Mega Food Park Guidelines
Mega Food Park Guidelines
Mega Food Park Guidelines
1. Objectives:
1.1. The primary objective of the Mega Food Park Scheme (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. The scheme will be demand-driven, and will facilitate food processing units to meet
environmental and safety standards.
1.2. The expected outcome is increased 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
2. Salient Features of the Scheme
2.1. The Scheme aims to facilitate the establishment of a strong food processing industry backed
by an efficient supply chain, which would include collection centers, primary processing
centres and cold chain infrastructure. The food processing units, under the Scheme, would be
located at a Central Processing Centre (CPC) with need based common infrastructure required
for processing, packaging, environmental protection systems, quality control labs, trade
facilitation centres, etc.
2.2. 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. CPC would be supported by Primary Processing Centers (PPC) and
Collection Centres (CCs) 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
and CCs at various locations would be in addition to land required for setting up the CPC.
2.3. It is expected that on an average, each project may have around 20 food processing units with
a collective investment of around Rs 250 cr. that would eventually lead to an annual turnover
of about Rs 500 cr. and creation of direct and indirect employment of about 30,000 persons.
However, the actual configuration of the project may vary depending upon the business plan
for each Mega Food Park. The aggregate investment in CPC, PPCs and CCs should be
proportionate and commensurate to the size of the total project keeping in view the
economies of scale
2.4. The spirit of the guidelines of the Mega Food Parks Scheme is to facilitate setting up of only
food processing industries. Accordingly, only food processing industries that make food
products fit for human/animal consumption may be permitted to be set up in the Mega Food
Parks. Packaging facilities of food products as ancillary to the food processing industries may
also be allotted land in the Mega Food Parks
3. Pattern of Assistance
3.1. The Scheme shall provide a capital grant at the rate of 50 % of the eligible project cost*
subject to a maximum of Rs.50 cr. per project
* The eligible project cost is defined as total project cost but excluding cost of land,
pre- operative expenses and margin money for working capital. However, interest
during construction (IDC) as part of preoperative expenses and fee to Project
management consultant (PMC) up to 2% of the approved grant would be
considered under eligible project cost
3.2. In the interest of expeditious implementation of the projects, the APFPS would engage a
Program Management Agency (PMA) to provide management, capacity building, coordination
and monitoring support. For meeting the cost of the above and also other promotional
activities by the APFPS, office expenses & travel expenses related to the scheme amounting
up to 5% of the overall grant available, will be earmarked.
3.3. The project cost for the purpose of eligibility under this Scheme would consist of the following
components:
3.3.6 Land:
i. At least 50 acres of land for the project shall be arranged by the SPV either by purchase
or on lease of at least 25 years with sublease eligibility. The registered value of such
land would be taken as part of the project cost and contribution/share of the SPV. The
Go AP grant shall not be used for procurement/purchase of land.
4. Implementation Process:
4.1.2. The Anchor Investor in the SPV holding majority stake, with or without other
promoters of the SPV, will be required to set up at least one food processing unit in
the park with an investment of not less than Rs. 10 cr. The Anchor Investor will
have at least 51% stake in such processing unit(s).
4.1.3. The Food Processing unit(s) to be set up by the Anchor Investor in the Mega Food
Park will be completed and commissioned along with the commissioning of the
Mega Food Park project by the SPV.
4.1.4. The preference for sanctioning assistance under the Scheme may be given to those
SPVs which focus on processing of wide range of perishable products
4.2.1. The main eligibility criteria of the SPVs, which shall act as Implementing Agencies
(IAs) of the project under the Scheme, are indicated below:
i. To formulate the Detailed Project Report (DPR) and execute the project in a
transparent, efficient and timely manner.
ii. To procure/purchase land and ensure external infrastructure linkages for the
project.
iii. To obtain statutory approvals/clearances including environmental clearances,
which are prerequisite for commencement and operation of the Project.
iv. To achieve financial closure and ensure completion of the project.
v. To own and maintain the common infrastructure including common facilities.
vi. To receive grant-in-aid under the Scheme, and to ensure its utilization in a
transparent and judicious manner.
vii. To maintain proper accounts of the project implementation and the
maintenance of infrastructure and common facilities after commissioning of
the project.
4.3. Program Management Agency (PMA)
4.3.1. The APFPS will appoint a Program Management Agency (PMA) to assist it in
implementation of the Scheme. The PMA will be a reputed institution with
extensive experience in project development, management, financing and
implementation of infrastructure projects.
4.4.1. In addition to the PMA, for ensuring smooth implementation of projects at ground
level, APFPS will provide a list of Project Management Consultants (PMC) with
experience in preparation of DPRs for large projects and in project implementation.
Any of these APFPS’s empanelled agencies may be engaged by the SPVs for
preparation of DPRs and for assistance in implementation and the cost of which
would be considered as one of the eligible components of the project. However,
such cost should not exceed 2% (inclusive of taxes) of the eligible grant amount of
the project. The list of agencies will be provided by APFPS.
4.4.2. In addition to assisting SPV in finalising business plan and preparing Detailed
Project Report for the project, which would meet the guidelines of the Scheme and
requirements of banks/financial institutions providing term loan for the project,
the envisaged role of PMC, inter-alia, would be as follows :
i. Detailed engineering and design including preparation of detailed cost
estimates for various project components/facilities,
ii. Assistance to SPV in preparation of a procurement policy, bid documents and
selection and appointment of contractors/equipment suppliers in a transparent
manner, for project construction and supply of plant and machinery,
iii. Monitoring and overseeing the work output of the contractors/equipment
suppliers in compliance of the terms and conditions of the
contracts/appointments with the objective of ensuring quality, completeness
and compatibility of the work carried out in relation to the Project,
iv. Assistance to SPV in preparing all necessary documentation for submission to
APFPS in order to facilitate release of funds sanctioned under Scheme
v. Assistance to SPV in submission of Monthly Progress Reports to APFPS in
prescribed format.
4.4.3. SPV would enter into an agreement with PMC as per Draft Agreement prepared by
the APFPS and any change in PMC later needs to be approved by the APFPS.
4.4.4. While PMC would be working primarily with SPV for smooth implementation of the
project, the APFPS may, if required, directly seek reports from PMC on the aspects
of project implementation.
4.5.1. In response to the notice inviting Expression of Interest (EoI) by APFPS for selection
of Projects, a proposal for the proposed Mega Food Park will be submitted by the
promoters/SPV. An illustrative list of points to be covered in the proposal along
with E o I is provided at Annexure-B. The proposal will be evaluated by the APFPS
through the PMA, as per illustrative criteria given at Annexure-C.
4.5.2. The proposal would have tentatively identified the locations of the CPC and PPCs,
availability of land, potential investors for food processing units in the park, proposed
level of investment including the estimated project cost and the proposed means of
finance, the number and type of food processing units, and requisite backward and
forward linkages. The proposals having ownership and possession of suitable land with
Change in Land Use (CLU) for the project will be given preference.
4.5.3. Suo Motu proposals will also be considered, for which a Swiss Challenge process
would be adopted for Sanction
4.6.1. The proposal received in response to the EOI proposals will be evaluated by the
Program Management Agency (PMA). The applicants will be invited to make a
presentation of their proposals before the Screening Committee (SC) to be formed
by Govt. of AP for the purpose.
4.6.2. The PMA will undertake evaluation on a scale of 100 points on the basis of EoI
proposals while the SC will provide their comments / observations on the basis of
the presentation made by the applicants. The final evaluation report along with the
comments / observations of the SC will be placed before the State Level
Empowered Committee (SLEC) for consideration of “In-Principle Approval” to the
projects. The evaluation criteria for PMA is placed at Annexure-C.
4.6.3. If the SPVs fail to submit the requisite DPRs along with other documents needed
for Final Approval, within 6 months from the date of issue of “In-Principle
Approval”, the “In-Principle Approval” will be automatically cancelled, unless
extension of time is granted by the APFPS.
4.7.1. Project will be accorded Final Approval on fulfilment of the following conditions:
5.1. Considering the complexities and challenges associated with a supply chain linked
agricultural infrastructure projects of this nature, the SPV may dovetail assistance
available under various other schemes of Central and State Governments, which would
improve the viability of the projects. While dovetailing such assistance, it will be
ensured that there is no duplication of assistance for the same component/activity of
the project.
5.2. The revision in project cost after final approval of the project shall be considered by the
SLEC.
6. Release of Funds
6.1. Once the project is accorded Final Approval by the SLEC the grant will be released by
the APFPS subject to fulfilment of conditions prescribed for each instalment as below:
6.1.1. First Instalment of 30 percent of total grant under the Scheme will be released
subject to fulfilment of following criteria:
i. Establishment of Trust and Retention Account and signing of the TRA Agreement
with any Schedule - A Commercial Bank and Regional Rural Banks (RRB). Draft TRA
Agreement, clearly giving mode of account operation and duties/responsibilities
of lending bank, SPV and PMC, would be shared by the APFPS with SPV.
ii. Representative of State Government will be appointed as a nominee on the board
of the SPV. Tenure of the nominee will be co-terminus to the operationalization of
the project.
iii. Proof of increase in authorized capital of SPV to allow stipulated equity
contribution as per approved means of finance for the project.
iv. Expenditure certificate from Chartered Accountant confirming expenditure of at
least 10 percent of the eligible project cost.
v. Award of contracts worth at least equivalent to 30 percent of total project cost
including at least 20 percent of approved components of basic enabling
infrastructure.
vi. Recommendation of PMA confirming the fulfilment of above conditions.
6.1.4. Fourth and final Instalment representing 20 percent of approved grant assistance will
be released to SPV subject to successful completion of project and commencement of
operations. The criteria for completion of project are as follows:
i. Utilization Certificate for the grant released as 3rd instalment.
ii. Proof of expenditure of 100% envisaged contribution of SPV including term
loan and equity on the approved project components.
iii. Certificate from PMC confirming completion of the project as per approval.
iv. Proof of allotment of at least 75 percent of total allotable plots and
commencement of operations in at least 25 percent of the units.
v. Completion and Commissioning of the Processing unit (s) of the Anchor
Investor in the Park.
vi. Recommendation of PMA confirming the fulfilment of above conditions.
6.2. Separate bank account as stipulated in Trust & Retention Account (TRA) Agreement
shall be kept by the SPV for the funds released by Government of Andhra Pradesh.
6.3. In the event of any SPV withdrawing from executing a project before utilizing the
Government assistance, the SPV has to immediately return the Government
assistance together with the interest accrued thereon, in accordance with
provision laid under GFR 19 as defined by Government of India.
6.4. SPV shall have to submit a Utilization Certificate (UC) for utilization of amount of
grant released by the Government as per provisions of General Financial Rules. A
format of the Utilization Certificate (UC) is given as per Annexure-E
7. Time Schedule
7.1. The time schedule for completion and operationalization of project will be 30
months from the date of issuance of final approval and 10 months for submission
st
of documents for release of 1 instalment unless extended by SLEC for the
reasons to be recorded.
7.2. The SPV shall make all possible efforts to complete the projects as per the
stipulated timelines committed to while seeking approval for the project. In case
of non-adherence to stipulated timeline, except in case of force de majeure or
reasons beyond the control of SPV, the SLEC may consider imposing appropriate
penalty in terms of reducing the grant amount, on case to case basis.
The APFPS will periodically review the progress of the projects under the Scheme. The PMA
would devise a suitable project monitoring system and shall furnish monthly reports/returns to
the APFPS on the progress of the approved projects. In so far as interpretation of any of the
provisions of these Guidelines is concerned, the decision of the SLEC shall be final.
Annexure-B
(The objective of this Checklist is to facilitate the potential promoters to submit the proposal
covering the salient features of the proposed Project, to enable the assessment of the project
against the criterion as listed in Annexure B)
1. Profiles of the Promoters who will be the key shareholders of the Proposed SPV
1.1. Names and brief profiles of the proposed promoters/shareholders of SPV along with
their contact details.
1.2. Indicate the nature and location of existing operations of the Promoters.
1.3. Audited balance sheets for last 3 years or Chartered Accountant (CA) Certificates that
would establish the net worth of each of the promoters. In case of companies, CA
certificates need to be certified by their statutory auditors.
1.4. Experience of the key promoters related to food processing industry and related
infrastructure development, particularly the relative strengths of each of the promoters
that will help in the smooth execution of MFP.
1.5. A brief note as to why the promoters are keen to undertake the Mega Food Park
project, their vision etc.
1.6. In case the SPV is already registered, the details of the SPV including shareholding
pattern.
1.7. Any other relevant information that would establish the credentials and suitability of
the promoters in the context of the Scheme.
3.1. Summary of estimated cost of each of the eligible components of the project for
funding by Government as outlined in the Scheme
3.2. Proposed means of finance to fund the project: equity, debt etc
3.3. The amount of grant support needed for the project, as per the Scheme
3.4. Tie-ups with Financial Institutions/Banks, if any, for funding of the Project
3.5. Proposed Business Plan –Estimated revenue sources and assumptions, Estimated
operating costs and assumptions, Projected profit and loss statements, balance sheets
and cash flows based on these assumptions
3.6. Key financial indicators such as IRR, DSCR based on above financial assumptions
Annexure-C
Illustrative Criterion for Assessment/ Evaluation of E o Is/ Proposals Criteria for Evaluation of
Proposals/E o Is by Programme Management Agency ( PMA)
S. Criteria Maximum
No. Score
1 Viability of the Cluster 15
1a Adequate volume of raw materials/days of operation in a year 5
1aa 200 to 250 days 2
1ab 251 to 300 days 3
1ac More than 300 days 5
1b Mix/variety of raw materials 5
1ba 5 to 10 crops 3
1bb More than 10 crops 5
1c Agreement/arrangements of raw materials 5
1ca Absence of backward linkages (strategy/proof not given) 0
1cb Proposed backward linkages (Copy of M o U/Agreements provided) 3
1cc Existing backward linkages in the proposed cluster (Copy of M o U/Agreements 5
provided)
2 Proposed Investment in Core Processing Facilities 10
2a Up to Rs. 50 Cr. 5
2b Rs. 50 Cr. to Rs. 100 Cr. 8
2c More than Rs. 100 Cr. 10
3 Possession of appropriate land 25
3a Land identified, but not acquired 0
3b Agreement to Sale/Purchase of more than 50 acres of Land 5
3c More than 50 acres of land available with one or more promoters 10
3d Allotment letter from State Govt. Agencies to the SPV or its member(s) 15
3e Complete title and possession of more than 50 acres of land in the name of SPV 20
3f Complete title and possession of more than 50 acres of land in the name of SPV 25
along with CLU
4 Investment by Anchor Investor in Food Processing Unit(s) 10
4a Up to Rs 10 cr. 0
4b Rs 15 cr. or more 5
4c Rs 20 cr. or more 10
5 Cumulative Net Worth of Promoters/Shareholder of the SPV 20
5a Rs. 50 Cr to Rs. 100 Cr 5
5b Rs. 101 to 150 Cr 10
5c Rs. 151 to 200 Cr 15
5d More than Rs. 200 Cr 20
6 Focus on perishables in Core Processing facilities at CPC and PPCs 10
6a Less than 30 percent of total investment in Core Processing facilities 0
6b 30 to 50 percent of total investment in Core Processing facilities 5
6c 50 percent or more of total investment in Core Processing facilities 10
7 Investment in PPCs as percentage of total eligible Project cost 10
7a Less than 10 percent 0
7b 10 percent and more 5
7c 20 percent and more 10
Total Points 100