INF RESEARCH

Cold Storage Chains in India: Business Outlook

Scope of Research
The report is a precise demand supply outlook prepared
through collection of secondary data. The data provided Key Target Audience of the report:
remains to be genuine as it has been collected from authentic
• Cold storage service providers
sources.
• Logistics service providers
How can the study be useful?
• Associate bodies related to cold chain storage and
The study can be useful in terms of understanding the logistics
investment opportunities in the given market segment. At • Market research and consulting firms
the same time, the report gives an insight on the market
dynamics of the industry in the last few years. • Small term investors

1.1 Cold Storage Chain in India: An Overview

The industry related to cold storage facilities (also known as

warehousing) in India have a huge demand potential as on
2021.The entire market of cold storages in India was
estimated to be INR 1425.49 Billion in 2020. Research
reports taken from IMARC group reveal that, the market was
expected to be having a compound annual growth rate of
14.6% during the period of 2021 -26. Growth of cold
storages had been quite significant undoubtedly, in relation
to the expansion of the frozen food market. Cold storage
remains to be a significant part of the pyramid with respect to
horticultural value chain post- harvest.

In relation to the above, data collected from authentic sources

reveal that:
Source: “India Frozen Food Market Size Increase between 2019 – 27 with a
• There are about 7645 number of cold storages across CAGR of 5.1% (Projected)
the country of which 68% of the capacity utilization
happens in potato storage.
• 30% of the total capacity is utilized as multi – storage • Export quality products are stored in cold storage
facilities. facilities for a longer time. Occupancy of products being
• Uttar Pradesh and West Bengal constitute almost 55 – stored vary as per agricultural productivity and seasonal
60% of the domestic cold storage capacity. demands.
• Multi storage facilities are mostly used for storing • India has a high production for tomatoes and potatoes.
fresh meat, poultry products, seafood etc. Besides cold Hence such commodities occupy bulk of cold storage
storages are utilized for storage of fruits and facilities.
vegetables, pharmaceuticals, dairy products etc.
• EXIM-focused commodities occupied 65-70% of cold
storage across the country.

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1.2 Market Size of the Cold Chain Industry: A brief Outlook

As per data available consultants opine that:

• The entire market of cold storage facilities is
broadly segmented into two segments:
Ø temperature-controlled storage and
Ø temperature-controlled transportation.
• Temperature controlled storage market has a
huge demand and an improved market share
• About 80% of the entire market is
unorganized. The market is getting organized
at a fast pace.
• Demand for warehousing is to increase
largely in future considering domestic
demand.
• Some of the major competitors in the market
include Snowman Logistics Ltd., Container Refrigerated Warehousing Capacity Variation as compiled by the Consultants’
Corporation of India Ltd. (CONCOR), Coldex
Logistics Pvt. Ltd., GatiKausar Ltd., DHL International
GmbH, ColdStar Logistics Pvt. Ltd., M. J. Logistics
Services Ltd., Gubba Cold Storage Ltd., Kelvin Cold Indian Cold Chain Market: Major Market Drivers
Chain Logistics Pvt. Ltd. and RK Foodland Pvt. Ltd.
Ø Growth in Organized Food Retail
Ø Growth in the Processed Food Sector
Ø Shift in consumer behavior
Ø Increasing Demand from the Healthcare Sector post
Covid – 19 outbreak
1.3 Cold Storage Facilities Distributed Across States: Ø Growth of the Fast paced Restaurants
Precise Demand Supply Outlook Ø Growth in the Exports Industry

From the available data, the consultants’ opine that:

• The market for the cold storage chains is distributed
state wise as mentioned above. Gujarat and UP
contribute significantly towards the supply of domestic
cold storage requirements.
• Opportunities for storing vegetables and related
products exist in various product segments which
include fruits and dairy products coupled with various
healthcare products as well.
• Demand for investments in the domestic cold storage
facilities include private investments, investment from
co-operative bodies, as well as the public sector.
• Consultants’ opine that, there in an increase in Source: Jha Dilip Kumar, “Cold storages: Nearly 50-fold rise in
projects approved by govt incentives”, https://www.business-
demand for cold storage facilities from Tier II cities standard.com/article/markets/cold-storages-nearly-50-fold-rise-in-
such as Coimbatore, Guwahati, Lucknow, Jaipur and projects-approved-by-govt-incentives-118031300784_1.html, March
Ludhiana. 14th 2018
• Such markets explore a partnership approach between • Implementation of GST had facilitated the demand for
small term investors and developers in order to invest. technologically advanced warehouses across the domestic
market.
• Off late, the segment is attracting private equity

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1.4 Cold Storage Infrastructure Distribution: Major

States
Data available from various sources, confirm that, there
remains to be a huge demand for storing vegetables and • Gujarat holds a capacity of 6403 lakh tonne per
related items in India, keeping in view, the demand horticulture produce.
supply outlook. From the available data the consultants’
• Punjab, Telangana, Uttar Pradesh, Rajasthan,
opine that
Haryana and Odisha are the states where the cold
• However, despite the past growth, number of storage capacity is at least more than 1 lakh tonne
cold storages in India is still inadequate as per horticulture produce of the state.
compared to the, requirement.
• There remains to be a huge demand of cold storage
• By the beginning of the year 2020, as per facilities in states like Maharashtra, Karnataka,
estimates given by National Centre for Cold Bihar, Chhattisgarh and West Bengal despite having
Chain Development (NCCD), there is a shortfall a huge existing capacity already.
of 126 lakh tons of cold storage capacity across
• Between the year, 2019 – 25, there is a probability
India.
that, Rs 21,000 crores can be invested in the storage
• More than 18% of the agricultural output which facilities related to fruits and vegetables.
include fruits and vegetables, require to be
• Opportunities for additional investments remain to
stored for 6 months approximately, in order to be
consumed. be there, especially in up-gradation of existing cold
storage infrastructure.
• Rising production of farm fresh products, have
• Majority of the consultants’ agree to the fact that,
fuelled the demand of cold storage chains in
technology related to storage of food item, is yet
India.
another aspect, which requires huge investments.
• Increasing agricultural production, had inflated
the demand of cold storage chains in India, Lack
of cold storage facilities have become a major
bottleneck in storage of agricultural production
in the long run.
• Most of the cold storage facilities in India, are
available for a single commodity of storage. This
results in poor capacity utilization at the end of
the day.
• Currently, there are about 7645 cold storages in
the country. 68% of the total available capacity
are currently being used for potato storage while
38% happens to be utilized for multi commodity
Source: Godamwale “Starting a Cold Chain logistics - An
cold storage. Alternative approach”, https://medium.com/@Godamwale_/is-
• Overall, the demand for cold storages in India is starting-a-cold-storage-business-in-india-profitable-12a489301baa,
March 10th 2020 (Compiled by the Consultants’)
quite skewed as had been revealed by experts.
• Gujarat remains to be a huge market, and
constitutes about 15% of the total demand of
cold storage chains in India during the year
2019.

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1.5 Investment Perspectives in a Cold Storage Facility: A guide for small term investors
Investments are subject to market risks as the entire segment of cold storage facility is quite unorganized till date.
However, investments include
• Land acquisition,
• Construction of Buildings
• obtaining permissions and licensing,
• arranging utilities like water, electricity, etc.
• Procurement of machinery and technology

Working capital Expenses

Working Capital Expenses include:

ü staffing,
ü utility bill payment, and
ü promotional expenses.

Please note that assumptions made have been generic, and Source: “Emerging Asset
costs might vary depending on a number of factors such as Class”,https://indianinfrastructure.com/2020/07/09/emerging-asset-
location of site, availability and demand of the materials etc class-2, July 2020

Loans & Financials

The Ministry of Food Processing Industries (MOFPI), can offer financial assistance. Grant in aids are given by the state
government in regions like J & K. Investors are suggested to take 80% of loans from nationalized bank. A rented site shall ensure
getting 90% of bank loan which remains to be the total rental cost of the cold storage.

Government Schemes that investors can avail:

• Pradhan Mantri Kisan Sampada Yojana (PMKSY) can be availed in order to improve the cold storage chain infrastructure.
• During the FY 2016 – 19, 461 cold storages had been sanctioned with a total capacity of 1,948 thousand MT. This was done
under the scheme for Integrated Cold Chain & Value Addition Infrastructure. By October 2019, another 313 cold chain
projects had been sanctioned by MFPI.
• The state governments had taken several initiatives in order to promote such projects.

Types of Company Structures to avail loans

ü Partnership / Proprietorship Firms,

ü Companies
ü Corporations,
ü Cooperatives,
ü Self Help Groups (SHGs)
ü Farmer Producer Organizations (FPOs), NGOs,

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Tips for Investors
ü Investments should be done after a proper site scanning. Cold storage sites should be well connected through rail road and
waterways.
ü Land should be converted to non-agricultural land
ü Load bearing capacities of the soil to be tested
ü Permission from the local authorities should be taken
ü Product and market capacity should be judged before undertaking the investment
ü The site requires soft water
ü Provisions should be taken for standby equipment
ü Well maintained provisions are to be made for fire safety

1.6 Investment Patterns in the cold storage market:

Source: “Emerging Asset Class”, https://indianinfrastructure.com/2020/07/09/emerging-asset-class-

2, July 2020

• Crisil Research has estimated that, an approximate investment amount of Rs 16,000-21,000 crore is being lined up in the cold
storage sector between 2019 and 2023.
• Data available from Crisil reveal that, huge investments were expected from the private players in relation to the cold storage
supply chains. With the Government subsidies available in the segments, low amount of bank loans can be applied by the
small operators to invest.
• Research data from Crisil reveal that, a multi-commodity cold storage remains to be high in terms of the demand.
• An approximate amount of Rs 20 crores could be estimated in order to build up a cold storage facility in India.
• The pay-back period for such a project remains to be 6 – 7 years approximately.
• During the year 2019, cold storage capacity in India was estimated to be 37 – 39 million tonnes approximately.
• During the year 2019, there were 7645 cold storage infrastructures in the country. 68% of the total capacity was being used
towards potato storage while 32% of the storage facilities remained to be multi-functional storage.
• Uttar Pradesh and West Bengal constituted to almost 55 – 60% of the overall potato storage facilities.
• The entire industry is facing financial difficulties post the outbreak of Covid – 19.

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THANK YOU!

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Research Team
INF Consulting Services Private Limited
E-Mail: [email protected]
Ph: 91-040-48527746
M: 91-70327 53717
https://www.infconsulting.in

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