkages
 Excellent & reliable infrastructure, road  Poor market information system
connectivity between production and
consumption points
 Enterprising farming community
 Abundance of skilled workforce
Opportunities Threats
 Investment in infrastructure  Market volatility
 Leveraging backward integration to grow  Product acceptance timeline
more fruits & vegetables and high value  Price fluctuations on the raw material front
crops
 Shift from traditional crops to new high
productivity crops
 Emerging opportunities in food retail
 Emergence of domestic markets for
processed foods
 High export potential for processed foods
52
6 Core Processing Facilities & Food Processing Units

6.1 Core Infrastructure at CPC
6.1.1 Pre-Processing
Due to the large quantities of marine products that will be handled at the CPC, a pre-processing
facility is proposed. Pre-processing will be mainly utilized for primary processing of aqua based
raw materials which include sorting, grading, peeling, cutting, sizing, filth washing, etc. Fresh
shrimp and other aqua products brought in the CPC will first pass through sorting, grading,
peeling, filth washing line; the description of which is provided below:
 Sorting and Size Grading/Cutting Capacity of 4 Tonnes/hr: While preparing each type of
product, they are thoroughly cleaned, defective pieces including foreign matters, if any, are
sorted out and size graded to obtain the required count after freezing.
 Peeling Capacity of 5 Tonnes/day: Another common pre-process which is provided for doing
the peeling, headless works of shrimp processing and for doing skinning, de boning, filleting
for fish processing.
 Filth Washing 3 Tonnes: Used for clean washing and accurate grading of Head-on, Headless
– Shell on types of Shrimps & Prawn.
All the equipment will be of stainless steel. This facility will also consist of a tube ice machine
and other necessary equipment such as Tubs, Crates, Nets, etc. The pre-processing
machinery/equipment costs and tentative supplier information is given in Table 6-1. The
quotations from the suppliers are provided in Annexure 5.
Table 6-1: Pre-Processing Equipment Tentative Costs and Suppliers
S Cost (Rs
Machinery/Equipment Name of Supplier
No. Lakhs.)
1 Grading Machine Namdung Co. Ltd. - 2 Nos. 60.32
2 Butterfly Peeling Nantong Powertech Machinery Co Ltd - 1 Unit 291.54
3 Tube Ice Machine Push Engineering Pvt. Ltd., India - 2 Nos. 57.00
4 SS Processing Equipment Loral Pumps 50.00
5 Filth Washing Machines Jeya Engineering - 2 Nos. 18.00
6 Tubs, Crates, Nets Nilkamal/Promens 13.50
Total 490.36
6.1.2 Processing
After pre-processing, the products will be sent for processing in this facility where they will be
frozen in IQF/plate freezers/water chillers. The processing facility also includes a fryer and other
processing equipment.
53
All the equipment will be stainless steel. This facility will have also consist of a tube ice machine
and other necessary equipment such as Tubs, Crates, Nets, etc. The processing
machinery/equipment costs and tentative supplier information is given in Table 6-2. The
quotations from the suppliers are provided in Annexure 5.
Table 6-2: Processing Equipment Tentative Costs and Suppliers
S Cost (Rs.
Machinery/Equipment Name of Supplier
No. Lakhs)
1 IQF – Shrimp Glory Co Ltd., Vietnam
a Plate Freezer Glory Co Ltd., Vietnam - 1 Nos. 378.06
b Water Chiller Glory Co Ltd., Vietnam - 2 Nos.
2 Auto weighing Ishida Co Ltd., Japan - 1 Nos. 73.13
a Check weigher and arm type rejecter Ishida Co Ltd., Japan - 1 Nos. 26.65
3 Fryer John Bean Technologies India Pvt. Ltd 31.09
4 Tube Ice Machine Push Engineering Pvt. Ltd., India - 2 Nos. 57.00
5 SS Processing Equipment Local Fabrication 19.00
6 Tubs, Crates, Nets Nilkamal/Promens 6.00
Total 590.93
6.1.2.1 Individual Quick Freezing (IQF)

Individual Quick freezing (IQF) is the process by which each piece is frozen individually to very
low temperatures (-300 C - 400 C) to halt the activity of microorganisms that cause decay of food.
In this technique, fruit and vegetables are frozen in only 10 to 12 minutes using technique of
fluidization. This results into better texture and there is no lump/ block formation and the product
is free flowing. One does not have to thaw or defrost the whole packet to take out only a portion,
and the rest will remain frozen till required again. IQF of capacity of 750 kg/hr (15 Tonnes per
day) is proposed.
Technology/ Process Description
IQF is a technology solution for block or cluster-freezing of small-sized products, to preserve

quality and to give unparalleled convenience to end-users. Quick Freezing is the only process
whereby, virtually all the properties of most of the parent food stuffs can preserved. IQF frozen
vegetables are produced from fresh, field-selected raw materials which are sorted, washed,
pitted, peeled, cut according to requirements, blanched and frozen in IQF flow-freezer and
finally packed in poly lined cardboard boxes after being metal detected. The technology of IQF
involves three sub sections:
 Processing Equipment
 Individual Quick Freezing Equipment
 Auxiliary Equipment
54
Processing equipment include de-podder, cross collection conveyor, waste collection conveyor,
bucket elevator, winnower, washer, inspection conveyor, blancher, after-cooler, dewatering
conveyor, grain recovery system. Dicer/slicer are required for items such as pineapple, mango,
potato etc. Freezing equipment is with product belting, high efficiency SS coils and fans. It
consists of conveyor system; defrost system, refrigeration evaporator, freezer enclosure,
electrical control panel and refrigeration plant, etc.
Freezers are equipped with two freezing zones. After the product is pre-treated (cleaned, washed,
inspected, blanched or precooked), it enters the feed and proceeds to the initial freezing zone,
where the airflow is high. Product is deposited onto the IQF track or tray containing thousands of
perforations. Blowers underneath the IQF track or tray force refrigerated air upwards, flowing
through the perforations. As a result, the airflow is evenly distributed rather than being
concentrated in one section. Through fluidization, products are separated from one another and
crust is frozen quickly. This preserves the flavor and texture, while minimizing dehydration
which tends to occur with slow freezing by locking in moisture so the product‘s weight and
quality are preserved before it proceeds to the next and final stage of the freezing process. It is in
the initial freezing stage that there is a high temperature difference between the air and the
product, which in turn increases the rate of crust-freezing. In the final, or finish freezing zone,
which typically occupies about two-thirds of the remaining length of the freezer, the temperature
is lower, so the product becomes fully frozen. Throughout the freezer, the product is fluidized by
undercurrent of air flowing through the perforations in the belt. A weir, or retaining plate,
separates the two zones, and ensures proper holding time for the products in each zone.
6.1.2.1.1 Plate Freezer for Marine Products

A 750 kg/hr (6 Tonnes per day) plate freezer is being planned to freeze primarily marine
products such as shrimps, fishes etc in the CPC. Also seafood based units are being planned for
tenants in the MFP who will utilize this freezer as a common facility.
6.1.2.1.2 Water Chillers

Water chiller of 10,000 l/hr is proposed for the IQF to continuously spray chilled water on the
products.
6.1.2.2 Auto Weighing

A weighing instrument (check weigher with arm type rejecter) that does not require the
intervention of an operator during weighing will also be provided.
6.1.2.3 Fryer
For efficient heating and fast recovery between frying cycles a deep fryer will be provided in the
MFP.
55
6.1.3 Cold Storage

After processing, the processed food will then be stored in cold storage. Four common units of
cold/frozen storage are proposed with an aggregate capacity of 4,000 MT in the CPC location; of
which 3,000 MT will be utilized by aqua products and rest 1,000 MT will be utilized for storing
other fruits and vegetables.
The major focus of the MFP is towards perishables including marine and reducing the amount of
wastage in horti and non horti commodities. The catchment area and surrounding districts are
rich in fruits, vegetables and seafood. Cold storage of this capacity will enhance the shelf life of
these products and will help in reducing considerable loss. The proposed cold store shall cater to
the needs and requirements of the tenants/ \investors who are willing to set up various food
processing units in the MFP. Apart from that it will also benefit farmers and producers who
would like to store their perishables. Considering the available commodities to be stored, it is
expected that the cold storage will be occupied throughout the year.
Thermal insulation – Cold chambers have to be insulated on walls, ceilings/roofs and floors with
proper insulating material of adequate thickness with provisions for vapour barrier on outer side
and proper cladding or cover on inner side. The commonly used insulation materials are
expanded polystyrene, rigid polyurethane foam, rigid phenolic foam, mineral wool/glass wool,
extruded polystyrene.
Refrigeration – Designing of a cold store and choosing suitable cooling system elements are
important for effective cooling and creating suitable storage conditions for various commodities
to be stored. The load of the heat consists of the transmission heat, infiltration heat, product heat,
other heat sources for calculation of the cooling load. The specific heat load and capacity of the
evaporator, amount of the cooling gas, specific heat load of condenser and capacity of condenser,
pressure heat, power of the compressor, cooling effect must be calculated for choosing the
cooling element.
Pre-fabricated insulated metal laminated panels with insulation of Poly Urethane Foam (PUF)
having a thickness of 100 mm will be used for construction of cold room chambers. Joinery will
be achieved through cam locks and finished with Silicone Sealant. For the above zero cold
storage motorized sliding doors made of high density PUF as per the required specifications will
be provided for zero degree application and up to 90% humidity.
This facility will also have a cold storage racking system and a double deep reach truck. The
machinery/equipment costs and tentative supplier information for cold storage is given in Table
6-3. The quotations from the suppliers are provided in Annexure 5.
Table 6-3: Cold Storage Equipment Tentative Costs and Suppliers
S No. Machinery/Equipment Name of Supplier Cost (Rs. Lakhs)

1 Cold Store Equipment
56
S No. Machinery/Equipment Name of Supplier Cost (Rs. Lakhs)

a Condensing System Bitzer India Pvt Ltd
190.46
b Evaporator System Guntner Indonesia
c PUF Panels Emirates Industrial Panels 537.84
Cold Store-Control panels,
d Southern Refrigeration Systems Pvt. Ltd. 40.63
scrolling units, fresh air units
2 DD reach truck Crown/Mitsubishi - 2 Nos 50.27
3 Cold Store Racking System Nilkamal/Godrej 60.00
Total 879.19
6.1.4 IQF (Fruits & Vegetables)

The envisaged facility at the CPC location is being planned as it will directly help tenants who
will be involved in fruits and vegetables processing units. There is an increasing demand for
frozen/IQF fruits and vegetables in the country as well as in the global market.
IQF technology covers a broader range of other products, apart from marine, such as fruits and
vegetables that are amiable for freezing and have market potential. IQF technology is a freezing
method for seasonal products. Using IQF technology, it is possible to preserve and store raw fruit
and vegetables for more than a year, without change in colour, flavour and texture of the
produce. The Technology/ Process Description is given in section 6.1.3
An IQF at the CPC of capacity of 750kg/hr has been proposed looking at the rising demand of
processed frozen vegetables and fruits by organized retail and institutional customers and also
based on produce mix available in the cluster and its compatibility to IQF. The target produce for
the IQF line are fruits and vegetables which are produced abundantly in the catchment and
surrounding districts of the Park.
An Octo Frost from Abm, Sweden with a cost of which is Rs. 320.29 Lakhs will be procured for
the MFP. The quotation from the supplier is provided in Annexure 5.
6.1.5 Multi Grain Sorting & Grading Facility

2 Tonnes/hr multi grain sorting and grading facility will be provided in the CPC for rice grains
and pulses. Andhra Pradesh is rich in production of cereals and pulses. Rice milling is the one of
the established industry in the state with various capacity mills present. Majority of the units are
small and cannot utilize the sorting and grading facilities on their own. Considering this in mind,
SPV is planning to set up a multi grain grading and sorting facility in the CPC where grains like
paddy, wheat and pulses will be cleaned and sorted in automated machines. Setting up such a
facility would help individual farmers/ associations/ traders in the region to utilize the services of
the facility. Along with this, some tenants like dal millers and grain based milled and packaged
products entities are envisaged in the park which will utilize the facilities of the multi grain
grading and sorting in the park.
57
A lump sum amount of Rs. 80.00 Lakhs is provided for procuring machinery for sorting/grading.
The quotation from the supplier is provided in Annexure 5.
6.1.6 Warehouse
As seen in Table 5-5, 17.11 MT of food grains are grown in the catchment districts with
significant contributions from Nellore District. Considering these production volumes in the
identified cluster, it is imperative that major processing activities in the Cluster would comprise
of grains and cereal based processing for various value addition activities.
Adequate storage space would be required considering that maximum procurement would take
place during the season and subsequent consumption by units shall be during the off season.
Accordingly, warehousing capacity in the form of dry warehouses has been proposed in the MFP
at the CPC in line with the available volumes in each of the Districts.
Modern dry warehouses have been proposed for cereals, pulses and other commodities which are
available in abundance in the cluster. Such produce shall be required as ingredients by various
grains and cereals based processing units that are envisaged to be set up in the MFP.
Dry Warehouse would be utilised by the major core infra components like flour milling, multi-
grain grading & sorting facility, etc. Considering the availability of non perishables in the region,
a warehouse of 60,000 sq.ft has been proposed at the CPC, which also be utilized by almost all
tenants for storing their raw material as well as the finished products before dispatch to
consumption markets. The warehouse will be used to store various cereals and pulses as raw
material which can be stored at ambient temperature in turn to be used by food processors and
tenants in the park. The warehouse would be scientifically designed to reduce wastage and would
be supported by pallets and forklifts for efficient operations.
The warehouse shall be a PEB structure supported on civil foundation. The maximum eave
height can go up to 25 to 30 m. The primary Members of steel frames are made as per the
specific design, Standard hot-rolled sections, cold-formed sections, profiled roofing sheets, etc. is
also used along with the tapered sections. Based on specific requirements, wall panelling shall
also be made available.
6.1.7 Other Infrastructure at CPC

Other infrastructure and related plant and machinery costs are given in Table 6-4.
Table 6-4: Other Infrastructure Plant and Machinery Costs
S. Machinery/
Name of Supplier Cost (Rs. Lakhs)
No. Equipment
Machine Room
1. DG set - 2 x 500 kva Powerica Limited - Cummins make, India 57.36
2. Screw compressors Frick Mycom, India 258.10
58
S. Machinery/
Name of Supplier Cost (Rs. Lakhs)
No. Equipment
Sub Total 315.46
Laboratory
3. Lab Equipment Sub Total 40.00
Total 355.46
6.2 Core Infrastructure at PPCs

Machinery costs for infrastructure at the PPCs are given Table 6-5. Quotations are given in
Annexure 5.
Table 6-5: Equipment/Machinery Costs for Infrastructure in the PPCs
S. No. Machinery/Equipment Cost (Rs. Lakhs)

1. Peeler 236.58
2. Filth Washing Machine 9.00
3. Tube Ice 28.50
4. Tables 40.00
5. Auto weigher 73.13
6. Plate Freezer 22.45
7. Compressor 64.00
8. Grading Machine 116.17
9. Reefer/Insulated Trucks 319.57
Total 909.40
Description of the process/technology for peeler, filth washing machine, tube ice, stainless steel
tables, auto weigher, plate freezer, compressor is as given in the above sections.
6.2.1 Reefer Vans/Insulated Trucks

The proposed PPCs for the MFP are located within 250-300 km radius of CPC. The fruits and
vegetables are required to be transported to the processing location in chilled and controlled
condition to reduce their wastage and enhance the shelf life. Thus reefer vans/insulated trucks are
being proposed to cater the needs of carrying raw materials to the processing centre and final
products to the consumption centre under controlled condition.
Reefer is a refrigerated container for transporting perishables, having its own stand-alone (self-
powered) cooling system. Reefer containers are bottom air delivery units designed to distribute
chilled air from the floor, via specific T-shaped decking, with the advantage of producing a
consistent and uniform flow of air across the entire shipment, powerful enough to ensure a
perfect air exchange with the goods. Refrigerated units can maintain or lower the temperature of
your shipment, even in the most difficult conditions. Reefer containers also equipped to ‘warm
up’ the goods for those shipments where required, with the ability to maintain temperatures up to
59
30°C when required, regardless of outside temperatures.
Important point to note is that a reefer unit is not designed to reduce the temperature of the cargo
but rather to maintain the pre-cooled cargo temperature. The airflow requirements of each
commodity vary and there is no one size fits all in reefer cargo movement.
A total of 12 Nos. of Reefer vans/insulated trucks are proposed to be purchased to handle all the
collection and distribution of produce to and between the PPCs and CPC. The cost of these
vehicles will be Rs. 319.57 Lakh and the quotations are provided in Annexure 5.
6.2.2 Sorting Area/Grading Machine

The facility will be provided in each PPC location for sorting and grading of fruits & vegetables
for further processing. Sorting and grading separates the fruit and vegetables into processing and
fresh market categories. Typically, the best quality produce is packaged and marketed at the
regional or national level. Cleaning, as well, can be by washing with chlorinated water or dry
brushing alone. An illustration of sorting, grading line for round fruits and vegetables is shown in
Figure 6-1.
Figure 6-1: Grading and Sorting
6.3 Area requirements and Cost Estimates for Civil Works in Core Processing
Facilities
Standard area requirement suggested for the proposed plant & machinery by the vendors/
equipment suppliers has been considered to arrive at the built-up area requirement. The proposed
built-up area for each of the core processing facilities also includes the area requirements for
movement of men & machinery, utilities, services, management spaces, specific parking, specific
storage, etc.
60
Block cost estimates are prepared based on CPWD/AP Revised Standard Data/applicable norms
for quantities and prevalent market rates/Common SoR 2016-17 of Andhra Pradesh. Based on
the above the cost of civil works for the proposed Core Processing Facilities is estimated at Rs.
3,045.44 Lakhs as presented in Table 6-6.
Table 6-6: Cost Estimates for Civil Works in Core Processing Facilities at CPC and PPCs
Civil Cost
Total Built-up Unit Rate
S. No. Facilities (Rs.
(sq.m) (Rs./sq.m)
Lakhs)
A CPC Facilities
1. Pre-processing 6224.68 13988 870.71
2. Processing 5107.59 13988 714.45
Cold Storage (Fruits and Vegetables,
3. 2612.32 13988 365.41
Aqua)
4. Warehouse 5576.00 12912 720.00
5. Multi Grain Sorting & Grading 800.00 13988 111.90
6. IQF (Fruits and Vegetables) 500.00 13988 69.94
Sub Total 20821.00 - -
B PPC Facilities 1380.00 13988 193.03
Total 22201.00 - 3045.44
6.4 Summary of Costs for CPC and PPC Infrastructure

The summary of costs for CPC and PPC Infrastructure is given in Table 6-7.
Table 6-7: Summary of Costs for CPC and PPC Infrastructure
Civil P&M Total

S.
Facilities Cost Cost Cost
No.
(Rs. Lakhs)
A CPC Facilities
1. Pre-processing 870.71 490.36 1361.07
2. Processing 714.45 590.93 1305.37
3. Cold Storage (Fruits and Vegetables, Aqua) 365.41 879.19 1244.60
4. Warehouse 720 0.00 720.00
5. Multi Grain Sorting & Grading 111.9 80.00 191.90
6. IQF (Fruits and Vegetables) 69.94 320.29 390.23
7. Laboratory - 40.00 40.00
8. Machine Room - 315.46 315.46
Sub Total 2852.41 2716.23 5568.63
B PPC Facilities 193.03 909.40 1102.43
Total 3045.44 3625.63 6671.06
61
The cost estimates for the civil works certified by Mr. B. Devi Prasad; a government registered
valuer and consulting engineer (Chartered Engineer Number F016365/8) is presented in
Annexure 6.
6.5 Anchor Unit

A food testing lab accredited by National Accreditation Board for Testing and Calibration
Laboratories (NABL) and a packing unit are being planned as processing units by the Anchor
Investor in the park. The details of anchor units are provided in Table 6-8.
Table 6-8: Details of Anchor Units
Unit Products
Food Testing Lab Accredited Testing of all food products including marine and
by NABL processed Fruits and Vegetables, grains, etc.
Packing Unit Processed Food Items
Fish value added unit Value addition for seafood
6.6 Standard Design Factories (SDF) For MSEs at CPC

Standard Design Factory (SDF) buildings have been envisaged to house the Micro and Small
Enterprises (MSEs) in the Park. Plug & Play Infrastructure shall be provided to the MSEs where
the entrepreneurs will have to make the investments related to plant and machinery. The total
land area allotted for MSEs is 8.9 Acres. It is proposed to provide internal flexibility of dividing
the space as per the demand and requirement of the MSEs.
It is proposed to provide a total built-up area of 5,100 sq.m initially for MSEs with internal
flexibility of dividing the space as per the demand and requirement of the MSEs. The main
function is based on the concept of plug and play facilities.
Block cost estimates are prepared based on applicable norms/Andhra Pradesh Standard Data and
prevalent market rates/Common SoR 2016-17 of Andhra Pradesh State. Based on the above the
cost of SDFs is estimated at Rs. 66.30 Lakhs as presented in Table 6-9.
Table 6-9: Block Cost Estimates for Standard Design Factories for MSEs
Amount
Item Built up Area Unit Unit Rate(Rs.)
(Lakhs)
Standard Design Factories 5,100 sq.m 1,300 66.30
62
7 Land and Site Analysis

The MFP is proposed to be set up in 52.22 acres at Kothapatnam Village, Kota Mandal, Gudur
Taluka, SPSR Nellore District; the southernmost coastal district in the state of Andhra Pradesh,
India. The project location map is given as Figure 7-1 and the project site on toposheet is given
in Figure 7-2.
Figure 7-1: Project Location Map
63
Figure 7-2: Proposed Project Site Location on Toposheet
7.1 Land Ownership, Cost Conversion and Other Statutory Approvals

The land measuring 52.22 acres has been bought by the SPV for establishing the MFP. Letter
from Andhra Pradesh Industrial Infrastructure Corporation (APIIC) stating land ownership
details is given as Annexure 7. The proposed 52.22 acres of land under Survey Numbers 698
and 699.
64
Figure 7-3: Proposed Project Site
7.2 Connectivity
The site is in close proximity (about 180 km) from Chennai. It is 200 km from the international
airport at Chennai and about 130 km from Tirupati airport at Renigunta. It is at a distance of
about 30 km from Venkatachalam railway station and about 47 km from Gudur railway station.
The entrance to the site is through a kutcha road of about 4 km which can be the right of access
that connects back towards Krishnapatnam Port. Another road connectivity options to the project
site is through Gudur Varagalli Junction via SBQ steel and R&B road.
The site is approachable from NH16 (old NH5) at about 30 km; which has already been
expanded into a four lane being part of the Golden Quadrilateral scheme. Further, NHAI
proposes to develop NH16 as six lane road (from Ichapuram to Tada) considering the present
traffic as well the traffic projected from the upcoming/proposed industrial activities in the coastal
region of Andhra Pradesh.
The Krishnapatnam port, a privately built and owned all weather, deep water port is about 10 km
from the proposed project site. The proposed connectivity with the port will ensure quick
movement of goods and personnel and the impact on the existing traffic in the region is
minimum there is an existing rail cum road corridor from Venkatachalam connecting NH16 and
the Chennai-Howrah trunk line to the port which can be used to assess the proposed project site.
A four lane expressway is developed for Krishnapatnam port from Venkatachalam on NH16 to
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the port. The area is well connected by the road network.
Buckingham Canal, which runs close to the project site is declared a National Waterway (NW)
and was used for transportation between Chennai in the south and Krishna river delta in the
north. This waterway (NW4) is currently under redevelopment by the Inland Waterways
Authority of India (IWAI).
Figure 7-4: Regional Connectivity
7.3 Site Configuration, Topography, Land Use and Ground Profile

The site is bounded by private lands on the east and towards the west and APIIC land on the
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north and to the south.
Nellore district is generally flat and low elevation. Most of the area falls in the category of slopes
less than 2%. It can be broadly divided into two divisions. The eastern half of the district is fairly
flat and comprises of sandy coastal belt extending all along the district up to 7 km from sea
coast. The proposed MFP project site which falls in the eastern half of the district comprises
coastal plains, a few ephemeral creeks and Buckingham Canal.
The project site consists of coastal plains and the terrain is generally flat; the contour map of the
project site is given in Annexure 8. The area around the projects site is predominantly rural. The
land area of the project site is mostly barren vacant land with grass, open scrub other mixed
vegetation. Google imagery of the project site with the project boundaries are given in Figure
7-5. Photographs of the project site are given in Figure 7-6.
Figure 7-5: Google Imagery of the Site with Project Boundary
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South Boundary Wall North Boundary Wall
Project Site Ground Profile of Project Site

Figure 7-6: Site Images
There are no national parks, marine parks, sanctuaries, wild life habitats including biosphere
reserves, structures of archaeological importance and heritage sites within 15 km of the proposed
project boundary.
7.4 District Profile2

Nellore is one of the 9 coastal districts and it is situated in the south eastern part of Andhra
Pradesh. It is the southernmost district of Andhra Pradesh bordering Tamil Nadu. It lies between
13014’ and 15007’ N Latitudes and 70005’ and 80005’ E Longitudes. The district is bounded on
the east by the Bay of Bengal, on the south by the Tamil Nadu state and partly the Chittoor
district and on the west by Veligonda Hill range which separates it from Kadapa District and on
the north by Prakasham District. Chennai - Howrah broad gauge railway line and NH16 runs
across the district almost parallel to the coastline. Nellore town is the district’s headquarters. The
2
District Planning Map Series for Nellore District prepared by the National Atlas and Thematic Mapping
Organisation, Department of Science and Technology, Government of India, is referenced for preparing the sections
of District Profile, Relief and Slope, Geological Profile, Hydrogeology, Soils and Land Use/Land Cover.
68
district is divided into three revenue divisions viz., Nellore, Gudur and Kavali. Further these
revenue divisions are divided into 46 revenue mandals. There are 5 towns 1201 villages in the
district.
The eastern portions of the district are fairly fertile and prosperous. The western portion
comprises wide stretches of wasteland containing lesser number of villages. The sandy coastal
belt extends for 5 to 6 km interior from sea. There are numerous backwaters along the coast and
the best known among them is the Pulicat Lake. Towards the extreme southeast is the island of
Sriharikota, a rocket launching station of Indian Space Research Organisation, which is a low
sandy track lying between Pulicat Lake and the sea.
Agriculture is the main occupation in the district. About 70% of the work force is dependent
upon agriculture either as a farmer or as agriculture labour. Nellore is also famous for quality
rice and aquaculture. The district is called the “shrimp capital of India” due to its high
production of cultured shrimp.
7.4.1 Geomorphology
Geomorphologically the district can be broadly divided into 3 distinct units, viz., western hills,
central pediplains and eastern deltaic & coastal plains. The higher relief is represented by hill
ranges of Eastern Ghats, in the western border of the district. These hills are locally known as
Veligonda hills, run in a north-westerly direction with a highest elevation of 1,105 m AMSL at
Penchalakonda. The pediplain area i.e., in the central part of the district extends in a north - south
direction. The general altitude of this physiographic unit varies from 36 to 170 m AMSL with
isolated hillocks. The master slope of the area is from west to east towards the Bay of Bengal.
The deltaic and coastal plain extends from north to south along the eastern margin of the district
all along the coast. Pennar and Swarnamukhi rivers are the major contributors to the formation of
the deltaic plains. The sandy coastal plain extends up to a distance of 5 to 6 km from sea coast.
The southernmost fringe of the coastal plain is occupied by Pulicat Lake.
7.4.2 Drainage
The Pennar is the major river which drains in the middle of the district. The other important
rivers flowing in the district are Swarnamukhi, Manneru and Upputeru. All the rivers are non-
perennial, flowing in the eastern direction and joins the Bay of Bengal. The general drainage
pattern is dendritic to subdendritic.
The drainage density varies from less than 1 to 3 km/km2. Pulicat Lake is located in the south
eastern part of the district. Pulicat Lake is the second largest lagoon of India and boasts of a rich
biodiversity. Therefore, the lagoon has been preserved as a Wildlife Sanctuary. It straddles the
border of Tamil Nadu and Andhra Pradesh states. The lake is separated from the Bay of Bengal,
by an inland spit called the Sriharikota Island. The lake has a length of 60 km and a breadth of
0.2 to 17.5 km. It has a high water spread of 460 sq.km and low water spread area of 250 sq.km
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with an average depth of one metre. The lake is drained by three larger inflows (Swarnamukhi,
Arani and Kalangi) and many minor inflows. It is connected with an estuary mouth with a width
of 200 m. Owing to its proximity to the sea; it has turned into a salt-water lagoon.
7.4.3 Relief and Slope

The district is generally flat with low elevation and is a part of the Carnatic plain. It generally
rises from the Bay of Bengal to Veligonda hills which runs in northwest direction from south of
Venkatagiri. The height above means sea level varies from 32 to 52 m.
7.4.4 Geological Profile

A major portion of the district is underlain by Dharwar Super Group. Peninsular Gneissic
Complex and Older Metamorphic of Archaean Age consisting of granite gneisses, schists
intruded by basic dykes and pegmatite reefs. The Baironkonda Quartzites, Cumbum shales of
Nallamalai series of Upper Cuddapah Group occur in western margins of the district. Veligonda
hills have been subjected to strong compressional forces. Laterite cappings of sub-recent age are
seen over the crystallines in Kavali, Naidupeta and Sullurupet areas.
7.4.5 Hydrogeology
Hydro-geologically, the rock types occurring in the district are classified as consolidated, semi-
consolidated and unconsolidated formations. Ground water occurs in almost all the formations
and potentially depends on nature of geological formation, structure, topography, rainfall etc.
The yields of wells depend on the recharge conditions and will reduce drastically in drought
situations.
7.4.6 Soils
The predominant soils in the district are red loam, black cotton, lateritic sandy and alluvial soils.
The soils range from somewhat excessively drained to moderately drained. Red loam soils cover
an area of more than 70% of the district except in the deltaic area. The black cotton soils
constitute about 10% of the district and it is found in the southern part in isolated patches of
Pennar river. Red lateritic soil occurs all along the eastern side of the district. The alluvial soil
occurs along the Pennar and Swarnamukhi rivers, and aso in the due north of the Pennar along
the eastern margin of the district. Soil & Water Analysis at CPC is given as Annexure 9.
7.4.7 Land Use/Land Cover

The general land use and cropping pattern shows that out of the total geographical area, 43.42%
alone is arable land whereas 18.7% of the area is covered by forests. The rest is barren and
uncultivable land. The net sown area is 25.75% while cultivable wasteland and fallow land
constitute 17.67%. Nearly 35% of the area is irrigated by canal, tank, tube well and lift irrigation.
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Source: Andhra Pradesh Fact File - MSME; msmehyd.ap.nic.in/PROFILE%20-AP.pdf
Figure 7-7: Land Use/Land Cover - Nellore

7.4.8 Meteorology
The nearest Indian Meteorological Department (IMD) station is Nellore. The climatological data
for Nellore published by the IMD, based on daily observations at 08:30 and 17:30 hour IST for a
30 year period (1970-2000), is presented in Table 7-1. The monthly variations of the relevant
meteorological parameters are reproduced in the table.
Table 7-1: Climatological Summary – Nellore Region
Predominant
Relative
Rainfall Station Level Wind
Temp (oC) Humidity Mean
(mm) Pressure hPa Directions
(%) Wind
Month (From)
Speed
No.
Daily Daily (km/h)
Total of 08:30 17:30 08:30 17:30 08:30 17:30
Max. Min.
days
Jan 29.9 20.3 9.7 0.9 86 65 1013.3 1010.1 5.0 NW NE
Feb 32.4 21.8 1.7 0.2 82 62 1011.6 1008.3 6.3 SE SE
Mar 35.0 23.4 1.5 0.2 77 61 1009.8 1006.2 7.6 SE SE
Apr 37.9 26.1 11.0 0.4 71 63 1007.1 1003.2 9.0 SE SE
May 39.8 28.1 30.1 1.3 63 55 1003.9 1000.2 9.2 W SE
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Predominant
Relative
Rainfall Station Level Wind
Temp (oC) Humidity Mean
(mm) Pressure hPa Directions
(%) Wind
Month (From)
Speed
No.
Daily Daily (km/h)
Total of 08:30 17:30 08:30 17:30 08:30 17:30
Max. Min.
days
Jun 38.1 28.3 31.1 3.5 63 51 1002.4 998.6 10.1 W W
Jul 35.9 26.9 75.4 6.0 70 56 1003.1 999.5 9.4 W W
Aug 35.1 26.7 85.2 6.4 70 56 1003.8 1000.2 9.5 W W
Sep 35.2 26.3 91.6 5.6 74 63 1005.7 1001.9 7.5 W W
Oct 32.6 25.0 265.9 8.9 82 72 1008.2 1005.0 5.6 NW NE
Nov 29.9 23.0 316.6 9.1 85 75 1010.7 1007.9 5.8 NW NE
Dec 28.9 21.2 102.5 4.0 87 71 1013.3 1010.3 5.8 NW NE
Source: Climatological data for Nellore published by the IMD (1970-2000)
Hottest month is May and average daily temperature is 39˚. Temperature gradually increases
from January; with onset of the southwest monsoon the temperature gradually decreases.
Figure 7-8: Variations in Temperature
72
Figure 7-9: Annual Rainfall

The district lies in an area of precarious and uncertain rainfall. As such, the climate of the district
is generally dry and salubrious. The average normal rainfall is 1,000 mm. Both the southwest and
northeast monsoons contribute to the rainfall in the district. The rain from former monsoon is
received between June and September. The principal rainfall is received during the latter
monsoon that is between October and December.
Figure 7-10: Variations in Mean Wind Speed
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Figure 7-11: Variations in Relative Humidity

7.4.9 Cyclone
The coastal areas face the problem of cyclones almost every year. Near about 108 villages fall
under the cyclone prone area, of which 65 villages are under marooned area and 43 villages are
under inundation. According to government sources, there are 175 cyclone shelters established in
Nellore District.
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8 Marketing Strategy and Business Plan

8.1 Marketing Strategies
The industrial set up of any business firm mainly depends on the marketing linkages it
establishes for both product marketing and raw material sourcing. Keeping this in view the
proposed MFP will be an integration of both forward and backward market linkages. The food
park with the objective of becoming the food processing hub in the region will be pre-marketed
to the reputed national and international food processing firms encouraging them for setting up
processing units. This is also important to assess the demand of developed plots and various
common facilities proposed to be set up in the Park. In addition, existing regional players and
also the entrepreneurs will be given adequate priority for setting up units with due consideration
of their credibility. This forward marketing linkage will ensure the brand, sustainability and
coverage of the food park which suffice its desired objective of inclusive economic growth of the
region.
The marketing strategy of the MFP would focus on the advantages that the project would provide
while also focusing on the location advantages and strengths and opportunities that SPV brings
into the project. Marketing of the project would be centred on these three key strengths as
detailed earlier.
 Farmers in the catchment area to promote utilization of services established in PPCs

 Potential agro-processors who could become tenants in the park and set up processing units
 State and Central government and other relevant organizations
8.1.1 Marketing among Farmers

The project proposes to set up three PPCs for various agricultural, horticultural crops and marine
products that will cover the districts proposed in the cluster. Other proposed activities to use the
facilities at PPCs/CPC by farmers include:
 Village level meetings with by using existing network of field level staff
 Activities like awareness creation program about the facilities among the extension staff of
government departments (Agriculture/Horticulture/Marine) for effective dissemination of
information
 Organizing farmer training programs for better cultivation and post-harvest management
practices which would help in disseminating knowledge about availability of facilities at the
MFP.
8.1.2 Marketing Strategy for Setting up of Food Processing Units

The marketing strategy for attracting processors in the MFP will depend upon demand of value
added products in the region as well as other neighboring regions. It also depends upon
availability of that raw material in the Zone of Influence. Other important factors to be taken care
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to attract potential investors will also include location and connectivity advantages, common
core processing facilities at the CPC, basic infrastructure facilities and utilities in the park and
services offered by the SPV for backward and forward linkages. In addition, off-take agreements,
equity infusion and preferential pricing for first movers and strategic tenants would also be
offered. The proposed activities under this marketing campaign include:
 Meetings with organized retail farms; various processors’ associations

 Meetings with exporter associations and export oriented processors
 Multiple road shows, Paper advertisements and investor meetings
8.1.3 Proposed Backward & Forward Integration Mechanism

The MFP will make all the possible efforts to establish strong backward linkages to ensure
viability and round the year availability of raw materials. These linkages will help in attracting
food processing units in the CPC and are also crucial to achieve economies of scale. Figure 8-1
illustrates the establishment of strong backward linkage for assured supply of raw material at the
MFP.
Figure 8-1: Proposed Procurement Channels to be adopted by the Mega Food Park
8.1.3.1 Direct Supplies by Farmers/Farmer Interest Groups/Society
As the MFP is targeted to be operational round the year the linkage shall be extended to a
sustainable long term supply of raw material. It is proposed that the MFP shall enter into MoUs
with interested individual farmers, farmer groups, and societies to provide them the facilities to
supply the raw material directly to MFP.
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8.1.3.2 Association with Corporate in Food Processing Sector

Association with service providing and complementing entities, such as agri-horti input
companies, logistics providers, etc. can be made to leverage and strengthen the linkages
established by them for procuring raw materials.
8.1.3.3 Contractual Arrangement with Farmers/ Farmer Societies/ Producer Companies

In order to procure assured supply of raw material in the MFP throughout the year, the MFP may
enter into contract agreements with individual farmers, farmer societies and producer companies.
8.1.3.4 Potential for Backward Linkages

Since the promoters of the SPV are already strong in food processing businesses, the importance
of backward linkages and supply chain is well understood. Therefore, the SPV proposes a strong
backward linkage program to be implemented for uninterrupted operations of the MFP. The
proposed backward linkage program shall look at leveraging existing linkages of the promoters
alongside developing strong linkages by working with farmers, farmer groups, federations, small
scale processors, NGOs etc
Farmers undertaking shrimp production would be the back-bone of the proposed Project. The
promoters of the SPV, NSFL are well versed with the business of shrimp trade and are already
having relationships with a network of farmers who supply their produce to their core businesses.
Time to time, they also perform extension activities pertaining to dissemination of information
regarding varieties of seed, feed and cultivation practice to be undertaken. Some of the strategies
for building long lasting and efficient backward linkages include:
 NSFL is facilitating trade for the farmers who were earlier unable to sell their produce after
harvesting
 NSFL is providing knowledge to the local farmers through their extension activities
 In most of the cases, it procures the shrimps and fish directly from the farm gate, resulting in
saving of lot of transaction costs for the farmer
 Business model of NSFL has exposed the farmers to the readily available market for their
produce
 Business tie-ups of NSFL has also resulted in reducing price volatility of the produce which,
indirectly, reduces the vulnerability of the farmers to price fluctuations and resulting losses
 For maintaining a healthy relationship, the company has a specific schedule for payments
made to the farmers i.e. farmers get their timely payments generally within two-three days
 NSFL has created infrastructure for facilitating procurement during favourable periods,
facilitating both farmers as well as themselves
 NSFL has also started pre purchase agreements with farmers and has developed considerable
practical experience in this field which will be used to set up the required sound backward
linkages for the proposed scheme.
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Forward Linkages in the MFP are as important as the backward linkages. As the project’s major
revenue sources are lease of plots and user fee from common facilities, forward linkages play a
major role in financial viability. Hence, sufficient reconnaissance work has been done by the
SPV in interacting with various stakeholders for pre marketing the facilities for product sales,
utilization of common facilities as well as for lease of plots. The details of existing backward and
forward linkages are provided in Annexure 10.
8.1.4 Corporate Farming

The MFP would also consider undertaking corporate farming, especially for crops/ products/ that
may require specialized seeds, inputs, etc. which may not be possible for farmers to undertake
due to the high costs and other inputs required. While it will take some time to set up the new
institutions, build up confidence with the farmers about the MFP operations, and attain the high
volume of production to sustain the linkages, it will be imperative to continue with the
conventional procurement chain, so that the fruits and vegetables supply for the operations is not
disrupted during the interim period. The development of the new linkages can be done
simultaneously with the procurement undertaken through existing means.
It may also be possible to amalgamate existing linkages in the new institutional set up so that
their role and experience can be put to use advantageously in the MFP such as:
 Engage the middlemen as procurement agents in the food park

 Engage the farmers’ society in contractual agreements for fixing supply to the MFP
The MFP proposes to set up support services that would enable processors to build efficiencies
both in their forward as well as backward linkages. Following are the support services proposed:
 Procurement & Warehouse Management Cell: This would include an exclusive team that
would facilitate procurement of raw material for various processors in the park. While the
PPC facility would be used as a common facility for all the processors for procurement
purposes, it is proposed that there would be a central procurement team that would facilitate
the processors manages their procurement and raw material storage needs. This team would
consist of commodity experts who would procure different agricultural raw material from
season to season and would be deputed for procurement to different areas depending on the
need of processors. This team would also take care of the warehouse management –
including cold store warehousing and stock control.
 Extension Cell: While processing activity initiates in the region, there would be a need to
educate farmers in the catchment area on various aspects of farming and post-harvest
handling of produce. This would include education on suitable varieties for processing, farm
input use to increase productivity, quality and certification needs and post-harvest handling
of produce. A separate cell would be formed to address these extension needs of various
processors.
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 Quality Control Cell: This division would form the common platform that would take care
of quality control requirements of various processors both for raw material as well as end
products. This facility would be supported by a food testing laboratory.
 Logistics and Distribution Cell: A Common logistics and distribution cell will be set up at
the CPC that would take care of both inward and outward logistics requirements of the
processors. This team would also facilitate in distribution of end products of each processor.
 All the above facilities would be available to farmers, processors and traders outside the park
also.
 Liaison and Marketing Cell: A common marketing cell would be formed that would
support various processors in marketing of their end products. This would include facilitating
processors in market studies, marketing strategies as well as facilitating linkages with various
touch points including government agencies, export and certification agencies,
documentation agencies, retailer touch points, agents, etc.
8.2 Business Plan

The MFP has been conceived based on a typical industrial park model and shall provide enabling
infrastructure that would include roads, water supply and distribution, power distribution, STP,
ETP, etc. Most importantly, it shall provide for common core processing infrastructure that are
generally highly capital intensive in nature. The Park shall provide for fully developed plots
which shall be made available to prospective entrepreneurs and investors on long term lease
basis for setting up various food processing units. The common facilities in the Park shall be
available to prospective tenants on user fee basis. Thus, the MFP shall be able to generate
revenue by way of lease recovery as well as from recovery of user charges. In addition, MFP
shall also provide Standard Design Factory Sheds for Micro, Small and Medium Enterprises
(MSMEs) on rental basis.
By providing infrastructure and services which otherwise would have been commercially
unviable for such units to set up on individual basis, the MFP frees the entrepreneurs from
investing in capital intensive infrastructure components. This strategy ensures win-win situation
for both the SPV and the tenants by making their relationship mutually beneficial. The MFP
facilitates quantity and quality supply of key raw materials like cereals, pulses, fruits and
vegetables that are produced in the catchment region to the tenants, processors in the CPC for
further value addition. Keeping the above strategy in mind, the following are the various ways of
revenue generation for the MFP developers.
 Lease of developed plots to prospective /entrepreneurs for setting up food processing units
 Levy of user charges for various common facilities in core infrastructure such as:
o Rentals from standard design factory sheds for MSMEs
o Levy of charges against various services to be offered by the SPV to units in the MFP
o Levy of various utilities charges on a monthly basis from units in the MFP
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As the implementation of the project progresses, more avenues for revenue generation would be
explored and put in place to reduce gestation period and in making the project commercially
viable on a long term.
The Nekkanti MFP envisaged itself is based on the “Hub & Spoke” model with strong focus on
backward and forward linkages. The backward linkage will assist in building strong supply chain
to ensure streamlined supply of raw materials especially marine, perishables and other fruits and
vegetables to the food processing industries in the proposed CPC. One of the promoters of the
SPV, NSFL has been in existence for about 30 years primarily in the field of production,
processing and export of marine and seafood (shrimps) and allied products. In this course of time
it has developed formal backward linkages with the growers and aggregators. Some of the
strategies for building long lasting relationships to ensure streamlined supply of perishables
including seafood and other raw materials required for the food processing units include:
 The pre-assessment of the interest levels and willingness of the growing community/ farmers
in the catchment region will be analysed for the supply of their produce to the processing
units of the envisaged MFP. The readiness and willingness of the farmers to supply their
produce will be recorded in writing.
 Clear and strategic dialogue will be communicated with the growing community about the
MFP and proposed processing facilities to give them crystal clear idea about the potential
crops to be grown and the supplementary benefits they will get by supplying the produce to
the nearest PPC. Detailed information about the proposed PPCs, collection and reefer vans,
cold storages, ripening chambers and other basic facilities which can be effectively utilized
by the farmers will be provided through proper channels.
 Contract farming will be encouraged for selected raw materials as per the requirement of the
industry. Regular suppliers will be given due recognition and informal agreements with them
for supplying other commodities will also be promoted. Tenants of the MFP will be
encouraged to reward regular suppliers of better quality and higher volumes.
 Need based trainings to the farmers will be arranged at different intervals from time to time
on topics ranging from adoption of new farm technologies to good post harvest
methodologies. This will help them to equip better and will enhance quality and quantity of
produce which can be supplied to the processing units in MFP.
 A special team within procurement team will be carved out which might be considered as
“extension cell” unit of the MFP. This team will be trained by various SMSs (Subject Matter
Specialists) and then sent to establish and maintain sustainable backward linkage with farmer
associations and groups.
These methodologies will definitely help to develop strong backward linkages with the farming
community and trade associations and it will ensure uninterrupted supply of fresh fruits and
vegetables, seafood and other perishables to the processing units envisaged in MFP.
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9 Proposed Master Plan

9.1 Planning Concept
The total site area is 52.22 acres and the entire area is proposed for setting up of the MFP. The
concept of the proposed MFP is derived based on the requirements of the entrepreneurs,
functionality with self contained facilities. The MFP shall be environment friendly facility
comprising of physical and common infrastructure components interwoven with green spaces.
The master plan has been conceptualized considering the opportunities and constraints of the
site.
The concept is guided by the applicable development guidelines under the Andhra Pradesh
Building Rules 2012. The design philosophy revolves around prioritizing various aspects viz.,
circulation, land suitability, environmental sustainability and topography to optimize various
land uses
The master plan is based on modern planning concepts of providing good and efficient internal
movement with supporting infrastructure and facilities. Provisions of National Building Code
and prudent engineering practice have been followed in preparing the Master Plan Integration of
aesthetics, environmental concerns, functional requirements and technological innovation with
various attributes of planning like land use distribution, zoning, transportation, infrastructure,
design, building guidelines & regulations were given due consideration. The interdependence
and at the same time, individuality, of the units was also kept in focus.
The planning of the MFP has been kept flexible so as to be adaptive to the rapidly evolving
business landscape. The Master Plan allows programmed or functional re-arrangement and re-
distribution of plot sizes, infrastructure network and open space distribution etc. The Master Plan
follows the zoning concept for meeting the statutory norms of planning, to minimise the impact
of pollution if any on resident population in and around the MFP and to attain the economics of
design by consolidating scarce and costly resources for shared access design envisages functional
road design and simplified accessibility through green spaces to work places The green space
envisaged for the MFP would include:
 Large open spaces for maintaining the green cover

 Small Quality green spaces for recreation
 Linear plantations to provide relief during movement
 Small aesthetic greens for forming vistas, etc.
Common facilities have been planned for ease of access to the users of the MFP. Another
guiding principle of the Master Plan is to incorporate the principles of eco-industrial Park by
maximizing green and open spaces, and provision of greenbelt.
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Table 9-1: Infrastructure Components
S. No. Infrastructure Components

1 Enabling Basic  Road network including Footpaths & Utility Corridors
Infrastructure  Storm Water Drainage System
 Domestic & Industrial Water Supply System
 Sewerage & Effluent Collection & Treatment System
 Waste Management facility
 Electrical Distribution System and Street Lighting
 Telecommunications
 Truck parking & Weighbridge
2 Non-Core  Administrative facilities, Canteen, Health Centre, Training Centre
Infrastructure  Labour Rest Facilities including Dormitories & Housing units for
managers
3 Core Processing  Dry Warehouse for Raw Materials
Facilities  Pre-processing and Processing
 Cold storage (Fruits and Vegetables, Aqua)
 Multi grain sorting & Grading
 IQF (Fruits and Vegetables)
4 MSEs Standard Design Factories
9.2 Land Use Plan

The Master planning exercise aimed at demarcating the boundaries of the industrial plots,
ascertaining location and level of infrastructure (utilities and amenities) and determining the inter
and intra circulation that has been carried out pursuant to detailed analysis of the site, assessment
of immediate surroundings and understanding the requirement of various vectors of the seafood
processing industry that are proposed within the MFP.
Intensive and proper use of every parcel of land is essential. Land distribution pattern is
determined on the basis of study & research of similar characteristics park. Study was done
mainly to identity and understands the fundamental requirement and utilities of Seafood
Processing unit intelligently and effectively. The total geographical area of the Project Site has
been classified according to different uses of land which is presented below:
The land use places emphasis on open and green spaces and accordingly about 10.1% of the area
is earmarked as open and green areas. Roads account for 13.6%. The master plan for the MFP
has been so designed to maximize the area under industrial plots and the core processing
facilities that support the industrial needs. Accordingly, industrial plots including space for MSE
Sheds account for 52.7% and core processing facilities account for about 9.5% of the total area.
The proposed land use pattern for the CPC of the MFP is presented in Table 9-2.
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Table 9-2: CPC – Land Use Distribution
Land Use Area (Acre) Percentage

Core Processing Facilities 10.23 19.60%
Enabling Basic Infrastructure (Roads Only) 5.99 11.50%
Enabling Basic Infrastructure (Excl. Roads) 5.12 9.80%
Non-Core Infrastructure 4.17 8.00%
Plots for Food Processing Units (Excl. MSE Sheds) 12.58 24.10%
Plots for MSE / Standard Factory Sheds 8.9 17.00%
Open/ Green Areas 5.22 10.00%
Total 52.22 100.00%
Proposed Master Plan for the CPC is presented in Figure 9-1 and the Master Plan Drawing is
given in Annexure 11.
Figure 9-1: Conceptual Master Plan for the CPC
83
10 Enabling Physical Infrastructure & Non-core Infrastructure

10.1 Site Development & Boundary Wall
Ground development is required before commencement of any construction activity at site. This
activity would consist of cutting, removing and disposing of all materials such as bushes, shrubs,
stumps, roots, grass, weeds, top organic soil, rubbish, etc., from the area of work.
Ground development would also include necessary excavation, backfilling of pits resulting from
uprooting of trees and stumps to required compaction, handling, salvaging, and disposal of
cleared materials, etc. All excavations below the general ground level arising out of the removal
of trees, stumps, etc., shall be filled with suitable material and compacted thoroughly so as to
make the surface at these points conform to the surrounding area.
The site shall be accessible by a gate house structure with entry/exits and a security office.
Block cost estimates are prepared based on CPWD/AP Revised Standard Data/ applicable norms
the same total cost of compound wall, land development and site entry/exit gateway is estimated
at Rs. 223.28 Lakhs.
Table 10-1: Estimated Cost for Site Development
S.
Site Development & Compound Wall Quantity Unit Rate/Unit Amount (Rs. Lakhs)
No.
1. Site Clearance, Grading & Filling 55.00 acres 100,000 55.00
2. Compound Wall 2435 rmt 6,500 158.28
3. Entrance & Exit Gate House 1.00 No. - 10.00
Total 223.28
10.2 Road Network

10.2.1 Types of Internal Roads
The proposed internal road network in the proposed MFP has been planned considering the
following types of roads:
 Type I: 24 m wide roads with median and 3-lane (10.5 m) carriageway on both sides
 Type II: 12 m wide roads with 7.5-lane carriageway
10.2.2 Right of Way (RoW)

The utility corridor would run parallel to either side of the road links and would require a
minimum width of 2-3 m on either side to accommodate Water Supply lines, Sewage
Conveyance lines, Storm Water Drains, etc.
84
The proposed RoW Planning for 12 and 24 m roads is as shown in Figure 10-1.
Figure 10-1: RoW Plan of the MFP

10.2.3 Design Parameters
The internal roads in the proposed Park would be designed as per the MoRTH Specification Rev-
4 and IRC Standard guidelines.
10.2.4 Pavement Structure

The pavement structure for both categories of roads would be similar in design specifications,
85
both categories would be with bituminous and Million Standard Axles (MSA) of 5.
As per IRC 37, 2001, pavement layers shall been provided as presented in Table 10-2.
Table 10-2: Proposed Pavement Structure Data of 24 m & 12 m Road
S. No. Characteristics Thickness

1 Semi Dense Bituminous Concrete 25 mm
2 Dense Bituminous Macadam 50 mm
3 Wet Mix Macadam 250 mm
4 Granular Sub Base 200 mm
Pursuant to detailed ground investigation, the existing soil in the sub-grade may be replaced with
material with a CBR in excess of 8%.
10.2.5 Junction Details

All the junctions would be designed to ensure free movement for vehicles travelling on the main
roads and internal roads. Turning radii at junctions would be designed to facilitate free
movement of large sized trailers and fire tenders.
10.2.6 Service Lines

Provision would be made for water distribution mains, sewer lines, telecommunication lines and
electrical cabling by the side of carriageway all along the road. Adequate space shall be reserved
for each of these utilities.
10.2.7 Block Cost Estimates

Block cost estimates are prepared based on CPWD/AP Revised Standard Data/ applicable norms
the above the cost of laying the road network is estimated at Rs. 391.59 Lakhs as presented in
Table 10-3.
Table 10-3: Estimated Cost for Road Network
S. Length Amount
Road Network Unit Rate/Unit
No. (m) (Rs. Lakhs)
1 24 m Roads (incl. Shoulder, Utility Corridor, etc.) 875 rmt 25,400 222.25
2 12 m Roads (incl. Shoulder, Utility Corridor, etc.) 810 rmt 19,450 157.55
3 Traffic Signages, Median Development, etc. 1685 rmt 700 11.80
Total 391.59
10.3 Storm Water Drainage System

10.3.1 Design Considerations
Designing of the storm water disposal system would be a key design aspect of the proposed Park.
86
Considering the topographic features and the levels at the site with the corresponding off-site
drainage network, a network of storm water drains parallel to the proposed road network has
been planned to drain the storm water.
10.3.2 Design Parameters

The following factors are taken into consideration for planning of the storm water drainage
system:
 The pattern of natural slope of the site, its extent and direction
 Strom water drained towards the ponds, thus natural drainage system in the downstream area
 The road network system envisaged and level of the roads
 The rain fall run off from plots/units, and other covered areas into catch basin connected to
branch drain lay along the road adjacent property line. The branch drain carries the water into
lateral, which in turn carries it to the trunk drain
 The rainwater from open spaces and from isolated places, flow over the ground following the
natural slope and get into the nearest drain through the vertical grating
 As a camber of 2.5% on the pavement is provided, the runoff from the ROW shall flow
towards the drains provided at either side of road
 For design of storm water drainage system for the park, following design parameters are
considered:
o Rainfall Intensity: 45 mm/hr for a return period of 2 years
o Runoff factor: 60% runoff factor from the total area
o Minimum gradient: 1 in 300
o Minimum velocity: 0.6 m/sec
10.3.3 Proposed Drainage System

The network shall be designed to drain away the runoff from the plots and the roads would
comprise of open rectangular RCC drains with PCC floor.
The storm water flow will finally drain into a lead off storm water drainage system connected to
the road system.
10.3.4 Estimated Cost

for quantities and prevalent market rates/Common SoR 2016-17 of Andhra Pradesh based on the
above the cost of the proposed storm water drain network is estimated at Rs. 274.12 Lakhs as
presented in Table 10-4.
87
Table 10-4: Estimated Cost for Storm Water Drain Network
S. Amount
Storm Water Drainage Quantity Unit Rate/Unit
No. (Rs. Lakhs)
1. Open Drains (Rectangular/"V" shaped) 2950 RM 5,648 166.62
2. Culverts 10 No. 850,000 85.00
3. Recharge Wells 5 No. 450,000 22.50
Total 274.12
10.4 Water Supply System& Fire fighting

10.4.1 Estimation of Water Demand
The proposed park comprises food processing units, core processing facilities and non-core
infrastructure. The water requirement is calculated based on the requirement for the processing
and domestic usage. The calculated aggregate water requirement for the MFP is about 1.50
MLD. It is proposed to have two to three bore wells within the park premises to meet the
preliminary/ initial requirement. Requisite permission from the state government in this regard
will be taken in due course. Industrial water supply shall be requested for from the GoAP at the
door step of the MFP as per the Industrial Development Policy of GoAP.
Table 10-5: Calculation of Water Demand
S. No. Water Supply (Storage & Distribution) Quantity Unit

1. Industrial (Core Processing + Ind. Units) 1.20 MLD
2. Common Facilities (Non-core + Amenities) 0.10 MLD
3. Domestic Needs (Industry + Rest Facilities) 0.30 MLD
The industrial water demand within the park is estimated at 1.20 MLD, out of which the
requirement for the core processing facilities is estimated at 0.80 MLD and for other processing
units is estimated at 0.40 MLD. Domestic water requirement is estimated at 0.40 MLD which
includes the potable and non-potable needs of industrial workers. Fire fighting demand in the
Park is estimated at 0.11 MLD.
10.4.2 Water Management System

Water from bore wells shall be stored in the raw water sump and the treated water will be
pumped with clear water GLSR and ESR.
Water distribution network has been designed for the proposed Park to supply water for
industrial purposes and drinking water use. This water will be supplied from the ESR to all the
industrial units and common amenities. Water for fire fighting purposes shall be stored in the
GSR in a separate compartment, and will be replenished on as required basis periodically. This
will be pumped through a parallel system to the various fire hydrants located in the MFP.
10.4.3 Pump House, Pumps and Transmission Mains
88
Separate pumps would be proposed near the bore wells to pump the raw water from the source to
proposed Raw Water Sump (RWS) through transmission mains. Two pump sets (one working
and one stand bye) shall be provided for each bore. A separate transmission mains shall also be
laid from the point where GoAP would provide surface water to the MFP as per the State
Industrial Policy.
10.4.4 Raw Water Sump (Ground Level)

The water from the respective sources would be pumped into the proposed two Nos. of RWS of
aggregate capacity (0.96 ML) equalling 60% of daily industrial water demand, before part of
which is sent to the Water Treatment Plant. Each Raw Water Sump shall be divided into two
compartments of equal size for facilitating cleaning and maintenance and as well to have
adequate storage for fire fighting requirements.
10.4.5 Water Softening Unit (WSU)

The water from raw water underground sump would be pumped to the water-softening unit for
softening purpose. Raw water will be softened by passing through resins would be collected in a
separate clear water underground sump for industrial and drinking purposes. The water-softening
unit shall have a capacity of 0.96 MLD with 18 hours of operations.
Multi-grade sand filters would be used prior to the water softening to remove suspended
impurities. The area required for the filtration and softening plant is estimated at approximately
15 x 12 m including the necessary operating space.
A clear water storage reservoir (CWR) comprising of two compartments for industrial and
domestic uses separately with an aggregate capacity of storing 0.96 ML of treated water has been
planned.
Ventilation provision shall be made on the roof of the CWR to facilitate release of gas and
moisture of the stored water. CWR shall also be provided with level switches to control the
operation of clear water pumps. Overflow arrangement shall be provided to effect exit of
overflow water into the drain. Water from the CWR shall be fed to Elevated Level Storage
Reservoirs (ELSR) through DI K-9 type rising main.
10.4.6 GLSR & ELSR – Clear water

1 No. of Ground Level Storage Reservoir (GLSR) to hold 0.48 MLD and Elevated Level Storage
Reservoir (ELSR) of total 0.38 ML capacity are proposed in the park. The ELSR shall be with a
minimum staging height of 12 m which would ensure minimum head at the farthest water
distribution node. The water from the treated and raw water sumps will be stored in clear water
GLSR and then pumped to Elevated Service Reservoirs. The water from the ELSRs will be
distributed throughout the park through distribution network to meet the requirements of
domestic as well as industrial demands.
89
10.4.7 Choice of Pipe Material

For the choice of pipe material, three options i.e. PVC, HDPE and CI pipes were considered.
After weighing the pros and cons of the above alternatives and after a thorough evaluation of the
same, HDPE pipes have been selected since these pipes have better mechanical properties, better
load and impact qualities, higher flexibility, speedy laying and easier handling and transportation
as compared to other pipes.
HDPE pipes are also cheaper as compared to CI/DI/PSC pipes. Hence, the distribution network
would be proposed with HDPE Pipes of PN 6.0, PE 80 Grade. Distribution network will be
designed for eight hours continuous supply.
The parameters considered for design of distribution network is presented in Table 10-6.
Table 10-6: Distribution Network Design Parameters
Parameters Design Variable

Peak Factor 3.0 x Average flow
Hazen and William’s Co-efficient HDPE pipe (PN 6.0, PE 80) 140
Minimum size in distribution system 90 mm
10.4.8 Distribution Lines

Distribution pipelines on different RoW of Road have been provided as presented in Table 10-7.
Table 10-7: Line Distribution Design Parameters

Type of Road Approach Connections
24 m RoW On both side of the road
12 m RoW On one side of the road
Total length of distribution network in the proposed MFP is estimated at 2950 m.
10.4.9 Fire Hydrants

The fire fighting system consists of dedicated water storage and pumping system, external fire
hydrant and sprinkler system. External fire hydrants, double outlet, stand post type, as per IS 908
would be provided on the main water supply distribution lines at strategic locations. Fire-brigade
inlet connections and draw-off connections shall be provided into the distribution system at
water works site. The MFP shall also have fire alarm system with portable fire extinguishers.
Estimated Cost: Block cost estimates are prepared based on CPWD/AP Revised Standard Data/
applicable norms for quantities and prevalent market rates/Common SoR 2016-17 of Andhra
Pradesh. Base on the above the cost of the Water Supply System including the cost fire fighting
system is estimated at Rs. 370.58 Lakhs as presented in Table 10-8.
90
Table 10-8: Estimated Cost for Water Supply Network
S. Amount
Water Supply (Storage & Distribution) Quantity Unit Rate/Unit
No. (Rs. Lakhs)
1. Tube Wells with Pumping Machinery 5.00 Nos. 850,000 42.50
2. Raw water sump 0.96 ML 10,000,000 96.00
3. Water softening plant 0.96 ML 5,500,000 52.80
Clear Water Sump (GLSR) with pumping
4. 0.48 ML 10,000,000 48.00
machinery
Elevated Storage Reservoir (staging Height
5. 0.38 ML 15,000,000 57.60
of 18 & 12 m)
Distribution Network (HDPE) with service
6. 2950 RM 1,650 48.68
connections
7. Fire fighting network, Pumps and Equipment - LS 25 25.00
Total 370.58
10.5 Sewerage Collection & Treatment System

An underground sewerage network has been designed to collect sewage from each building and
convey it to a sewage treatment plant. At the STP, the sewage would be treated to acceptable
standards and the treated sewage could be used for irrigation purpose within the proposed park,
for green belt development.
10.5.1 Sewage Flows, Pipes and Manholes
10.5.1.1 Sewage Flow

80% of the design water demand is assumed as the sewage flow. The sewage flow has therefore
been assumed to at 0.56 MLD The network has been designed with a peaking factor of 3.
10.5.1.2 Sewer Pipes

Considering the type and characteristics of the sewage flow, strength, durability and cost of the
pipe material, HDPE pipes shall be used for the sewage network system.
To enable smooth flow of sewerage, it is proposed to have a minimum pipe size of 150 mm to
ensure easy cleaning flow. Minimum clear cover of 1.00 m below the formation level of the
road/access shall be adopted for pipes.
Sewers shall be designed to maintain flow velocities of more than 0.6 m/sec to avoid silt
deposition and also to ensure self-cleansing.
10.5.1.3 Manholes
Manhole providing access to sewers for inspection and cleaning shall be provided at 30 m
intervals, as well as at points of change in direction, change in pipe sizes, changes in gradient and
at junction points. The manholes shall be of brick masonry, with shape and size of the manholes
91
for different depths as shown in Table 10-9.
Table 10-9: Sewage Network Design Parameters
S. No. Depth Range (m) Shape Int. Dim. (mm)

1. d <= 0.90 Rectangular 900 x 800
2. 0.90 < d <= 2.50 Rectangular 1,200 x 900
3. 2.50 < d <= 9.00 Circular 1,500 dia
10.5.2 Sewage Treatment System

A sewage treatment plant of 1.2 MLD capacity using attached growth activated sludge process
has been proposed for the MFP. The STP shall have a screen and grit removal mechanism
followed by an equalization tank, aeration tanks with extended aeration and sludge recycling
facility, secondary clarifier with sludge removal mechanism, sand and activated carbon filters
and a treated sewage tank. Bleaching powder doses will be used for chlorination before disposal
of the treated sewage. It is proposed that treated sewage will be used to the extent possible for
landscaping and flushing of toilets. The schematic diagram of the sewage treatment system is
presented in Figure 10-2.
GAS FLARE
MOISTURE HOLDER STACK
TRAP UNIT
SECONDARY
UASB PLANT GAS CLARIFICATION
COLLECTORS TRICKLING
EQUALISATION FILTER
BAR SCREEN SETTLER
PLATES
EFFLUENT LAUNDER
EFFLUENT LAUNDER
PUMPING
PUMPING
UASB
SEWAGE
FIL LING
SP
RS
TE
K
TO
CHAMBER
RIC
S
TANK
LUD
TO
COLLECTION WELL
GE
DRY
EFFLUENT
ING
B
E
EDS
SP
UD
SL
LE
SS
YC
SCUM
CE
C
EX
RE
FILTRATE
ON LINE SLUDGE
CHLORINATION DRYING BEDS
PSF FFP TREATED WATER
SP SLUDGE PUMP
FFP FILTER FEED PUMP

GARDENS
PSF PRESSURE SAND FILTER
SUMP
FFP
Figure 10-2: Proposed Sewage Treatment System
92

the above the cost of sewage and collection system is estimated at Rs. 140.94 Lakhs as presented
in Table 10-10.
Table 10-10: Estimated Cost for Sewage & Effluent Collection System
S. Amount
Sewerage System Quantity Unit Rate/Unit
No. (Rs. Lakhs)
1. Sewage collection system incl. manholes 2950 M 1,350 39.83
2. Sewerage treatment plant 0.56 MLD 15,000,000 84.00
3. Recycled water conveyance system 1180 M 1,450 17.11
Total 140.94
10.6 Effluent Collection & Treatment System

The core processing facilities and the food processing units in the park are expected to generate
about 0.84 MLD. The waste water so generated will be conveyed through pipes and discharged
into the effluent treatment plant. The effluent collection network would be of 1770 m in length in
HDPE and would be separated from the domestic sewage collection system.
The treatment process proposed is a biological treatment. Effluent shall be processed using
extended aeration technology with aeration tanks and secondary clarifiers with sludge handling
and processing units. The treated effluents shall be used for mass foresting in that area.
Cost Estimates: Block cost estimates are prepared based on CPWD/AP Revised Standard
Data/applicable norms for quantities and prevalent market rates/Common SoR 2016-17 of
Andhra Pradesh. Based on the above the cost of the Effluent Collection and Treatment System is
estimated at Rs. 189.19 Lakhs as presented in Table 10-11.
Table 10-11: Estimated Cost of Sewerage & Effluent Management System
Effluent Collection, Amount

S. No. Quantity Unit Rate/Unit
Treatment and Discharge (Rs. Lakhs)
1. Effluent collection system 1770 M 1,450 25.67
2. Effluent treatment plant 0.84 MLD 25,000,000 210.00
Total 235.67
10.7 Integrated Waste Management System

The main goal of Integrated Waste Management (IWM) planning in the MFP is to optimise
waste management by maximizing efficiency, and minimizing associated environmental impacts
and financial costs. The waste hierarchy in IWM starts with waste prevention and minimisation
followed by recycling/reuse, finally treatment and disposal. The system should be planned
93
considering the safety of workers and safeguard public health by preventing the spread of
disease. Estimated waste generation is in the range of 8.0 Tons per day the break-up of which is
provided in Table 10-12.
Table 10-12: Estimated Quantity of Solid Waste Generated
S. Solid Waste Storage Shed Management

Activity
No. Generation (TPD) details Option
1. Processing Facilities and Units 6.0
Temporary
Non-core Infrastructure including Send to the
2. 1.0 Segregated
Canteen waste nearest
Storage Facility
Common Infrastructure & operational
3. 1.0 (90 days) 117
Treatment Plants TSDF Facility
smt
Total Waste Generated 8.0
The Environmental Management Plan (EMP) proposed for the park envisages a comprehensive
waste management system comprising collection & segregation, reuse/ recycling, temporary
storage and disposal. To accomplish this adequate numbers of bins, pickup vans, dumpers,
compacters, manpower, etc. will be employed. A primary collection system shall be put in place
wherein dedicated staff will be provided with tri-cycles and engaged in street sweeping activities.
Collection bins would be located at convenient locations and such waste shall be transferred by
the staff to the nearest bin which would be collected by the tractor-cum-trailer.
The solid waste generated from street sweepings, packaging and other commercial activities in
the industrial units which is dry in nature and does not include the process wastes from the
industries shall also be collected and stored in segregation.
The overall collection activity itself would also involve segregation and as suggested in the table
above, the waste collected would be stored in a temporary storage facility which shall be
designed as per the CPCB/ MoEF guidelines and would have storage capacity of up to 90 days.
Organic waste segregated during collection itself will be sent to nearest composting facility and
industrial dry waste to any waste recycling facility. The rest will be sent for final disposal to a
secured landfill facility.
Estimated cost: Block cost estimates are prepared based on CPWD/AP Revised Standard Data/
applicable norms for quantities and prevalent market rates/Common SoR 2016-17 of Andhra
Pradesh. Based on the above the cost of the Integrated Waste Management System is estimated
at Rs. 24.41 Lakhs as presented Table 10-13.
Table 10-13: Estimated Cost of Integrated Waste Management System
S. Amount
Solid Waste Management System Quantity Unit Rate
No. (Rs. Lakhs)
1. Waste Collection Trolleys 2 No 2,400 0.05
2. Waste Collection Bins 6 No 16,500 0.99
94
S. Amount
Solid Waste Management System Quantity Unit Rate
No. (Rs. Lakhs)
3. Tractor cum Trailor 1 No 1,250,000 12.50
Temporary Waste Storage Facility of 90 days
4. 145 smt 7,500 10.88
capacity (Bulk Density of 0.82 Tons/Cu.m)
Total 24.41
10.8 Power Transmission System

The following are the feasible options for drawing from grid.
10.8.1 Power Demand

The aggregate power demand of the Park is estimated to be approximately in the order of 5 MW
for the processing, core and noncore activities including common infrastructure. For the purpose
of estimation the internal distribution of the complete park is considered, including the cost of
distribution transformers. The core processing facilities are estimated to be in need of 2.00 MW
while the processing units together are estimated to be in need of 2.15 MW. 0.76 MW is the
estimate requirement for the enabling basic infrastructure including street lighting and 0.09 MW
is the estimate requirement of the non-core infrastructure.
10.8.2 Transmission of Power

Andhra Pradesh Southern Power Distribution Company Limited (APSPDCL) is responsible for
distribution and bulk supply of power in this area. The nearest source of power supply to the site
is the 33/11 kV electric sub-station located at Vinukonda at a distance of 35 km from the CPC
site. The MFP is proposed to have its own 33/11 kV substation which shall meet the power
requirements of the MFP and the Units therein.
GoAP will be requested to setup the proposed sub-station as part of external infrastructure
assistance under the Industrial Development Policy 2015-2020.
The sub-station shall be equipped with 12.5/ 16 MVA transformers, where the power would be
stepped down from 33 kV to 11 kV for further distribution to various industries. The distribution
of power has been envisaged at 11kV and the internal distribution network would be designed
accordingly.
10.8.3 Primary Distribution

Once the 33 KV supply reaches the site, it shall be stepped down to 22 KV, by using 2 × 10
MVA, 33 KV / 22 KV transformers provided by APSPDCL. This 22 KV output would be is
distributed to the consumers using 22 KV, cables with interlinking facility.
95
Figure 10-3: View of HT Pole and Schematic Distribution Network

10.8.4 Street Lighting
Street Lights shall be with 7 m high poles with 40 Watts LED fittings and shall be installed on
either side at staggered intervals of 25 m. Total number of poles and fitting envisaged is 411.

Block cost estimates are prepared based on CPWD/ AP Revised Standard Data/ applicable norms
the power demand calculations, the cost estimates for electrical transmission and distribution
network and street lighting is Rs. 237.01 Lakhs as presented Table 10-14.
Table 10-14: Estimated Cost for Power Distribution Network
S. Amount
Power Supply& Street Lighting Qty. Unit Rate (Rs.)
No. (Rs. Lakhs)
1. 33/ 11 kV GIS Sub-Station incl. EB Charges etc 1 No. 10,000,000 100.00
2. 11 kV /415 V Overhead HT distribution network 2950 RM 1,850 54.58
Charges towards State Electricity Board for
3. - LS - 50.00
connection /Installation and supervision charges
4. Street Lighting - - - -
5. Street Lighting (Double arm poles with Fixtures) 35 - 49,000 17.15
6. Street Lighting (Single arm poles with Fixtures) 32 - 41,000 13.28
7. Area Lighting (Pole Mounted Medium Height) 2 - 100,000 2.00
Total 237.01
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10.9 Landscaping, Communication Network, Entry/Exit Gates

An attractive landscape of international standards would not only improve the image of the MFP
but would also provide an aesthetic environment to the work force. The proposed landscaping
would integrate hard and soft landscapes. The hard landscape envisages roadscapes, street
furniture, signage and building fronts, etc whereas the soft landscapes would consist of open
spaces, rotundas, areas within the right of way, etc. the estimated cost of providing landscaping
at the site works out to Rs. 5.00 Lakhs.
10.10 Generators and Truck Parking

DG sets/ generators as stand-by source of power are proposed for procurement for the MFP.
Accordingly, it is proposed to install 2 Nos. of 500 KVA, 3 Phase 415 Volts Silent DG Set
mounted on a common base frame including fuel tank, battery & leads, silencer-residential,
AVM pads, acoustic enclosure and STD control panel. These are estimated to cost Rs. 57.36
lakhs.
Further, truck parking lot shall be provided for the truck drivers who need a safe place to sleep,
drop a trailer or park a semi-truck for short term, overnight or long term. The parking lot shall
also provide for servicing requirements as well as basic accommodation facilities. The parking
lot shall be paved with heavy duty paver blocks with appropriate surface drainage facility, well-
lit at night, fully attended and monitored 24 hours every day. The facility shall be developed on
an area of 1000 sq.m at a cost of Rs. 24.50 Lakhs and the operations shall be outsourced.
10.11 IT & Telecom Infrastructure

Success of modern day business depends upon communication infrastructure. Internet
connectivity through broadband connection, close circuit video network are some of the likely
requirements of the proposed MFP. Considering these, a lump sum amount of Rs. 10.00 lakhs
have been provided towards data cabling, etc.
10.12 Enabling Basic Infrastructure at PPCs

Three numbers of PPC’s are proposed in Ongole, Machlipatnam and Nellore as earlier presented
in the Report. The cost towards development of Buildings, roads, drains, water distribution
network, sewerage collection network, street lights, ETP is envisaged in these facilities.
Accordingly the total cost towards enabling basic infrastructure at PPCs is thus estimated as Rs.
270.00 lakhs.
10.13 Aggregate Estimated Infrastructure Cost

On the basis of cost estimation exercise carried for each of the components of Common
Infrastructure, the aggregate estimated cost of common infrastructure at CPC and PPC is
estimated at Rs 2212.10 Lakhs as shown in Table 10-15.
97
Table 10-15: Estimated Cost for Infrastructure Development
Components Cost (Rs. Lakhs)

Land development, compound wall & Entry /Exit gates 223.28
Road network & culverts 391.59
Storm water drains 274.12
Water supply system 370.58
Sewerage system & Sewerage treatment plant 140.94
Effluent treatment system 235.67
Solid waste management 24.41
Street Lighting & Electrical Distribution 237.01
IT/Telecom Infrastructure 10.00
Landscaping 10.00
Truck Parking 24.50
Enabling Basic Infrastructure at PPCs 270.00
Total 2212.10
10.14 Proposed Non-core Infrastructure

The components of non-core infrastructure are derived from the standards laid down in the Time
Saver’s and National Building Code for such facilities. The spatial requirements have been
derived based on the population to be served by each of the facilities.
The design philosophy is based on the aesthetic and equitable distribution of the programmatic
components of the buildings around courtyards and open spaces. The central square would be
left open to sky as a courtyard – to ensure adequate light and ventilation within the building.
Green spaces within the plot areas have been emphasized and maximized.
10.14.1 Administration Complex

The administration complex shall be developed with a built-up area of 500 sq.m. The complex
shall house various facilities like the offices of the SPV, First aid centre, post office, Bank,
ATM, Canteen, Agri shops, Communication rooms, etc.
10.14.2 Training cum Design Centre

An exclusive training cum design centre shall be developed in the Park which would have a
training, class rooms, demo hall and auditorium where there would be facilities for product
development and training of new workforce. The facility would cover an area of 400 sq.m.
10.14.3 Workers’ Hostel & Managers Residential facilities

A 200-bedded hostel in bunker arrangement is proposed to cater to the residential needs of the
workers employed in the units within the Park which will also facilitate easy conveyance to work
place. A residential studio apartment (500-600 sft each) is also proposed to house the managers
98
and senior managers in the park. The total built up area of this facility is estimated at 32,000 sft.
The hostels will also have common entertainment space, dining area, etc.
10.14.4 Estimated Cost for Non-Core Infrastructure

for quantities and prevalent market rates/Common SoR 2016-17 of Andhra Pradesh. The cost of
the buildings of non-core infrastructure at CPC and PPCs is estimated at Rs. 315.71 Lakhs as
presented in Table 10-16.
Table 10-16: Estimated Cost for Non Core Infrastructure at CPC & PPCs
Built-up Unit Rate Amount

S. No. Description
Area (sq.m) (Rs.) (Rs. Lakh)
1. Administration Complex 500 15602 78.01
2. Training cum Design Centre and Laboratory 400 15602 62.41
3. Workers’ Hostel & Managers Residential facilities 2900 15602 452.46
Total 592.88
Drawings for Road Network, Road Section, Storm Water Drains Section, Water Supply
Network, Sewerage Network, Electrical Poles, Proposed components such as Pre-
processing, Processing, IQF and Cold Storage Lines are all given in Annexure 11.
99
11 Cost Estimates
11.1 Project Cost
Based on the estimates for the various facilities proposed in the Park, the eligible project cost
under the MFPS is Rs. 10,122.19 Lakhs. The aggregate cost of the project after including land
cost, other pre-operative expenses is Rs. 10,585.51 Lakhs.
Table 11-1: Project Cost

Total Eligible Project Cost
S. Project %
Project Cost Total (Rs. % CPC (Rs. PPCs (Rs.
No. Components Share
(Rs. Lakhs) Lakhs) Share Lakhs) Lakhs)
1. Core Processing Facilities
i. CPC 5,568.64 52.6 5,568.64 55.0 5,568.64 -
ii. PPCs 1,102.43 10.4 1,102.43 10.9 - 1,102.43
MSE Standard
2.. 66.30 0.6 66.30 0.7 66.30 -
Factory Sheds
Enabling Basic
3. 2,176.08 20.6 2,176.08 21.5 1,906.08 270.00
Infrastructure
Non-core
4. 592.88 5.6 592.88 5.9 592.88 -
Infrastructure
Project
5. Implementation 90.00 0.9 90.00 0.9 90.00 -
Expenses
6. Pre-operative expenses
i. IDC 525.88 5.0 525.88 5.2 525.88 -
Administrative and
ii. - 0.0 - - - -
Other Expenses
7. Land 313.32 3.0 - - - -
Working Capital
8. 150.00 1.4 - - - -
Margin
Total Project Cost 10,585.51 100.0 10,122.19 100.0 8,749.77 1,372.43
Percentage of Eligible Project Cost 86.4% 13.6%
About 13.6% of the total eligible project cost amounting to Rs. 1,372.43 Lakhs is the proposed
investment in the PPCs. Further, of the total Rs. 6,671.06 Lakhs investment proposed in Core
Processing Facilities, 87% amounting to Rs. 5,801.11 Lakhs is the proposed investment on
perishables.
Project Implementation expenses includes preliminary expenses such as engineering design,

construction supervision towards which a total provision of Rs. 90 Lakhs has been made, the
whole of which is eligible component under MFPS.
100
Provision towards pre-operative expenses includes interest during construction period, business
development expenses, capacity building, marketing, insurance, security, salary & wages during
construction period etc. It is envisaged that the project will be completed over a period of 30
months and the interest during construction period of 2 years is capitalized in the project cost.
The total estimated pre-operative expense is Rs 525.88 Lakhs.
The project will generate revenue by charging rental from the users of the facilities. Rentals will
be charged from users on monthly basis. Once the project commences operation, it would incur
operational expenses on monthly basis towards manpower expenses, electricity bills and other
administrative expenses. Therefore, working capital requirement would only confine to meet the
operational expenses. Based on the first year of capacity utilization, margin money for working
capital has been estimated Rs. 150 Lakhs. It may be noted that the working capital requirement
may increase as project would increase its capacity utilization over a period of time
11.1.1 Means of Finance

The Project is proposed to be financed through a mix of equity, grant from APFPS under the
MFPS and term loan from Bank. The promoters would contribute about 20.92% of the total cost
of project. The grant from APFPS would be 50% of eligible project cost excluding cost of land,
margin money for working capital and pre-operative expenses or Rs. 5000.00 Lakhs, whichever
is lower. However, interest during construction (IDC) and PMC charges would be considered
while calculating the eligible project cost. In this case the estimated grant amount is Rs. 5000.00
Lakhs. The remaining funds would be arranged as term Loan from Bank
Table 11-2: Means of Finance
Total Project Cost

S. No. Sources
Amount (Rs. Lakhs) % Share
1. Equity capital 2,214.51 20.9
2. Grant under MFPS 5,000.00 47.2
3. Term Loans 3,371.00 31.8
Total 10,585.51 100.0
The term loan sanction letter and appraisal note for the MFP from Yes Bank are enclosed as
Annexure 12.
11.2 Financial Projections and Viability

The below operational and financial appraisal is aimed at comprehensively assessing the
financial capability of entrepreneurs to contribute towards capital and operating costs of the
Project as well as to assess the solvency of Implementing Agency.
11.2.1 Key Operational and Financial Assumptions

The following are some of the basic underlying presumptions on which the profitability of the
101
operations of the SPV has been estimated.
The entire Project Cost though shall be expended during a construction period of 30 months, for
the purpose of financial projections the construction period shall be treated as two years “-2” and
“-1”.
The capacity utilisation is assumed at starting from 30% during first year of operation to
reaching 90% by the fifth year and continuing to operate at 90% capacity from then on.
The SPV shall operate and maintain the core processing facilities, enabling basic infrastructure
and outsource the operations and management of training and laboratory facilities to specialised
agencies under specific O&M contracts and collect lease rentals.
Grant contributions from various sources have not been considered for the purposes of
calculating the Post-Tax Internal Rate of Return (IRR).
11.2.2 Revenue Assessment

The revenues are assumed to flow by way of industrial plot lease premium, lease rentals against
industrial space/ common facilities and user charges from Core Processing facilities and enabling
Basic Infrastructure. The basis of calculation is presented in Table 11-3.
Table 11-3: Revenue Assumptions for CPC and PPCs

S.
Nature of Revenues Assumption
No.
1 Fixed Infrastructure Charges
Plot Lease Premium and - Lease of all plots over a period of 5 years
Rentals from 15.62 acres of - Lease Premium to commence at Rs. 30 Lakhs/Acre
industrial plots including - Annual Lease Rentals of 1% of Lease Premium
apportioned common areas - Upward revision every year by 1%
2 Lease Rentals against
54,896 sft SDF space created - Monthly Lease Rentals at Rs. 4/sq.ft/ month
for SMEs - Upward revision every three years by 2%
3 Variable Utility Charges
Maintenance charges on Maintenance Cost + 10% service charges; to be recovered from
enabling basic Infrastructure units
Maintenance charges on non- Maintenance Cost + 10% service charges; to be recovered from
core infrastructure units
Employee Costs + 10% service charges; to be recovered from
Administration Charges
units
Power cost on account of common facilities to be recovered
Power Charges from units and on account of other services to be charged as per
usage
Water Procurement Charges Water Procurement Cost @Rs. 25/ KL + 10% service charges
102
S.
Nature of Revenues Assumption
No.
in proportion of Utillisation
Water Treatment Cost @Rs. 7.50/ KL + 10% service charges in
Water Treatment Charges
proportion of Utillisation
STP operations & maintenance Cost @Rs. 15/ KL + 10%
STP Operating Charges
service charges in proportion of Utillisation
ETP operations & maintenance Cost @Rs. 30/ KL + 10%
ETP Operating Charges
service charges in proportion of Utillisation
Revision in Utility User
Upward revision every three years by 5%
Charges
4 Core Processing User Charges No. of Months of Operation
IQF (Aqua) Rs. 9,000/MT 11
Plate Freezers Rs. 9,000/MT 11
Cold Storage (Fruits and
Rs. 3,000/MT/Month 12
Vegetables, Aqua)
Warehouse Rs. 12/sq.ft 12
Multi Grain Sorting & Grading Rs. 500/MT 12
IQF (Fruits and Vegetables) Rs. 9,000/MT 11
Block Freezing Rs. 9,000/MT 11
Reefer Vans Rs. 70,000/Vehicle/Month 12
Revision in User Charges Upward revision every two years by 1%
5 Enabling Basic Infra User Charges No. of Months of Operation
Rs. 70/Large Truck/Day
Truck Parking 12
Rs. 40/Small Truck/Day
Revision in User Charges Upward revision every two years by 1%
11.2.2.1 Estimate of Total Revenues against Full Capacity Utilisation

Against a full capacity utilisation scenario, the revenues are estimated to be of the order of Rs.
2,941 Lakhs during the first year increasing to Rs. 3,000 Lakhs by the sixth year as presented in
Table 11-4.
Table 11-4: Total Revenues at Full Capacity Utilisation
1 2 3 4 5 6
S. No. Revenue Head/Operating Year
(Rs. Lakhs)
Full Capacity Utilisation 100% 100% 100% 100% 100% 100%
1. Plot Lease Premium & Rentals 521 245 62 69 76 15
2. Lease Rentals from MSE SDFs 510 222 58 58 59 18
3. Core Processing Facilities at CPC 2,381 2,381 2,405 2,405 2,429 2,429
i IQF (Aqua) 356 356 360 360 364 364
ii Plate Freezers 143 143 144 144 145 145
iii Cold Storage (F&V, Aqua) 1296 1296 1309 1309 1322 1322
iv Warehouse 69 69 70 70 71 71
103
1 2 3 4 5 6
S. No. Revenue Head/Operating Year
(Rs. Lakhs)
v Multi Grain Sorting & Grading 41 41 42 42 42 42
vi IQF (F&V) 475 475 480 480 485 485
4. Enabling Basic Infrastructure - User Charges 3 3 3 3 3 3
i Truck Parking at CPC 3 3 3 3 3 3
5. Variable Utility Charges 444 444 451 457 463 463
6. Revenue from PPCs 252 252 254 254 257 257
i Block Freezing 143 143 144 144 145 145
ii Reefer Vans 109 109 110 110 111 111
Total Income 4,110 3,546 3,232 3,246 3,287 3,185
11.2.3 Expenditure Assumptions
11.2.3.1 Manpower Requirement and Expenses

The SPV will require adequately qualified/ experienced management staff, technical experts and
skilled operators for operating and maintaining the various utilities and facilities at the CPC and
the PPCs. Employment of workforce and hence the establishment expenses shall be for full
operational capacity irrespective of the capacity utilisation pattern. In all there is a requirement
for about 173 persons to be employed by the SPV, the annual cost of which works out to Rs.
270.20 Lakhs as per the details presented below.
The manpower cost as presented below is assumed to increase at 3% per annum hence providing
for increase in salaries, bonus payments and other benefits.
Table 11-5: Manpower/ Employee Costs for the SPV
S. Total Annual Salary

Function Numbers
No. (Rs. Lakhs)
1. CEO 1 16.00
2. Manager - Production & Quality Assurance 1 7.80
3. Manager – Business Development 1 7.80
4.. Manager HR& Admin 1 7.80
5. Managers Commercial (Finance, Account etc.) 1 7.80
6. Food Technologist 1 7.80
7. Research Associates 2 6.00
8. Operation Staff/Accounts Assistant/Other Support Staff 4 7.20
9. MIS and IT Staff 1 2.40
10. Supervisors 50 90.00
11. Operators 100 100.00
12. Security Staff 10 9.60
Total 173 270.20
104
11.2.3.2 Other Administrative Expenses

Administrative expenses including costs towards overheads, marketing, capacity building,
insurance etc., are assumed @5% of other annual expenses for the respective operating year.
11.2.3.3 Power Consumption

For the entire MFP including the Food Processing Units power consumption is estimated at 250
Lakh units against a connected load of 5 MW at full operational capacity. Within this, power
consumption of the SPV (excluding the consumption of food processing units) alone per annum
is estimated at 85 Lakh units against a connected load of 1.94 MW at full operational capacity.
The Power tariff has been assumed at Rs. 6.50/- per unit and accordingly the annual power cost
is Rs. 460.32 Lakhs. However, at the assumed capacity utilisation pattern, the power cost during
the first year of operations works out to Rs. 167 Lakhs. The power tariff is assumed to be revised
upwards by 5% every second year.
11.2.3.4 Water Consumption

The water demand of the MFP is 1.50 MLD at full operational capacity. The cost of procurement
of water is assumed as Rs. 25/- per KL and treatment of required quantity to the required levels
is assumed at Rs. 7.5/- per KL. Accordingly the annual cost of water procurement and treatment
is Rs. 126 Lakhs. However, at the assumed capacity utilisation pattern, the water procurement
and treatment cost during the first year of operations works out to Rs. 38 Lakhs. The costs are
assumed to increase upwards by 5% every second year.
11.2.3.5 Sewerage & Effluent Treatment Costs

Sewerage flow is estimated at 1.19 MLD and effluent flow is estimated at 0.34 MLD. Sewage
treatment cost is assumed as Rs. 15/- per KL and Rs. 30/- per KL for effluent. Accordingly the
annual cost of treatment is Rs. 84 Lakhs. However, at the assumed capacity utilisation pattern,
the sewerage treatment cost during the first year of operations works out to Rs. 21 Lakhs. The
costs are assumed to increase upwards by 5% every second year.
11.2.3.6 Enabling Basic Infrastructure maintenance expenses

The initial annual cost of maintenance has been assumed at 0.5% of the capital expenditure
amounting to Rs. 5 Lakhs per annum. The costs are assumed to increase upwards by 3% every
second year.
11.2.3.7 Core Processing Facilities & Non-Core Infrastructure maintenance expenses

The initial annual cost of maintenance has been assumed at 0.25% of the capital expenditure
amounting to Rs. 18 Lakhs per annum. The costs are assumed to increase upwards by 3% every
second year.
105
11.2.3.8 Estimate of Total Expenditure

Against a full capacity utilisation plan, the total expenditure is estimated to be of the order of Rs.
949 Lakhs during the first year increasing to Rs. 1,052 Lakhs by the sixth year as presented in
Table 11-6.
Table 11-6: Total Expenditure at Full Capacity Utilisation
1 2 3 4 5 6
S. No. Expense Head/ Operating Year
(Rs. Lakhs)
1. Establishment/ Administrative Expenses 321 330 339 350 359 368
i. Establishment/ Employee costs 270 278 287 295 304 313
ii. Other administrative costs 51 52 52 54 55 55
2. Operations, Repairs & Maintenance Expenses 753 753 754 790 791 791
i. Maintenance cost (Enabling Basic Infra) 5 5 6 6 6 6
ii. Maintenance cost (Core & Non-Core Infra) 18 18 19 19 19 19
iii. Power cost (Core & Non-Core Infra) 556 556 556 583 583 583
iv. Water Purchase and Treatment Cost 126 126 126 132 132 132
v. STP/ ETP Operating Cost 48 48 48 51 51 51
Total Expenditure 1,074 1,083 1,092 1,140 1,150 1,159
11.2.4 Other Assumptions
11.2.4.1 Taxes
The income tax has been taken @ 33.063% as per the prevailing rate of income tax for corporate/
industry players. The Minimum Alternate Tax (MAT) rate is taken as 20.389% as per the
prevailing rate.
11.2.4.2 Depreciation Rates

Depreciation has been calculated using straight-line method for book purpose, whereas for tax
purpose written down value method has been used. The rate of depreciation for plant &
machinery, Misc fixed assets, buildings and enabling infrastructure has been given in Table
11-7.
Table 11-7: Rates of Depreciation
Book Depreciation
Assets Category Tax Depreciation
One shift Two shift Three Shift
Plant & Machinery 4.75% 7.42% 10.34% 15.00%
Miscellaneous Fixed Assets 4.75% 7.42% 10.34% 15.00%
Buildings 3.34% 3.34% 3.34% 5.00%
106
11.2.4.3 Interest
Interest has been calculated @ 12% per annum for term Loan as per the sanction letter of Yes
Bank. The SPV intends to avail the term loan from Yes Bank. Interest rate for working capital
loans has been assumed at 12.5%. The repayment mode shall be Equated Quarterly Instalments
and the repayment period has been kept at 7 years including the moratorium period of 2 years (8
quarters). The term loan has been assumed as Rs. 3,371.00 Lakhs.
11.2.5 Financial Projections
11.2.5.1 Profitability Estimates

The profit and loss statement of the SPV operations against the assumed capacity utilisation of
starting from 25% during first year of operation to reaching 90% by the sixth year and continuing
to operate at 90% capacity from then onwards is presented below. It can be observed that the
SPV would generate PBIDT of Rs. 430 Lakhs during the first year of operations itself and
increasing to Rs. 1,731 Lakhs by the sixth year. Net cash accruals are on the positive side from
the first year of operations.
107
Table 11-8: Profit & Loss Statement for the SPV Operations
1 2 3 4 5 6 7 8 9 10
S. No. Head/ Operating Year
Rs. Lakhs
Capacity Utilisation 30% 45% 60% 75% 90% 90% 90% 90% 90% 90%
Revenues
1. Plot Lease Premium & Rentals 521 245 62 69 76 15 16 18 20 22
2. Lease Rentals from MSE SDFs 510 222 58 58 59 18 18 19 19 20
3. Core Processing Facilities - User Charges 714 1,071 1,443 1,803 2,186 2,186 2,208 2,208 2,230 2,230
4. Enabling Basic Infrastructure - User Charges 1 1 2 2 3 3 3 3 3 3
5. Variable Utility Charges 133 200 270 343 417 417 429 429 435 441
6. Revenue from PPCs 76 113 153 191 231 231 233 233 236 236
Total Income 1,954 1,853 1,987 2,466 2,972 2,869 2,907 2,909 2,942 2,950
Expenditure
1. Establishment/ Administrative Expenses 296 310 324 340 355 365 376 386 397 409
2. Operations & Maintenance Expenses 239 349 460 597 714 714 749 749 750 786
Total expenditure 534 658 784 937 1,069 1,078 1,125 1,135 1,146 1,195
PBIDT 1,420 1,194 1,204 1,529 1,903 1,791 1,782 1,774 1,796 1,755
Interest on term loans (if any) 381 316 241 158 64 0 0 0 0 0
Interest on working capital borrowings (if any) 1 1 2 2 3 3 3 3 3 3
Depreciation 707 707 707 707 707 707 707 707 707 707
Profit Before Tax (PBT) 330 170 253 661 1,129 1,081 1,072 1,064 1,085 1,045
Tax 67 35 52 135 230 220 310 431 461 466
Profit After Tax (PAT) 263 135 202 526 899 860 761 632 624 578
Net cash accruals 970 843 909 1,234 1,606 1,568 1,469 1,340 1,332 1,285
11.2.5.2 Cash Flows

The cash flow statement for the SPV operations against the assumed capacity utilisation of starting from 30% during first year of
operation to reaching 90% by the fifth year and continuing to operate at 90% capacity from then onwards is presented in Table 11-9.
108
Table 11-9: Cash Flow Statement for the SPV Operations
S. -1 -2 1 2 3 4 5 6 7 8 9 10
Head/Operating Year
No. Rs. Lakhs
Capacity Utilisation 0% 0% 30% 45% 60% 75% 90% 90% 90% 90% 90% 90%
Sources
1. Increase in Equity 1,827 388 - - - - - - - - - -
2. Increase in Term Loans (if any) 1,517 1,854 - - - - - - - - - -
3. Increase in Grants 1,500 3,500 - - - - - - - - - -
Increase in Working Capital
4. 8 4 4 5 5 - 1 - 0 0
Borrowings
Net cash from operations (PAT
5. - - 970 843 909 1,234 1,606 1,568 1,469 1,340 1,332 1,285
+ Depreciation)
Total Sources 4,844 5,742 979 847 913 1,238 1,611 1,568 1,469 1,340 1,332 1,286
Uses
1. Capital Expenditure 3,327 7,259 - - - - - - - - - -
2. Increase in working capital - - 11 6 6 6 6 - 1 - 1 1
Principal Repayment on Loans
3. - - 525 591 665 748 842 - - - - -
(if any)
Total Uses 3,327 7,259 536 596 671 754 848 - 1 - 1 1
Opening cash balance - 1,517 - 443 693 936 1,419 2,182 3,749 5,218 6,557 7,889
Surplus/(deficit) 1,517 (1,517) 443 251 242 484 762 1,568 1,468 1,340 1,331 1,285
Closing cash balance 1,517 - 443 693 936 1,419 2,182 3,749 5,218 6,557 7,889 9,174
It can be observed that the SPV would appreciate a positive cash balance of Rs. 443 Lakhs by the end of the first year of operations
itself and increasing to Rs. 2,182 Lakhs by the end of sixth year. Surpluses are also generated from the second year of operations
itself.
11.2.5.3 Balance Sheet

The balance sheet for the SPV operations against the assumed capacity utilisation of starting from 30% during first year of operation
to reaching 90% by the fifth year and continuing to operate at 90% capacity from then onwards is presented in Table 11-10.
109
Table 11-10: Balance Sheet for the SPV Operations
S. -1 -2 1 2 3 4 5 6 7 8 9 10
Head/ Operating Year
No. Rs. Lakhs
Liabilities
1. Net Worth 3,327 7,215 7,478 7,613 7,815 8,341 9,240 10,100 10,862 11,494 12,118 12,697
2. Term Loans 1,517 3,371 2,846 2,255 1,591 842 (0) (0) (0) (0) (0) (0)
3. Working Capital Loans - - 8 12 17 21 26 26 27 27 27 28
Total Liabilities 4,844 10,586 10,332 9,881 9,422 9,205 9,266 10,126 10,888 11,521 12,146 12,724
Assets
1. Net Fixed Assets 3,327 10,586 9,878 9,171 8,464 7,757 7,049 6,342 5,635 4,928 4,221 3,513
2. Working Capital - - 11 17 23 29 35 35 36 36 36 37
3. Cash Balance 1,517 - 443 693 936 1,419 2,182 3,749 5,218 6,557 7,889 9,174
Total Assets 4,844 10,586 10,332 9,881 9,422 9,205 9,266 10,126 10,888 11,521 12,146 12,724
It may be observed that the Net Worth of the SPV Operations at the end of the first year of operations even at a reduced capacity
utilisation pattern is Rs. 33.27 crore. The working capital borrowings are minimal owing to the reserves generated from the cash
flows.
11.2.5.4 Project IRR

The Project IRR (Post-Tax) is calculated against investment net of grants and estimated at 15.8% as presented in Table 11-11.
Table 11-11: Project IRR Calculations for the SPV Operations
Operating Year -2 -1 1 2 3 4 5 6 7 8 9 10
Capacity Utilsiation 0% 0% 30% 45% 60% 75% 90% 90% 90% 90% 90% 90%
Operating Cash flow (PBIDT) - - 1,420 1,194 1,204 1,529 1,903 1,791 1,782 1,774 1,796 1,755
Increase in Working Capital - - 11 6 6 6 6 - 1 - 1 1
Investment net of GoI grant (3,327) (7,259) - - - - - - - - - -
Terminal value - - - - - - - - - - - 19,489
Pre-tax cash flows (3,327) (7,259) 1,431 1,200 1,210 1,535 1,909 1,791 1,783 1,774 1,796 21,245
Pre-tax IRR - 17.1% - - - - - - - - - -
110
Operating Year -2 -1 1 2 3 4 5 6 7 8 9 10
Tax - - 67 35 52 135 230 220 310 431 461 466
Post-tax cash flows (3,327) (7,259) 1,364 1,165 1,158 1,400 1,679 1,571 1,473 1,343 1,335 20,778
Post-tax IRR - 15.8% - - - - - - - - - -
Table 11-12: Key Financial Indicators for the SPV Operations
S. No. Head/Operating Year 1 2 3 4 5 6 7 8 9 10

Capacity Utilisation 30% 45% 60% 75% 90% 90% 90% 90% 90% 90%
1. PBIDT Margin 72.7% 64.5% 60.6% 62.0% 64.0% 62.4% 61.3% 61.0% 61.0% 59.5%
2. PAT Margin 13.5% 7.3% 10.1% 21.3% 30.2% 30.0% 26.2% 21.7% 21.2% 19.6%
3. Debt – Equity Ratio 0.38 0.30 0.21 0.10 0.00 0.00 0.00 0.00 0.00 0.00
4. Debt – PBIDT Ratio 2.01 1.90 1.34 0.56 0.01 - - - - -
5. Interest Cover 3.54 3.66 4.73 8.69 24.95 - - - - -
6. DSCR 1.49 1.28 1.27 1.53 1.84 - - - - -
7. Average DSCR 1.48 - - - - - - - - -
As can be seen from the above workings, the SPV would be financially viable against the availability of grant support, even at reduced
capacity utilisation and would likely generate positive cash flows after meeting the operating expenditure and debt servicing charges.
Table 11-13: Pay-back Period Calculations
S.
Head/ Operating Year -1 -2 1 2 3 4 5 6 7 8 9 10
No.
1. Project Cost 4,844 5,742 11 17 23 29 35 35 36 36 36 37
Net Investment by
2. 4,843 742 5,585 5,585 5,585 5,585 5,585 5,585 5,585 5,585 5,585 5,585
Promoter
3. Net cash inflow - - 1,364 1,165 1,158 1,400 1,679 1,571 1,473 1,343 1,335 20,778
4. Cumulative cash inflow - - 1,364 2,529 3,687 5,087 6,766 8,337 9,810 11,153 12,489 33,267
5. Is payback achieved - - No No No No Yes Yes Yes Yes Yes Yes
6. Payback Period - - - - - - 4.83 - - - - -
111
12 Project Implementation Framework and O&M

12.1 Role of Project Management Consultant (PMC)
The SPV has appointed IL&FS Cluster as the PMC for the Project. The proof of appointment of
PMC is presented in Annexure 2.
PMC would assist SPV in development and implementation of the Project. The PMC has been
working in close association with the team from the SPV for implementation of the MFP.
12.2 Proposed Contractual Framework

On selection of construction contractor and equipment supplier through transparent bid process
management process, SPV will enter into an agreement with such selected contractors and
equipment suppliers which would include detailed terms and conditions laid out in the Bid
Document.
SPV shall also enter into a Lease/Leave and License Agreement with each of the potholders/ unit
holders in the Park providing those rights to set up food processing units. This agreement will
contractually bind the users to pay all such charges as may be levied by the MFP for
development and maintenance of infrastructure assets
12.3 Proposed Framework for Operation and Maintenance

The MFP is proposed to be owned by Nekkanti MFP. The SPV will own and manage common
infrastructure established within the Park and will also provide requisite technical and extension
services. Thus, the CPC and PPC, backward linkage mechanism and front end linkages will be
owned and managed by SPV. In case of PPCs, SPV may consider leasing out operation and
management of these to interested professional agencies or entrepreneurs in the region.
Since the O&M is a critical component of the overall functioning of the MFP. The overall O&M
would be broadly coordinated through distinct functions namely Operations & Maintenance
(O&M), Sales & Marketing, Finance and Administration. The key lies in the well-defined
functions and the linkages between organizations and how well the operations department and
the outsourced agencies, as the case may be, take this forward for efficient functioning of the
MFP.
12.4 Proposed Framework for Recovery of Charges

Charge I – Lease rentals through long term lease of developed plots to units in the Park and
rentals from MSME units for usage of Plug n’ Play facility.
Charge II – Charges based on usage of the facilities like:
 Truck Parking (Inward and Outward)
112
 Dry Warehouse for Raw Materials

 Blast freezing line
 Processing - Freezing IQF & Plate Freezers including cookers, fryers
 Cold Storage (Fruits and Vegetables, Aqua)
 Warehouse
 Multi Grain Sorting & Grading
 IQF (Fruits and Vegetables)
Charge III – Monthly variable Utility charges will be based on monthly consumption of utilities
such as water, power, STP/ ETP will be charged from the member units as per actual
consumption and on cost basis.
Charge IV – Monthly Rentals, if any from non-core infrastructure.
The SPV will outsource common facilities like shops, canteen, banks and other space to different
agencies for providing requisite facilities. These agencies / individuals will be charged on actual
for the facilities like water, electricity utilized by them.
The operations of the units will be adequately supported by requisite capacities to absorb the cost
of the infrastructure as proposed to be charged by SPV to recover the capital and operational
costs as briefly described above.
SPV shall enter into an Agreement with the units. The Agreement shall provide rights to the
units for setting up food processing facilities in the park. The Agreement shall also contractually
bind the Industrial Units to pay all such charges as may be levied by the SPV for the allotment,
development and maintenance of infrastructure assets and provide recourse by way of rights to
replace units that have defaulted in respect of payments to SPV or which do not commence
operations within 6 months from the date of commencement of commercial operations of the
SPV.
12.5 Project Implementation Schedule

The proposed Project Implementation schedule is presented in Figure 12-1.
113
Figure 12-1: Project Implementation Schedule
114
13 Risk Analysis and Mitigation Framework

The MFP projects involve certain challenges and complexities during implementation phase as
well as during operational phase. Such challenges and complexities may lead to certain risk
factors during implementation which are needed to be analyzed and mitigation framework to be
arrived at. Mechanisms for minimizing such risks include: (a) conducting due diligence as to the
possibility of the relevant risks; (b) allocating such risks to other parties as far as possible and (c)
requiring adequate insurances which note the financier’s interests to be put in place.
Financiers are concerned with minimizing the dangers of any events which could have a negative
impact on the financial performance of the project, in particular, events which could result in the
project not being completed on time, on budget, or at all; the project not operating at its full
capacity; the project failing to generate sufficient revenue to service the debt; or the project
prematurely coming to an end.
Every project is unique and it is not possible to compile an exhaustive list of risks or to rank
them in order of priority. What is a major risk for one project may be quite minor for another.
Therefore, it is important to categorize the risks according to the phases of the project within
which they may arise (1) The design and construction phase; and (2) The operation phase. It is
useful to divide the project in this way when looking at risks because the nature and the
allocation of risks usually change between the construction phase and the operation phase.
13.1 Project Development/Construction Risk

Mitigation measures for risks during construction phase are given in Table 13-1.
Table 13-1: Project Development/Construction Risk

Risk Mitigation Framework
Land The complete land of 52.22 Acres has already been purchased from APIIC
Development
Site Connectivity The site has easy access to basic infrastructure like road, power, water, seaport,
airport and other support infrastructure.
The Krishnapatnam port, a privately built and owned all weather, deep water port
is about 10 km from the proposed project site.
Project Design Nekkanti MFP has appointed IL&FS Cluster Development Initiative Limited
Approvals, bid (IL&FS Clusters) as its PMC, which will assist SPV in Project Development,
management and Approval Process, Bid Process Management and Construction Supervision of the
construction Project during implementation. Given rich experience of IL&FS Clusters in
supervision of the implementation of large scale cluster based projects across sectors and its
Project association with APFPS, it is expected that project will undergo smooth
implementation in a timely manner duly leveraging wide experience of IL&FS
Clusters.
115

Promoter Risk One of the lead promoters is an already established player in marine food
processing and is successfully operating its business. The other lead promoters
have proven track records in infrastructure projects.
Financing Risk In food processing industry, financing of projects is primarily done on a stand-
alone basis, with banks and financial institutions adapting the same risk models
which are applied to the manufacturing sector. The key parameters of evaluation of
risk rating of companies involve assessment of the following:
Financial risk: Evaluation of the financial position of the company, turnover,
profitability, liquidity, debt burden, debt service capability and repayment, asset
quality, financial flexibility and cash flow adequacy
Industry risk: Industry characteristics, size, growth potential, cyclicality,
Government policies (duties, price controls, licensing etc.), competition, threats of
imports/substitutes/unorganized sector, technology risk, entry barrier/s, bargaining
power with supplier/s
Business risk: Market position, product range, quality, brand equity, operating
efficiencies, availability of raw material
Given the financial strengths of existing promoters and more importantly, their
experience and exposure to agriculture and food processing sector as well as into
infrastructure, financing risk may not be considered a potential risk and a
challenge to the project.
Delay in project The SPV will enter into date certain fixed price contracts with contractors and
completion and / suppliers of the equipments. The risk of delay and cost overrun would be passed
or construction on to the contractors/suppliers. Such clauses would be suitably provided for in the
cost overrun TOR/MOU to be entered into with various contractors and equipment suppliers.
The technical consultant would periodically submit progress reports on the project
construction and would bring any time slippages to the attention of the Board of
Management.
Availability of Ample water is available at the site
Water
Utilization of the SPV would route project funds through Trust & Retention Account (TRA) to
money by SPV for ensure that the money raised by the SPV from the promoters as equity
unauthorized contribution, from the units by the way of long term/non-refundable deposits,
payments GoAP’s grant and debt are utilized in a transparent manner for authorized
expenditure during the project implementation and operational phase. A suitable
Trust and Retention Account Framework would be put in place and agreement
with TRA agent would be entered into for safeguarding project funds and its
transparent and proper utilization.
The SPV shall open and maintain TRA with a bank designated as TRA agent for
escrowing all funds flows/cash flows of the SPV during the project
implementation stage.
Force Majeure Suitable Insurance Cover would be obtained for insurable items/events
Events
116
13.2 Operating Period Risk

Mitigation measures for risks during operation phase are given in Table 13-2.
Table 13-2: Operating Period Risk

Recovery of SPV proposes to recover the O&M charges from the entrepreneurs by way of charges
charges such as Lease rentals through long term lease of developed plots to units in the MFP
and rentals from MSME units for, charges based on usage of the facilities, monthly
variable Utility charges, etc.
SPV shall enter into an Agreement with the units for setting up food processing
facilities in the park. The Agreement shall also contractually bind the Industrial Units
to pay all such charges as may be levied by the SPV for the allotment, development
and maintenance of infrastructure assets
Units do not The agreement would provide for re-possession of the factory shed/plot by SPV in the
commence event a unit does not commence production within a given time period or such time
production may be extended by SPV.
O & M risks The SPV will enter into suitable O&M contracts for the operation and maintenance of
Project assets.
Availability of Availability of skilled manpower in the project area is an element with moderate risk.
manpower To address this requirement, SPV shall take necessary steps to organize training
programs for unskilled manpower. The training programs shall be designed and
undertaken in consultation with professional agencies having requisite competency.
Breach of If any unit commits breach of the agreement and fails to pay the charges, the Licensor
agreement by would be entitled to terminate the Agreement and take the following steps:
the Units  The Lessee shall, without any notice, be entitled to enter upon the Plot of the Land
and/or Work shed given on and license basis (“Demised Premises”) and/or evict
the member from the Demised Premises and take possessions of the same.
 The Lessee shall have the right to stop and cease provision on any or all of the
utilities like power and water to the Demised premises and/or take other such
actions at its sole discretions.
 In addition to the member’s rights provided in Clause (A) hereinabove, the
member shall also be entitled to recover from the Lessee and the Lessee shall be
bound to pay to the SPV the following amounts:
o The cost incurred toward repair and maintenance of the Demised Premises to
render and maintain it in good working order and condition and all costs
charges and expenses incurred by the SPV and in re possessing the Demised
premises and in enforcing its remedies howsoever occasioned.
o All other sums which have become due and payable by the Licensee under the
Agreement along with interest
o Allot the Demised Premises to a third party.
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14 Project Impact
Brief of the impacts of the MFP in the region are described in this chapter also detailing some of
the major benefits of establishment of MFP.
Various types of economic effects will be visualised by MFP coming up at Nellore district. The
direct or primary impact is the employment and income generated by the direct operation of the
MFP. The role of the suppliers and other related stakeholders to the MFP will also be taken in to
consideration for estimating overall economic impact. This will involve an examination of the
indirect impact, which is defined as the employment and income generated in the chain of
suppliers of goods and services to the direct activities that are located both at and in the vicinity
of the MFP. Apart from direct and indirect impact, MFP will also have induced impact which is
the measure of employment and income generated by the spending of disposable incomes by the
direct and indirect employees on local goods and services such as retail, food etc.
Setting up of MFP will have following positive effects in the Nellore district and surrounding
district and states:
 New employment opportunities: With the setting of MFP, there will be an urgent need of
skilled and semi-skilled workforce and Nekkanti MFP will look to hire skilled & semi skilled
workforces from the local population. Table 14-1 gives details of direct employment in the
MFP.
Table 14-1: Employment Opportunities in the MFP
Estimated
S. Type of Food Processing
Product Mix Employment
No. Units
Generation
1. Beverages Fruit based beverages, health drinks 250
Tomato, chilly, soya sauces, ketchup,
2. Sauces, Ketchup, Purees, Pulps 150
Tomato purees, mango, papaya, orange
Ginger/ garlic/ tamarind paste/
3. Ginger, Garlic, Tamarind, etc. 80
masala mixes
4. Pickles Mango, lime, Ginger, carrot, Mixed 150
5. Sea food based unit Shrimps, fishes and other aqua 300
6. Jams, Jellies and Squash Mango, papaya, guava and other fruits 200
7. Corn based products Corn flour/ flakes 100
8. RTE & Instant mixes Upma, Idli, Dosa mix, gulab jamun mix 100
Cereals/ Pulses based Milled & Jowar/ bajra flour, other coarse grain
9. 200
Packaged Products flour, flakes, Rawa, maida etc
10. Pulse based Savories Bhujia, Mixtures, etc. 200
11. Soups Tomato, corn, mixed veg etc 50
12. Packaging Units Rice, Pulses 200
118
Estimated
S. Type of Food Processing
Product Mix Employment
No. Units
Generation
Onions, cucumber, garlic powder/ flakes,
13. Dehydrated Vegetables potatoes, gram, sweet corns, Mushrooms, 100
carrot, cabbage
14. Extruded snacks RTE Snacks, Breakfast snacks 100
15. Citrus fruit processing plant Juices 100
16. Dal Milling Pulses 300
17. Rice Milling Rice 300
18. Fruit canning Unit Fruits & vegetables 200
Total 3,080
 Better Infrastructure & Living Condition: The setting of this project would bring in
infrastructural development in the area. The project would ensure new transportation
facilities, water supply facilities and medical facilities being setup.
 Contract and Supply Opportunities for Local Population: This would be an important
category for the income mobilization for the area. Local entrepreneurs will be provided with
an opportunity to take up various contracts in the development of the park. Also the labour
force that will be needed in the beginning of the project can be derived from the local
population.
 Alternate market channel for the farmers: The MFP will handle considerable volumes of
fruits & vegetables, marine produce and grains sourced from the catchment area. This will
eventually become an alternate marketing channel for the farmers for selling their produce.
This processing facility would also stabilize the prices of perishable commodities in this
region as a whole.
 Impact on Agriculture, Horticulture and Aquaculture: There will be direct impact of MFP on
the Agriculture, Horticulture and Aquaculture sector of cluster areas where the growers
would fetch better prices for their produce and also eventually get bigger pie of the consumer
rupee. It is estimated that MFP will result in improvement in the quality of produce,
increased demand, higher marketability as well as reduced intermediation resulting in better
price realization for marine, fruits & vegetables and grains.
 Entrepreneurial activities: Establishment of MFP will result in development of various
ancillary businesses apart from the core business. This will promote entry of new
entrepreneurs, start-up business’ and including established industrial houses into the food
processing sector
 The total investment in the MFP is estimated to be of the order of Rs. 244 crores, which
includes SPV investments of Rs. 105.85 crore and individual unit investments of Rs. 35
crore. Investment in plant and machinery by individual units is estimated to be in the range of
the order of Rs. 103 crores.
119
15 Conclusion
The proposed MFP will provide the required impulsion to the region to enable it to emerge as a
major processing hub for horticultural and agricultural produce. It will be first of its kind project
in food processing sector in the State where entire gamut of food processing activities can be
undertaken. The MFP is proposed to be set up in line with a typical industrial park model and
will be the most preferred destination for setting up processing facility for three major reasons
inter alia:
 Availability of developed plots with sizes to suit the need of the investor
 Availability of basic enabling infrastructure like road, water, power, etc.
 Availability of enabling core processing infrastructure such as storage facility, ripening
chambers, IQF and so on.
Major expected outcome by establishment of MFP will include increased realization for farmers,
creation of high quality rural processing infrastructure, reduction in wastage, capacity building of
the producers and processors and creation of an efficient supply chain along with significant
direct and indirect employment generation.
The project, once completed, shall be in a position to mobilize investments prospective units in
the Park. The existing policy framework and incentives offered by State for food processing
sector will only accelerate the process of mobilizing the said investments in the Park.
The project would play a vital role in changing the agricultural and food processing landscape in
the region at large and the State as a whole. The level of investments and envisaged leverage
thereon would have visible impact in redefining the existing socio-economic structure.
The project becomes significant in catering to the needs of the farming community and food
processors across the state of Andhra Pradesh that is progressive in terms of marine, fruits and
vegetables and grains and cereals production and productivity. Though the cluster is known for
food processing related business activities, a project of this nature and scale can accelerate the
growth of the sector
Wide variety of raw materials, adequacy of volumes and amenability for processing makes the
cluster unique and the project technically feasible.
The Promoters of the SPV/MFP being established players in the business of food processing
brings in their vast experience towards smooth execution of the project and thereby achieve the
scale and volume of food production through innovation.
The Project is being set up with a vision to provide excellent infrastructure to the food processing
industry with a specific focus on seafood and horticulture processing industry in India; thereby
benefitting all stakeholders from farmers to the consumer. At the heart of this dream lies
120
empowerment for the farmers, and choices for the consumers, whose changing lifestyle is
spurring the demand for quality and processed food.
Setting up of the MFP will lead to economic development of the region as a whole, besides
generating significant employment opportunity in the region, both direct and indirect. The key
focus during implementation would be completing the project in a timely manner to participate
in the significant opportunities generated due to the growing demand and to make the project
economically viable.
121

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DETAILED PROJECT REPORT

NEKKANTI MEGA FOOD PARK PRIVATE LIMITED

6.2.1 Reefer Vans/Insulated Trucks ................................................................................. 59

10.1 Site Development & Boundary Wall ............................................................................. 84

10.8.1 Power Demand ........................................................................................................ 95

13.1 Project Development/Construction Risk ...................................................................... 115

Table 10-3: Estimated Cost for Road Network............................................................................. 86

Annexure 8: Contour Survey Map

GoAP Government of Andhra Pradesh

Figure 1-1: Segments in the Indian Food Processing Industry

1.2 The Indian Food Processing Industry - Status and Significance

In order to capitalize on the available opportunities it is necessary to create an enabling

1.4 Mega Food Parks Scheme (MFPS)

1.6 Project Objectives

Key Objectives of the project include:

 To create an infrastructure that establishes an ecosystem to facilitate efficient food processing

1.7 Brief Outline of the Project

Table 2-1: Profile of Current Business Operations of NSFL

Form of Unit Company

Table 2-2: Experience of NSFL to Food Processing Industry

2.1.3 Communication Details

Table 2-3: Communication Details of NSFL

Name Nekkanti Sea Foods Ltd. (NSFL)

2.2 RVR Projects Private Limited

Form of Unit Company

Some of the major projects implemented by RVR are detailed below:

 External electrification for married and OTM accommodation in Rajasthan

Table 2-5: Experience of RVR Projects P Ltd. to Food Processing Industry

Experience in Food Processing Experience in technical projects involving Civil, Mechanical

2.2.2 Management of the Company

2.2.3 Communication Details

Table 2-6: Communication Details of RVR Projects P Ltd.

Name RVR Projects P Ltd.

2.3 Proposed Shareholding Structure and Sectoral Experience of the Promoters

Table 2-7: SPV Shareholding Pattern

2.4 Project Vision

3.1.2 Andhra Pradesh

Table 3-1: Estimation of Expenditure on Food Items

3.2 Dividing Demand into Component Parts

 Cereals and Grains

3.2.1 Marine Products

3.2.1.1 Global Scenario

Figure 3-1: World Fish Utilization and Supply

3.2.1.2 Indian Scenario

3.2.1.3 Andhra Pradesh

Table 3-2: Fish Production in Tonnes in Andhra Pradesh (13 Districts)

3.2.2 Cereals and Grains

3.2.2.1 Global Scenario

3.2.2.2 Indian Scenario

Source: Grains and Cereals - DSIR; www.dsir.gov.in/reports/ittp_tedo/agro/AF_Farm_Grains_Cereals_Intro.pdf

Figure 3-2: Yield of Food Grains – India and the World

Table 3-3: Andhra Pradesh - India’s Leading Producer

Table 3-5: Crop Production Statistics of Andhra Pradesh- 2012-13

Parameters Area (‘000 Ha) Production (‘000 Tonnes) Productivity (Kg/Ha)

Parameters Area (‘000 Ha) Production (‘000 Tonnes) Productivity (Kg/Ha)

3.2.3 Fruits and Vegetables

3.2.3.1 Global Scenario

Table 3-6: Worlds Fruits and Vegetable Production

Fruits Production Vegetables Production

Fruits Production Vegetables Production

3.2.3.2 Indian Scenario

3.2.3.3 Andhra Pradesh