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Project Profile on Mott MacDonald

Vegetable Pack house iNDEXTb

Sector Agro and Food Processing


Sub - sector Agri Infrastructure
Profile No. AF-30
Project Title Vegetable Pack house

Project Description
The project proposal is for setting up of vegetable pack house, at important crop pockets in order to
provide basic Agri infrastructure facilities for maintaining consistent quality of fresh vegetables to be
supplied for export, while also providing technical support facilities for pre and post harvest
procedures at one point to the vegetable growers.

The project envisages vegetable procurement directly from the farmers, while facilitating vegetable
sorting, grading, cleaning, pre-cooling, cold storage (controlled atmosphere) and transportation
system to reach out to the domestic and export market.

Project Concept
The proposed Vegetable Pack house project is an important link in the complete supply chain
management for fresh horticulture produce and provides necessary support for the development of
vegetable market for domestic and global demand. The project will provide required impetus in the
form of physical infrastructure and technological inputs, to the Vegetable growers and exporters,
which in turn will develop vegetable exports from the region.

Market and Growth Drivers


Market
The share of top 20 vegetable producing countries in the world for the year 2005 is shown graphically
in the chart below. China dominates the world in vegetable production with 63%, followed by India
(16%). This concentration of vegetable production has intensified over a period of time and is showing
a different regional distribution.

 India’s horticulture production in the Top 20 vegetable producer in the w orld - 2005
China
year 2004-2005 was around 164 million 63%
tons with 17.8 million hectares of area
under cultivation. It is estimated that
Others
horticulture production was set to 14%
increase to 178.1 million tons in 2005- Japan India
2006 with acreage of 18.6 million 1% 16%
Russian
Viet Nam
hectares under cultivation. Federation
Philippines 3%
1%
 The technological changes in the post Source: FAO Statistics
2%

harvest storage and transportation facilities particularly with the availability of cool chain
domestically and globally in the developed countries, boosted growth in the global vegetable trade

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Project Profile on Mott MacDonald
Vegetable Pack house iNDEXTb

in the last few years. The global vegetable trade which was estimated at US $ 36 billion is
expected to grow to US $ 50 billion by the year 2010.

Area and Production for Vegetables at prime locations in Gujarat

Year & Locations for 2002-2003 2003-2004 2004-2005


setting up the pack house
Area* Prodn.** Area* Prodn.** Area* Prodn.**
a) Sabarkantha-Prantij
Covering Sabarkantha,
43216 313472 46718 5100537 44324 627296
Mehsana, Banaskantha &
Gandhinagar
b) Anand-covering Kheda,
40429 549454 48533 507235.5 45689 494591
Anand, Ahmedabad districts
c) Surat- Covering Surat,
32539 339935 41143 392486 37091 383032
Valsad, Navsari districts
Source: MM Analysis of Gujarat State Horticulture Statistics, NB * = Area in Hectares, ** = Production in Metric Tons for
the years 2002-03, 2003-04, and 2004-05.

Growth Drivers

 India is world’s second largest producer of horticulture products after China.

 India exports a mere percentile of the total fresh vegetable production and thus, there is a
vast potential for increasing this quantity, provided a Vegetable pack house system comes up.

 Indian Vegetable production has increased substantially in last few years, due to increased
adoption of tissue culture plants which give higher yield, consistent quality and production for
longer part of the year.

 There is a huge potential for export to EU countries, CIS countries. India already exports
Vegetables to Germany, France, U.K., but still needs to go a long way to meet strict quality
standards.

Why Gujarat?
 The average horticulture production in the state was around 63.08 Lac MT, cultivated under
380184 Hectares of area.
 Gujarat has availability of technically trained man power for pack house operation at
economical cost.
 Gujarat has well developed transport infrastructure facilities like rail & road network and
availability of world class ports like Kandla, Mundra and Pipavav having required container
cargo handling facilities.

Raw Material
Vegetables are the basic raw material for a pack house to function. The following table summarizes
vegetable production in the suggested locations of Gujarat.

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Vegetable Pack house iNDEXTb

Vegetables Production at the selected locations

Year
Sr.
Location
No
2001-02 2002-03 2003-04 2004-05 2005-06

Sabarkantha (A) 6700 10905 12316 12594 15930


1
(P) 14343 162057 218707 293782 349170

Mehsana (A) 10679 11493 13538 13157 17053


(P) 112478 170601 150145 175465 226685

Banaskantha (A) 31149 35496 30025 40868 42580


(P) 490363 544775 614630 794376 918987

Gandhinagar (A) 15341 10854 11573 11435 14570


(P) 198150 102667 122377 172175 265543

Anand (A) 19006 18014 23990 19040 17476


2
(P) 225216 200014 251377.5 211014 315871

Kheda (A) 21713 21667 23440 25000 22955


(P) 520700 405370 327169 374080 399554

Ahmedabad (A) 10857 11151 11070 11012 9630


(P) 128865 140321 138054 134570 111051.58

Surat (A) 18280 19643 26670 21440 21453


3
(P) 216132 257735 254056 225694 276665.4

Valsad (A) 3081 6083 5593 5190 5890


(P) 29724 38696 53290 53341 94400

Navsari (A) 6305 7505 8880 10766 9500


(P) 55495 63597 85140 109592 125495

Source: Directorate of Agriculture, Gujarat. (A) stands for Area in Hectares, (P) stands for Production in MT. Letters in bold are
the suggested hub for Pack house.

Technology / Process
As core infrastructure, the project will require Vegetable procurement system from farms, Vegetable
cleaning, sorting, grading and packing line, Vegetable pre-cooling, Controlled atmosphere cold
storage and Logistic system to carry Vegetables to ports.
In case the operational area of the proposed pack house is having more than 40 km periphery, then it
is suggested to have mobile pre-coolers to get pre-cooled Green Vegetables, to eliminate any
damage to this sensitive crop from farm heat, before it is brought to pack house, particularly in
adverse climatic conditions.
In Gujarat, horticulture department as well as the state agriculture universities would provide
necessary extension services and technological inputs to the farmers or their growers’ co-operatives,
for getting quality Vegetable crop from the region.

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Vegetable Pack house iNDEXTb

Harvesting

Grading /Sorting

Washing

Pre-cooling

Cold Storage

Cool Transporting

Suggested Project Capacity and Project Cost


The proposed Vegetable pack-house would have capacity of handling and storing 500 MT of
Vegetable at any point of time. It would be equipped with a pre-cooling chamber to cater to the need
of domestic market. The proposed pack-house would store Vegetables for the duration of 1-2 months.
The indicative project cost would be INR. 50 million (US $ 1.11 million)
Estimated Project cost & Means of finance
Sr. No. Cost of project INR in million
1 Land and Land development 1.50
2 Building & Civil works 5.25
3 Plant & Machinery 22.00
4 Misc. Fixed Assets 2.50
5 Preliminary & Pre-operative 2.70
6 Provision for contingencies 2.61
Total Fixed Assets 36.56
7 Margin Money for working capital 13.44
Estimated Block Capital Cost of Project 50.00
Means of Finance
8 Promoters contribution 16.70
9 Term loan 33.30
Total Means of Finance 50.00

As indicated above, the proposed project will require an approx 6000 sq. mt of land with a proposed
built up area of 1500 sq. mt. The unit is proposed to have an installed capacity of 500 MTPA. The total
fixed cost of the project is estimated at INR 36.56 million and INR 13.44 million is the working capital
margin which adds upto total capital cost of INR 50 million. The unit being proposed to cater to
domestic as well as to International demand and hence it is suggested to have a Debt equity ratio of
2:1. Thus, the estimated term loan amounts to INR 33.30 million and Equity at INR 16.70 million.

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Vegetable Pack house iNDEXTb

Suggested Location
Vegetable pack-house could be set up at various places in North, Central and South Gujarat Regions
in the districts of Sabarkantha, Mehsana, Banaskantha and part of Ahmedabad, Kheda, Anand,
Surat, Navsari and Valsad.

Project Time Line


The proposed project will have project timeline of 6 to 8 months for obtaining various clearances from
concerned authorities and the project implementation period will be approx. 12 to 14 months.

Financial Indicators
Based on the profitability projections worked out for the proposed project, key financial indicators are
as summarized below:

Key Financial Indicators


st nd rd
Sr. No Financial Ratios 1 Year 2 Year 3 Year
A Break-Even Point in % capacity 32.20 30.11 28.09

B Debt-service Coverage Ratio 1.54 1.95 2.74

C Average DSCR 2.08

D Return on Investment (ROI) 29.69 % 32.51% 39.09 %

E IRR for a 10 Years Project Period 44%


As perceived from the Project cost and Means of finance table, the suggested Debt Equity Ratio for
the proposed project is 2:1. The IRR (Internal Rate of Return) for the proposed project is approx. 44%
projected for a period of 10 years.

Clearances Required
Filling of Industrial Entrepreneur’s Memorandum (IEM) with the Secretariat of Industrial Approvals
(SIA), Department of Industrial Development, Ministry of Industry, New Delhi
Registration with Ministry of Food Processing Industries (MOFPI), through state nodal agency GAIC,
to avail benefits of scheme for food processing industry - under Agri Infrastructure Project category

Approach state office of National Horticulture Board for availing incentives under the scheme for
Vegetable Pack house and other post harvest infrastructure facilities including cold chain
transportation.

Agencies to be Contacted
Industrial Extension Bureau, Gandhinagar
Mott MacDonald Pvt.Ltd, Ahmedabad
Gujarat Agro Industries Corporation Ltd. Ahmedabad

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