With food processing sector emerging as the fastest-growing sub-sector of the manufacturing during last few financial years, setting up of food processing units have been promoted in Mega Food Parks with basic infrastructure facilities like warehouses, storage facilities, testing labs and fruit-ripening chambers. And with clear signs showing food processing industry’s consistent growth rate faster than the agricultural sector, the Indian government has recognised the need to boost a sector which is consistently adding value to the agriculture sector.
The Ministry of Food Processing Industry had announced a while back about the fact that mega food parks coming up at different places in the country would be under an ‘open ended’ scheme of the centre and hence no ceiling on their number was fixed. To keep up with the plan, the centre has cleared 30 mega food parks, 17 of which are in-principle approval. Though the biggest hurdles had been land acquisition, the private public partnership has helped in sorting things out. The main features of the scheme are cluster based and demand driven approaches. Availability of approximately 50 -100 acres of land and adequate quantity of raw materials are basic criteria for the selection of location for setting up of such parks. The parks are aimed at providing direct linkages from the farm to processing and further to the consumer markets through a network of collection centres and primary processing centres. Through backward linkages, Special Purpose Vehicle (SPV) of the Mega Food Park enters into an arrangement with farmers groups in the catchment area for production of desired variety and quantity of farm produce to ensure regular supply of raw material to the Mega Food Park. The farmers are assured of the market for their farm produce and get remunerative prices thereby increasing their income considerably. They would provide state-of-the-art infrastructure for food processing and sustainable supply chain solution for reducing waste and ensuring value addition, especially in perishables like fruits and vegetables. The ministry has constituted District Coordination Committees under the chairmanship of concerned district collectors for coordinating various activities of these parks.
Dankuni Food Park and the role of Kaventer, West Bengal is all set to start one of the biggest foreign direct investments (FDI) in food processing sector in India, which could also be the biggest project signed during chief minister Mamata Banerjee’s first trip to foreign soil. One of the largest private equity (PE) firms which has large exposure in social infrastructure and agriculture will invest a large amount in the proposed Dankuni food park promoted by the Keventer group.
The Keventer group is an 18-billion agro and food processing company from West Bengal with three seperate business verticals, namely Keventers Agro, Keventer’s Fresh & Keventer’s Projects with almost 40 brands under its name. In Bengal, the group had aready tied up with Carso, a France based global food testing laboratory. The INR 250 million investment in the state will be used for setting up a testing laboratory. Looking at the potential, the group chalked an expansion plan on realizing the opportunities that were presented by the government and the global markets to make India a global food destination. On an average Keventers has been exporting goods worth over USD 300 million, of which 50 per cent goes to the European Union (EU).
Keventer Projects Limited was introduced as anchor promoter for the Dankuni Food Park in 2005. The area of the food park is located on NH-2 (Delhi Road) linking many cities in Eastern India, Delhi on one side and Mumbai in the southwestern state of Maharashtra on the other side. There are three railway stations on three sides and the Bally Canal flows right next to site on the southern side, linking it to River Ganges. The Food Park is strategically located, just 25 kilometres away from the Kolkata airport and 20 kilometres away from Kolkata port. It has a catchment that is ideal for cultivation of potato, rice, vegetables, fruits, oliseeds, pulses and coconut along with a good yield from aqua-cultural farms within 50 kilometre radius. For this first FDI in foods sector in Bengal, a memorandum of understanding (MoU) between the giant PE firm and Keventer group was signed with complete support from the state government. A source close to the development said Keventer is roping in Surbana, one of the biggest urban development planning bodies in Asia, for the planning and implementation of the proposed food park. Keventer officials admitted that the PE fund has investors from 10 countries, including Singapore. The Kolkata based group has lined up INR 10 billion investment in the food park and the global PE giant is likely to pick up between 30-49 per cent stake in the project through this investment. This is being looked upon as the the biggest FDI in food processing in India so far, with Keventer developing the food park on 305 acres in the first phase and 225 acres in the second. Many large brands such as FMCG-to-hotel-to-tobacco conglomerate ITC are planning to invest as much as INR 10 billion in the same sector in Bengal.
After the initial investment of INR 7 billion for infrastructural development, the company expects to bring in investments of about INR 25-26 billion. A lot of food companies from all over the world are looking to set up a base here. Instead of going individually, and getting their clearances, Keventer is approaching them together to bring them all at one place and have already secured a number of expressions of interest. Keventers is expecting about 70 to 80 more companies to set up their fully functional units at the park, with the state government also exploring the possibility of picking up a stake in the project through the West Bengal Industrial Development Corporation (WBIDC). According to sources, WBIDC could look to pick up an 11 per cent stake in the project that spans over 500 acres. Keventer is also developing similar parks in Bihar and Orissa. In Bihar, the company is developing the park along with the Future group. Meanwhile, the company started the Edward Food Research and Analysis Centre (EFRAC) and the INR 650 million manufacturing unit of ITC’s Sunfeast Yipee noodles at its Barasat complex over the years. The ITC unit has a capacity of 50 tonnes per day and they have already shown interest in setting up another line with an additional INR 600-650 million over the next three to four years to develop EFRAC into a technical institute.