Cold chain logistics sector in Gujarat State - India. NBSO Ahmedabad

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1 Cold chain logistics sector in Gujarat State - India NBSO Ahmedabad

2 Colofon This is a publication of: Netherlands Enterprise Agency Prinses Beatrixlaan 2 PO Box AC The Hague Phone via contact form on the website Website This survey has been conducted by the Netherlands Business Support Office in Ahmedabad, Gujarat, India with the support of MBA (Maritime Management) SEM II students from B.K School of Business management, Gujarat University, Ahmedabad, Gujarat, India. If you have any questions regarding this business sector in Gujarat state or need any form of business support, please contact NBSO, Ahmedabad: Chief Representative Deputy Representative Jacob(Job) Glas Jolly Joseph Phone +91 (0) info@nbsoabad.org.in For further information on the Netherlands Business Support Offices, see Netherlands Enterprise Agency September 2015 NL Enterprise Agency is a department of the Dutch ministry of Economic Affairs that implements government policy for agricultural, sustainability, innovation, and international business and cooperation. NL Enterprise Agency is the contact point for businesses, educational institutions and government bodies for information and advice, financing, networking and regulatory matters. Although a great degree of care has been taken in the preparation of this document, no rights may be derived from this brochure, or from any of the examples contained herein, nor may NL Enterprise Agency be held liable for the consequences arising from the use thereof. This publication may not be reproduced, in whole, or in part, in any form, without the prior written consent of the publisher. Pagina 2 van 20

3 Contents Colofon 2 1. Scope and definition of cold chain logistics in India 4 2. Cold chain sector overview in Gujarat State 7 3. New policy initiatives for cold chain sector in Gujarat 9 4. Major companies active in Gujarat Challenges of the sector, as opportunities for Dutch companies Relevant trade fairs and conferences Relevant authorities and branch organisations Other online sources 17 Appendix: Overview of Gujarat State 18 Pagina 3 van 20

4 1. Scope and definition of Cold Chain Logistics in India Cold Chain Logistics here in this report is oriented towards Horticulture and Processed Food sector. So here in these sector cold chain logistics stands for cold chain facilities from farm to end user consumers. This includes Controlled Atmosphere Vehicles, Cold Storages, Shorting and Grading facilities, Morden pack Houses and Controlled Atmosphere Retail Stores. Cold Chain Logistics for Horticulture and Agro Food Products has been the focus area for India as post-harvest food loss has been the major concern. This food loss is hindering the goal of food security and price stability. Indian food waste Product Loss Cereals 3.9% - 6.0% Pulses 4.3% - 6.1% Oil seeds 2.8% % Fruits and Vegetables 5.8% % Inland and Marine Fisheries 6.9% & 2.9% Meat and Poultry 2.3% & 3.7% Pagina 4 van 20

5 Cold Storage Distribution In India Sr. No State/UTs No. of Cold Stores Capacity in MT 1 Uttar Pradesh West Bengal Gujarat Punjab Andhra Pradesh Other In order to boost development of cold chain for Horticulture and Agro food Products sector Government of India is providing various financial and technological assistance under the schemes of Ministry of Food Processing and Industries, Agriculture and Processed Food Products Export Development Authority, and National Horticulture Board. An uneven distribution of storage capacity, lack of logistical connectivity support, highly segregated cold storage location, need for high capital investment and others are acting as the hurdles for cold chain industry in India. India s cold chain industry is still evolving, unorganized and operating below capacity as most equipment in use are not technically updated, the study highlighted. Utilization of obsolete refrigeration system in cold stores of India is quite prevalent as most of the cold stores across India lack upgraded or technologically sound refrigeration system, which has been directly impacting the profit margins of cold chain industry s stakeholders, the combined study pointed out. Pagina 5 van 20

6 Majority of cold stores in India are running on slow speed compressors which are based on the ammonia refrigeration system lacking the capacity control mechanism, due to which, energy efficiency is considerably low for the cold stores which are utilizing them, the study stated. Besides, the cold stores based on old compressor technology, the study pointed out, are also losing their precious space as the installation of these compressors require the installation of large sized bunker styled evaporator coils or other diffuser units. There is also an urgent need to establish more multi-purpose cold storages across India as about 75 per cent of the current cold storage capacity in India is suitable only for potato storage and only 23 per cent is meant for multi-purpose, the study said. However in value terms, potato storage, according to the study, contributes only about 20 per cent in the total revenue of cold chain storage, while over 54 per cent of cold chain storage revenues come from multi-purpose storage only as the rent fetched for potatoes is quite low as compared to the other food products. There is a need to look for economically viable options like multi-purpose cold storages as they have high capacity utilization as compared to that of conventional storages. Growing at a compounded annual growth rate (CAGR) of about 26 per cent, the market value of Indian temperature controlled warehouse industry is likely to cross Rupees Six hundred thousand million mark by Besides, the total cold chain storage capacity in India is likely to grow at over 13 per cent CAGR and may reach about 47 MT by 2017.While, growing at a CAGR of about seven per cent, the global cold chain market is likely to cross $147 billion mark by Growth in sectors like organized retail, pharmaceuticals, processed food, growing shift towards horticulture together with various initiatives undertaken by the government are driving the growth of cold chain industry in India, the study said. Presence of a large number of small players in India's cold storage market is a significant disadvantage as they lack monetary means to make investments in establishing large cold storages, the study said, adding that exorbitant property prices coupled with usage of obsolete technology has led to the lower cold storage capacity in India. Though India accounts for about 11 per cent of global vegetable production, but the cold chain capacity in India is available for just about 9 million tons of vegetables, the study asserted. This not only leads to huge wastage of fruits and vegetables worth about Rs 35,000 crore annually but severely impacts India s share in the global export of fruits and vegetables, which is just about two per cent. Of about 85 million tons (MT) of vegetables and 45 MT of fruits being produced in India annually, the study said, only about four million tons of fruits and vegetables are transported in refrigerated vehicles in the country. Apart from horticulture, India produces about 130 million tons of milk annually but the country currently has milk storage capacity of just about 80,000 tons. Due to lack of cold chain infrastructure, about 30 per cent of about 10 million metric tons of fish produced in India annually gets wasted. In India, about 95 per cent cold storages are managed by private companies while in countries like USA, China, Brazil, Germany, Japan and others, major portion of refrigerated storage falls under public refrigerated warehouses. (Ref. Business Standard April 3, 2015) It is certain that India needs to adopt green cold chain concept by promoting installation of energy efficient equipment as this would not only make a positive impact on the environment but would also help the cold chain industry s stakeholders to increase their revenue in the long run. Pagina 6 van 20

7 1. Cold Chain Sector Overview in Gujarat In Gujarat cold Chain Industry is well developed when concerned with Dairy and Pharmaceutical products, but still there is huge capacity gap in all aspects like cold stores, refer vehicles, integrated pack houses and CA storages etc. when talking about cold chain in Horticulture and Processed Food Sector. Gujarat (5.2 per cent) was ranked fourth behind Uttar Pradesh (41 per cent), West Bengal (23 per cent) and Punjab (5.5 per cent) in total share of India's cold chain storage capacity, according to a study titled 'Opportunities in Cold Chain: Emerging Trends and Market Challenges, jointly conducted by ASSOCHAM and global market research and consulting company TechSci Research. Gujarat was followed by Bihar (4.7 per cent), Andhra Pradesh (3.7 per cent), Madhya Pradesh (3.3 per cent), Maharashtra (2.2 per cent) and Karnataka (1.7 per cent), the study said. With about two million tons of cold chain storage capacity, Gujarat has the fourth highest share of over five per cent in India s total cold chain storage capacity of about 35 million tons (MT) worth over Rs 10,000 crore, reveals the joint study. (Ref. April 3, 2015 Business Standard). Many cold chain facilities for export oriented produces and Potatoes has already been established but potential for other commodities is still remaining untapped. Various factor like approval of three Mega Food Parks at three strategic locations, increasing disposable income of population, awareness for hygiene and health, developing culture of central kitchen for restaurant chain and good connectivity with world ports leading to prospectus for exports are being driving force for development Cold Chain in Gujarat. Cold Storage Comparison (India and Gujarat) Particulars India Gujarat Number of Operating Cold Stores Storage Capacity Capacity Utilization percentage Total Man power (on rolls) Cold Stores reporting continued interest for skill development Average Age of Cold Stores MMT 75% % 15 years Tonnes 62% % 12 years Temperature Zone in cold storage Mild Chill (Greater than 10 C) 4% 2% Chill (0 to 10 C) Frozen (Less than -18 C) DK / CS 72% 8% 16% 64% 18% 16% Product type stored in the cold storage Horticulture / Agriculture 87% 65% Processed Food Animal Husbandry Pharmaceutical Other products 10% 9% 1% 1% 10% 25% 0% 0% Pagina 7 van 20

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9 2. New Policy Initiatives in Cold Chain Sector in Gujarat National Centre for Cold Chain Development (NCCD), an autonomous Centre for excellence, has been established as a registered society to work in close collaboration with industry and other stakeholders to promote and develop integrated cold chain in India. Investor s portal has been introduced by Ministry of food processing to facilitate investors and entrepreneurs to bring private investment in development of cold chain. 122 new cold chain projects are being established with the support of MOFPI in India. Scheme of Integrated cold chain & preservation Objective: To provide integrated and complete cold chain and preservation infrastructure facilities without any break, from the farm gate to the Consumer To enable linking groups of producers to the processors and market through wellequipped supply chain To establish value addition with infrastructural facilities like sorting, grading, packaging and processing for horticulture including organic produce, marine, dairy, poultry, etc. Pattern of Assistance: Provides 50% of the total cost of Plants & Machinery and Technical Civil Works in general areas and 75% for NE Region and difficult areas subject to a maximum of Rs.100 Million. National Horticulture Board (NHB) NHB provides capital investment subsidy for construction / expansion / modernization of cold storages. Pattern of Assistance: Back-ended 40% of the project INR 6000/- per MT for normal cold INR 7000 & INR 8000 per MT for specialized cold storages INR 32,000 per MT for CA storages. Reefer Vehicles Scheme The objective of the scheme is to provide financial assistance to standalone reefer vehicles and mobile pre-cooling vans for carrying & transporting both Horticultural & non- Horticultural produce. Pattern of Assistance: Credit linked back ended 50% of the cost of New Reefer Vehicles/ Mobile pre-cooling vans up-to a maximum of INR 5 Million. The reefer unit and refer cabinet permanently mounted on the vehicle are eligible. Pagina 9 van 20

10 Netherlands Enterprise Agency Cold Chain Logistic Sector in Gujarat State - INDIA 3. Major Companies active in Gujarat Tolsma-Grisnich cold stores in India Tolsma-Grisnich is in India for last 6 years as a full-fledged office. The Company has a specialized knowledge to build stores in any part of India as per the Indian climate. The company has built series of stores starting from Balaji Wafers 8000mt Box Store at Valsad Plant to the recently completed Long Term Potato Store -The Ronak Agro Foods (8000Mt) which is a mile stone and not only unique but a kind of its own in India. Website: Mooij Agro Cold Store in Gujarat Real Cold Store near Himmatnagar in Gujarat is built with Mooij Agro s Long Term Storage Technology for storing Processing Potatoes. Material that is harvested in March can be processed till December with the implementation of Mooij System. Mooij is specialized in storage of Potato, Onion, and other vegetables. This technology, developed by Mooij in the Netherlands, allows for a more uniform convection of cold air through the stacks of potato bags, ensuring a more even product quality as well as increased energy efficiency. Pagina 10 van 20

11 Netherlands Enterprise Agency Cold Chain Logistic Sector in Gujarat State - INDIA The Store was built by Mr. Jignesh Patel who is also a grower for McCain. The store is one of its kind in the country and maintains best frying colour with minimum weight loss. Built in 2013, the total capacity for the storage is 7500 MT. The store is utilized by McCain to store French fries varieties. Omnivent Omnivent has provided the Indian market with solutions for storage automation and store management for potatoes, onions and other root crops, to reduce losses and maintain product quality during long-term storage. These objectives are met in all projects whether it concerns a new build project or a upgrade of a traditional Indian Bag store. Website: Kelvin Cold Chain Logistics Private Limited Kelvin Cold Chain Logistics Pvt. Ltd. provides the Integrated Cold Chain Logistics & Supply Chain Management - Primary, Secondary & Tertiary Distribution including Cold Storage Facilities. Website: Gati Kausar Cold Chain Solutions Gati Kausar is a subsidiary and the cold chain arm of India s logistics giant Gati Limited. It is the longest established cold-chain company in India, with 30 years of expertise in the cold-chain distribution business. Website: Allround Vegetable Processing Machinery India Allround is a successful Dutch company into storage grading and handling of potatoes and other vegetable products. The Company has its own manufacturing of equipment in Mohali Punjab India, which is a boost for its rapid growth in India. In Deesa, Banaskantha district of Gujarat has a very successful project Sai Cold Storage which has installed Allround machinery for the store as well as for handling, grading and for sorting of potatoes. Pagina 11 van 20

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13 4. Challenges of the sector as Opportunities for the Dutch Companies Challenge 1: Lack and Viability issues of Multiple Commodities Storages Almost 67% of cold stores are single commodity storages. There is strong need for development of multiple commodity storages that can help to reduce food losses. Opportunities for Dutch Companies: Offer economically viable effective technology to developers for development of Multiple Commodities Storages. Challenge 2: High Cost of Conventional Power Source Though Gujarat is a state with power surplus but still there are viability issues in cold stores due to use of conventional power sources like Diesel Generators and Electricity Board. There is need for development of cold stores operating with renewable energy sources like solar and biogas. Opportunities for Dutch Companies: Offer economically viable renewable energy source enabled cold chain technologies. Challenge 3: Lack of Refer Vehicles Various issues like non availability of Fully Built refer vehicles, low funding on refer vehicles and non-viability in horticulture sector etc. are hindering the growth of cold chain in horticulture and processed sector. Opportunities for Dutch Companies: Providing solution to reduce operating cost of refer vehicles. Challenge 4: Lack of good quality India made technologies Most of the good quality cold chain technologies are imported leading to higher cost. These exporting companies are mainly doing marketing work at India and producing in India is still not being done by many companies. Opportunities for Dutch Companies: Many Dutch companies are already operating in this sector in Gujarat. There are opportunities for them to Make in India and penetrate in Market. Challenge 5: Lacking Skills in Human Resources There is still lack of skill development in Manpower to operate this Morden technology oriented cold stores. Knowledge of Cold Chain Economics is also lacking. Opportunities for Dutch Companies: Government, Industry and University level collaboration for skill development programmes. Pagina 13 van 20

14 5. Relevant trade fairs and Conferences India Cold Chain Show 2015 Running in its 4 rd annual edition, India Cold Chain Show is a focused exhibition and conference on Cold storage infrastructure, Temperature controlling, IT solutions for cold storages/warehouses, Material handling solutions for cold storages, Cold chain and cold supply chain. Every year, technology providers gather to showcase latest solutions in front of hundreds of decision makers visiting from all parts of the world. The event offers comprehensive business, networking and learning opportunity. Date: 16 th -18 th December 2015 Venue: Bombay Exhibition Centre, Goregaon (East), Mumbai. Website: Indian Cold chain Expo 2015 It is a two-day exhibition with latest technology on display. The exhibition is beneficial for the cold storage owners, logistics and supply chain professionals dealing in temperature sensitive products. ICE showcases complete range of cold chain technologies and solutions on one platform. The exhibition, conference and award night provides an opportunity for modern cold chain, logistics, retail and other related industries to identify new trends, discuss new ideas, witness latest innovations, view a wide range of products specific to the industry. Date: 17 th -18 th November 2015 Venue: Park Plaza, Zirakpur, Chandigarh. Website: Pagina 14 van 20

15 6. Relevant Authorities & Associations National Horticulture Board National Horticulture Board (NHB) was set up by the Government of India in NHB implements various schemes under overall supervision and guidance of the Board of Directors of NHB as well as the Department of Agriculture & Co-operation, Ministry of Agriculture, Govt. of India. Website: National Centre for Cold Chain Development National Centre for Cold Chain Development (NCCD) has been established to promote and develop integrated cold chain in India for perishable agriculture and horticulture produce including perishable from allied sectors. The main objectives of the centre are to recommend standards and protocols for cold chain infrastructure, suggest guidelines for human resource development and to recommend appropriate policy frame-work for development of cold chain. Website: Warehousing Development Regulatory Authority The mission of Warehousing Development and Regulatory Authority (WDRA) is to regulate and ensure implementation of the provisions of the Warehousing (Development and Regulation) Act, 2007 for the development and regulation of warehouses, Regulations of Negotiability of Warehouse Receipts and promote orderly growth of the warehousing business. Website: Pagina 15 van 20

16 7. Other Online Sources National Horticulture Board Report on All India Cold Storage Capacity and Technology Baseline Study. Link: O%20COMPILED%20FINAL.pptx National Centre for Cold Chain Development NCCD Publishes Newsletters and various reports for cold chain sector. Link: Pagina 16 van 20

17 Appendix: Overview of Gujarat State Geographical Overview of Gujarat Gujarat is a state having 1600 KMs coastline located in west coast of India. The Arabian Sea borders the state both to the west and the southwest. Gujarat is also a Gateway to the rich land-locked Northern and Central Vicinity of the country. Gandhinagar, the capital city of Gujarat is located close to Ahmedabad, the commercial capital. The state currently has 33 districts (248 talukas, 18,618 villages, 242 towns). One of the reasons for good Infrastructure facilities in Gujarat is its flat landscape that makes infrastructure development easy compared to other states of India. Socio Economic Overview of Gujarat Gujarat has population of approximately 60.3 million accounting for about 5% of the India s population. It accounts for 6% of land area of India and is India s most progressive States with a positive development quotient that has always capitalized on its strength to leverage strategic opportunities. Its continued progress is based on business friendly policies and proactive administration, which has led to the State being a preferred investment destination. Gujarat is a strong Economy with the SDP rising at an average growth rate of 10.1% since 2005 to 2013, more than the national average. Gujarat pays a 27% tax of India. Gujarat achieved an annual growth rate of 9.51% during Gujarat is located on the western coast of India and has the longest coastline of 1,600 km among all states in the country. The state shares its borders with Rajasthan, Madhya Pradesh, Maharashtra and the Union Territories of Daman & Diu and Dadra & Nagar Haveli. The Arabian Sea borders the state both to the west and the southwest. Gujarat is one of the leading industrialized states in India. The state attracted cumulative FDI worth US$ 11 billion from April 2000-March 2015 and is the second highest recipient of FDI in India after Maharashtra. At current prices, Gujarat's gross state domestic product (GSDP) was about US$ billion over Average annual gross state Pagina 17 van 20

18 domestic product (GSDP) growth rate from to was about per cent. Gujarat is considered the petroleum capital of India due to presence of large refining capacity set up by private and public sector companies. The state is the world s largest producer of processed diamonds, accounting for 72 per cent of the world s processed diamond share and 80 per cent of India s diamond exports. With a contribution of 65 to 70 per cent to India s denim production, Gujarat is the largest manufacturer of denim in the country and the third largest in the world. Gujarat contributes around 19.1 per cent to India s total exports of goods in The state has excellent infrastructure as compared to other states. There are 45 ports, 18 domestic airports and one international airport. There are 106 product clusters and 60 notified special economic zones (SEZs). Large-scale investment is expected in Gujarat as part of the US$ 90 billion Delhi-Mumbai Industrial Corridor (DMIC). Gujarat s Industrial Policy, 2015, offers attractive incentives and concessions for prospective investors. Gujarat is one of India's most industrialised states in India, with an enviable track record of attracting investments over the last decade to become the most favoured investment destination of Indian Republic. Gujarat has a variety of industries including engineering and auto manufacturing, food and agri-business, textiles, gems and jewellery, mineral and mining and ports and shipbuilding. Some of the other important industries in the state include chemicals and petrochemicals, pharmaceuticals and tourism, with nearly 30 per cent of India s petrochemicals business being conducted in Gujarat, while those of chemicals and pharmaceuticals account for almost 50 per cent. Gujarat s share in manufacturing of soda ash, salt and caustic soda is around 90 per cent, 70 per cent and 20 per cent, respectively. Some of the Identified industrial projects in Gujarat are: Agro Based & Food Processing Industry; Chemical & Petrochemicals; Information Technology; Mineral-Based and Allied Industries; Plastic and Allied Industries; Port-Related Activities & Infrastructure; Textile & Apparels Industry; Gems and Jewelry. About Gujarat: Industries, Economy, Ports, Exporters, Climate, Geography Latest update: August 2015 Economic Snapshot: GSDP of Gujarat Gujarat's gross state domestic product (GSDP) was at US$ billion over Economic Snapshot: NSDP of Gujarat Gujarat' net state domestic product (NSDP) was at US$ billion over Pagina 18 van 20

19 Indian Economy is expected to grow at the rate of 7.5% surpassing china in financial year Indian economy is being investment destination for foreign player and FDI in India grew by 40% to reach 1760 Billion INR for the year India s biggest asset is huge size of its young and working population class. The proportion of population in the working age-group years is expected to rise from 57.7 per cent in 2001 to 64.3 per cent in As per the report by United Nations published in November 2014 India has 356 million people between ages of years making it largest country in terms of young population. India has been ranked world s No 1 investment destination by the World Bank, based on baseline profitability ranking methodology. The Netherlands Business Support Office (NBSO) in Ahmedabad supports trade and investment of Dutch enterprises in Gujarat State in close cooperation between the Embassy of The Netherlands in New Delhi. Gujarat and the Netherlands have a close business relationship in Agriculture, Ports, Shipping & Logistics, Chemicals, Water & Life Sciences & Healthcare, Minerals, etc. Gujarat is the best Indian State to do business in, shows the World Bank s ease of doing business ranking of the Country s states. The State, which has topped the list with per cent score. The World Bank report, Assessment of State Implementation of Business Reforms, was released in New Delhi on Monday 14 th September, under the aegis of Confederation of Indian Industry Pagina 19 van 20

20 This is a publication of: Netherlands Enterprise Agency Prinses Beatrixlaan 2 PO Box AC The Hague