PROJECT PROFILE ON MODERN COLD STORAGE Prepared by: Kerala State Industrial Development Corporation
PROJECT PROFILE FOR MODERN COLD STORAGE INTRODUCTION Cold Storage is a special kind of room, the temperature of which is kept very low with the help of machines and precision instruments. India is having a unique geographical position and a wide range of soil, thus producing variety of fruits and vegetables like apples, grapes, oranges, potatoes, chillies, ginger, etc. Marine products are also being produced in large quantities due to large coastal areas. As per 2008-09 figures, India produces around 215 Million Tons of Fruits and Vegetables, 3 Billion Tons of Marine Products, 109 Million Tons of Milk, 56 Billion Eggs and 38 Million Tons of Meat per annum. Kerala accounts for around 20% of the marine production from the country, though the state s share in the production of Fruits & Vegetables, Milk, Egg & Meat taken together is less than 10%. Keeping in view the growth rate of population and demand, the production of perishable commodities is increasing every year. The cold storage facilities are the prime infrastructural component for such perishable commodities. Besides the role of stabilizing market prices and evenly distributing both on demand basis and time basis, the cold storage industry renders other advantages and benefits to both the farmers and the consumers. Commercially apples, potatoes, oranges, etc are stored on large scale in the cold storages. Other important costly raw materials like dry fruits, chemicals, essences and processed foods like fruit juice/pulp, concentrate dairy products, frozen meat, fish and eggs are also stored in cold storages to regulate marketing channels of these products. COLD STORAGE REQUIREMENTS IN KERALA Kerala is a consumer state as it imports most of the fruits and vegetables from the neighbouring states. The annual growth rate in the area of food grain is negative in the state. Since there is no cultivation of generally cold stored items like apple, potato, oranges, chilly, tamarind etc, in the state, the growth of cold storages for horticultural items is very slow. As on 31.12.2009, there were 193 cold storages in the State having a total storage capacity of 58105 Tons. Of these, 176 cold storages were in the private sector, 11 in the Public sector and 6 in the cooperative sector. During the same period, the total number of cold storages in the country was 5381, having a total storage capacity of 24.45 Million Tons. Thus Kerala accounted for only 3.5% of the cold storage units in the country, with the storage contribution being a meager 0.24%. Almost 95% of the cold storages in the state are for the storage of marine products and for the captive use of exporters. There are very few cold storages for horticultural commodities
and the development of such cold storages in the state is slow. Even though there is not much production, considering the huge arrivals of fruits and vegetables in the markets across the state, there is a need to construct cold storages in all major cities of the state to take care of the demand, fluctuation in price, spoilage etc. MARKET POTENTIAL Cold storages are essential for extending the shelf life, period of marketing, avoiding glut, reducing transport bottlenecks during peak period of production and maintenance of quality of produce. According to a rough estimate, 25% of fruits and vegetables worth crores of rupees are spoiled every year for want of adequate post harvest technologies including cold storages. It is therefore necessary that cold storages are to be constructed in major producing as well as consuming centers. The development of cold storage industry has therefore an important role to play in reducing the wastages of the perishable commodities and thus providing remunerative prices to the growers. STORAGE CONDITIONS Living food items such as fruits and vegetables have some natural protection against the activities of micro organism. The best method of preserving these items is to keep the product alive and at the same time retard the natural enzyme activity which will retard the rate of ripening or maturity. Preservation of non-living foods like meat, fish etc is more difficult since they are susceptible to spoilage. The problem is to preserve dead tissues from decay and putrefaction. Long term storage of meat and fish product can only be achieved by freezing and then by storing it at temperature below -15 C. PROJECT PARAMETERS Capacity The storage capacity envisaged for a multi-purpose medium capacity Cold Storage plant is 5000 MT. A multi-purpose Cold Storage is used in the storage and preservation of all kinds of vegetables, fruits, dry fruits, fruit pulp, spices, food grains, frozen items, dairy products, jaggery, ice creams, etc. Plant operation will be on an average of 10 hours/day. Land An extent of around 1 acre of dry land is required for setting up a multi-purpose Modern Cold Storage.
Location The project is proposed to be located at Thrissur District. Raw Material & Utilities The Raw materials for the Cold Storage Plant are Water and chemicals like Ammonia, Salt, etc. Approximate water requirement is around 1 MLD. Plant & Machinery The machinery/ equipments required for a Cold Storage Plant is as follows: Sl. No. Particulars Qty. 1 Super freeze refrigeration compressor 1 No. 2 100 HP screen protected Induction Motor 1 No. 3 Hand operated oil immersed starter 1 No. 4 Ammonia Oil Separator 1 No. 5 Atmospheric Type Ammonia Condenser 12 Nos. 6 Ammonia Air Cooling units 16 Nos. 7 Valves & fittings for Condenser 1 lot 8 Ammonia Receiver 1 No. 9 Valves & fittings for Receiver 1 lot 10 Instrument with Dry & Wet Thermometers 6 Nos. 11 5HP Monoblock centrifugal pump 2 Nos. 12 Ammonia valves & fittings 1 lot 13 Insulated cold storage door & fittings 4 Nos. 14 Slide rail for compressor 2 Nos. 15 Ammonia interconnecting pipe 1 lot 16 Water pipelines & fittings 1 lot 17 Material Handling equipments (Forklifts, High lifts, Stackers, Towing tractor, etc) 2 each The total cost of machinery and equipments for a 5000 MT modern Cold Storage would be around Rs.150 Lakhs. Technology support and details of machinery manufacturers are available from institutions like NABARD. The total volume of the storage chamber would be 12,000 m 3 with dimensions of 40m x 30m x 10m. Manpower The total manpower requirement for a 5000 MT Cold Storage Plant would be around 25 numbers. This includes managerial staff, skilled and unskilled labourers. Cost of the Project
The total project cost for setting up a 5000MT Modern Cold Storage would be in the range of Rs.350-400 Lakhs, including cost of 1 acre land. The project implementation period would be 12 months. Project Components Cost (Rs. Lakhs) Land (1 acre) & Land Devpt 50.00 Building & Civil works (12,000 cu.m Storage chamber) 85.00 Plant & Machinery 148.00 Utilities 23.00 Technical Know how 2.00 Misc. Fixed Assets 20.00 Preliminary & Pre-operative expenses 17.00 Contingencies 13.00 Margin money 22.00 Total Project Cost 380.00 Means of Finance The proposed means of Finance for the Project is given below: Equity Promoters contribution 100.00 Subsidy 50.00 Unsecured Loan 40.00 Term Loan /KFC/Banks/FIs 190.00 Total Project Cost 380.00 The Debt-Equity ratio is 1:1. Sales Turnover The Revenue at optimum utilisation (70% from the 3 rd year onwards) would be around Rs. 307 Lakhs. The capacity utilisation for the first and second years of operation is assumed to be 50% & 60% respectively. FINANCIAL INDICATORS The Profit after Tax is Rs.82 Lakhs. The Break Even Point (BEP) for the project is 31%. The Debt Equity Ratio (DER) for the project is 1:1
Average Debt Service Coverage Ratio (DSCR) is 3.08 The average Internal Rate of Return (IRR) for the project is 23.11%. CONCLUSION The total available cold storage space in the State, at present, comes to only around 58000 MT. Considering the exponentially increasing demand for food, especially taking into account the acute food insecurity that exists in the State, it is expected that the total demand for cold storage space in the State within the next 10 years would be at least 300000 MT. Hence there is a tremendous potential for world-class modern Cold Storages in the State, also taking into account the stringent quality control measures adopted by western countries especially for marine products. The Cold Storages in the State can also be linked through a cold chain and the procurement and distribution could be done through refrigerated trucks. The retail sales may be done through air-conditioned super bazaars, to avoid spoilage, as the post storage life of most of the fruits and vegetables is low. Thus there is also ample scope for necessary forward and backward linkages from Cold Storages to Cold Chains within the State, so as to meet the food demands and export requirements of the coming decades... For further details please contact Kerala State Industrial Development Corporation Ltd. Disclaimer: The findings contained in this Project Profile are based on the initial information collated through primary and secondary research, which is indicative in nature. Reference herein to any specific commercial product, process, service by trade name, trademark, manufacturer, or otherwise, does not constitute or imply its endorsement, recommendation, or favoring by or any entities thereof.