Financing For Potato Grower under Agreement with Pepsi Cola International under Kissan Dost Agriculture Finance Scheme

M/S Pepsi Cola Intl. is a beverage company, which is currently serving 15 brands in Pakistan . Recently Pepsi Cola Intl has introduced a new brand of snacks/chips with a brand name of “Lays”, which at present is being imported from Saudi Arabia . Now the company has decided to produce this product in Pakistan for which they have decided to purchase potatoes directly from local potato growers. The company will sign a buy back agreement with the growers. In order to facilitate these potato growers having a buy back agreement or a guarantee from Pepsi Cola Intl. the Bank has rolled out the following scheme with detailed terms & conditions.    

Purpose:       

Provision of financial facility to potato growers for purchase of inputs (Seed, fertilizers, pesticides,

fungicides etc having a buy back agreement with Pepsi Cola. Int. OR under guarantee of Pepsi

Cola. Intl.

Eligibility:     

Resident/Self cultivator of potatoes. The applicant should not be a defaulter of any other Bank and

the land under cultivation should be free from any encumbrance. He should be having a buy back

agreement with Pepsi Cola Intl. or a guarantee from Pepsi Cola Intl.

Amount:      

As recommended by Pepsi Co Int.

Security:       

1. Hypothecation of stock (Inputs/Crop). OR

             Charge on Agriculture Land through Agri. Pass Book.

OR

          Registered / Equitable mortgage of urban property assessed by PBA’s approved surveyor

              and cleared by Bank’s legal counsel.

OR

          Liquid security in the shape Bank’s Fixed Deposited Receipts/DSC/NSC or Regular  

          Inome Certificates.                                                                                       

2. One personal guarantee of a reputable person. In case of hypothecation of stock as the only collateral, the guarantor should be having assets double the amount of finance. Two written satisfactory market checking reports.
3. Irrevocable undertaking from the borrower to Pepsi Co Int. that all payments to be made to him by Pepsi Cola Intl. shall be routed through a designated account in BOP.
4. Letter of confirmation in favor of the Bank of Punjab from Pepsi Co Int. that they will route all payments due towards the borrower through his designated account in BOP.
5. In case of hypothecation of stocks only, the agri land on which potato crop has been cultivated should remain unencumbered during the tenure of facility, because the crop has been hypothecated with the bank. 
6. Assignment of receivables with right to set off.

Margin on Collateral Security:

            50% Margin on Agri land or urban property assessed by PBA approved surveyors.

            25% margin on liquid security or Agri land as per value in revenue record.

            25% margin on hypothecated stock.

Insurance:

Crop Insurance and Life assurance of the Borrower/Farmer under Bank’s Charge.

Mark-up:      

Average Six month KIBOR + 350 bps with the floor of 9% per annum. (Mark up will be recovered

on quarterly or on half yearly basis).

Disbursement:

Disbursement would be made to Pepsi Cola Intl. against the inputs purchased by the borrower from the company. The borrower shall submit bill/invoice issued by Pepsi Cola Intl. and the Bank shall pay 75% of the amount of invoice/bill through the finance account, rest of the 25% of invoice/bill shall be paid by the borrower.    

Validity:

            07 months from the date of disbursement.

Repayment: