The Department of Industry Policy and Promotion (DIPP) has stipulated that special purpose vehicles (SPVs) must be created for the implementation of the proposed mega leather cluster (MLC) projects.
The SPV has to be formed by group of at least seven `legally independent companies’ that are engaged in leather tanning, manufacturing of leather goods and components and other activities associated with leather industry and who intend to set-up production units in the proposed MLC.
Any other structure of SPV would require approval of Empowered Committee. Majority of the equity shall be held by the Leather & Leather Goods Manufacturers.
The net worth of each of the entrepreneur or independent unit has to be at least Rs 1 crore and the combined net worth of the seven promoters should be at least Rs 10 crore. The share of any individual/group of entities should not exceed 25%.
The SPVs will prepare Detailed Project Reports (DPR) covering technical, financial, institutional and implementation aspects, based on diagnostic studies carried out by them. It will have to mobilize funds and bank loans, procure land, allocate sites or work-shed, obtain all necessary clearances, including environmental clearances and quality standards and maintain the utilities and infrastructure created for the MLC.
The SPV for each cluster will sign an MOU with Government of India and the State Government concerned. The SPV shall be responsible for coordinating the implementation of each of the components of the project. Allocation or site or sheds has to be according to DIPP norms.