We are looking to expand and diversify our business to increase the range of goods that can be stored in our facilities. Investment required - USD 1,500,000.
We are a 12 years old company in the operating in cold chain sector in India. We already have a 12000 MT capacity to store agricultural products requiring a temperature of 40-45 degrees F. We now want to serve companies looking to store goods at -20 degrees.
India is primarily an agricultural economy, and even today, the agricultural sector employs 60% of India’s working population and accounts for 20% of its GDP. As a result from the government’s efforts, today India is ranked as one of the leading producers of primary products in the world. The achievement becomes all the more impressive when one considers the fact that at the time of its independence, India was a major importer of food grains.
However, despite these achievements, numerous sources of disappointment remain. In a recently published report, it was highlighted that India wastes about $12 billion worth of agricultural produce annually, owing to lack of proper post-harvest handling, cold chains and storage facilities. About 40% of India’s total food production is wasted as a result of this infrastructural lacuna. Nearly 7% of grain and over 30% of fruit and vegetables is estimated to go waste each year without post-harvest facilities. In a country where hunger remains to be a pressing concern for a significant proportion of the population, this is unpardonable and must be corrected immediately.
Although, India is a leading producer of most of the primary products, it still accounts for a miniscule percentage of global food trade. This again is attributable to the widespread wastage of the farm produce. Also, an astonishingly low 2% of fruit and vegetable production is processed annually in India, compared with 30% in Thailand, 70% in Brazil, 78% in the Philippines and 80% in Malaysia and a much higher figure in the developed world.
It has been recently estimated that India has 60 million tonnes of agricultural storage capacity. This stands in stark contrast to China, which is believed to have an installed capacity of more than 150 million tonnes. The agricultural ministry puts the immediate need for additional storage capacity at 14 million tonnes. The requirement for the primary sector as a whole obviously stands at much more. Moreover, whatever limited capacity is already available is mainly concentrated in unorganized sector with obsolete technology and provision to store single commodity.
All these factors collectively reveal an immense scope for development and investment opportunities in this sector.
The Indian government on its part has taken several steps to promote the cold chain infrastructure setup in the country and provides for a capital subsidy of upto 40% for the same.
There is a huge demand for deep freezers these days from companies like Mother Dairy, Amul, Vadilal, etc. owing to rising standards of living and the concomitant increase in the consumption of lifestyle products and the rent income could be quite substantial.
We already have land in NCR region for the proposed facility.
The following are the expected milestones in project implementation:
• Civil construction (RCC/PUF panels) ( 6 months)
• Insulation of the building ( 1-2 months)
• Installation of machinery ( 1-2 months)
Investment required: USD 1,500,000
Retained Earnings: USD 200,000
This presents an opportunity to the investor(s) to become a part of the cold chain/infrastructure story in India in partnership with an established player in the sector with the drive and enthusiasm to set-up a pan-India network. The fact that the government is firmly behind the cold chain/logistics industry is an added bonus. The project, once setup, involves dealing with reputed and organised companies instead of small and informal companies that have to be dealt with in most other industries. Since the model is based on rent income, it requires minimal shareholder involvement in the later stages.