Cold Chain. Opportunities in India. YES Bank-Dutch Embassy Collaborative Study

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1 Cold Chain Opportunities in India YES Bank-Dutch Embassy Collaborative Study

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3 TITLE COLD CHAIN Opportunities in India- YES BANK- Dutch Embassy Collaborative Study YEAR December 2014 AUTHORS COPYRIGHT Food and Agribusiness Strategic Advisory & Research (FASAR), YES BANK No part of this publication may be reproduced in any form by photo, photoprint, microfilm or any other means without the written permission of YES BANK Ltd. & Embassy of the Kingdom of the Netherlands. This report is the publication of YES BANK Limited ( YES BANK ) & Embassy of the Kingdom of the Netherlands and so YES BANK & Embassy of the Kingdom of the Netherlands has editorial control over the content, including opinions, advice, statements, services, offers etc. that is represented in this report. However, YES BANK & Embassy of the Kingdom of the Netherlands will not be liable for any loss or damage caused by the reader s reliance on information obtained through this report. This report may contain third party contents and third-party resources. YES BANK & Embassy of the Kingdom of the Netherlands takes no responsibility for third party content, advertisements or third party applications that are printed on or through this report, nor does it take any responsibility for the goods or services provided by its advertisers or for any error, omission, deletion, defect, theft or destruction or unauthorized access to, or alteration of, any user communication. Further, YES BANK & Embassy of the Kingdom of the Netherlands does not assume any responsibility or liability for any loss or damage, including personal injury or death, resulting from use of this report or from any content for communications or materials available on this report. The contents are provided for your reference only. The reader/ buyer understands that except for the information, products and services clearly identified as being supplied by YES BANK & Embassy of the Kingdom of the Netherlands, it does not operate, control or endorse any information, products, or services appearing in the report in any way. All other information, products and services offered through the report are offered by third parties, which are not affiliated in any manner to YES BANK & Embassy of the Kingdom of the Netherlands. DISCLAIMER The reader/ buyer hereby disclaims and waives any right and/ or claim, they may have against YES BANK & Embassy of the Kingdom of the Netherlands with respect to third party products and services. All materials provided in the report is provided on As is basis and YES BANK & Embassy of the Kingdom of the Netherlands makes no representation or warranty, express or implied, including, but not limited to, warranties of merchantability, fitness for a particular purpose, title or non infringement. As to documents, content, graphics published in the report, YES BANK & Embassy of the Kingdom of the Netherlands makes no representation or warranty that the contents of such documents, articles are free from error or suitable for any purpose; nor that the implementation of such contents will not infringe any third party patents, copyrights, trademarks or other rights. In no event shall YES BANK & Embassy of the Kingdom of the Netherlands or its content providers be liable for any damages whatsoever, whether direct, indirect, special, consequential and/or incidental, including without limitation, damages arising from loss of data or information, loss of profits, business interruption, or arising from the access and/or use or inability to access and/or use content and/or any service available in this report, even if YES BANK & Embassy of the Kingdom of the Netherlands is advised of the possibility of such loss. Maps depicted in the report are graphical representation for general representation only. This study has been done basis a pre decided scope of work between YES BANK and Embassy of the Kingdom of the Netherlands with the objective of achieving specified outcome and does not cover all aspects/all opportunities pertaining to the cold chain sector in India. CONTACTS YES BANK Ltd. Registered and Head Office 9 th Floor, Nehru Centre, Dr. Annie Besant Road, Worli, Mumbai Tel : Fax : Northern Regional Office 48, Nyaya Marg, Chanakyapuri New Delhi Tel : / fasarybl@yesbank.in Website : Netherlands Embassy in New Delhi 6/50 F, Shantipath, Chanakyapuri New Delhi Tel: : (+91) nde-lnv@minbuza.nl

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5 Message Agriculture has been identified as the lead sector for growth which will help meet the Millennium Development Goals. It is being advocated that it should get a more prominent place in the world s development agenda. Even though rapid strides have been made in the last few decades in the agricultural development, hunger still exists and rural populations are amongst the poorest. India has been transforming in response to various challenges and developments. There s no gainsaying the crucial role of cold chain in reducing agricultural losses. There is a large amount of literature that has been and is being generated in this field of inquiry. Cold Chain is essential in qualitative post-harvest management and farm to fork food security and food quality by efficiently handling agricultural products upstream & downstream. The Netherlands is the world s second-largest exporter of agri-food products. For decades, the Dutch agriculture sector has succeeded in maintaining its lead over international competitors through continual investment in innovation in agri-food value chains. The Netherlands is a hotbed of R&D in the area of agri-food, due largely to the excellent knowledge infrastructure and close collaborations between knowledge institutes, government and the private sector, the so-called golden triangle. Key R&D centers include Wageningen University and Research Centre (WUR), the Top Institute Food & Nutrition (TIFN) and the public-private innovation program FND+ (Food & Nutrition Delta). Some 12 out of the 40 largest Food & Beverage companies in the world have R&D facilities located in the Netherlands. Wageningen (WUR) is the foremost university in Europe in the field of agriculture. The Netherlands has the second largest cooling and freezing storage capacity in the EU. In May 2012 an extensive Indo-Dutch Agriculture Action-plan was signed between the Central Government of India and government of the Kingdom of The Netherlands. Within this broad agreement, several areas of cooperation in the agriculture/food sector are defined. This study is a tool in implementing the projects being identified in cold chain sector under the Action Plan. This study, a joint effort of YES BANK and Agriculture Department of Embassy of the Kingdom of the Netherlands, New Delhi, compiles available and recent literature on developments in the cold chain sector in India with primary focus on Maharashtra, Andhra Pradesh, Gujarat & Delhi. I congratulate YES BANK for their dedicated efforts in bringing out this volume whose work shaped this piece. We have no doubt it will be useful to policy analysts, policymakers, the research & development community at large. This study will also help to achieve commercial success by collaborating on mutually identified development projects & will contribute to respective bilateral goals for both India & Netherlands. Wouter Verhey Agricultural Counsellor Netherlands Embassy in New Delhi

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7 Foreword The Indian perishables market is generally characterized by fragmentation, low levels of processing, high potential for value addition, significant amounts of quality & quantity losses and high price volatility. In order to salvage the sector out of the above challenges as well as to leverage on the intrinsic strengths of the Indian perishable sector for incremental domestic & export opportunities, the cold chain sector offers tremendous potential to catapult India into the big league in food processing. There are a couple of changes in the industry eco- system as well that shall aid these efforts, including urbanization, changing consumer preferences, changing pattern of the wholesale/ retail industry and the renewed regulatory thrust by the Government on food safety, hygiene, better nutrition and convenience. The Indian cold chain scenario is increasingly moving out of the cold store focus (into end to end cold chain management) and within this segment is fast moving out of the single commodity focus (into multi commodity systems). Furthermore, there is a strong shift in the regional bias of the sector from West Bengal, UP, Bihar, AP & Maharashtra to other states. The industry is growing fast at a pace of 16%. Further the sector is moving out of the trading model into a services model wherein there is a big increase in services are being outsourced to the cold chain sector by various multinationals and Indian entities. Having identified that this sector offers huge potential for sustainable socio- economic development of the nation, the Government of India, through various Ministries & Departments, is incentivizing set up of these facilities on a very large scale, with a host of schemes being continued and new ones being launched. The report details out value chains of commodities, current cold chain capacities, trends, challenges, key industry drivers & success stories in the Indian context as well as key state and commodity profiles that are of direct help in identifying key opportunities. In addition to secondary data analysis, a lot of efforts have gone into first hand discussions and meetings with a large number of participants and stakeholders in the industry across production, trading & consumption pockets of the country, in order to ensure a first-hand perspective on challenges & opportunities offered by the sector. Some of the specific & immediate intervention opportunities detailed out are in mango (AP & Delhi), marine products (Gujarat & AP) and apples (Delhi/NCR). We hope that the report titled Cold Chain: Opportunities in India- YES BANK-Dutch Embassy Collaborative Study focusing on four states and nine commodities shall be of great value to the Dutch Cold Chain industry to identify ground realities, specific opportunities, challenges and priorities for charting out their plans for the Indian market. We are extremely thankful to Mr. Wouter Verhey, Mr. Frederik Vossenaar, Mr. Anand Krishnan and Mr. Rajesh Bhatia for their insights and continuous support during the engagement. Nitin Puri President & Country Head Food and Agribusiness Strategic Advisory & Research (FASAR) YES BANK Ltd.

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9 Contents I. Executive Summary 1 II. Indian Cold Chain Sector 7 1. Concept of Cold Chain 8 2. Cold Chain Industry Classification State-wise Cold Storage Capacity State-wise Requirement of Cold Storage Sector-wise and Commodity wise Cold Storage Capacity in India Major Trends in the Cold Chain Industry Key Challenges of the Cold Chain Industry SWOT Analysis Competition Analysis Key Drivers of Growth Future Trends and Success Factors 24 III. Overview of Global Cold Chain Industry 27 IV. Key States and Commodities Production of Horticulture Crops, Meat, Milk and Fish 32 V. Policies & Schemes for Cold Chain Sector Role of Stakeholders and Stakeholders Expectations Policies related to the Indian Cold Chain Sector Subsidies & Schemes 44 VI. Assessment of Cold Chain Sector in Andhra Pradesh Overview of Cold Chain Sector in Andhra Pradesh Commodity Profile and Value Chain Mango Marine Products Meat Milk & Milk Products 68

10 Contents VII. Assessment of Cold Chain Sector in Maharashtra Overview of Cold Chain Sector in Maharashtra Commodity Profile and Value Chain Onion Citrus Banana 80 VIII. Assessment of Cold Chain Sector in Gujarat Overview of Cold Chain Sector in Gujarat Commodity Profile and Value Chain Potato Fish Milk & Milk Products 95 IX. Assessment of Cold Chain Sector in Delhi/NCR 1. Overview of Cold Chain Sector in Delhi/NCR 100 CA Storage Capacity for Apples in Delhi/NCR, Himachal and J & K Commodity Profile and Value Chain Apple Mango Milk & Milk Products 107 X. Conclusion 111 XI. Success Stories 117 XII. Major Deals and Investment in Cold Chain Sector 121

11 Exhibits Exhibit 1: Market size of cold chain industry 10 Exhibit 2: Region-wise spread of cold storages in India (2012) 11 Exhibit 3: Cold storage product mix in volume & value terms ( E) 11 Exhibit 4: TCV product mix in value terms ( E) 12 Exhibit 5: State-wise distribution of cold storages in India (up to 30th Oct, 2012) 13 Exhibit 6: State-wise requirement of cold storage (in 000 MT) 14 Exhibit 7: State-wise % share in cold storage gap 15 Exhibit 8: Sector-wise cold storage capacity in India (2009) 16 Exhibit 9: Commodity wise cold storages capacity (2009) 17 Exhibit 10: Funds released and capacity created under various schemes for development of cold storage in India ( ) 24 Exhibit 11: Global cold chain market revenues in USD billion ( ) 28 Exhibit 12: Top 5 nations on the basis of cold storage space growth during Exhibit 13: Difference in reefer exports between peak month & slack month per country 30 Exhibit 14: State-wise production of fruits, vegetables & spices during (in 000 MT) 32 Exhibit 15: State-wise meat production during (in 000 MT) 33 Exhibit 16: State-wise milk production during (in 000 MT) 34 Exhibit 17: State-wise fish production during (in 000 MT) 35 Exhibit 18: Top five states basis production ( ) 37 Exhibit 19: Top five states basis storage capacity 38 Exhibit 20: Top five states basis storage gap 38 Exhibit 21: Arrival of Azadpur mandi (including sub-yards) in last 5 years in 000 MT 39 Exhibit 22: Schemes under MIDH 49

12 Exhibits Exhibit 23: District wise % share of cold storage in Andhra Pradesh ( ) 53 Exhibit 24: District wise mango production in Andhra Pradesh ( ) 54 Exhibit 25: Major fish producing states in India ( ) 59 Exhibit 26: District wise production of inland fisheries in MT (including prawns) in AP 60 Exhibit 27: District wise production of marine fisheries in MT (including prawns) in AP 60 Exhibit 28: Major buffalo meat producing states in India (% share) 64 Exhibit 29: District wise share of buffalo population in Andhra Pradesh (census 2007) 64 Exhibit 30: Milk production trend in Andhra Pradesh (in 000 MT) 69 Exhibit 31: Top onion producing states ( ) 73 Exhibit 32: Onion production season in Maharashtra 73 Exhibit 33: Varieties grown in Maharashtra 73 Exhibit 34: Mandi arrivals of onion (in 000 MT) 74 Exhibit 35: Top citrus producing states (in 000 MT) ( ) 76 Exhibit 36: Arrival of citrus in major markets in Maharashtra during last 4 year (in MT) 77 Exhibit 37: Top banana producing states ( ) 80 Exhibit 38: District wise production of potatoes ( ) 87 Exhibit 39: Area wise number of cold storages and potato storage capacity in Gujarat 88 Exhibit 40: Fish production in last two years in Gujarat 91

13 I Executive Summary YES Bank- Dutch Embassy Collaborative Study 1

14 I Executive Summary India has seen a phenomenal growth in production of horticulture produce, dairy and meat products over the last decade. Presently, India occupies a position amongst the top three in production of a host of commodities including spices, fisheries, poultry, milk, fruits and vegetables. But even with such large production volumes, India s present share in global farm trade is still very small. India is the second largest producer of fruits and vegetables in the world with production of 81.3 million MT and million MT respectively but its share in global export of fruits and vegetables is around 1.4% only. Approximately 18% of fruits and vegetables get wasted in the country. This is mainly due to lack of cold chain infrastructure which includes both storage and transportation facilities. The cold chain industry in India is still at a nascent stage and despite large production of perishable produce the cold chain potential still remain untapped due to high share of single commodity cold storage, high initial investment (for refrigerator units and land), lack of enabling infrastructure like power & roads, lack of awareness for handling perishable produce and lapse of service either by the storage provider or the transporter leading to poor quality produce. However, increasing urbanization and growth of organized retail, food servicing and food processing sector are boosting the growth of cold chain industry in India. The trend is shifting towards establishing multipurpose cold storages and providing end to end services to control parameters throughout the value chain. The report gives an overview of the cold chain sector in India including present storage capacity, regulatory framework and subsidies, trends, growth enablers, challenges and key success factors of the industry. The report also highlights the cold chain scenario in key states like Andhra Pradesh, Maharashtra, Gujarat and Delhi/NCR with focus on the key perishable commodities like meat, marine, dairy and fruits & vegetables. India s cold chain sector is estimated at INR billion ( ~ USD 2.9 billion) 1 in where 88-90% of market share is with the Temperature Controlled Warehouses (INR 162 billion ( ~ USD 2.7 billion); stores; 30.4 million MT) and remaining 10-12% comprises of Temperature Controlled Vehicles (INR billion ( ~ USD 0.2 billion); vehicles). It is highly fragmented industry and unorganized sector accounts for an estimated 1 1 USD = INR 61 2 Cold Chain: Opportunities in India

15 80-85% share of the total capacity. Wholesalers and organized retailers are the key user segments of cold chain services with a share of 70-75% and 10-15% respectively. Currently, about 68% of the total cold storage capacity is concentrated in the states of West Bengal, Uttar Pradesh and Bihar, wherein storage of potatoes accounts for 85-90% of the capacity. The government s emphasis on Food Parks and Integrated Cold Chain Development has increased in the recent past. Government has taken several policy level and schematic steps to increase investment in this sector. Other than duty cuts, depreciation benefits, service tax exemptions, 100% FDI has been allowed in cold chain infrastructure through automatic route. Several schematic supports exits through Department of Agriculture, Ministry of Food Processing Industries (MoFPI), Agricultural and Processed Food Products Export Development Authority (APEDA), National Cooperative Development Corporation (NCDC) and others. State-wise Analysis Multiple opportunities for intervention exist across regions, commodities and stages of the value chain. While some progress has been observed in specific commodities/value chain legs/regions like apples in Himachal Pradesh and Jammu & Kashmir, grapes in Maharashtra, processing grade potatoes in Gujarat and milk products, there is still a lot of potential for more widespread interventions. Accordingly, the regions and commodities for the study have been selected to capture a flavor of both production as well as consumption centers for regions and an assessment of commodities which are at various stages of development with respect to cold chain usage and where there is a potential to further develop the market. Given the numerous opportunities in India the selection has been done from a larger basket of opportunities available in the space and is provided in the table below. States Andhra Pradesh Maharashtra Gujarat Delhi/NCR* Commodities Mango, Marine & Meat Products, Milk & Milk Products Onion, Citrus, Banana Potato, Fish, Milk & Milk Products Apple, Mango, Milk & Milk Products * including CA storage of Apples in Himachal and J&K Andhra Pradesh With annual production of around 28.9 million MT of horticulture produce, Andhra Pradesh (AP) stands 2nd in the country next to West Bengal. Andhra Pradesh ranks among top 5 states in production of fruits, vegetables, spices and meat. Presently, there are only 371 cold storages in AP with a total capacity of 1.4 million MT. More than 90% of the cold storages are multipurpose followed by dedicated cold storages for Meat & Fish, Fruits & Vegetables and Milk & Milk Products with a cumulative share of 6%. Only 1% of the cold storages store Fruits and Vegetables exclusively. Majority of the cold storages are located in Guntur region which are primarily used for storing Chilly. The commodities for which profiling is done in AP include mango, meat, marine and dairy products, a brief of which is given below. YES Bank- Dutch Embassy Collaborative Study 3

16 AP is the largest producer of mango with production amounting to 4.4 million MT (accounting for 24% of India s mango production). The major markets for mango are in districts of Chittoor, Krishna and Kadapa. The major varieties are Baiganpally, Suvarnarekha, Neelum and Totapuri. Mango ripening is still done using calcium carbide presenting an opportunity for establishment of modern ripening chambers nearby urban consumption centers. There is also a huge potential to develop and propagate controlled atmosphere/modified atmosphere storage of mango to increase shelf life and gain price arbitrage during off-season. Apart from domestic consumption, mango is also used to prepare mango pulp which is produced from specific varieties like Totapuri and Alphonso. The market size of mango pulp industry in India is approximately INR 15 billion (~USD million) 2 of which AP accounts for about 50-60%. Mango pulp packed aseptically is generally kept under ambient conditions but now the trend is changing and industry is using cold storages for storing mango pulp. AP is the major sea food exporting state of India with its 35-40% of the produce being exported to highly remunerative markets like EU, Japan and USA. The frozen shrimp (in value terms) is the major commodity exported from the state. The state has cultured shrimp production of vanamei variety at around 300,000 MT, of which approximately 80-90% is exported after being processed. There is a potential to intervene at all levels of value chain from grading/sorting at farm level to final processed product due to the expansion of the industry. Technology interventions in cold storage, transportation, ice making plants-flake and tube ice, freezing units- IQF, plate freezers, blast freezer, freezer cold storages etc. can be utilized for inducing efficiencies and reducing wastages. AP is the 3rd largest producer of buffalo meat (117,690 MT) majority of which is exported. In India, meat is mostly consumed in fresh form. With policy for modern abattoirs by the central government, cold chain could be integrated to meet the demand of domestic market. The state has recorded highest growth in milk production and per-capita milk availability as well. Optimal utilization of storage space and cost economization are the two major interventions that can be looked into for dairy industry. Maharashtra Maharashtra is the second largest producer of fruits with total production of 9.8 million MT. The commodities for which profiling has been done in Maharashtra include onion, citrus and banana, a brief of which is given below. In Maharashtra, Nasik, Ahmednagar, Pune and Satara are the major onion producing districts. Majority of the crop (~50-60%) is produced in rabi season which has good storage quality as the variety grown in this season has higher TSS, dry matter and more number of outer dried intact scales. For onion, entire domestic supply chain is via ambient temperature and cold chain is maintained only for exports. There is a potential to introduce technology for longer term storage of onion and harvesting procedure for effective cold chain intervention in the crop. Maharashtra ranks 4th in the country with total citrus production of 878,000 MT. Citrus in domestic market is generally stored and transported under ambient conditions. It is also a seasonal crop available for 6-7 months only. Players are storing second season crop under cold chain as it has good storage quality. New age cold chain interventions could be adopted for lengthening the storage time of citrus fruits. 2 1 USD = INR 61 4 Cold Chain: Opportunities in India

17 With Banana production of 3.7 million MT Maharashtra ranks 3rd in the country. Nasik division (Nasik, Dhule, Nandurbar, Jalgaon) and Latur division (Latur, Osmanabad, Nanded, Parbhani, Hingoli) contributes to 48% and 35% of total banana production in Maharashtra. In case of Banana, there is minimal post harvest infrastructure in Maharashtra at present. Thus, major intervention can be taken-up for the region in terms of establishment of modern pack houses at main production clusters which would cater to the banana and citrus grown in the surrounding area. Gujarat In Gujarat, the major categories for which cold chain is maintained are fruits & vegetables, marine produce, milk & milk products. The commodities for which profiling has been done include potato, fish and dairy products, a brief of which is given below. In terms of potato production, Gujarat ranks 4 th after UP, West Bengal, and Bihar but it has a unique advantage of being the state capable of producing good quality processing varieties of potato. Total potato production in Gujarat during was 2.5 million MT. Presently, a few entrepreneurs have started construction of modern potato cold storages using technology in the areas of storage ventilation, cooling system and programmed logic controller equipment. New technologies will be required for storage of processing grade potato as companies as companies expand their procurement from Gujarat. Gujarat has a long coastline extending to 1,600 km, a continental shelf area of 0.18 million square km and Exclusive Economic Zone (EEZ) of million square km. Fish for consumption in domestic market is not processed and is stored in ice flakes for transportation. Veraval and Porbandar are key fish landing centers in Gujarat. In Veraval, around 50 factories with the processing capacity of 200-2,500 MT capacity are located. All the factories in Veraval are 100 % export oriented units (EOU) exporting the processed fish to countries like China, Korea, Japan, Canada and Europe. The potential exists in providing cost effective cold chain solutions starting from ice manufacturing/ handling, refer vans/insulated vehicles and cold storages to improve the quality of fish. Dairy industry is well established in Gujarat and has been taken as a model for other states in the country. Anand model cooperative dairying has emerged as one of the successful dairy development programs in India. Dairy players are still looking for cost effective, energy efficient and space saving technology interventions in chilling and storage of milk and milk products. Delhi/NCR In Delhi, the total cold storage capacity is 126,158 MT out of which multipurpose and milk & milk products cold storages accounts for 93% and 4% respectively. The commodities for which profiling has been done in Delhi/NCR include apple, mango and milk & milk products. In India, Controlled Atmospheric (CA) stores, which use more advanced technologies, are mostly dedicated to apples, a brief of which is given below. Apples arriving in Delhi/NCR region are mainly procured from Himachal Pradesh and J & K. With increase in demand of good quality produce the percentage of apples going under CA storage is bound to increase, indicating a potential for cold storage of the produce. Presently apples are transported at ambient temperature from the producing regions to consumption markets. Transportation of apples under cold chain and pre cooling after harvesting are the potential areas where technological intervention is required. YES Bank- Dutch Embassy Collaborative Study 5

18 In Delhi/NCR, mango is majorly procured from Uttar Pradesh, Maharashtra and Andhra Pradesh. Some players in Delhi/NCR are experimenting to store mango under controlled atmospheric conditions at a small scale but have achieved limited success. Increase in shelf life of mango has potential for intervention. Though use of carbide is banned by Indian government but presently it is being used illegally for ripening of mangoes. With increase in health awareness and increasing ability of the consumer to pay higher prices the demand for good quality fruit which are ripened using natural process is going to increase. This will create a huge potential for ripening chambers to be used for ripening of mangoes. The total Delhi/NCR liquid milk market size is estimated at 7.6 million litres per day which translates to 2,774 million litres annually. Milk being a highly perishable commodity, cold chain is maintained starting from the milk procurement in villages to the retailer level and there is a potential to maximize the operating efficiencies in the already established cold chain by introduction of energy efficient low cost technologies. 6 Cold Chain: Opportunities in India

19 II Indian Cold Chain Sector YES Bank- Dutch Embassy Collaborative Study 7

20 II Indian Cold Chain Sector 1. Concept of Cold Chain India is an agrarian economy contributing approximately 14% of the country s GDP. The country is the leading producer of milk and world s 2nd largest producer of fruits and vegetables apart from producing significant quantity of meat and poultry. In terms of investment, Government of India spends around 1% of the total GDP on the food distribution system. But it lacks a world class cold chain infrastructure which is directly contributing to the wastage level of perishables. The supply chain management, including its cold chain component is better organised for India s dairy sector as compared to fruits and vegetables. A cold chain is a temperature-controlled supply chain network, with storage and distribution activities carried out in a manner such that the temperature of a product is maintained in a specified range, required to keep it fresh and edible for a much longer period than in normal ambient conditions. The industry comprises of two segments- Temperature Controlled Warehousing (TCW) and Temperature Controlled Transportation (TCT) Vehicles (Reefer Vans). The key components of the cold chain industry include: Procurement and Delivery Systems Pre Cooling Facilities Refrigerated Vehicles Ripening Chambers Cold/Controlled Atmosphere (CA)/Modified Atmosphere Stores Refrigerated Retail Outlets Information Systems and Traceability Classification of Cold Storage As per present day practice in India cold storage can be classified as follows: Bulk cold stores: For storage of single commodity, which mostly operates on seasonal basis e.g. potatoes, chillies etc. Multipurpose cold stores: Designed for variety of commodities which operate round the year like fruits, vegetables, dry fruits, spices, pulses, milk products etc. 8 Cold Chain: Opportunities in India

21 Frozen food stores with freezing facility for fish, meat, poultry, dairy products and processed fruits & vegetables with or without processing facility. However, percentage of foods processed is extremely low and a great potential exists for growth in this category. Mini units/walk in cold stores situated at hotels, restaurants and super markets. Controlled atmosphere (CA) stores for fruits like apples, pears and cherries Ripening chambers for ripening of fruits, mainly setup for bananas and mangoes. Controlled Atmosphere (CA) Storage: CA stores are cold storages fitted with additional equipments to actively control the atmospheric content inside the closed chamber. The broad concept involves forcibly taking away the air from the closed room and replacing with other inert gas to quickly obtain a low level of oxygen inside the chamber which further reduces the physiological rates of fruits/vegetables stored in such environment. CA technology helps in reducing produced respiration, slowing ethylene production, inhibiting pathogen infestation and also killing insects thus increasing the shelf life of the produce. Ripening chambers are examples of short term controlled atmosphere storage in which ethylene and carbon dioxide are controlled parameters and are used for ripening of fruits like mango and banana. Process Flow of Cold Chain A typical cold chain network comprises of following stages. Procurement & Pre Cooling Transport Refrigerated Storage Distribution Centre Transport Retailer Processing Plant Export The first stage is procurement of produce from farmers and bringing the produce after harvesting to a pre-cooling centre/collection centre, which is located nearby the production zone. Pre-cooling is carried out within a short period after procurement to prepare the fruit or vegetable for transportation over long distances. Refrigerated or reefer trucks are used to transport the harvested produce at controlled temperatures from the pre-cooling centre to the cold storages. Primary processing of produce like sorting, grading and packaging is done at collection centers before storage. Cold storages are generally centrally located built to cater to multiple production zones and pre-cooling centers like a typical hub and spoke model in logistics. Here, depending on factors like how long the product needs to be stored and what use it is going to be put to, the product is stored under different conditions using chilled storage, cold room storage, controlled atmosphere storage. Storage under chilled conditions and controlled atmosphere essentially slow down the ripening process of the food product and enhance its shelf life. The produce from cold stores is transported in reefer trucks to a distribution centre from where it is either exported or transported to retailers. In retail stores, the food products are stored at low temperatures in refrigerated display units to maintain freshness as well as to increase shelf life. YES Bank- Dutch Embassy Collaborative Study 9

22 The produce from cold stores is also used for manufacturing processed food items like jams, jellies, pickles or juices. Many processing plants also source fruits and vegetables directly from the production zone or pre-cooling centre. 2. Cold Chain Industry Classification The cold chain industry in India comprises majorly of two segments i.e. Temperature Controlled Warehouses and Temperature Controlled Vehicles. The total industry size is estimated at INR billion in (CRISIL Research). Around 88-90% of market share is of the Temperature Controlled Warehouse (INR 162 billion) and remaining 10-12% comprise of Temperature Controlled Vehicles (INR billion). India s cold chain sector is highly fragmented and unorganized accounting for an estimated 80-85% share of the total capacity. There are approximately 6,500+ cold stores but most of them are operated by small cold storage service providers. Exhibit 1: Market size of cold chain industry Market Size (INR Billion) Cold Storage Reefer Transport Source CRISIL Research, YES BANK Analysis Market size of cold storage and reefer industry is expected to grow to around INR 250 billion and INR billion respectively in Business Models Key Products Technology used Key End User Segment Temperature Controlled Warehouse (TCW) Potatoes, F&V, Meat, Sea Food, Milk & Milk Products Ordinary Cold Store Gas Controlled Cold Stored Controlled Atmosphere Cold Store Deep Freezer Storage Wholesalers (70-75%) Organized Retailers (10-15%) Food Service (15-20%) Others (3-5%) Temperature Controlled Vehicles (TCV) Meat, Ice Cream, Milk & its products, Pharma products, Confectionery Value Added Services (Sorting, Grading, packaging etc) Fruits (Apples), Pharma, Packaged Food, Meat & Sea Food 10 Cold Chain: Opportunities in India

23 Exhibit 2: Region-wise spread of cold storages in India (2012) Gujarat 6% Bihar 5% A.P 5% Others 15% U.P 44% Punjab 6% W.B 19% Source: CRISIL Research Taking into consideration the geographic spread majority of the cold storages are located in and around potato growing areas. About 68% of the cold storage capacity is concentrated in the states of West Bengal, Uttar Pradesh and Bihar, wherein storage of potatoes accounts for 85-90% of the capacity. Storage units in Maharashtra, parts of Gujarat and the country s southern states are designed for storing commodities such as dairy products, fruits, processed fish and meat products, and seasonal vegetables Commodity wise Breakup of Cold Storages Multipurpose cold storages are cold storages where potatoes, fruits and vegetables, meat, fish, etc can be stored at the same time. Meat and fish products account for over 50% of the others segment. Exhibit 3: Cold storage product mix in volume & value terms ( E) 2% 6% 17% 30% 68% 77% Potatoes Multi purpose Others Source: CRISIL Research YES Bank- Dutch Embassy Collaborative Study 11

24 Potatoes accounted for 68% of total volumes handled followed by multipurpose storage which accounted for 30%. However, in value terms multipurpose stores have the largest share of 77% while the share of potatoes was a mere 17%. This is mainly due to substantially low storage rentals for potatoes, which are also seasonal in nature (limited to 8-9 months in a year). So, next phase of growth will be in multipurpose cold storage segment which is also corroborated by CRISIL Research which cites that, multipurpose cold storage segment will be the primary growth drivers and its volume is expected to grow at 10-12% CAGR and realization at 5-6% CAGR. On an overall basis, average capacity utilization rates in are estimated to be in the range of 68-70%. Utilization levels of potato storage capacities have been low at 66% because of the seasonal nature of the produce. Utilization levels for multipurpose cold storages are relatively higher at 75-80%. Temperature Controlled Vehicles (TCV) In India, unlike Western Europe or USA, cold chain distribution or refrigerated transport is still at a nascent stage. When compared with the world standards for cargo movement through cold chain, India is still far behind. The percentage of movement of fruits and vegetables through cold chain in U.S. is around 80 to 85%, Thailand is 30 to 40% while it is negligible in India. Currently, most of the refrigerated transport segment is fragmented with large number of small, non integrated private players focusing on select commodities /regions. Their key assets comprise of modified trucks with additional insulated fixed containers and air conditioning units. The number of refrigerated transport vehicles during the year was estimated to be around 8,000 units and the market size of the TCV segment was estimated INR billion. The market size is expected to reach INR billion by Exhibit 4: TCV product mix in value terms ( E) Confectionary 6% Other 3% Butter,Cheese 10% Pharma 11% Ice Cream 14% Meat 56% Source: CRISIL Research 12 Cold Chain: Opportunities in India

25 3. State-wise Cold Storage Capacity Below table represents the State-wise total number of cold storages and installed capacity in MT. There are around 6,500 cold storages in India with a total capacity of 30.4 million MT (up to 2012). Top 5 states in terms of total installed capacity are Uttar Pradesh (13.2 million MT), West Bengal (5.8 million MT), Punjab (1.9 million MT), Gujarat (1.8 million MT) and Andhra Pradesh (1.3 million MT). Exhibit 5: State-wise distribution of cold storages in India (up to 30th Oct, 2012) State Total Number Total Capacity (MT) Uttar Pradesh 2,084 13,221,610 West Bengal 493 5,849,818 Punjab 569 1,901,935 Gujarat 514 1,834,290 Andhra Pradesh 371 1,397,011 Bihar 2 1,396,179 Madhya Pradesh 244 1,035,664 Maharashtra ,300 Karnataka ,262 Haryana ,196 Rajasthan ,248 Chhattisgarh 82 3,549 Odisha ,139 Tamil Nadu ,371 Jharkhand ,280 Delhi ,158 Assam ,402 Uttarakhand 16 70,8 Jammu and Kashmir 24 64,769 Kerala ,105 Tripura 12 34,181 Himachal Pradesh 18 19,858 Chandigarh 6 12,216 Goa 29 7,705 Nagaland 2 6,150 YES Bank- Dutch Embassy Collaborative Study 13

26 State Total Number Total Capacity (MT) Arunachal Pradesh 1 5,000 Mizoram 1 3,471 Meghalaya 3 3,200 Sikkim 1 2,000 Andaman and Nicobar Islands Puducherry 3 85 Lakshadweep 1 15 India 6,488 30,380,275 Source: Indiastat 4. State-wise Requirement of Cold Storage Tamil Nadu, Maharashtra and West Bengal have the highest cold storage capacity gap at 7.6 million MT, 5.7 million MT and 4.7 million MT. Exhibit 6: State-wise requirement of cold storage (in 000 MT) State Cold Storage Requirement Cold Storage Capacity Cold Storage Gap Tamil Nadu 7, ,611 Maharashtra 6, ,669 West Bengal 10,566 5,850 4,716 Bihar 4,241 1,396 2,845 Kerala 2, ,708 Karnataka 2, ,917 Odisha 1, ,524 Andhra Pradesh 2,324 1, Gujarat 2,748 1, Assam Jammu Jharkhand Himachal Pradesh Haryana Meghalaya Madhya Pradesh 1,213 1, Chhattisgarh Tripura Cold Chain: Opportunities in India

27 State Cold Storage Requirement Cold Storage Capacity Cold Storage Gap Manipur Mizoram Nagaland Rajasthan (45) Punjab 1,318 1,902 (584) Uttar Pradesh 12,228 13,222 (4) Total 61,130 30,154 30,976 Source: Directorate of Marketing and Inspection, Indiastat, NSE 2010 Study, YES BANK Analysis Exhibit 7: State-wise % share in cold storage gap Gujarat, 3% Others, 7% AP, 3% Odisha, 5% TN, 25% Karnataka, 6% Kerala, 9% Maharashtra, 18% Bihar, 9% WB, 15% YES Bank- Dutch Embassy Collaborative Study 15

28 5. Sector-wise and Commodity wise Cold Storage Capacity in India Exhibit 8: Sector-wise cold storage capacity in India (2009) S. No. State/UT Private Sector Cooperative Sector Public Sector 1 Uttar Pradesh 97% 3% 2 West Bengal 95% 5% 3 Punjab 97% 3% 4 Gujarat 97% 2% 1% 5 Bihar 96% 4% 6 Andhra Pradesh 98% 1% 7 Madhya Pradesh 87% 13% 8 Maharashtra 93% 5% 3% 9 Karnataka 96% 2% 2% 10 Haryana 96% 1% 3% 11 Chhattisgarh 100% 12 Rajasthan % 1% 13 Orissa 85% 13% 2% 14 Tamil Nadu 95% 3% 2% 15 Jharkhand 84% 16% 16 Delhi 82% 4% 14% 17 Assam 98% 1% 1% 18 Uttarakhand 88% 12% 19 Kerala 95% 2% 3% 20 Jammu & Kashmir 95% 5% 21 Tripura 43% 17% 40% 22 Himachal Pradesh 65% 4% 31% 23 Chandigarh 10% 8% 24 Goa 100% 25 Nagaland 8% 19% 26 Arunachal Pradesh 100% 27 Meghalaya 38% 63% 28 Sikkim 100% 29 Andaman & Nicobar Islands 81% 19% 30 Puducherry 41% 59% 31 Lakshadweep 100% Source: Indiastat India 96% 4% 16 Cold Chain: Opportunities in India

29 Exhibit 9: Commodity wise cold storages capacity (2009) S. No. State/UT Potatoes Multipurpose Fruits & Vegetables Meat & Fish Milk & Milk Products 1 Uttar Pradesh 86% 14% 2 West Bengal 96% 4% 3 Punjab 82% 18% 1% 4 Gujarat 76% 21% 2% 1% 5 Bihar 93% 7% 6 Andhra Pradesh 93% 1% 3% 1% 2% 7 Madhya Pradesh 70% 29% 8 Maharashtra 76% 9% 12% 3% 1% 9 Karnataka 4% 93% 1% 1% 1% 10 Haryana 57% 42% 11 Chhattisgarh 11% 88% 12 Rajasthan 20% 79% 1% 13 Orissa 48% 45% 5% 2% 14 Tamil Nadu 90% 3% 5% 2% 15 Jharkhand 16% 84% 16 Delhi 93% 1% 4% 2% 17 Assam 100% 18 Uttarakhand 100% 19 Kerala 23% 75% 2% 20 Jammu & Kashmir 26% 73% 21 Tripura 37% 63% 22 Himachal Pradesh 49% 19% 31% 23 Chandigarh (UT) 8% 91% 1% 24 Goa 47% 52% 1% 25 Nagaland 100% 26 Arunachal Pradesh 100% 27 Meghalaya 100% 28 Sikkim 100% 29 Andaman & Nicobar Islands (UT) 100% 30 Pondicherry (UT) 18% 24% 59% 31 Lakshadweep (UT)) 100% Source: agmarknet.nic.in Others YES Bank- Dutch Embassy Collaborative Study 17

30 Uttar Pradesh, Andhra Pradesh and Maharashtra have the highest multipurpose cold storage capacity (in absolute terms) followed by Karnataka, Chhattisgarh and Gujarat. Fruits & Vegetables cold storage capacity is highest for Maharashtra, Orissa and Andhra Pradesh followed by Tamil Nadu, Himachal Pradesh and Karnataka. Maharashtra, Gujarat, Punjab and Andhra Pradesh have the highest cold storage capacity for milk and milk products followed by Delhi, Tamil Nadu and Karnataka. For Meat and Fish cold storage, Maharashtra, Kerala and Andhra Pradesh has the highest capacity followed by Gujarat, Tamil Nadu and Orissa. 6. Major Trends in the Cold Chain Industry Cold store industry players are now focusing on the modernization of stores, as well as quality transportation and value-added services. Historically, cold storages are built for a particular commodity such as potatoes to reduce operational cost. Current demand necessitates the consolidation of demand across multiple customers, commodities, temperature profiles, resulting in a surge in multipurpose storage capacity While the cold chain industry is extremely fragmented, food servicing industry including quick service restaurants usually opt for organized players and tend to pay higher for assured quality. Many of the logistics operators are venturing into cold chain business rather than focusing on surface and transport infrastructure. The strategies of backward integration have a direct implication on companies reducing their costs as well as providing complete supply chain solution. For example, companies like Gateway Distriparks, Transport Corporation of India Ltd., Container Corporation of India Ltd. etc. have developed their own in-house third party cold chain business. Future Group has integrated backward from food retailing to storage and transportation with the launch of Future Logistics which focuses on verticals like courier services, road transportation, freight forwarding and cold chain infrastructure Reliance Retail has also started cold chains for its business in India. Reliance Retail Limited (RRL) is investing for its farm to fork strategy for trading in open market as well as serving its own Reliance Fresh outlets Players such as Dev Bhumi, Suri Agro Fresh, Harshna Group and Adani Agro are establishing in-house cold stores which has enabled them to reap the benefits of higher margins by selling fruits during off season, along with driving the utilization of cold storage. Recognizing the potential for cold chain business in India, several foreign players have expressed interest in the sector in last couple of years. Among them are some of the major players including Canada based Spire Group. 9 9 In the last few years, private sector participation in the cold chain sector has witnessed an increase provided the potential it has on offer. Adani Agrifresh, CONCOR owned Fresh and Healthy Enterprises, Bharti Field Fresh etc. are some of the key integrated cold chain players who have built cold chain infrastructure support for backward integration. 18 Cold Chain: Opportunities in India

31 Recently, temperature controlled facilities have been established at Delhi, Mumbai, Chennai, Kolkata, Amritsar and Thiruvananthapuram airports to handle perishable cargo. In addition to that cold storage facilities have been established at Tier II and Tier III city airports of Coimbatore, Lucknow, Guwahati, Amritsar, Goa, Ahmedabad, Bagdogra, Jaipur and Bhubaneswar. Integrated cargo complexes are being planned at major airports in India which will be equipped to handle all kinds of goods, including perishables, agriculture produce and pharmaceuticals. 7. Key Challenges of the Cold Chain Industry Some other key issues/ challenges that cold chain industry is facing in India are: Change of Land Use: Cold stores, pack house and pre coolers are static infrastructure and Change of Land Use (CLU) is required for conversion of agricultural land to industrial land to set this infrastructure. The procedure to award to CLU is long drawn out process and the delays and processes in acquiring CLU have a negative impact on cold chain development. Service Tax: The cold chain is deprived of perceived benefits, with service tax exemptions extended only to limited single storage capacity players which contradicts the agenda of integrated cold chain development. Service tax exemption benefit is not applicable to modern cold chain services, thus should include cold chain activities and not cold warehousing alone. Unavailability of Power: Cold chain operations have high dependency on power and its lack thereof impact cold chain development. Due to irregular electricity supply, industry use backup systems like diesel generator which impact the economic viability of the project. Thus, there is a need to make uninterrupted regular supply of power available for cold chain use. Lack of Reefer Van: Approximately, there is only 12-15% of transport availability out of the total available capacity. Lack of refer vans deters overall development of the cold chain. The industry is at a nascent stage of development and stakeholders like farmers, traders, cold chain and logistics players have limited knowledge and experience. Capital Intensive Infrastructure: An even bigger struggle for new entrants in the present day context is the increasing real estate price. Cooling units are not mobile, and so location becomes a key factor, and with India s small land holdings, getting a sufficiently large tract of land to build a cold storage unit becomes a major additional constraint. Business Model: High operational costs and low yield models lead to unattractiveness in the sector. Gradually new players are entering the sector and also capital market is responding to the long term attractiveness. Example, the recent IPO by Snowman Logistics witnessed stellar response and was subscribed around 60 times. 9 9 Infrastructure Bottleneck: No fast track perishables corridors are available in the country which can transport F&V from one place to another with minimum wastages and retaining the quality of the produce YES Bank- Dutch Embassy Collaborative Study 19

32 Cold Chain Logistics Infrastructure Manufacturing/ Imports/ Company Storage Bottlenecks Lack of in house infrastructure to manage cold chain efficacy Lack of MIS tracking system on periodic intervals High infrastructure cost Uneven distribution of cold storage capacity Primary Transport (By air, Reefer, Refrigerated Railway Wagons/ Cargo Containers) In transit hubs are not available Lack of domain knowledge Lack of airport hubs/ lower volumes Long transit time, thus efficacy of produce is reduced significantly Distributors/ Company Storage Secondary Transport (Reefer, Refrigerated Railway Wagons/ Cargo Containers) Constraint in trainings, packaging solutions, investment, power cost Lack of transport solutions Sense of ownership Low volumes/ Packaging solutions Investments/ Power cost Absence of in transit storage End Customer Storage infrastructure Lack of product knowledge Ownership and integrity issue 8. SWOT Analysis 8.1. Strength Top producer in milk (132 MMT), 2nd largest in F&V (Horticulture production ~268 MMT) Strong growth in organized retail Rising income levels and changing food habits 8.2. Weakness Highly unorganized and fragmented industry segment. More than 6,500 cold storages, most of them operating below 5,000 MT capacity and operated by small cold storage service providers 68% of cold storage are single commodity storage (Potato) Limited knowledge & experience of cold chain players- Nascent stage of development Low capacity utilization Lack of enabling infrastructure like roads, power 8.3. Opportunity Total fruits and vegetable cold storage capacity is less than 1% of the total fruits and vegetable production (excluding Potato); Huge Potential Multi product/ Multipurpose/ CA/ MA cold storage are very few in number and highly localized. There is great need and potential for the growth of this segment in near future 20 Cold Chain: Opportunities in India

33 Proactive government policies and various incentives to set up cold chain/ modernize existing facilities Entry of various foreign players in high end technologies in cold chain segment Growth in organized retail segment, processed food segment, high disposable income & shift towards high value crops will drive the growth of cold chain requirement Huge export potential of Indian processed food. Requires state of the art cold chain facilities to enhance shelf life and quality of the produce 8.4. Threat High power cost/ operating cost Capital intensive Non availability/high cost of land at strategic locations 9. Competition Analysis The cold storage segment in India majorly store potatoes which have led to severe price competition among players. The industry is highly unorganized thus buyers have the upper hand. There are low entry barriers and high competition which makes it more difficult for cold storage service providers to realize higher margin in the segment. Analyzing the cold storage industry by using Porter s five forces model High High Threat of New Entrants Bargaining power of Buyers Low Threat from new substitutes Bargaining power of Suppliers Low Competitive Rivalry within the Industry- High Threat of New Entrants: The significant entry barriers for the new entrants are availability of land at strategic locations and cost of land. The capital outlay for setting up the cold storage business in multi commodities involves moderate expenditure. Also cost of setting up storage facilities for single commodity like potato is significantly low. The government also provides various subsidies via schemes to establish cold chain segments to entrepreneurs. Thus, threat of new entrants is significantly high in the industry. Bargaining Power of Buyers: The industry is dominated by unorganized players in India and majority of end users are wholesale traders who frequently trim down the additional investment to safeguard their profit margins. In YES Bank- Dutch Embassy Collaborative Study 21

34 addition to that, limited user base of cold stores and minimal value addition to the stored products increase the bargaining power of buyers in the industry. Though in the recent past, organized players are able to bargain effectively with the customers by entering into the long term contract with them. Bargaining Power of Suppliers: The industry is dominated by low technology users like ammonia based cold storages which source their equipment from local suppliers. Thus suppliers have lesser weight in the bargaining with these players. But technology providers for highly organized players are limited and thus have stronger say in bargaining with the players. Threat from New Substitutes: Cold storage has very low threat from other substitutes as normal storage facilities are the only substitute which is not viable for storing perishables. Packaging techniques may support ambient storage but that has limited scope due to cost and stage of processing. Thus, though there is no suitable substitute but due to low entry barrier for new entrants and lower bargaining power of the suppliers in low-end technology, which is currently prevalent, the industry is highly competitive and not able to gain higher margins. But in medium to long run this is a high growth industry and there are key drivers for growth which are given in the following section. 10. Key Drivers of Growth Increasing government focus and incentives for the sector as well as investments in user segments such as organized retail and distribution chains, FMCG and agri-processing are likely to drive investments in cold chains. Some of the key drivers of growth of Indian cold chain sector are mentioned below Growth in Organized Retail Food and grocery is the largest vertical with 23% share in total organized retailing (revenues of INR 1,750 billion in ). This vertical, which forms the largest share of the total retail market, includes retailing of fresh fruits and vegetables, milk and other dairy products, staples, cereals, processed foods, ready-to-eat meals, spices and other edible products. Organized retail require multiple sourcing and centralized holding and dispatch, followed by decentralized sales. Hence, cold storages are essential for maintaining the quality of the produce. Growing urbanization and changing demographic profile of the Indian population is spurring the growth of the organized retail industry. The organized retail sector is expected to grow at a faster rate than the total retail at 24% by as compared to 15% growth of total retail during the same period. With the retail sector booming and the super market culture on the rise, the cold storage business is set to grow further. 9 9 Growing urbanization and changing demographic profile of the Indian population is spurring the growth of the organized retail industry. Growth in literacy levels, rapid urbanization, rising per capita incomes have caused rapid growth and changes in demand patterns. The consumption trend is shifting towards taking healthy food items. 22 Cold Chain: Opportunities in India

35 10.2. Growth of Food Services Industry Due to urbanization and increased income levels the number of people eating outside has increased over the past 3-5 years leading to growth of food services industry. This in turn has contributed to the growth of the cold storage industry as the food services industry require a constant supply of frozen/perishable products and a significant portion of raw materials is stored in chilled/frozen form. The market size of food services industry in India was estimated at INR 4,700 billion in 2011 and is expected to increase to INR 5,600 billion by The organized segment accounting for 16% of industry is growing at 20-25% per annum. Entry of leading fast food chains such as Pizza Hut, McDonald s, Subway and growth in food services industries is driving the growth of cold chain sector Growth in Food Processing Sector Food Processing Industry in India is estimated at USD 100 billion. The industry has witnessed a growth rate of about 14% and is poised to retain a high growth in the near future. There has been a gradual shift towards processed and convenience foods among the urban population due to increased income levels, urbanization and increasing constraints on time Further, GoI is setting up 30 Mega Food Parks (MFP) and has approved 15 additional food parks in Financial Year This is going to further propel the demand for cold storage. In India only 3% of fruits and vegetables are processed and with a production of 244 million MT of there is a huge potential for domestic food processing industry. Processing level of meat & poultry and fisheries is also very low at 1% and 12% respectively. Growth in investments in food processing and greater export opportunities are expected to provide an impetus to the domestic cold storage industry. Fruits & Vegetables Dairy INR Billion % INR Billion % Snacks & RTE Marine Products INR Billion % INR Billion % Source: IBEF, Industry and YES BANK Analysis YES Bank- Dutch Embassy Collaborative Study 23

36 10.4. Exports of Processed Food India exports a wide range of processed foods, including fresh and processed fruits and vegetables, meat products and cereals. Processed fruits, vegetables and meat products, which are the main users of cold storage facilities, contribute to about 40% of the total processed food exports. Revenues from the exports of processed fruits and vegetables, and animal products have grown at a rate of 12% and 31%, respectively, in Hence increase in exports of processed food products will drive the demand of cold chain services Government Initiatives The Government has set objectives to promote the setting up of cold storages in the country for reducing post harvest losses. Additionally, the government is also aiming to create over 1.6 million MT of new storage capacity as well as modernize the existing storages of around 0.8 million MT. The Government has several subsidy schemes, depreciation benefits, duty cuts and foreign investment policies in place to aid the development of this sector. In the last few years the Government has undertaken various schemes for setting up of cold storages and distribution centers, promotion of refrigerated transportation etc. On the supply side Government has taken steps like 100 percent FDI, access to ECB s for channelizing investment in the cold chain sector. Exhibit 10: Funds released and capacity created under various schemes for development of cold storage in India ( ) No. of New CA/MA/Cold Capacity Created Govt. Subsidy Name of Scheme Storage Infrastructure (MT) (INR million) NHM 451 2,435,000 3,259 NHB 538 2,828,000 1,641 MoFPI ,000 1,467 APEDA 24 2, HMNEH 9 41, NCDC 5 22, Total 1,066 5,560,000 6,593 Source: NCCD, Indiastat 11. Future Trends and Success Factors The cold storage industry is closely related to the food processing segment, QSRs and organized retailing of the perishables. In past, wholesalers and exporters of meat and marine food were the key customers of the cold chain segment. But shift in consumption pattern with all season demand of fruits and vegetables as well as increase in demand of processed food products has shifted the focus to storage of fresh F&V, dairy products and processed food along with meat products. Organized retail outlets, fast food chains and food service industries will be the major customer base of the cold chain sector in the near future. 24 Cold Chain: Opportunities in India

37 Market size of the TCW segment is expected to grow at 15-17% CAGR to INR 250 billion by Market size of the TCV segment is expected to grow at 16-18% CAGR to INR 22 billion in Cold storage rentals are expected to grow by 3-5%in near future in line with increase in power and fuel costs Due to increasing demand for multi-purpose cold storage and limited capacity additions in the traditional potato segment, the cold chain utilization will be high Increase in contract farming will steer growth of cold storage facilities in India As per estimates of NCCD, the total investment expected in India s cold chain in the next 5-10 years is approximately USD 6 to 10 billion (estimate doesn t include cost of land and added cold chain ancillary requirements Specialized storage systems like CA cold stores would involve a higher investment cost of USD 580 per MT capacity Further investments would be needed for up grading technology of existing cold storages amounting to USD 27 per MT (involves thermal integrity, refrigeration installation, handling systems etc) An estimated USD 1 billion investment will be required for long haul refrigerated transportation Some of the key success factors of cold chain sector are mentioned below: Maintaining quality of equipments: Cold chain business majorly thrives on constant temperature maintenance in the cold chain. Even slight variation in the temperature affects the quality and value of the produce. Thus, pre requisite of success of cold chain industry are presence of high quality equipments and handling mechanisms required to maintain consistency in temperature of the cold chain Business mix: The current business model of the sector is majorly dependant on facilities utilized by wholesalers to store fruits and vegetables. Major part of the industry is highly dependent on quantity and quality of harvest and prevailing prices of commodities which has inherent risks and uncertainties in terms of monsoon, diseases, export-import trends and such others. Thus to mitigate the risk, there must be a mix and match of rental and trading business in the cold chain sector. There should be a captive model of revenue generation in the industry. 9 9 Diverse customer base and presence across the value chain: Rather than depending on one particular customer segment, there must be diverse customer base ranging from wholesalers, farmers, retailers, food processing companies, QSRs to pharmaceutical companies which will help in deciding upon pricing flexibility of the produce. Also, presence across the value chain from producer to consumer will enhance the quality of produce and help in increasing the utilization capacity of cold chain sector. YES Bank- Dutch Embassy Collaborative Study 25

38 26 Cold Chain: Opportunities in India

39 III Overview of Global Cold Chain Industry YES Bank- Dutch Embassy Collaborative Study 27

40 III Overview of Global Cold Chain Industry Across the globe there is increase in the efforts by various countries to prevent the wastage of agricultural products which has been playing a constructive role in the development of cold chain infrastructure. Increase in the import and export of the perishable goods and products as well as the movement of such goods within with in the country have led to an increase in the global cold chain market value. Global cold chain market s revenues have increased consistently due to the increasing trend of utilization of cold chain technology for preserving the food grains also, apart from storage of perishables. The global cold chain market had recorded sales of around USD billion in 2011 which was an increase of over 14% from 2008 figures. During the period, , the global cold chain market is anticipated to grow at the compounded annual growth rate of around 6.7% which will make the total revenues of global cold chain market to reach at around USD billion as per the estimates. The total capacity for refrigerated warehouses is estimated at 460 million cubic meters worldwide (Global Cold Chain Alliance, 2011), of which 310 million cubic meters is public warehouses (for hire). USA, India and China account for the largest share in cold storage industries worldwide. The major growth drivers for the segment include increased globalization of food industry, global efforts towards sustainable growth of the sector and most importantly changing consumer taste and preferences. Exhibit 11: Global cold chain market revenues in USD billion ( ) CAGR 6.7% Source: Industry Source, Global Cold Chain Alliance 28 Cold Chain: Opportunities in India

41 The developing nations are anticipated to play a key role in structuring the fate of global cold chain industry. Due to increased efforts and various policy incentives by governments of developing nations like India and China, there will be a significant demand of cold chain infrastructure by the developing nations in coming years. In 2011, developing nations had around 36% in global cold storage capacity which is expected to increase to 57% by the year The growth rate of cold storage capacity is anticipated to be much higher in case of developing nations than developed nations. The United States of America has the highest cold storage capacity whereas India and China hold 2nd and 3rd position respectively as per the cold chain storage capacity. Exhibit 12: Top 5 nations on the basis of cold storage space growth during CAGR % India Ireland Germany Costa Rica Brazil Rank Source: IARW Growth in the global market of cold chain products is supported by decreasing tariffs (WTO, GATT), improvement of transportation efficiency, development of communication and information technology, and development of cold chains techniques. The strong growth of international perishable trade also relates to the increase of global gross domestic product (GDP). Increasing income levels provides customers with more purchasing power to create a change to a healthy diet towards more fresh fruits and higher value foodstuffs, such as fish and seafood. Therefore, producers and retailers have responded with an increasing trend of reefer trade from all over the world. For example in Eastern and Central Europe, the consumption of fresh fruits rose from insignificant levels to levels of Western Europe. Sales volumes of cold chain products, especially for fresh fruits experiences seasonal earnings characteristics, because fresh fruit prices traditionally are lower in the second half of the year, when summer fruits are in the markets. The extent of seasonality influence on perishable export of each country is not the same because of the difference in reefer products each country relies on (see Exhibit 12). Some reefer products have more seasonal characteristics than others, such as fresh fruits. YES Bank- Dutch Embassy Collaborative Study 29

42 Exhibit 13: Difference in reefer exports between peak month & slack month per country Brazil Indonesia US Atlantic Southeast Ecuador Denmark Costa Rica Philippines Belgium China Australia US Pacific Southwest France Germany Vietnam Spain Peru India Thailand Argentina Russia New Zealand Chile Source: Global Cold Chain Alliance Israel South Africa Strong reliance on few non-seasonal reefer products Big variance in reefer goods minimize seasonality effect Strong reliance on few seasonal perishable goods 0% 20% 40% 60% 80% 100% Source: Global Cold Chain Alliance Challenges The cold chain scenario across the globe is improving by leaps and bounds. Both TCW and TCV segments are showing healthy CAGR in the past and is expected to maintain the same in coming decade. With the advent of more globalized and integrated world, there is increased focus on agri trade across the nations focusing on improving the value chain of perishables and thus integrated cold chain sector. Still, the industry as a whole is poised with some challenges which need to be rectified in future to make the industry more viable and profitable for all the involved stakeholders in the chain. All developed and developing nations are facing high real estate and energy costs as the major challenge. Cold chain sector globally is facing the major issue of high CAPEX and OPEX in successfully operating an integrated cold chain. Infrastructure & land costs and power costs have a high share in overall capital and operational expenditure respectively. Developing nations are also facing challenges like lack of enabling infrastructure, unskilled manpower, large no. of intermediaries in the supply chain and unavailability of cost efficient technology. Some of the critical challenges which need to be addressed are: gaps in appropriate infrastructure development in the cold chain, lack of awareness and willingness to adopt energy efficient modern cooling techniques, lack of market information, unfavorable tax regime and fiscal policies which is inadequate to attract private investors. These challenges pose a threat for the holistic development of the Integrated Cold Chain sector. Some of the challenges are country specific and some are faced by almost all cold chain players. They need to be addressed in future by both private and public sector stakeholders involved in the value chain effectively to reduce the wastage of perishables and increasing their shelf life. 30 Cold Chain: Opportunities in India

43 IV Key States and Commodities YES Bank- Dutch Embassy Collaborative Study 31

44 IV Key States and Commodities 1. Production of Horticulture Crops, Meat, Milk and Fish 1.1. State-wise Production of Fruits, Vegetables & Spices Exhibit 14: State-wise production of fruits, vegetables & spices during (in 000 MT) State Fruits Vegetables Spices Total West Bengal 3,173 25, ,847 Andhra Pradesh 13,939 12,105 1,188 27,231 Uttar Pradesh 5,176 19, ,960 Bihar 4,249 16, ,587 Gujarat 8,413 10, ,816 Madhya Pradesh 5,450 12, ,485 Maharashtra 9,785 8, ,902 Tamil Nadu 6,700 7, ,877 Karnataka 6,620 7, ,831 Orissa 2,210 9, ,856 Chhattisgarh 1,702 4,4 15 6,712 Kerala 2,584 3, ,160 Assam 2,074 3, ,776 Haryana 516 5, ,610 Punjab 1,503 3, ,353 Jharkhand 890 4,325-5,215 Jammu & Kashmir 1,742 1, ,139 Rajasthan ,451 Himachal Pradesh 556 1, , Cold Chain: Opportunities in India

45 State Fruits Vegetables Spices Total Uttarakhand 806 1, ,906 Tripura ,470 Meghalaya Manipur Mizoram Nagaland Delhi Arunachal Pradesh Sikkim Goa Andaman & Nicobar Pondicherry Dadar & Nagar Haveli Lakshadweep Daman & Diu Total 81, ,187 5, ,215 Source: National Horticulture Board (NHB) 1.2. State-wise Meat Production Exhibit 15: State-wise meat production during (in 000 MT) States/ UTs Cattle Buffalo Pig Poultry Sheep Goat Total Uttar Pradesh ,136.9 Andhra Pradesh West Bengal Maharashtra Tamil Nadu Kerala Haryana Bihar Punjab Karnataka Rajasthan Orissa Delhi Nagaland Jharkhand Madhya Pradesh Meghalaya YES Bank- Dutch Embassy Collaborative Study 33

46 States/ UTs Cattle Buffalo Pig Poultry Sheep Goat Total Assam Gujarat Jammu and Kashmir Chhattisgarh Tripura Manipur Uttarakhand Arunachal Pradesh Pondicherry Mizoram Goa Himachal Pradesh Sikkim Chandigarh Andaman and Nicobar Islands Lakshadweep Dadar & Nagar Haveli Daman and Diu Total 327 1, , ,947.8 Source: Indiastat 1.3. State-wise Milk Production Exhibit 16: State-wise milk production during (in 000 MT) S No. States/UTs Milk Production 1 Uttar Pradesh 23,330 2 Rajasthan 13,946 3 Andhra Pradesh 12,762 4 Gujarat 10,315 5 Punjab 9,724 6 Madhya Pradesh 8,838 7 Maharashtra 8,734 8 Haryana 7,040 9 Tamil Nadu 7, Bihar 6, Karnataka 5, Cold Chain: Opportunities in India

47 S No. States/UTs Milk Production 12 West Bengal 4, Kerala 2, Odisha 1, Jharkhand 1, Jammu and Kashmir 1, Uttarakhand 1, Chhattisgarh 1, Himachal Pradesh 1, Assam Delhi Tripura Meghalaya Manipur Nagaland Goa Puducherry Chandigarh Sikkim Arunachal Pradesh Andaman & Nicobar Islands Mizoram Dadra and Nagar Haveli$ Lakshadweep 2 35 Daman and Diu 1 Source: Indiastat Total 132, State-wise Fish Production Exhibit 17: State-wise fish production during (in 000 MT) S No. State/Union Territory Fish Production 1 Andhra Pradesh 1, West Bengal 1, Gujarat Kerala Tamil Nadu Maharashtra YES Bank- Dutch Embassy Collaborative Study 35

48 S No. State/Union Territory Fish Production 7 Karnataka Uttar Pradesh Odisha Bihar Chhattisgarh Assam Haryana Punjab Jharkhand Goa Madhya Pradesh Tripura Rajasthan Puducherry A & N Islands Manipur Jammu & Kashmir Daman & Diu Lakshadweep Himachal Pradesh Nagaland Meghalaya Uttarakhand Arunachal Pradesh Mizoram Delhi Sikkim Chandigarh Dadra & Nagar Haveli 0.1 Total 8,666.5 Source: Indiastat 36 Cold Chain: Opportunities in India

49 The top 5 states basis the production of fruits, vegetables, spices, meat, milk and fish are provided below. Exhibit 18: Top five states basis production ( ) In 000 MT Rank 1 Rank 2 Rank 3 Rank 4 Rank 5 Ranking basis Fruit Prod n Andhra Pradesh Maharashtra Gujarat Tamil Nadu Karnataka Fruit Prod n 13,939 9,785 8,413 6,700 6,620 Ranking basis Vegetable Prod n West Bengal Uttar Pradesh Bihar Vegetables Prod n Madhya Pradesh Andhra Pradesh 25,467 19,572 16,326 12,574 12,105 Production Ranking basis Spice Prod n Andhra Pradesh Gujarat Rajasthan Madhya Pradesh Karnataka Spices Prod n 1, Ranking basis Meat Prod n Uttar Pradesh Andhra Pradesh West Bengal Maharashtra Tamil Nadu Meat Production 1, Ranking basis Milk Prod n Uttar Pradesh Rajasthan Andhra Pradesh Gujarat Punjab Milk Prod n 23,330 13,946 12,762 10,315 9,724 Ranking basis Fish Prod n Andhra Pradesh West Bengal Gujarat Kerala Tamil Nadu Fish Prod n ( ) 1,603 1, YES Bank- Dutch Embassy Collaborative Study 37

50 Exhibit 19: Top five states basis storage capacity In 000 MT Rank 1 Rank 2 Rank 3 Rank 4 Rank 5 Ranking basis Multipurpose Storage Capacity Multipurpose Storage Capacity Uttar Pradesh Andhra Pradesh Maharashtra Karnataka Chhattisgarh 1, Storage Capacity Ranking basis Fruits & Vegetables Storage Capacity Fruits & Vegetables Storage Capacity Ranking basis Meat & Fish Storage Capacity Meat & Fish Storage Capacity Maharashtra Orissa Andhra Pradesh Tamil Nadu Himachal Pradesh Maharashtra Kerala Andhra Pradesh Gujarat Tamil Nadu Ranking basis Milk & Milk Products Storage Capacity Milk & Milk Products Storage Capacity Maharashtra Gujarat Punjab Andhra Pradesh Delhi Ranking basis Total Cold Storage Capacity Total Cold Storage Capacity Uttar Pradesh West Bengal Punjab Gujarat Andhra Pradesh 13,221 5,849 1,901 1,834 1,397 Source: Agmarknet, Indiastat, YES BANK Analysis Exhibit 20: Top five states basis storage gap In 000 MT Rank 1 Rank 2 Rank 3 Rank 4 Rank 5 Storage Capacity Ranking basis Cold Storage Gap Cold Storage Gap in 000 MT Tamil Nadu Maharashtra West Bengal Bihar Kerala 7,611 5,669 4,716 2,845 2,708 Source: YES BANK Analysis 38 Cold Chain: Opportunities in India

51 Andhra Pradesh, Maharashtra, Gujarat, Tamil Nadu, Karnataka, West Bengal, Uttar Pradesh, Madhya Pradesh and Rajasthan lists among top 5 producers in minimum two categories. Andhra Pradesh ranks in top 5 states for fruits, vegetables, spices, meat and fish production as well as in multipurpose, fruits & vegetables, meat & fish and milk & milk products storage. Andhra Pradesh has the highest capacity utilization at 92% because of storage of red chilies, usually stored round the year. Uttar Pradesh, West Bengal, Punjab and Bihar have the highest cold storage capacity but the major utilization of this is for potatoes. Rentals in West Bengal for potato storage are regulated by the State Government limiting the interest of industry players in investing in high end technology for Potato storage. Majority of states have lower capacity utilization as potato cold storages in these states remain closed during the lean seasons. In Agra, Uttar Pradesh there are approximately 140 cold storages which are mostly dedicated to potato storage. In western region, Maharashtra is amongst the top producer of fruits and has high multipurpose, fruits & vegetables, milk & milk products and meat & fish storage capacity. Maharashtra has cold storage gap of 5.7 million tonnes. Fruits like grapes, pomegranate, citrus and mango are exported from Maharashtra. The capacity utilization of cold storages in Maharashtra is 55%. Gujarat also has high fruits, spices and milk production. The cold storage capacity utilization in Gujarat is 51%. Himachal Pradesh, J & K and part of Uttarakhand has CA storages majorly for Apples. Uttarakhand also have IQF facilities for green peas, cauliflower, carrot, okra, spinach but have less capacity utilization due to seasonal availability of vegetables and lack of demand in the nearby areas. The total CA storage capacity in India is approximately 70,000 to 80,000 tonnes out of which Himachal Pradesh accounts for 28,000 MT, J & K for 20,000 MT and rest is located in Delhi/NCR and other regions. Delhi/NCR is one of the major consumption markets as well distribution centre of India. In terms of arrivals, Azadpur Fruit & Vegetable Market, Delhi is the biggest Fruit & Vegetable market in Asia. This market serves as a National Distribution Center for fruits like Apple, Banana, Orange, Mango etc. and vegetables like Potato, Onion, Garlic, Ginger etc. Exhibit 21: Arrival of Azadpur mandi (including sub-yards) in last 5 years in 000 MT Year Fruit Vegetable Total ,265 2,163 4, ,042 2,179 4, ,293 2,240 4, ,125 2,379 4, ,167 2,451 4,619 Source: APMC Azadpur Delhi has total cold storage capacity of 126,158 MT which is mainly allocated to multipurpose cold storage. Kundli, nearby Delhi is one of the major cold storage hub has over 50 cold stores with an approximate capacity of 300,000 MT. The CA storage capacity in Kundli is approximately 25,000 MT which is used mainly for Apples procured from Himachal. Kundli also has cold storages for pulses, spices, dry fruits, milk powder, banana, peas, potatoes and seeds. The key commodities kept in cold storage in Kundli are apples, kirana items (pulses, fresh spices) and potatoes. YES Bank- Dutch Embassy Collaborative Study 39

52 40 Cold Chain: Opportunities in India

53 V Policies & Schemes for Cold Chain Sector YES Bank- Dutch Embassy Collaborative Study 41

54 V Policies & Schemes for Cold Chain Sector 1. Role of Stakeholders and Stakeholders Expectations Fruits and vegetables are produced in rural areas while major consumption is in semi-urban and urban areas in addition to the local area where it is produced. Different agencies and functionaries are engaged between producers and the consumers. Thus, a channel of distribution of a product is the route taken by the ownership of goods by various stakeholders as they move from the producer to the consumer or industrial user. Major stakeholders involved in the cold chain include producers, pre-harvest contractors, wholesalers, processors, cold storage and logistics players and retailers Farmers Farmers are the starting point of the cold chain as they cultivate the produce for selling in market. Majority of the farmers sell their produce to pre harvest contractors and sometimes to wholesalers with a very small percentage selling directly to processor or retailers Pre-harvest contractors Pre harvest contractors take orchards on lease from farmers at flowering stage or after maturity and take care of all post harvest activities. Pre harvest contractors aggregate and sell produce to wholesalers. Some wholesalers also act as pre-harvest contractors. Thus pre harvest contractors play an important role in the supply chain as they are the linking point of farmers and wholesalers as well as manage post harvest practices thus impacting the quality of fruit. In vegetables supply chains, the commission agent/aggregator purchase produce from the farmers and sells to wholesalers after aggregation Wholesalers Wholesalers are the main purchasing agency in the market which buys produce directly from the farmers or thorough commission agents/pre harvest contractors. Wholesalers supplies produce to processors and retailers. 42 Cold Chain: Opportunities in India

55 Some wholesalers also market their produce directly to consumers or exports to other countries. Generally they have their own packing centers and incur expenditure on packing material, sorting and grading, transportation, loading / unloading, market cess and other miscellaneous charges Processors Processors buy produce from wholesalers as well as directly from the farmers. In case of direct buying, farmers grow specific varieties as per the requirement of the processor like in Gujarat farmers are growing processing grade quality potato for processors like ITC, McCain Cold Storage and Logistics Players Third party logistics players provide cold storage as well as transportation facilities on rental basis. Some of the wholesalers have their own cold stores while other players outsource storage and distribution of produce to third party logistics players. A cold chain logistics player could be solely a cold storage owner or owner of a fleet of reefer trucks or, as is becoming increasingly common, an integrated 3PL firm that offers services across the entire network right from procurement to the final destination of the product. The players in this segment operate on various business models such as full ownership model (asset heavy), lease model (asset light) or a combination of two (mix of owned and leased assets) Retailers Retailers are the end point of the cold chain and store the produce for selling to customers. In India, sale of majority of fruits and vegetables happen through local shops, vendors using street cart. A small percentage of produce is sold through organized retail chains like Reliance, Walmart and Spencer s. 2. Policies related to the Indian Cold Chain Sector The present capacity of cold chain in India is around 31 million MT and government is planning to create over 1.6 million MT of new storage capacity in cold chain segment and additionally will modernize 0.8 million MTs of existing cold chain infrastructure in the country. The government has taken many steps in the past to stimulate the sector and has granted Infrastructure status to the cold chains which gives special emphasis in policy making to aid the development of the cold chain sector. Various incentives provided to the cold chain sector in India: 1) Duty Cuts: In the Union Budget , the central government incentivized investment in this infrastructure by giving following benefits a. The customs duty was decreased from 5% to 2.5% with setting up and expansion of cold storage units and processing units were granted full exemption from service tax b. Refrigerated units required for manufacture of reefer vans were granted full exemption from customs duty 2) Depreciation benefits: The extent of depreciation was increased to 150% from 100% of the total capital expenditure incurred, within a year of investments, in the union budget of ) 100% Foreign Direct Investment (FDI) in cold chain infrastructure through automatic route 4) External Commercial Borrowing (ECB) route open for cold chain infrastructure 5) Service tax is exempted for storage of agriculture produce in cold storages and warehouses YES Bank- Dutch Embassy Collaborative Study 43

56 6) Service tax is exempted for erection, installation or commissioning of cold storage equipment, transport, technical testing by state or central certification agency 7) National Centre for Cold Chain Development (NCCD) was established in 2011 to look into matters related to cold chain infrastructure 8) Section 80-IB of the Income Tax Act provides deductions in respect of profits from industrial undertakings related to cold chain. For the first 5 years the deductions and for the next 5 years 9) Under section 35-AD of the Income Tax Act 1961, 150% is permitted for expenditure incurred on capital investment in setting up a cold chain facility 10) The government s emphasis on Food Parks and Integrated Cold Chain Development has increased in the recent past and has dedicated financial outlay for cold chain schemes and MFPs in the budget and in 5 yr plan. 3. Subsidies & Schemes 3.1. Integrated Cold Chain, Value Addition and Preservation Infrastructure Scheme under Ministry of Food Processing Industries (NMFP/MoFPI) 3 Objective The objective of the scheme of Cold Chain, Value Addition and Preservation Infrastructure is to provide integrated cold chain and preservation infrastructure facilities without any break from the farm gate to the consumer. Eligible Entries Individual, Groups of Entrepreneurs, Cooperative Societies, Self Help Groups (SHGs), Farmers Producer Organizations (FPOs), NGOs, Central/State PSUs etc. with business interest in cold chain solutions are eligible to setup integrated cold chain and preservation infrastructure and avail grant under the Scheme. Components It covers pre-cooling facilities at production sites, reefer vans, mobile cooling units as well as value addition centers which includes infrastructural facilities like Processing/Multi-line Processing/ Collection Centers, etc. for horticulture, organic produce, marine, dairy, meat and poultry etc. Pattern of Assistance Currently, the cold storages focusing on horticultural produce can apply for the grant to MoFPI, while those focusing on non-horticultural produce have to submit the proposal to NMFP. For horticulture produce - Financial assistance (grant-in-aid) of 50% of the total cost of plant and machinery and technical civil works in General areas and 75% for NE region including Sikkim and difficult areas (J&K, Himachal Pradesh and Uttarakhand) subject to a maximum of INR 100 million QxZHjaRzpHHkmAAdPnAb/b0qJ86du9xNucufOszZXdjokcgAhR 44 Cold Chain: Opportunities in India

57 For non horticulture produce - Financial assistance (grant-in-aid) of 35% of the bank appraised project cost including Interest during Construction (IDC) in General areas and 50% for NE region including Sikkim and difficult areas (J&K, Himachal Pradesh and Uttarakhand) subject to a maximum of INR 50 million. Implementation Status (As on ) 122 cold chain projects are being established with the support of MOFPI and proposals for setting up another 15 cold chain proposals are under evaluation. A total of 1.91 lakh MT of Cold Storage/Controlled Atmosphere (CA)/ Modified Atmosphere (MA) storage, Deep Freezer, MT per hour of Individual Quick Fridge (IQF), Lakh litres per day of milk storage, and 225 numbers of reefer carriers have already been created (status as on 31 March, 2014). Of this, a capacity of 94,000 MT has been created under this scheme in the Twelfth five year plan ( ) with a financial assistance of INR 18,207 lakh. The maximum storage has been created in west Bengal (18,392 MT) followed by Maharashtra (15,647 MT) and Kerala (10,500 MT) (during twelfth five year plan till 31 March, 2014) Infrastructure Development Scheme under Agricultural & Processed Food Products Export Development Authority (APEDA) 4 Objective The scheme primarily aims to address the gap in infrastructure in the country for facilitating export of agricultural commodities and making India competitive with other nations. Eligible Entries Government or Public Sector agency like Airport Authority of India or Port Trust etc. exporters/producers/ growers/cooperative organization and federations for horticulture and floriculture Components APEDA gives assistance for purchase of specialized transport units for animal products horticulture and floriculture sector, mechanization of harvest operation of the produce, setting up of mechanized handling facilities including sorting, grading, washing, waxing, ripening, packaging & palletisation etc, setting up of both pre cooling facilities with proper handling system as well as cold storage for storing, providing facilities for pre shipment treatment such as fumigation, X-ray screening, hot water dip treatment, water softening plant, setting up of vapor heat (treatment, electronic beam processing or irradiation facilities, setting up of environment control system e.g. pollution control, effluent treatment etc, setting up of specialized storage facilities such as high humidity cold storage deep freezers, controlled atmosphere (CA) or modified atmosphere (MA) storage etc. 4 YES Bank- Dutch Embassy Collaborative Study 45

58 Pattern of Assistance A. Assistance for purchase of specialized transport units for animal products horticulture and floriculture sector 40% of the cost subject to a ceiling of INR 750,000 per beneficiary. B. Assistance for all APEDA scheduled products for i. Setting up of sheds for intermediate storage and grading / storage / cleaning operation of produce. ii. a) Setting up of mechanized handling facilities including sorting, grading, washing, waxing, ripening, packaging & palletisation etc. 40% of the cost of equipment subject to a ceiling of INR 1,000,000 per beneficiary 40% of the cost of equipment subject to a ceiling of INR 2,500,000 per beneficiary b) Setting up of both pre cooling facilities with proper handling system as well as cold storage for storing 40% of the cost of equipment subject to a ceiling of INR 2,500,000 per beneficiary c) Providing facilities for pre shipment treatment such as fumigation, X-ray screening, hot water dip treatment, Water softening Plant 40% of the cost of equipment subject to a ceiling of INR 2,500,000 per beneficiary d) Setting up of integrated post harvest-handling system (pack houses / green houses with any two or more of the above facilities) 40% of the cost subject to a ceiling of INR 7,500,000 per beneficiary iii. iv. Setting up of cable cars (covering minimum of 50 ha of plantation) for banana and other crops (as decided by APEDA) Setting up of vapor heat (treatment, electronic beam processing or irradiation facilities 40% of the cost subject to a ceiling of INR 7,500,000 per beneficiary 40% of the cost subject to a ceiling of INR 5,000,000 per beneficiary v. Assistance for setting up of environment control system e.g. pollution control, effluent treatment etc 40% of the cost subject to a ceiling of INR 3,500,000 per beneficiary vi. Setting up of specialized storage facilities such as high humidity cold storage deep freezers, controlled atmosphere (CA) or modified atmosphere (MA) storage etc. 40% of the cost subject to a ceiling of INR 2,500,000 per beneficiary Implementation Status (As on ) A capacity of 15,000 MT has been created under the scheme in the 12th five year plan with a financial assistance of INR million. The maximum storage capacity under this scheme has been created in the state of Maharashtra (10,285 MT) followed by Assam (2,000 MT) and Uttar Pradesh (1,550 MT) 46 Cold Chain: Opportunities in India

59 3.3. NABARD Warehousing Scheme (NWS) 5 Objective Consequent upon the announcement of an allocation of INR 5,000 crores to NABARD in the budget for , for supporting creation of infrastructure for storage of agricultural commodities, Reserve Bank of India (RBI) issued guidelines for creation of Warehouse Infrastructure Fund (WIF) in NABARD. With a view to operationalising WIF, NABARD has formulated a scheme viz., NABARD Warehousing Scheme (NWS), which envisages extension of loans to Public and Private Sectors for construction of warehouses, silos, cold storages and other cold chain infrastructure. Funds under this scheme would be utilized for meeting the growing demand for storage capacity for agricultural commodities in the entire country and also in the wake of enactment of National Food Security Act Priority will be given for the projects proposed in Eastern, North Eastern and food grain deficit states. Eligible entities State Governments, Agencies Owned/ Sponsored by State Govt., Panchayati Raj Institutions (through respective State Governments, Agencies owned/ sponsored by Government of India, Special Purpose Vehicles (SPVs) set up under the projects in Public- Private Partnership (PPP) mode, Cooperatives (and their Federations), Farmers Producers Organizations (FPOs), Federations of Farmers Collectives, APMCs, Apex Marketing Boards, Private Companies, Individual Entrepreneurs, etc. Components Loans will be provided for projects involving creation of storage infrastructure, with a minimum capacity of 5000 MT, for agricultural and allied produce including construction of Warehouses, Silos, Cold storage, Controlled Atmosphere (CA) stores, other cold chain activities like reefer vans, bulk coolers, Individually Quick Frozen units (IQF), chilling/ freezing infrastructure, etc. Modernization/ improvement of the existing storage infrastructure projects will be considered on merit of each proposal provided it leads to scientific/ additional storage capacity. Pattern of Assistance NABARD will provide direct financial support for public and private sector by sourcing funds from WIF at subsidized rates of interest Implementation Status NABARD Warehousing Scheme (NWS), announced in the Union Budget , is a dedicated scheme for providing assistance for creation of storage infrastructure with a corpus of INR 50 billion. The scheme has found many takers including private players. NABARD has already sanctioned INR 22 billion for storage and warehousing under the scheme across India which will lead to creation of additional 8.62 million MT storage capacity. 3 YES Bank- Dutch Embassy Collaborative Study 47

60 3.4. Establishment of Cold Chain under Rashtriya Krishi Vikas Yojna (RKVY) 6 Objective Rashtriya Krishi Vikas Yojna is a central scheme with 100% grant from department of Agriculture, Ministry of Agriculture, GOI being implemented through state. This scheme was launched in with the aim to incentivize states to increase public investment in agriculture and allied sector to boost agricultural growth rate. RKVY has become exceedingly popular with States on account of flexibility and autonomy provided in process of planning and execution of agriculture and allied sector schemes. Funds utilization under the Scheme by states has improved remarkably. The outlay under RKVY was INR billion for Components & Eligible Entries The RKVY funds can be availed by the State Governments for the development of various sectors and industries like crop husbandry, dairy, fisheries, warehousing and storage, soil conservation research & Development etc. Only the state governments are entitled to get a grant with the RKVY. Pattern of Assistance Since there is no private party involved in the transaction, PPP does not exist. However, after the states have received grant under RKVY, they have involved private players for operations and maintenance of the facilities created Cold Storage and Fruits & Vegetables Development Program under National Cooperative Development Corporation (NCDC) Objective The National Cooperative Development Corporation (NCDC) supports fruit and vegetable marketing and processing cooperatives. It is a unique organization, which not only plays a developmental role but also provides financial assistance for creating infrastructure for marketing, processing and storage of agricultural produce in the cooperative sector. It extends financial assistance in practically all the areas of post harvest operations. Eligible Entries Cooperative Components Assistance to the cooperatives is provided for setting-up of new ice plants and cold storages as also for expansion/ modernization of the existing units. Pattern of Assistance NCDC provides financial assistance to the extent of 90% of the block cost to the State Governments for setting up/ modernization/ expansion/ rehabilitation of cold storages and Ice plants by cooperatives. In case of direct funding, assistance to the extent of 75% is provided. NCDC has also dovetailed its cold storage programme with National Horticulture Board (NHB). In such cases quantum of assistance provided by NCDC is reduced by the subsidy available under the Capital Investment Scheme (CIS) of NHB. The scheme provides enhanced back-ended Cold Chain: Opportunities in India

61 40% of the project cost for general and 55% in case of hilly and scheduled areas for maximum storage capacity upto 5,000 ton per project at normative INR 6,000 / 7,000 / 8,000 per ton as per prescribed standards under the scheme. Implementation Status Due to inability of State Governments / Cooperative Societies to pose suitable proposals during the financial year (upto ), no financial assistance could be sanctioned so far to cold storage projects Mission for Integrated Development of Horticulture (MIDH) 7 A mission for Integrated Development of Horticulture has been launched by the Central Government to promote holistic growth of horticulture sector covering fruits, vegetables, root & tuber crops, mushrooms, spices, flowers, aromatic plants, coconut, cashew, cocoa and bamboo through area based regionally differentiated strategies, which includes research, technology promotion, extension, post harvest management, processing and marketing, in consonance with comparative advantage of each state/region and its diverse agro-climatic features. The scheme, which has taken take off from , integrates the ongoing schemes of National Horticulture Mission, Horticulture Mission for North East & Himalayan States, National Bamboo Mission, National Horticulture Board, Coconut Development Board and Central Institute for Horticulture, Nagaland. The assistance for setting up of new cold storage infrastructure will be available only to multi-chamber cold storage units with technologies which are energy efficient with provision for thermal insulation, humidity control, advanced cooling systems, automation, etc., having specifications and standards approved by the National Horticulture Board. While Cold storages up to 5,000 MT capacity will be promoted under NHM/HMNEH sub-schemes, capacity above 5,000 MT up to 10,000 MT will be promoted under NHB sub-scheme. Assistance for pre cooling unit will be linked to pack-houses and cold rooms. Government of India (GOI) contributes 85% of the total outlay for development programs in all the states except the states in North East and Himalayas and 15% share is contributed by the respective State Governments. In the case of North Eastern States and Himalayan States, GOI contribution is 100%. Similarly, for development of bamboo and programmes of National Horticulture Board (NHB), Coconut Development Board (CDB), Central Institute for Horticulture (CIH), Nagaland and the National Level Agencies (NLA), GOI contribution will be 100%. MIDH will have the following sub schemes and their respective area of operation Exhibit 22: Schemes under MIDH S No. Sub Scheme Target Group/ Area of Operation 1 NHM All states & UTs except states in NE and Himalayan region 2 HMNEH All states in NE and Himalayan region 3 NBM All states & UTs 4 NHB All states & UTs focusing on commercial horticulture 5 CDB All states and UTs where coconut is grown 6 CIH NE states focusing on HRD & capacity building YES Bank- Dutch Embassy Collaborative Study 49

62 MIDH Subsidy Assistance 50% of Capital Cost Functional Pack hose/ on farm collection unit Evaporative/ low energy cool chamber Low cost onion storage Pusa zero energy cool chamber Subsidy@ 35% of Project Cost (General Areas), 50% in Hilly Areas Integrated Pack House with mechanized facility Pre cooling unit Cold room Mobile pre cooling unit Single product cold storage Multi product cold store (>6 chambers) Reefer Vehicles Primary processing units Ripening Chambers Fund Flow Mechanism The Central government will release the fund to the state government which in turn will release the funds to the State Horticulture Mission (SHM) or state level implementing agencies. Funds received from there on will be made available to District Implementing Agency. Flow chart of release of funds under MIDH is given below: 85% State Govt. + 15% by SHM states District Implementing Agency (DIA) Beneficiaries 100% State govt., HMNEH states- SHM HMNEH Districts Beneficiaries Department of Agriculture & Cooperation 100% National Level Agencies (NLA) Beneficiaries 100% National Bamboo Mission States Forest/ Bamboo Development Agency Beneficiaries 100% CDB/ CIH Beneficiaries 50 Cold Chain: Opportunities in India

63 VI Assessment of Cold Chain Sector in Andhra Pradesh YES Bank- Dutch Embassy Collaborative Study 51

64 VI Assessment of Cold Chain Sector in Andhra Pradesh 1. Overview of Cold Chain Sector in Andhra Pradesh With annual production of around 28.9 million MT of horticulture produce, Andhra Pradesh (AP) stands 2nd in the country next to West Bengal. Andhra Pradesh ranks among top 5 states in production of fruits, vegetables, spices and meat. Andhra Pradesh is the highest producer of fruits with production of 13.9 million MT. Mango and Banana with production of 4.4 million MT and 3.2 million MT are the major fruits produced in the state. It is the 5th largest producer of vegetable in India with total production of 12.1 million MT. Tomato & Onion with production of 5.2 million MT and 1.6 million MT respectively are suitable for cold storage. Andhra Pradesh is also the highest producer of spices with total production of 1.2 million MT. All major spices like Chillies, Turmeric, Tamarind, Coriander and Ginger are suitable for cold storage. Andhra Pradesh is the third largest milk producer with milk production amounting to 12.8 million MT. Andhra Pradesh is the second largest state both for meat (0.9 million MT) & fish production (1.6 million MT). Existing commodities which are utilizing cold chain in Andhra Pradesh are milk & milk products, marine products, chillies, turmeric, mango and banana. Presently, there are only 371 cold storages in AP with a total capacity of 1.4 million MT. More than 90% of the cold storages are multipurpose followed by dedicated cold storages for meat & fish, fruits & vegetables and milk & milk Products with a cumulative share of 6%. Only 1% of the cold storages store exclusively fruits and vegetables. Two cold storages along with Vapour Heat Treatment facility for treatment of fruits and vegetables especially mangoes were established in Tirupati and Nuziveedu each. Both these facilities are now leased out to Srini Mega Food Park. 52 Cold Chain: Opportunities in India

65 District wise % share of cold storage is given the graph below. Exhibit 23: District wise % share of cold storage in Andhra Pradesh ( ) Nellore, 3% Others, 12% East Godavari, 3% Vizianagaram, 4% Vishakapatnam, 4% Guntur, 36% Krishna, 6% Rangareddy, 6% Warangal, 6% Prakasam, 6% Hyderabad, 7% Khammam, 7% Source: APEDA Agri Exchange, YES BANK Analysis Majority of the cold storages are located in Guntur region which are primarily used for storing Chilly. 2. Commodity Profile and Value Chain 2.1. Mango a) Mango Production Mango is the leading fruit crop of Andhra Pradesh, which occupies an area of 0.49 million hectares (accounting for 52% of the total area under fruits). It is the largest producer of mango with production amounting to 4.4 million MT (accounting for 24% of India s mango production). The major mango growing districts in AP are Chittoor (14%), Krishna (13%), Vizianagaram (10%) and Khammam (9%). YES Bank- Dutch Embassy Collaborative Study 53

66 Exhibit 24: District wise mango production in Andhra Pradesh ( ) S No. District Production (MT) % Production 1 Chittoor 605,700 14% 2 Krishna 538,533 13% 3 Vizianagaram 428,652 10% 4 Khammam 389,925 9% 5 Warangal 266,400 6% 6 Adilabad 217,818 5% 7 Kadapa 210,303 5% 8 Mahbubnagar 185,337 4% 9 Karimnagar 182,574 4% 10 Nalgonda 177,939 4% 11 Anantpur 169,146 4% 12 West Godavari 160,812 4% 13 Visakhapatnam 145,800 3% 14 Rangareddy 127,368 3% 15 Kurnool 110,475 3% 16 Nellore 103,185 2% 17 Srikakulam 83,808 2% 18 East Godavari 64,458 2% 19 Prakasam 62,694 1% 20 Nizamabad 29,340 1% 21 Medak 9,576 0% 22 Guntur 7,893 0% 23 Hyderabad - 0% Total 4,277, % Source: Ministry of Food Processing Industry Seasonality State Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Andhra Pradesh Lean season Peak season 54 Cold Chain: Opportunities in India

67 The major markets for mango in AP are as follows: Chittoor district Chittoor, Tirupathi, Pakala, Banarupalem, Palamaneru, Pottur Krishna district - Vijaywada, Nuziveedu Kadapa district -Koduru Major varieties are Baiganpally (Badami/Safeda), Suvarnarekha, Neelum and Totapuri. b)mango Pulp Industry The market size of mango pulp industry in India is approximately INR 5 billion for domestic market and INR 10 billion for exports. In volume terms, the Indian mango pulp industry is equivalent to 400,000 MT and Andhra Pradesh accounts for about 50-60% of the total mango pulp market in India. Mango pulp is produced from specific varieties of mangoes like Totapuri, Alphonso. Out of the total market, 70% mango pulp is aseptically packed and balance 30% is canned pulp. As per APEDA estimates, in India exported 174,860 MT of mango pulp worth INR 7.7 billion. Major destinations for Indian pulp exports are Saudi Arabia, Yemen Arab Republic, UAE and Netherlands. Mango Processing Industry in Chitoor District In AP, Chitoor is the major mango growing district as well as hub of mango processing industry. 90% of the mango pulp produced in Chitoor district is being exported mainly to the Gulf countries like Kuwait, Saudi, Dubai and also to the European Countries. 53 processing units are established in the district 7 units are with aseptic processing 46 units are with canning system 126,000 MT of mango pulp is produced 90% of Totapuri fruit of the district is utilized for pulp processing and remaining is used for table purpose. c) Storage Conditions The appropriate storage conditions for Mango are mentioned below: Temperature Storage Conditions 13 C ± 0.5 C Relative Humidity % Storage Period Freezing Point 3-7 weeks -1 C Note: Mango has sensitivity to refrigeration, freezing and ethylene exposure YES Bank- Dutch Embassy Collaborative Study 55

68 Mango ripening is done at 25 degree Celsius with high humidity (100 %). Presently, majority of mango ripening in India is done using chemicals like calcium carbide despite a government ban and very few players are using ripening chambers. Mango is stored and transported under ambient conditions after ripening. Mango ripening has not yet picked up in a big way as mango is a seasonal crop available only during 4-5 months and people are not willing to invest in ripening infrastructure. One of the food parks in Andhra Pradesh, Srini Food Park, Chittor had experimented for storage of mangoes for long duration but the results were not very promising due to chill injury of mangoes. Storage of Mango Pulp In recent years, processing and exporting companies have started keeping aseptic mango pulp in cold storage as per client s requirements. Companies like Coke, Pepsi and few exporters prefer to store mango pulp in the cold storage. Temperature of cold storage for storing pulp is 7-10 degree Celsius. In Chitoor cluster, cold storage capacity of pulp is around 100,000 MT, with half of the storage for organized players like Coke, Pepsi. Average inventory held for aseptic mango pulp is months (in cold storage). d) Mango Value Chain in Andhra Pradesh Mango in AP reaches to the consumer through four channels, i.e., Grower to Pre-Harvest Contractors (PHC), Grower to Wholesalers, Grower to Village Trader/Commission Agent (VT/CA) and finally Grower to Mango Processing Units (MPUs). From the grower, mango reaches the consumer and export destination through any of these channels. The Commission Agents (CAs) are the most important link in the marketing of mango and these agents control about two-thirds of the total market. Most of the mango supply to processing industries is taken up by the CAs. Role of different players in value chain of Mango in AP Pre-Harvest Contractors: The mango orchard owner leases out his orchard as per contract to the PHCs. The PHCs visit the mango orchards just after the mango-harvesting season to survey the orchards after which the negotiation takes place between the grower and the contractor. PHCs take care of all post harvest activities and sell the produce to wholesalers. Village Trader/Commission Agents: About more than half mango growers in AP transact through village trader/commission agent (VT/CA). VTs often provide advance to the farmer with the condition that the grower has to sell his produce through them. They sell mangoes to wholesalers/ processing units/retailers. Wholesalers: Traders from various parts of India participate in mango trading in Chitoor and Krishna District. These traders visit mango orchards during the months of January-February and survey the orchards at flowering stage and estimate the output for the forthcoming harvesting season. Based upon the estimation, wholesalers fix the prices for the purchase of mango production from the orchard owners. Unlike the PHCs, the wholesalers generally do not undertake maintenance of the farm. Under an informal agreement, wholesalers pay an advance (10 to 20 %) to the orchard owner. 9 9 Processing Units: Processors purchase mango for the production of pulp from traders as well as mango growers. Totapuri mangoes are preferred for preparing pulp because of its high pulp-yielding rate. Processors determine the price after analyzing the mango orchards and offer advances to the growers. Processing units also purchase mangoes from market yards as they are assured of large quantities. 56 Cold Chain: Opportunities in India

69 Farmers keep the produce for approx hrs for consolidation and primary sorting and grading Farmers Pre Harvest Contractors Ripening Chambers Commission Agent Pre Harvest Contractors take orchards on contract from farmers at a predetermined price and manage all post harvest activities. Some wholesalers also act as pre harvest contractors Wholesalers Retailer Consumer Wholesalers store Mangoes approx. for 7 days Retailers store Mangoes approx. for 3-4 days Transportation of Mangoes to wholesalers take 1 day for Hyderabad and 2-3 days for Delhi/NCR The different channels for marketing of mango in AP are detailed as under: S No. Marketing Channels Share (%) 1 Grower CAs/VTs Wholesalers Retailers Consumer 55 2 Grower PHCs Wholesalers Retailers Consumer 25 3 Grower Wholesalers Retailers Consumer 10 4 Grower Local Wholesalers Retailers Consumer 7 5 Grower Processors 3 6 Growers Consumer Negligible Indicative price across the value chain for fresh Banganpalli Mango (Table variety) in AP is as depicted below: S No. Banganpalli Mango (Table Variety) Price (INR/kg) Cumulative Price (INR/kg) 1 Procurement Price from Farmers Market Fee+ Commision (@ 6%) Transportation Cost from Farm to Hyderabad Wastage (@ 2%) Wholesaler's Purchase Price Sorting, Grading and Local Transportation Ripening Cost Wholesaler's Margin (@ 8%) Retailer Purchase Price Transportation to Retail Shop Retailer Margin (@ 20%) Consumer Price Source: Industry Sources Additional wastages happening at wholesaler, retailer level are covered within the margins. These wastages are difficult to quantify as they differ from case to case basis. YES Bank- Dutch Embassy Collaborative Study 57

70 The trade for table variety of Banganpalli mango happens from Chittor and Nunna Market, Vijaywada from where the mango is transported across India in trucks and rakes at ambient temperatures. Value Chain for Mango Pulp Farmers keep the produce for approx hrs for consolidation and primary sorting and grading Farmers Pre Harvest Contractors Some wholesalers also act as pre harvest contractors Wholesalers Processing of mango starting from fruit ripening to aseptic sterilization (aseptic line) is done by the processor/exporter Processors/ Exporter Importers Commission Agent Wholesalers may store for 1-2 days Ripening is done for 6-7 days and after processing pulp is stored for months Domestic Juice Processors The indicative value chain of processed mango pulp double concentrate (Totapuri pulp) for exports is as depicted below: Processed Mango Pulp Double Concentrate Totapari Price (INR/kg) Cumulative Price (INR/kg) Procurement Price from Farmers Wholesaler's Margin + Cess (@ 7%) Processor's Purchase Price 12.8 Inbound Logistics Processing Charges Pulp Conversion 26% Exporter Price including 8% Importer Price 60.6 Source: Industry Sources Additional wastages happening at wholesaler, retailer level are covered within the margins. These wastages are difficult to quantify as they differ from case to case basis. e) Potential for Cold Chain Intervention Andhra Pradesh is one of the major producers of table as well as processing variety of mango. At present the cold storage for table variety of mango has not been commercialized, although some experimentation has been done on a small scale. There is a huge potential to develop and propagate Controlled Atmosphere/Modified Atmosphere storage of mango to gain price arbitrage in off-season. Even one month storage of table mango can fetch returns for the mango stakeholders. In addition, the ripening of mango is still done through traditional methods (using chemicals like calcium carbide). Thus, there is huge potential for establishment of modern ripening chambers near urban consumption centers. Chittoor and Vijayawada are hubs for mango processing with production of both canned and aseptic pulp. In the recent years there has been trend by importers and beverage giants demanding storage of aseptic pulp in cold chain. Earlier, aseptic pulp used to be stored in warehouses under ambient conditions. Thus there is a huge opportunity to upgrade the existing facilities for storing mango pulp. 58 Cold Chain: Opportunities in India

71 2.2. Marine Products a) Fisheries and Marine Production Andhra Pradesh is the leading state in terms of fisheries production in India with a production of 1,603,200 MT ( ) and contributes to 18% to the national fisheries production. AP is the 2nd leading inland fish producing state (contributing to 20.8% of the national inland fish production) and 6th leading marine fish producing state (contributing to 9.0% of the national marine fish production) in the country. The fisheries sector contributed to 2.9 % to the Gross State Domestic Product and 9.96 % to the Agricultural GDP of Andhra Pradesh during Production of fish/prawn in the state has increased constantly from 1,056,000 MT in to 1,603,200 MT in , registering an average annual growth rate of 11.5%. Exhibit 25: Major fish producing states in India ( ) Production in 000 tonnes ,603 1, Andhra Pradesh West Bengal Gujarat Kerala Tam il Nadu Maharashtra Karnataka Source: DAHD, MoA, YES BANK Analysis Krishna and West Godavari are the major inland fish producing districts in the state with a share of 34% and 31% respectively. YES Bank- Dutch Embassy Collaborative Study 59

72 Exhibit 26: District wise production of inland fisheries in MT (including prawns) in AP S No. District % Share 1 Krishna 415,955 34% 2 West Godavari 380,836 31% 4 S.P.S Nellore 75,612 6% 5 Guntur 31,009 3% 6 East Godavari 41,021 3% 7 Nalgonda 34,966 3% 8 Warangal 22,233 2% 9 Kurnool 20,580 2% 10 Medak 20,133 2% 11 Mahabubnagar 29,164 2% 12 Karimnagar 24,0 2% 13 Nizamabad 21,810 2% 14 Adilabad 18,361 2% 15 Khammam 23,770 2% 16 Prakasam 16,627 1% 17 Vizianagaram 9,075 1% 18 Srikakulam 9,919 1% 19 Ranga Reddy 5, % 20 Y.S.R 4, % 21 Anantapur 2, % 22 Chittoor 1, % 23 Hyderabad % 24 Total 1,209,656 Source: Commissioner of Fisheries, Andhra Pradesh, YES BANK Analysis East Godavari, Visakhapatnam and Nellore are the major marine fish producing districts with a share of 21%, 21% and 19% respectively Exhibit 27: District wise production of marine fisheries in MT (including prawns) in AP S No. District % Share 1 East Godavari 81,128 21% 2 Visakhapatnam 79,274 21% 3 S.P.S Nellore 71,334 19% 4 Srikakulam 41,402 11% 5 Krishna 31,207 8% 6 Guntur 30,387 8% 7 Prakasam 22,904 6% 8 Vizianagaram 13,591 4% 9 West Godavari 8,190 2% Total 379,417 Source: Commissioner of Fisheries, Andhra Pradesh, YES BANK Analysis 60 Cold Chain: Opportunities in India

73 Seasonality and Storage Condition Shrimp: Round the year with the major seasons from May-Oct and Nov-Jan Fish: Round the year with lean season during June to August Average inventory turnover in cold storage is approximately days. Processed Shrimp and Fish destined for export is stored and transported in cold chain. The freezer cold storage for shrimp/marine products has a temperature of -18 to 20 degree Celsius. b) Marine Market Andhra Pradesh Andhra Pradesh is the major sea food exporting state of India with its 35-40% of the produce being exported to highly remunerative markets like EU, Japan and USA. The frozen shrimp (in value terms) is the major commodity exported from the state. The state has cultured shrimp production of vanamei variety at around 300,000 MT, of which approximately 80-90% is exported after being processed. Andhra Pradesh is also a major producer of cultured species like rohu, catla which are ice packed in airtight containers and sent to different parts of the country, predominately West Bengal, Assam, Bangladesh and other major northern markets like Delhi and Haryana. c) Value Chain of Fisheries & Marine Produce Value Chain for Fresh Fish/Seafoods The fisherman sells his catch as per types of fish to the commission agent. The fish at this stage is not graded because the fisherman lacks adequate knowledge of fish handling. The commission agent is the link between the fisherman and the supplier. The commission agent procures goods from the fisherman and grades each type of fish as clean or defective, based on the condition of the fish. The supplier is the link between the commission agent and the exporter. Suppliers have small depots alongside docks or harbors and trucks to transport products to his facility where products are sorted and cleaned. Fresh Fish Value Chain Domestic Market Fish Farmers Transported to village Cleaning, Sorting & Grading Commission Agent Icing and Packing Supplier Retailer Consumer Fish is not stored at any level in the value chain as it is highly perishable. Fish is packed in crates or thermacol boxes with ice for transportation to domestic markets like Haryana, Delhi, West Bengal and Maharashtra. Retailers also sells the fish within one day and do not store it for longer duration. YES Bank- Dutch Embassy Collaborative Study 61

74 Indicative value chain costing-indian Major Carp Rohu for domestic market Indian Major Carp Rohu Price (INR/kg) Cumulative Price (INR/kg) Procurement Price from Farmers Grading and Sorting Market Fee 1%) Transportation Commission Agent 4%) Supplier's Purchase Price 72.1 Icing+Thermocol Box Supplier's Margin 8%) Retailer's Purchase Price 81.3 Costs Incurred by Retailer Wastage 5%) Margin 30-40%) Consumer Price Source: Industry Sources Marine Products Value Chain Export No storage at farmer level. Catch is packed and transported in ice crates Fish/Shrimp Farmers Transportation to village Cleaning, grading/sorting, icing & packaging which may take around 4-5 hours. Transported to processing plant in less than 12 hours Commission Agent/Supplier Processing (deheading, cutting fins, removal of slime). After processing the product is frozen and stored for days Exporter Consumer/ Importer Value Chain for Shrimps & Marine Produce for Exports In AP most of the shrimp exporters have established purchase centers which spread all over the coastal region of AP. The major collection centers in AP for the exporters are in Srikakulam, Vizianagaram, Vishakapatnam, East Godavari, West Godavari, Krishna, Prakasam & Nellore districts. All these centers have infrastructure facilities like cold stores, ice plants, etc. The operating companies have a fleet of insulated trucks and refrigerated vehicles to transport the raw material from various purchase centers to their own processing plants. The finished product is normally transported in reefer containers either to Visakhapatnam Port or to Chennai Port for exports. 62 Cold Chain: Opportunities in India

75 Indicative value chain costing of Vannamei Shrimps for exports Shrimp - Vannamei Export Price (INR/kg) Cumulative Price (INR/kg) Procurement Price from Farmers Commission Agent (@ 2%) Processor's Purchase Price Packing with Ice Transportation Cost (distance from farm to Processing Plant in Insulated 5 MT trucks) Processing Cost Shrimp Wastage due to Processing (@ 32%) Packaging Material Transportation of Finished Goods (40 FT container-16 MT) Processor cum Exporter Margin (@ 12-14%) Importer Price Source: Industry Sources Additional wastages happening at wholesaler, retailer level are covered within the margins. These wastages are difficult to quantify as they differ from case to case basis. d) Potential for Cold Chain/Technology Intervention Andhra Pradesh is one of the major aquaculture production hub, as well as sea food exporting state in India. With the introduction of the Vannamei shrimp the production of cultured shrimp has increased dramatically and has completely replaced the traditionally cultivated black tiger shrimp. The capacity utilization of the shrimp processors has also increased from 20-30% to around 40-60% in the recent past. AP has highest shrimp production and net cultivable area is growing in the recent years. This is leading to up-gradation and capacity expansion by the shrimp processors. All the major players are planning to expand their capacities by 20-30% in next twothree years. In addition, there is high demand from major importers like US, EU and Japan. Processors have also upgraded to tube ice as compared to flake ice and block ice which is used traditionally. The growth in aquaculture/ processing will benefit the cold chain industry as it is crucial to maintain the quality of produce. There is potential for cold chain industry to intervene at all levels of value chain from grading sorting at farm level to final processed product due to the expansion of the Industry. Cold chain potential is possible in the following domains in the export value chain. Cold storage and transportation -reefer vans, pre cooling infrastructure Ice making plants-flake and tube ice Freezing units-iqf, plate freezers, blast freezer Freezer cold storages YES Bank- Dutch Embassy Collaborative Study 63

76 2.3. Meat a) Meat Production in Andhra Pradesh Andhra Pradesh (AP) has a large population base of animals and poultry. The state has the highest population of poultry and the second highest population of cattle and buffaloes in India. As per the livestock census 2007, AP has around 11.2 million cattle, 13.3 million buffaloes, 9.6 million goats and 25.5 million sheep. The state is the second largest producer of meat in the country with an annual production of 906,230 MT and contributes to 15% to the total meat production in India. AP is the 3rd largest producer of Buffalo meat (117,690 MT) after Uttar Pradesh and Punjab. Buffalo meat contributes to 13% of total meat production in the state. Poultry, sheep and goat meat contribution is 55%, 22% and 10% respectively. Exhibit 28: Major buffalo meat producing states in India (% share) Maharashtra, 5% Delhi, 5% Bihar, 4% Rajasthan, 2% Kerala, 9% Uttar Pradesh, 47% Andhra Pradesh, 11% Punjab, 11% Source: Indiastat, YES BANK Analysis In AP, Prakasam & Guntur districts accounts for a major share of Buffalo population (9% each) followed by Krishna (7%) Khammam, Nellore, Nalgonda & Warangal (6% each) Exhibit 29: District wise share of buffalo population in Andhra Pradesh (census 2007) Prakasam, 9% Guntur, 9% Others, 27% Krishna, 7% Anantapur, 4 % Kurnool, 5% Karimnagar, 5 % East Godavari, 5% Source: Department of Animal Husbandry, Andhra Pradesh West Godavari, 5% Nalgonda, 6% Khammam, 6% S.P.S Nellore, 6% Warangal, 6% 64 Cold Chain: Opportunities in India

77 In Andhra Pradesh, the price of a buffalo is decided on the basis of the estimated weight and age of the animal. Number of buffaloes slaughtered and meat production has doubled over the last four years. Major Slaughterhouses: There are 196 Government owned and 273 unorganized slaughterhouses. Only two private slaughterhouses have state of the art slaughter and processing facilities. In addition, there are two carcass utilization centers. Municipal slaughterhouses are at Chengicherla, Ramnaspura and Amberpet. b) Meat Market in Andhra Pradesh In AP, the organized processors are mainly present in the chilled and frozen segment. Frozen meat is mainly meant for export and Tier-I cities. There are about seven processing units in the state in organized sector including Allanasons, Al-Kabeer in animal meat segment. These processors are mainly catering to the meat export market and high end domestic market. c) Market for Exports of Buffalo Meat Total exports of Buffalo meat from India amounted to 1.4 million MT during Importing countries are majorly emerging markets in Malaysia, Egypt, Algeria, Philippines and Jordan. Indian buffalo meat is considered as lean meat and preferred in Middle East and South Eastern countries. During , AP figured as the third largest beef exporting state in the country, accounting for a substantial 35% of the total beef exported. Buffalo meat is also procured from nearby states for processing and exports. Major Export Units in Andhra Pradesh Approved Indian Abattoirs-Cum Meat Processing Plants are Al Kabeer Exports (P) Ltd. Frigerio Conserva Allana Ltd. Chengicherla Slaughterhouse d) Storage Conditions for Buffalo Meat As the meat processing companies are export oriented, the industry is well equipped with the cold chain facilities. Cold chain is required in buffalo meat export value chain once the buffalo is slaughtered and converted into boneless meat. Before deboning, the carcass is temporarily stored in chiller. Boneless meat is then packed in foodgrade polythene film, frozen at -35 to -40 degree Celsius (core temperature inside meat needs to be maintained at -18 degree Celsius), packed in cartons and kept in cold storage for export. Cartons are dispatched in refrigerated containers for shipment. Freezing is done either through blast freezer or plate freezers. For domestic sale, cold chain is not maintained as meat is consumed locally in a short span of time. Average Inventory at Processing Unit: Processing plants hold an average inventory of 400 MT, with around 4-5 days of storage. The frozen product is usually not stored for longer durations due to strong demand from the international markets. YES Bank- Dutch Embassy Collaborative Study 65

78 e) Meat Value Chain in Andhra Pradesh Buffalo meat production can be classified into two major value chains: Large-scale production for export Municipal slaughterhouse system for domestic consumption The third prevalent model is informal smallholder backyard slaughtering in remote areas. Backyard slaughter is characterized by low inputs and slaughter of animals for one s own consumption or for sale of surpluses to local markets. Municipal slaughterhouses are state government bodies that provide services for buffalo meat production for domestic consumption. Production for export consists of companies controlling the initial stage of animal purchase from livestock traders to marketing deboned meat in the international market. Domestic Value Chain for Buffalo Meat The domestic value chain for buffalo meat production integrates livestock producers, traders, butchers, wholesale meat dealers and retailers. The livestock (buffalo) are moved from farmers to traders, then to butchers who slaughter animals and convert them into marketable products. The products finally reach consumers through wholesale meat dealers and retailers. Farmers: Farmers rear buffalo till they reach an unproductive age and thereafter sell them either to traders or at the livestock market. Traders: Traders transport the purchased animal to a municipal slaughterhouse for slaughtering. Traders play a very active role in this value chain as intermediary aggregators. Farmers (primary producers) have limited market access and are isolated from major consumers due to logistical and transport costs. Commission agents facilitate animal transactions between sellers (farmers/livestock traders) and buyers (butchers) and charge a commission on every sale. Retailers/Wholesalers: Retailers/wholesale meat dealers purchase buffalo meat from municipal slaughterhouses and sell to consumers. Wholesale meat dealers collect meat from municipal slaughterhouses and resell to retailers in the locality. Retailers buy from wholesalers/slaughterhouses and sell to consumers. However, in few instances retailers perform the function of slaughtering. Wholesale meat dealers and retailers have to obtain licenses from municipal corporations for buying from a slaughterhouse. The Indian buffalo meat industry for domestic consumption is based on production of fresh meat which is processed and sold daily. Retail outlets generally are not equipped with air conditioners, refrigerators or deep freezers. Farmer Purchase of animal from farmer or through livestock market Commission Agent Slaughtering of animal at municipal slaughter house Retail/Wholesale Meat Dealer Consumer Livestock Trader 66 Cold Chain: Opportunities in India

79 The indicative value chain costing of meat in Andhra Pradesh is explained as below: Buffalo Meat Domestic Price (INR/kg) Cumulative Price (INR/kg) Price paid to Farmer (including commission to commission agent) Transportation Cost to Municipal Slaughter House Market fees at livestock market (animal mandi)+ taxes Fees for slaughtering at municipal slaughterhouse Fees for health certificates obtained from veterinarians Realization from Hide Margin to Wholesaler 9%) Wholesale (Bone-in) price of buffalo meat to retailer Margin to Wholesaler 30%) Wholesale (Bone-in) price of buffalo meat to consumer Source: Industry Sources Additional wastages happening at wholesaler, retailer level are covered within the margins. These wastages are difficult to quantify as they differ from case to case basis. Exports Value Chain The buffalo meat value chain for export has different stakeholders working at several stages of production. Farmers raise the buffalo till they become uneconomical and thereafter sell them to traders. Traders play the role of aggregators in the value chain and sell the buffalo to exporters for further processing and sale in export markets. Livestock Market Farmer Livestock Trader Exporter/ Processor Retail/Wholesale Meat Dealer Farmers: Farmers rear buffalo for milking and breeding and cull them for meat production when the animals become unproductive. Livestock Traders/Registered Vendors: Livestock traders play crucial role as assemblers and suppliers of buffalo to exporters. The traders collect buffalo from different farmers directly or buy animals from livestock markets and sell to exporters. Livestock traders are paid weekly. Players like Al Kabeer operate through registered vendors (a form of livestock trader). Once animal is purchased they pay the registered vendor basis carcass weight. YES Bank- Dutch Embassy Collaborative Study 67

80 Exporter: After receiving, buffaloes are kept in lairage for 24 hours for inspection by state government veterinary officers. The first processing stage starts with slaughter of the buffalo at an abattoir. The supplier (trader) is paid on the basis of carcass weight. The carcass is converted to boneless meat and bones. Boneless meat is packaged in food-grade polythene film, frozen (at 18 degrees Celsius), packed in cartons and kept in cold storage for export. Cartons are dispatched in refrigerated containers for shipment. The indicative value chain costing of buffalo meat for exports is explained as below: Buffalo Meat Exports INR per kg Cumulative Price (INR/kg) Price Paid by Exporters to Livestock market/ Livestock Trader/Registered Vendor (for 240 kg of carcass) Slaughtering, Packaging & Freezing Bone and Other Waste 35%) Margin 15%) Exporter Price Source: Industry Sources Additional wastages happening at wholesaler, retailer level are covered within the margins. These wastages are difficult to quantify as they differ from case to case basis. f) Potential for Cold Chain Intervention In recent years, Andhra Pradesh has become one of the major exporters of buffalo meat contributing to 35% of total beef export from India. In India the meat is consumed in fresh form and with the policy for modern abattoirs by the central government, cold chain could be integrated to meet the demand of domestic market. In the recent years frozen chicken meat for the domestic market is also picking up, and this may offer opportunity for cold chain interventions at storage and transportation levels Milk & Milk Products a) Milk Production & Consumption Scenario in Andhra Pradesh Andhra Pradesh has recorded highest growth in terms of both milk production and per-capita milk availability. Annual milk production in AP was 12.7 million MT ( ) against a per capita availability of 269 gm/day. 71% of total milk production is from Buffalo milk and 28% from cow. Milk in the state comes mostly from farms of less than 2 hectares with 1 to 4 dairy animals. The milk yields in Andhra Pradesh are slightly higher than the Indian average and are increasing at a faster rate. Average yield from buffalo is about 4.5 kg/day whereas from exotic cow is 7.45 kg/day against non-descript cow with a yield of 2.05 kg/day. As per the projections, the milk production in the state will reach 17.5 million MT in the year Cold Chain: Opportunities in India

81 Exhibit 30: Milk production trend in Andhra Pradesh (in 000 MT) 14,000 12,000 10,000 8,000 6,000 5,521 5,814 6,583 6,959 7,257 7,624 7,935 8,926 9,569 10,430 11,204 12,088 12,672 4,000 2, Source: Animal Husbandry Department, Government of Andhra Pradesh The major milk producing districts in the state are Prakasam, Guntur, East Godavari, Krishna and Chitoor, contributing 38% to milk production in the state. The major consumption centers in Andhra Pradesh are Hyderabad/Secunderabad, Visakhapatnam, Vijayawada, Warangal, Tirupati and Guntur. b) Milk Value Chain in Andhra Pradesh There are four different marketing channels prevalent in Andhra Pradesh. The first marketing channel involves direct marketing to consumers, restaurants or hotels. This channel represents the shortest value chain, as no middleman comes into play. It is most popular amongst dairy farmers with more than 5 dairy animals. The second marketing channel is through the traditional milk man, who picks up the milk from the producers farm gate, markets it directly to consumers, hotels or restaurants and takes a margin on the milk sold. The third marketing channel is selling through an intermediary trader. An intermediary trader is an agent working for a private processing company. He collects milk from the farmers at village level and supply to the processor in cans or by insulated milk tankers. The fourth channel is based on cooperative model of direct milk procurement from farmers. In this channel, farmers bring milk to the collection centre which is established by the co-operative society for milk collection. Milk is chilled and stored at the collection centre and is transported to the plant through insulated milk tankers. From the plant the processed milk and milk products are dispatched to distributors and finally from distributors to retailers. Commission Agent Distribution Centre Farmers Collection Centre Processing Plant Wholesaler Retailer Consumer Bulk milk chillers In house cold store In case of companies having greater market reach in domestic market, C&F agent is responsible for hiring cold storage facility YES Bank- Dutch Embassy Collaborative Study 69

82 Processors collect milk from the farmers twice a day hence farmers do not store milk at their level. From the collection centre, milk is transported daily to the plant for processing. From the plant, pouch milk is dispatched daily and other products are stored for different duration depending on shelf life like curd is stored for 3-4 days, ice cream is stored for 2-3 months. Distributors also have storage capacity to store products depending on shelf life. Retailers keep pouch milk for a day and other products like curd, buttermilk for 3-7 days depending on demand and shelf life of products. In case of products stored at ambient temperature with long shelf life like ghee, UHT milk, the wholesaler and retailer hold the product for a longer duration. Indicative value chain costing of milk in AP is given in the table below Milk Cumulative Price (INR per litre) Procurement Price (6.5% Fat & 9% SNF) 42 Transportation Charges from Village to Collection Centre 0.5 VSP Commission 0.7 Chilling Cost 0.4 Other Expenses 0.7 Transportation Cost from Collection Centre to Plant 0.8 Processing Cost (Processing margin, processing cost and packing) 3.8 Transportation Cost to Distributor 0.4 Distributor Margin 1.9 Retailer Margin 1.6 Consumer Price 52.8 Source: Industry Sources Additional wastages happening at wholesaler, retailer level are covered within the margins. These wastages are difficult to quantify as they differ from case to case basis. Storage Conditions Cold storage in milk procurement and processing is streamlined. The milk is chilled to 4 C at the collection centre and transported to the plant in insulated tankers. The milk is then processed and packed into pouch milk or other dairy products like Butter, Ice Cream etc. The optimum conditions for storing Butter & Ice Cream is as mentioned below: Butter (-18 degree Celsius) stored in 20 kg boxes Ice-cream (-20 degree Celsius) Butter storage in leased cold storages is charged at around INR paisa per kg/month. Average inventory of butter is 6 months as it is stored for use during lean season (summers) c) Potential for Cold Chain Intervention Reduction in space required of cold chain machinery and cost economization are the two major interventions that can looked into for dairy industry in Andhra Pradesh. 70 Cold Chain: Opportunities in India

83 VII Assessment of Cold Chain Sector in Maharashtra YES Bank- Dutch Embassy Collaborative Study 71

84 VII Assessment of Cold Chain Sector in Maharashtra 1. Overview of Cold Chain Sector in Maharashtra Maharashtra has horticulture production of 18.4 million MT (ranks 9th in the country). It is the second largest producer of fruits with total production of 9.8 million MT. Banana, Grapes, Citrus, Mango and Pomegranate are the major fruits produced in the state which are suitable for cold storage. Maharashtra has total vegetable production of 8 million MT (ranks 8th in the country). Onion and Tomatoes are the major vegetables produced in the state. Maharashtra meat production is 590,690 MT (ranks 4th in the country). In Maharashtra, the major categories for which cold chain is maintained are fruits & vegetables, meat, milk & milk products. There are 488 cold stores present in Maharashtra with a total installed capacity of 604,300 MT. Multipurpose cold store accounts for 76% of cold storage capacity in the state followed by 12% for meat & fish storage, 9% for fruits and vegetables storage and 3% for milk and milk products storage. Major commodities utilizing cold chain are Banana, Onionv, Grapes, Citrus, Mango, Pomegranate, Strawberries, Milk & Milk Products, Marine, Meat and Potatoes. 2. Commodity Profile and Value Chain 2.1. Onion Onion is one of the important commercial vegetables crops grown in different parts of the country mainly by small & marginal farmers. The perpetual demand of onions within the country and for export has made it essential to supply onions round the year either from fresh harvest or from stocks. It has become necessary to have proper planning for production, post-harvest handling and storage as well as marketing so as to maintain the stability in prices and supplies. a) Onion Production India is the 2nd largest onion producing country in the world after China with production of over 19 million MT in Onion is grown and consumed in all parts of the country. The major onion producing states in the country are Maharashtra (30% of the total production), MP, Karnataka, Andhra, Bihar and Gujarat. 72 Cold Chain: Opportunities in India

85 Exhibit 31: Top onion producing states ( ) State Area ( 000 ha) Production ( 000 MTs) Maharashtra 468 5,867 Madhya Pradesh 117 2,826 Gujarat 70 1,817 Karnataka 150 1,675 Andhra Pradesh 90 1,525 Bihar 54 1,304 Haryana Rajasthan India Total 1,217 19,2 Source: National Horticulture Board In Maharashtra, Nasik, Ahmednagar, Pune, Satara, Solapur, Dhule, Jalagaon, Osmanabad, Beed, Aurangabad, Bhandara, Nandurbar and Latur are the major onion producing regions. Majority of the production (~50-60%) is produced in Rabi season which has good storage quality as the variety grown in this season has higher TSS, dry matter and more number of outer dried intact scales. Exhibit 32: Onion production season in Maharashtra S No. Season Growing Months Harvest Months Storage Quality Remarks 1 Kharif /Rainy June-August August-September 2 Late Kharif (Rangda) 3 Rabi /Winter Source: NHRDF/ MSAMB September- November December- February November-December February-March Poor (1 month) Poor (1 month) Good (4-6 month) 10 % of production % of production % of production Exhibit 33: Varieties grown in Maharashtra S No. Varieties Season Colour Remarks 1 N-53 Kharif Red Poor Storage 2 Baswant-780 Kharif Red Poor Storage 3 N2-4-1 Rabi Brick-Red Good Storage 4 N Rabi White Good Storage 5 Phule Safed All year White Good for Dehydration 6 Phule Suvarna Late Kharif /Rabi Yellow Red Good for export to Europe 7 AFDR Late Kharif /Rabi Dark Red Fairly Good for Storage 8 AFLR Rabi Light Red Good Storage Source: NHRDF/ MSAMB YES Bank- Dutch Embassy Collaborative Study 73

86 b) Arrivals of Onion Lasalgaon, Mumbai, Nagpur, Nashik, Pimpalgaon and Pune markets are the major onion markets in Maharashtra. Among them, Pune and Lasalgaon have the highest arrivals. Exhibit 34: Mandi arrivals of onion (in 000 MT) Year/ Mandis Pune Mumbai Lasalgaon Pimpalgaon Nagpur Nasik Source: NHB Statistics c) Export Potential There is lot of demand for Indian onion in the world and the country has exported 1.5 million MT of fresh onion during worth INR 31.7 billion. Major export destinations are Bangladesh, Malaysia, Sri Lanka, UAE, Indonesia, Pakistan and Singapore. Maharashtra contributes approximately 80-85% of the total onion exports. For exports, onion is graded, sorted, packed in 1 kg, 2 kg, 5 kg and 25 kg plastic bags and then stuffed in refer containers. It reaches JNPT (Jawaharlal Nehru Port) or airport from where it is sent to destination in cold temperature so that it remains fresh. d) Storage Conditions Onions are stored in a cool and dry environment. When humidity levels and temperatures are too high the onions may decay or begin to sprout. The ideal storage condition for onions is 0-2 C at a relative humidity (RH) of 65-70%. Under ambient conditions the onions are stored at a temperature of C and RH of 60-65%. Refrigerated storage is often used to hold onions for approximately six months. Cold storage of onion is not a common practice in India, due to prohibitively high costs and technical feasibility. Considering the low prices of onions, expensive storage models will threaten viability and hence there is need for cheap and efficient storage structures. e) Value Chain Onion in the state is produced in three different seasons. Kharif and late kharif onion is sold by the farmers within 15 days to 1 month after harvest of the crop (not good for storage) while around 40 to 50% of rabi/summer onion is stored by farmers in on-farm bamboo based conventional storage structures. The farmer takes out the onion from storage when he has to sell it in the APMC market. 80% of farmers sell onion in local mandi s and they bring material in open small tractor/trailers from home to mandi. The produce is graded manually at farm level and packed in gunny bags of 50 kg each or brought loose to the nearest APMC market. About 20% of farmers move material to far off mandi s including APMC, Vashi in anticipation of higher prices by networking with commission agents. 74 Cold Chain: Opportunities in India

87 Onion comes in APMC market through open auction system facilitated by commission agents who are licensed operators and have to pay to farmer on cash terms. The APMC markets levies a market cess of 1% on wholesalers. The wholesaler does the distribution of produce and sells to either retailers or wholesalers of distant markets or Pucca Aradhtiyas. The wholesalers store onions in storage structures, owned or rented, after buying it from APMC market. Some of the large traders also provide storage facility to other traders on rental basis. The stored produce is graded, packed and then dispatched to destination markets. Onion are dried on the field for minimum 3 days Transportation of onions to APMC take 1-2 days depending on distance of market and auctioning takes around 1 day Commission distant APMC/ Pucca Aradhtiya Selling of produce to wholesalers in distant markets or near by markets may take around 1-5 days Wholesalers Growers Commission agents Traders/ (APMC) Wholesalers Retailer Consumer Indicative value chain costing of onion is represented in the below table: Onion INR/kg Cumulative Price (INR/kg) Procurement Price APMC cess, logistic cost, unloading & handling (@ 20%) Commission agent (@ 10%) Pucca Aradhatiya (@ 12%) Wastages (@5%) Wholesalers (@ 20%) Retailers (@ 25%) Consumer Price 27.9 Source: Industry Sources Additional wastages happening at wholesaler, retailer level are covered within the margins. These wastages are difficult to quantify as they differ from case to case basis. YES Bank- Dutch Embassy Collaborative Study 75

88 f) Potential for Cold Chain Intervention Over the years, asymmetry in market information and inadequate storage along with irregular rainfall, hoarding and unsuitable export/import policy at the APMC market has led to demand supply gap of onion in domestic market leading to volatility and inflation in prices. Only winter crop of onion which is harvested in February- March has good storage quality and is stored for 4-5 months. For onion, entire domestic supply chain is via ambient temperature from farm to fork. Cold chain is only maintained for exports of onion. Many players are experimenting for long term storage of onion but on a small scale. However, the decision of the new government of bringing onions under the essential commodities act (which limits the quantity of onion stored) and increasing the minimum export prices might affect these initiatives adversely. There is a potential to introduce technology for longer term storage of onion as it will help in taming the price volatility and inflation. Also modification in harvesting procedure is required for effective cold chain intervention Citrus a) Citrus Production Maharashtra ranks 4th in the country with total citrus production of 878,000 MT. Majorly four varieties of citrus namely Kinnow, Lime, Mandarin and Mosambi are cultivated in India. Other major citrus growing states are Andhra Pradesh, Madhya Pradesh and Punjab. Exhibit 35: Top citrus producing states (in 000 MT) ( ) States Lime/Lemon Mandarin (M.orange, Kinnow, Orange) Sweet Orange (Malta, Mosambi) Other Citrus Andhra Pradesh 766-2,957-3,723 Madhya Pradesh ,241 Punjab 5 1, ,030 Maharashtra Gujarat Karnataka Assam Orissa Total India 2,569 2,967 3,398 1,011 9,945 Source: National Horticulture Board The production of oranges is mainly in Vidarbha region of the state. The major lime/lemon producing belts in the state are Pune, Amravati, Satara, Sholapur, Akola, Beed and Aurangabad. Varieties of Citrus grown in Maharashtra Total Citrus Lime Lemon Sweet Orange Mandarin Variety Kagzi Lime, Pramalini, Vikram, Jai Devi, Sai Sharbati, Phule Sharbati, Seedless Lime Eureka, Assam Lemon Mosambi, Blood Red Malta, Valencia Nagpur Mandarin/ Santra Kinnow 76 Cold Chain: Opportunities in India

89 b) Seasonality There are two major seasons in citrus cultivation: Ambia Bahar (Spring Blossom) In this season flowering happens in December/January and harvesting during September to December Mirg Bahar (Monsoon Blossom) In this season flowering happens in June/July and harvesting during January to March/April. Second season crop is suitable for cold storage. Seasonality of Lime State Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Lime Sweet Orange Mandarin Lean season Peak season Round the year c) Arrivals of Citrus The arrival of total citrus in Maharashtra is localized in Mumbai, Nagpur, Pune and Nashik markets (mandis). Out of the total produce arrived in these markets, around 50-55% comprise of Mosambi variety of citrus followed by Mandarin and Lime. Exhibit 36: Arrival of citrus in major markets in Maharashtra during last 4 year (in MT) Year/ Mandis Kinnow Mumbai 4,847 21,340 7,954 Nashik Pune 88 8 Mumbai 24,341 18,266 19,433 13,225 Lime Nagpur 2,735 3,920 5,441 5,643 Nashik 1, Pune 12,162 11,456 13,713 13,251 YES Bank- Dutch Embassy Collaborative Study 77

90 Mandarin Mumbai 21,615 34,518 58,043 43,389 Nagpur 44,174 29,598 25,743 27,506 Pune 9,342 3,838 7,520 8,485 Mosambi Mumbai 46,228 46,946 79,887 47,067 Nagpur 72,229 85,558 86,020 63,323 Pune 9,623 9,429 17,404 8,767 Total Citrus 2,48,963 2,44,363 3,34,874 2,38,962 Source: NHB Statistics d) Export/Import Scenario Indian imports of orange are more than the export. India imported 34,590 MT of oranges worth INR 1,096.9 million while exported 28,817.2 MT of oranges worth INR million during Bangladesh is the major importer of orange from India (contributing to 92% of India s exports) while India imports majority of orange from Egypt. Approx 20% of Citrus produced in Maharashtra is exported to Bangladesh. Citrus is also transported from the state to all over India for domestic consumption. The government has announced the creation of an AEZ for oranges covering the districts of Nagpur and Amravati. MSAMB with the help of APEDA and APMC has also planned for an orange Export Facility center at Aashi district, Wardha. e) Storage Conditions Mandarin: Generally, 6-7 C temperature and 85-90% Relative Humidity (RH) is maintained to store mandarins for 4 to 8 weeks. The shelf life of fruit is 9 days, 6 days and 3 days after refrigerated storage of 30 days, 45 days and 60 days respectively. Mosambi (Sweet Orange): Sweet orange variety Malta can be effectively stored at 4-5 0C in cold storage for 2-3 months. Mosambi obtained in western Maharashtra can be stored at temperature of 50C and 85-90% relative humidity for 8-10 weeks. Waxing treatment further reduces moisture loss and extends shelf life in all citrus fruits. f) Value Chain In Maharashtra, majority of the producers sell their mandarin to pre-harvest contractors while a few sell the produce directly to the wholesalers in the market or sell their produce to processing industries via commission agents. Pre-harvest contractors take orchards on contract before harvesting from farmers at a predetermined price and manage all post harvest activities themselves. The main reasons for the leasing of orchards to contractors are high risk of spoilage of fruits, no assurance of higher prices in markets, delay in getting payment, higher transportation cost and lack of market information. Contractors after harvest give the produce to the retailers via commission agents which reach end consumers. Sometimes, producers sell their produce directly to 78 Cold Chain: Opportunities in India

91 the wholesalers via mandis and then to retailers. This is done by farmers who have convenient access to markets, expectation of higher net margins and small quantities of produce. Diagrammatic representation of the value chain of Mandarin in the state is depicted below: Pre Harvest contractors take orchards on contract from farmers at a predetermined price and manage all post harvest activities Pre Harvest Contractors Commission Agents Produce is brought and sold in the mandi in loose condition Growers Some wholesalers also act as pre harvest contractors Wholesalers Retailer Consumer Farmers and other stakeholders store citrus under normal conditions for 2-3 days each. Processors store citrus under cold chain for 3-5 days in wooden boxes or plastic crates. Indicative value chain costing of citrus is given in the table below: Citrus Price INR/kg Cumulative Price INR/kg Procurement Price Sorting/Grading, Packing and Local transportation Market Fee (@ 1%) Commission agent (@ 10%) Wastages (@5%) Wholesalers (@ 14%) Retailers (@ 22%) Consumer Price 40.6 Source: Industry Sources Additional wastages happening at wholesaler, retailer level are covered within the margins. These wastages are difficult to quantify as they differ from case to case basis. g) Potential for Cold Chain Intervention Citrus in domestic market is generally stored and transported under ambient conditions. It is also a seasonal crop available for 6-7 months only. Players are storing second season crop under cold chain as it has good storage quality. New age cold chain interventions, if any, present in the developed markets may be adopted in our value chain for lengthening the storage time of the citrus fruits. YES Bank- Dutch Embassy Collaborative Study 79

92 2.3. Banana a) Banana Production With banana production of 3.7 million MT Maharashtra ranks 3rd in the country. Other major Banana producing states are Tamil Nadu, Gujarat, Andhra Pradesh and Karnataka. The production of banana is concentrated in parts of western Maharashtra and Marathwada regions. Exhibit 37: Top banana producing states ( ) State Area ( 000 ha) Production ( 000 MT) Tamil Nadu 118 5,650 Gujarat 71 4,523 Maharashtra 83 3,694 Andhra Pradesh 96 3,357 Karnataka 102 2,656 Bihar 34 1,789 Madhya Pradesh 26 1,735 West Bengal 46 1,098 Total ,575 Source: National Horticulture Board Banana grown in the states of Maharashtra, Madhya Pradesh and Gujarat reaches North India in the markets of Jaipur, Lucknow and Delhi from where it is distributed in northern states like Himachal Pradesh, Uttarakhand, Jammu & Kashmir, Punjab and Haryana. Nasik division (Nasik, Dhule, Nandurbar, Jalgaon) and Latur division (Latur, Osmanabad, Nanded, Parbhani, Hingoli) contributes to 48% and 35% of total banana production in Maharashtra. Varieties grown in Maharashtra: Dwarf Cavendish, Robusta, Grand Naine, Red Banana Seasonality State Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Maharashtra Lean season Peak season Round the year 80 Cold Chain: Opportunities in India

93 b) Export Total export of Banana from India during was 34,927.5 MT worth INR 1,538.5 million. The major importing countries are UAE, Saudi Arabia, Kuwait and Iran. Low rainfall and humidity in Maharashtra results in fewer incidences of insects, pests and diseases compared to Central and South America and South East Asian countries. A superior cultivar namely Grand Naine, well accepted in international market is being cultivated in sizeable area in Maharashtra. But the export of bananas from the state is minimal. The government of Maharashtra has announced the creation of AEZ for banana in the districts of Jalgaon, Dhule, Nandurbar, Buldana, Wardha, Nanded, Parbhani and Hingoli. c) Storage Conditions Storage Conditions Temperature (Holding Room) Temperature (Ripening Room) C C Relative Humidity 90-95% Storage Period 4-6 weeks in controlled atmosphere at 14 0 C Source: APEDA/ NHB Presently banana is ripened using ripening chambers. It is transported and stored under ambient conditions. d) Value Chain Most of the banana produced (around 80-85% of the total) in the state of Maharashtra is marketed out of the state to various other locations in the country like New Delhi, Lucknow, Kanpur, Amritsar, Jaipur etc. New Delhi is the most important consumption centre of Banana which comes from Maharashtra and it is redistributed to NCR and other nearby regions via Azadpur Mandi. Banana in the state is generally marketed by following channels: Through Cooperative Societies: Majority of the banana in the state (around 70%) is marketed via cooperative societies. These societies are generally formed to market the produce and provide linkages to the farmer with the destination market. Every grower has to pay some nominal fee to become a member of the society and society also charges 2-3% of the selling price of the produce from the farmers. These cooperative societies are responsible for negotiating with the commission agents to get a fair price. Through commission agents the produce moves to wholesalers and then to retailers before reaching to final consumer. 9 9 Through post harvest contractors (fruit merchants): In this type of marketing arrangement, contractors make advance payments to the farmer for mature bunches of banana. Activities starting from on farm procurement to final dispatch to consumers are borne by contractors. PHC facilitates aggregation, transportation to the destination market and payments to the farmers from the traders/commission agents. For his services, the PHC generally charges a commission of 2-3% of the value of the crop to the farmers. YES Bank- Dutch Embassy Collaborative Study 81

94 Procurement by Companies: Companies like Jain Irrigation procure banana directly from progressive farmers. Such companies provide on farm extension services and other facilities to growers. The transportation cost is borne by the company itself. Less Prevalent Post Harvest Contractors Commission Agents Ambient Transportation More Prevalent Growers Cooperative Society Traders/ Wholesalers Retailer Consumer Companies Ripening Chambers The banana after it is harvested manually is aggregated and then loaded on trucks for transportation to nearest rake point or directly to destination market. Bananas are transported via railway wagons or surface transport (trucks) to destination markets (Around 75-80% of the banana is transported through trucks while remaining is routed through railways). Sorting/ grading and packing (as per requirement) are done at the destination market and are very minimal at the field level. Also, ripening activities are mostly carried out at destination location to minimize post harvest loss during transportation. Post ripening, sorting/grading, produce is transported under a non-cold chain environment to retail markets in the catchment area of destination markets. Indicative value chain costing of Banana (per kg) from Jalgaon to New Delhi is represented in the below table: Banana INR/kg Cumulative Price (INR/kg) Procurement Price from Jalgaon Commission of PHC/ Cooperative Society (@ 2%) Labour & Transportation Cumulative 27% Commision at Azadpur Mandi (@ 4-6%) Wholesale margin at Azadpur Mandi (@ 12%) Secondary transportation + Ripening Cost Retailers 17% Consumer Price Source: Industry Sources Additional wastages happening at wholesaler, retailer level are covered within the margins. These wastages are difficult to quantify as they differ from case to case basis. 82 Cold Chain: Opportunities in India

95 In this value chain, the farmers pay 2% to cooperative societies/ Post harvest Contractors. The loading and unloading labour cost and transportation cost to distant markets are paid by the wholesaler. Further transport, labour and ripening costs are borne by the retailer. The wastage is minimum (5%) at farmer/ PHC level due to improper handling and harvesting techniques. At the wholesale level wastage is 8-10% due to moisture and weight loss which is because of poor handling, storage and transport. The maximum loss of 10-12% is at the retailer level poor handling, grading and sorting etc. e) Potential for Cold Chain Intervention Currently, there is minimal post harvest infrastructure for the banana in the state. As the crop is available round the year, there is no storing facilities and almost negligible cold chain infrastructure. Cold chain technology is being used for banana primarily for the export (very low volume). There are few pack houses in the region to carry out sorting and grading of bananas such as MSAMB export oriented banana pack house in Jalgaon, one pack house at Chinnawal, Raver taluka etc. The major gaps identified in the value chain of banana are as follows: Post harvest mechanism followed in the state is very traditional which leads to some damage. Sorting, grading, de-handling, washing and packing are absent at farm level centers In total, 25-30% of fruits are wasted along the value chain from farm to fork There are very few pack house in the region and even pack house already present are facing problem in procurement and quality maintenance as they are stand alone facilities without any support infrastructure. Thus, major intervention for the region is establishment of modern pack houses at main production clusters which would cater to the banana grown in the surrounding area having a truck travel time of about 2-3 hrs from the farm to the pack house. YES Bank- Dutch Embassy Collaborative Study 83

96 84 Cold Chain: Opportunities in India

97 VIII Assessment of Cold Chain Sector in Gujarat YES Bank- Dutch Embassy Collaborative Study 85

98 VIII Assessment of Cold Chain Sector in Gujarat 1. Overview of Cold Chain Sector in Gujarat Gujarat is the 5th largest state in the country with horticulture production of 20.2 million MT. Horticulture crops suited to subtropical and tropical climates can be grown in Gujarat. The state has 1,600 kms of long coastal belt, about 42 fruits & vegetable co-operative marketing societies and 197 APMC s dealing with horticulture produce. These are some of the unique advantages due to which Gujarat has a leading position in Onion, Potato, Banana, Lime and Papaya. Gujarat is also introducing new horticulture crops like Cashew nut, Sweet Orange and medicinal crops. Gujarat is the third largest fruit producing state with total production of 8.4 million MT. Banana, Mango and Citrus with production of 4.5 million MT, 1.0 million MT and 0.43 million MT respectively are the major fruits produced in the state. Total vegetable production in Gujarat is 10.5 million MT with major vegetables like Potato & Tomato suitable for cold storage. Total spice production in Gujarat is 0.88 million MT with Garlic, Ginger and Chillies being the major spices. Gujarat is the 4th largest producer of milk with production of 10.3 million MT. Gujarat is the 3rd largest producer of fish with production of 0.78 million MT. In Gujarat, the major categories for which cold chain is maintained are fruits & vegetables, marine produce, milk & milk products. Gujarat ranks 5th in the country in terms of total cold storage capacity of 1.8 million MT. Potatoes constitute 76 % of the commodities stored in cold storages followed by other multipurpose commodities at 21%. Meat and fish and milk categories merely constitute 1-2% of the commodities stored. There still exists gap in cold storage capacity which can be bridged by development of cold chain infrastructure across the commodity categories. The estimation of demand for cold storage capacity based upon the existing production pattern of the crops in Gujarat and growth of demand for cold storages is given in table below: Product Category Long Term Growth Rate % of Produce Requiring Cold Storage Total Demand for Cold Storage Capacity FY 15 (MT) Total Demand for Cold Storage Capacity FY 20 (MT) Fruits 5 % 10 % 790,000 1,010,000 Vegetables 4 % 10 % 830,000 1,010,000 Source: CRISIL 86 Cold Chain: Opportunities in India

99 It is estimated that a total of 2 million MT per annum of cold storage capacity will be required by CRISIL has estimated that 130 additional medium to large capacity cold storages would be required. Additional investment required is estimated to be INR 7.5 billion by Commodity Profile and Value Chain 2.1. Potato a) Potato Production In terms of potato production, Gujarat ranks 4 th after UP, West Bengal, and Bihar but it has a unique advantage of being the state capable of producing good quality processing varieties of Potato. Total potato production in Gujarat during was 2.5 million MT. Potato is a mainstay of rural economy in North Gujarat. Multinational companies like Pepsi and McCain Foods have selected Gujarat for potato procurement due to suitable agro climatic conditions (soil type, day length, night and day temperature) in the state. The farmers have adopted cultivation of new varieties and required package of practices as per market needs due to which they are reaping the benefits with highest productivity within country and better price realization due to better quality. While McCain has set up a Potato processing unit in Gujarat, the other major manufacturers of Wafers like Pepsi, ITC, Parle, Haldirams, Balaji are largely sourcing potatoes from Gujarat. The district wise production of potatoes as on has been tabulated below. Banaskantha, Sabarkantha and Gandhinagar contributed to 80 % of the potato production in Gujarat. Exhibit 38: District wise production of potatoes ( ) District Area (Hectares) Production (MT) % Share Banaskantha 43,273 1,381,373 55% Sabarkantha 11, ,800 15% Gandhinagar 7, ,406 10% Mehsana 7, ,063 7% Anand 5, ,483 6% Kheda 4,570 93,870 4% Patan ,054 1% Vadodara 280 6, % Panchmahal 300 4, % Jamnagar 230 4, % Kutch 85 1, % Surendranagar % Tapi % Total Gujarat 81,272 2,4,725 Source: Horticulture in Gujarat, Directorate of Economics and Statistics, GoG YES Bank- Dutch Embassy Collaborative Study 87

100 Varieties The following varieties are grown in Gujarat: S No. Variety Average Yield (MT/ha) Suitability 1 Kufri Sindhuri 40 Processing 2 Kufri Chandramukhi 25 Flakes and Chips 3 Kufri Jyoti 20 Processing 4 Kufri Badshah 50 Table 5 Kufri Jawahar 40 Table 6 Kufri Pukhraj 40 Table Source: NHB Seasonality In India, more than 80% of the potato crop is raised in the winter season (Rabi) from October to March under assured irrigation. The schematic representation of seasonality matrivx of potatoes in Gujarat is given below: Seasonality State Aug Sept Oct Nov Dec Jan Feb March Gujarat Sowing Growth Harvesting Potato Storage Capacity At present there are 217 potato cold storages in the state of Gujarat and another 5-6 stores are under construction. The cold stores are concentrated according to the production of potato and maximum cold stores are in Banaskantha. Exhibit 39: Area wise number of cold storages and potato storage capacity in Gujarat S No. Area No of cold storages Potato cold storage capacity (in 000 MT) 1 Banaskantha Mehsana, Gandhingar and Sabarkantha Kheda, Anand & Baroda Ahmedabad Saurashtra Surat Total 217 1,080 Source: The Gujarat cold storage owners association 88 Cold Chain: Opportunities in India

101 Out of 217 cold storages some have facilities for storage of processing type of potatoes which are generally booked by processors/traders. These cold storages have some of the facilities like Chlorpropham CIPC fogging for maintaining low level of sugar. b) Storage Conditions The storage condition for various varieties for potatoes in the state is given in table below: Intended Use Temperature RH (%) Seed 2-4 degree Celsius 95 Table 7-10 degree celsius 98 Processing degree celsius 95 The seed potatoes are stored at 2-4 degree Celsius as no sprouting takes place at this temperature and metabolic process goes down. Besides, low temperature, sweetening is of little importance in case of seed potatoes. The storage of potatoes meant for wafers at 2-4 C is not desirable since low temperatures induce accumulation of large amounts of sugars making the tubers sweet and therefore, less suitable for consumption; also the cold stored potatoes are unfit for processing as high level of reducing sugars causes browning in potato chips, even the keeping quality of cold stored potatoes deteriorates quickly once they are removed from the cold store as tubers begin to sprout fast and marketing of cold stored potatoes is also a problem, due to their poor keeping quality. Therefore, 2-4 C storage is used for potato seed only and the potatoes meant for table and processing are stored at higher temperatures either under elevated temperatures of 7-10 C and C respectively for long-term (6-8 months) or under non-refrigerated conditions for short-term (3-4 months). Sprout suppressants like CIPC [isopropyl-n-(chlorophynyl) carbamate] is used to check the sprouting while potatoes are stored at degree Celsius. c) Value Chain of Potato Potato is harvested during the months of February and March. A part of the produce is then directly sold in the markets. The most common supply chain for potato is depicted below: Stored for 6-9 months Cold Store Grading, Packing, Farmers Transportation Farmers hold the produce in heaps for hrs at their field. This help in bringing the temp. of potatoes down to normal temp. Commission Agent Stored for 1-2 days Weighing, Loading and Unloading at Mandi Transportation, Repacking Wholesaler Stored for 2-3 days. In case the produce is not stored in cold storage after harvesting the holding time with CA/wholesaler increases Retailer Stored for 2-3 days depending on demand YES Bank- Dutch Embassy Collaborative Study 89

102 For Processing Grade Potato Cold Store Transportation by farmer and storage Processors have tie ups with cold storages for supplying potato. They maintain only 1-2 days inventory of raw potatoes at plant. Farmers Processor Distributor Retailer Consumer Grading, Packing, Transportation Transportation, Processing (wafer variety) Transportation, Repacking In peak season, the farmers take their produce to the shop of the commission agent in the market who facilitates the sale of his produce by means of an auction. The agent deducts his commission from the transaction. The agent does not take the possession and in most cases no value is added at this level of ownership. In off season, the farmers bring their produce to the cold storage. The produce from the APMC markets in the peak season and from the cold storages in the off season is acquired by the wholesalers who transport the produce from the market yard to their premises and sell the produce to the retailers. Various private processors like McCains, PepsiCo etc directly procure the potatoes meant for wafer variety from the cold storages for processing. The indicative potato value chain costing for table variety has been tabulated below: Potato (Table Variety) INR/Kg Cumulative Price (INR/kg) Procurement Price from Farmers Packaging Cost Transportation Cost to the Cold Storage Cold Storage Cost (during the season) Transportation Cost from Cold Storage to Mandi Wastage 6%) Commission Agent Margin 6%) APMC Tax 8%) Wholesaler Margin INR 2 per kg) Wholesaler Price 16.3 Retailer Margin (@ INR 3 per kg) Consumer Price 19.3 Source: Industry Sources Additional wastages happening at wholesaler, retailer level are covered within the margins. These wastages are difficult to quantify as they differ from case to case basis. 90 Cold Chain: Opportunities in India

103 d) Potential for Cold Chain Intervention Gujarat potato production is 2.5 million MT of which approximately 20% is processing variety cultivated for specific players like ITC, McCain and Haldiram s. Out of 217 potato cold storages in Gujarat, some players have facilities for storage of potatoes suitable for processing. Presently, few of the entrepreneurs have started construction of modern potato cold storages using technology in the areas of storage ventilation, cooling system and programmed logic controller equipment. Also, as per revised policy of NHM, subsidy will be available to only those units which will adopt energy efficient technologies with provision of insulation, humidity control and fin coil cooling system, hence giving necessary push to adopt new technologies. Thus, new technologies will be required for storage of processing grade potato as companies expand their procurement from Gujarat Fish a) Fishery Resources of Gujarat Gujarat is endowed with a wide range of marine and inland aquatic resources. The state has a long coastline extending to 1,600 km, a continental shelf area of 0.18 million square kms and Exclusive Economic Zone (EEZ) of million square kms (An exclusive economic zone (EEZ) is a sea zone prescribed by the United Nations Convention on the Law of the Sea over which state has special rights over the exploration and use of marine resources, including energy production from water and wind). Gujarat occupies 32% of the continental shelf area and 10% of the total EEZ of India. Fishing industry, which has grown substantially in the last four decades with the continuous intensification of fishing effort, contributes significantly to the economic, social and nutritional well being of the people of Gujarat. Marine Profile of Gujarat Length of Coast Line 1,600 kms Continental Shelf 184,000 square kms Number of Fish Landing Centers 123 Inland Total Inland Water Bodies 426,000 ha Rivers and Canals 3,865 km Source: Fisheries Dept, Govt of Gujarat Exhibit 40: Fish production in last two years in Gujarat Production in 000 MT Year Inland Marine Total Prod n % Growth Rate Prodn % Growth Rate Prodn % Growth Rate Source: Fisheries Dept, Govt. of Gujarat YES Bank- Dutch Embassy Collaborative Study 91

104 Of the total fish production in Gujarat, marine sector contributes over 88% of the catch. It is reported that 35% of the catch in the marine sector is low value miscellaneous fish. Junagadh district contributes the bulk of the marine landings, followed by Valsad, Jamnagar, Amreli, Kutch, Bhavnagar, Rajkot, Surat, Baruch and Kheda. The Saurashtra coast between the Gulf of Kutch and Gulf of Cambay presents unique oceanographic features and is endowed with a wide variety of highly relished table fishes. The bulk of the inland catch is derived from Surat, Jamnagar, Bharuch, Ahmedabad, Vadodara and Valsad districts. Freshwater prawns are mostly derived from Surendranagar, followed by Sabarkantha, Kheda, Ahmedabad, Valsad and Vadodara. Fish drying, semi-drying, salting, icing, freezing and fishmeal production are the main methods of processing in Gujarat. Large varieties of fishes and shrimps are iced and marketed in Delhi, Punjab, Madhya Pradesh and Rajasthan. Fresh fish marketing in iced form is mainly confined to internal markets of the state and different parts of the country. The number of cold storages and capacity set up for fisheries in Gujarat for the year , and is tabulated below: Year No. Capacity (MT) No. Capacity (MT) No. Capacity (MT) Gujarat 84 30, , ,327 % contribution India , , ,482 b) Exports The fish and fish products are exported to Japan, EU, China, South East Asian and Middle East countries. The low value fish species such as ribbonfish and scianids are exported to China, Taiwan, Korea and Hong Kong. The products for export are frozen mainly in plate freezer. Bigger fishes like tunas and fillets are frozen in blast freezers. Value added items like cuttlefishes and squids are individually quick-frozen (IQF). Veraval and Porbandar are key fish landing centers in Gujarat. In Veraval, around 50 factories with the processing capacity of 200-2,500 MT capacity are located. 90 % catch is fin fish. All the factories in Veraval are 100 % export oriented units (EOU) exporting the processed fish to countries like China, Korea, Japan, Canada and Europe. The fish is processed and deep frozen at degree Celsius. The fishing season is for 9 months (15-30th Aug to end of May of subsequent year) and is banned in the months of monsoon. The catch is procured from fishing harbors situated at Porbandar, Dwarka, Mangrol, Sutrapada, Jafrabad, Kodinar. c) Value Chain for Fisheries in Gujarat In general, Fish passes through several intermediaries from the landing centre or fish pond to the consumer. The intermediaries are involved in providing services of head loading, processing, preservation, packing and transporting and these activities result in cost addition at every stage of marketing. The key intermediaries in fish marketing are: commission agent, wholesaler, vendor and retailer. 92 Cold Chain: Opportunities in India

105 The fisherman brings his catch to commission agents or factory agents appointed by the processors. Some value addition is carried out by the commission agent in terms of sorting, grading, cleaning, icing and packing fish before sale. The fish is manually graded and sorted. The processors further grade, clean, process and pack fish for exports. Retailers mainly buy fish from the commission agents. In Gujarat, the following models exist with respect to fisheries value chain. For Domestic Market Fish for consumption in domestic market is not processed and is stored in ice flakes for transportation. The domestic industry is not organized and vendors procure unprocessed fish from commission agents after primary sorting and grading to sell to consumers in local markets. Trucks with ice (unprocessed) Fishermen Commission Agent Vendors Consumers Collection and harvesting of fish Weighing, Loading and Transportation Unprocessed For domestic consumption, fish reaches the consumer within 1-2 days. Various stakeholders do not store the fish due to very high perishability and sells it to the next level as soon as possible. For Exports Fishermen Collection and harvesting of fish. Fishermen does not store raw fish as it is highly perishable. Insulated vans with ice The agent transports the fish immediately to the processor without any holding at his level. Fish procured from regions like Dwarka take 8-10 hrs to reach to the processor Purchase men/factory agent appointed by processor OR commission agent Weighing, Loading and Transportation to the factory and unloading Processing and cold storage facility Processor/Exporter Processed fish is stored for approximately 7-8 days depending on demand Refer vans at -18 degree celsius It takes days depending on destination of exports Exports Exports via seaport at Gujarat YES Bank- Dutch Embassy Collaborative Study 93

106 The indicative fisheries value chain costing for exports has been tabulated below: Ribbon Fish Export INR/kg Cumulative Price (INR/kg) Procurement Price from Farmer Transportation Cost to Factory (considering the distance of 200 kms) Processing Cost (water, ice, consumables) Fish Wastage due to Processing 30% ) Labor Cost Packaging Cost Freezing Cost (IQF) Container Charges Freight Charges (considering export to China) Price at Pipavav/Mundra port* Source: Industry Sources *Margins have not been covered here as the same were not disclosed during the discussions. The export price is highly variable and hence the above numbers are indicative for ribbon fish and would depend upon variety of fish, processing adopted, freezing method (IQF/blast freezing), packaging material and export destination. d) Potential for Cold Chain Intervention Cold chain is one of the most critical requirements to guarantee the quality of the fresh, chilled, frozen or processed fishery products. In the artisanal and small-scale fisheries sector which produces between 85%-90% of total fish landings of the region, there is lack of awareness and appreciation for cold chain systems especially in the more remote and rural areas where artisanal fishermen operate. Fisheries sector in Gujarat is currently facing challenges of poor quality of produce. During recent years, low value fishes have dominated the landings, whereas the contribution of prime varieties of fish has declined. Few of the smaller processing units operating in Veraval have closed due to lack of raw material and/or their inability to cope with the quality. The restrictions imposed by exporters and inability of the local processing houses to comply with them have resulted in the rejection of marine/fishery products in the overseas market. But given the large resource potential along with the entrepreneurial zeal of the people, the existing constraints could be overcome. The infrastructure created, especially at Veraval, Mangrol and Porbandar, have turned out to be very inadequate vis-à-vis the expansion of the fishing fleet. There is an urgent requirement on expanding and strengthening domestic marketing of fish by supporting fresh fish preservation, transportation and marketing through hygienic and organized retail outlets. Large processing units are expanding and modernizing their processing units which would entail investments in cold chain infrastructure starting from harvesting of fish to exports. The potential exists in providing cost effective cold chain solutions starting from ice manufacturing/handling, refer vans/ insulated vehicles and cold storages to improve the quality of fish. 94 Cold Chain: Opportunities in India

107 2.3. Milk & Milk Products Gujarat milk production during was 10.3 million MT (4th rank in the country). According to an ASSOCHAM study on dairy sector, with an annual dairy output of worth over INR 125 billion, Gujarat has acquired the highest share of about 21% of India s dairy output of INR 600 billion. In terms of per-capita milk availability, the state has ranked 5th and has clocked a growth rate of about 17% which is well above all-india growth rate of 12%. The information regarding Milk Producers Co-operative Unions of the State during is given in table below: District No. of Milk Cooperative Societies Milk Collected from Societies ( 000 kg) Milk Procurement (LKPD) No of societies with BMCs No of societies with Automatic Milk Collection System Ahmedabad , Amreli , Banaskantha 1,379 1,033,264 2, ,350 Bharuch , Bhavnagar , Gandhinagar , Kheda 1, ,520 1, ,100 Mehsana 1, ,520 1, Panchmahals 1, , ,024 Rajkot , Sabarkantha 1, ,297 1, Surat ,760 1, Surendranagar , Vadodara 1, , Valsad 1, , Junagarh , Kutch , Total 15,118 4,284,540 11,732 4,021 8,736 Source: Bulletin of animal husbandry & dairying statistics , Directorate of animal husbandry, Gujarat State YES Bank- Dutch Embassy Collaborative Study 95

108 The information regarding infrastructure facility of cooperative dairies in is given below: S No. Milk Producers' Cooperative Union No of chilling centers Installed capacity 000 litres per day 1 Ahmedabad Banaskantha Bharuch Bhavnagar Gandhinagar Kheda Mehsana Panchmahal Rajkot Sabarkantha Surendranagar Vadodara Surat Valsad Junagadh Kutch Amreli 1 60 Total 75 4,835 Source: Bulletin of animal husbandry & dairying statistics , Directorate of animal husbandry, Gujarat State Dairy Value Chain The typical dairy value chain for cooperative model in Gujarat is given below: Value Chain Process Institutional Arrangement Role Production Aggregation Processing, packaging, branding, support Marketing Farm Household Village Dairy Cooperative (VDC) District Milk Unions, GCMMF District Milk Union, GCMMF Purchase of milch animals, husbandry, milk production Daily procurement from farmers, quality testing, storage in bulk coolers if required Transport of milk from VDCs to district dairy units Processing in to packaged milk, milk products, packaging, branding with own brand by District unions and packing in the brand name of GCMMF Both by district milk union and GCMMF depending on nature of the product, market and branding 96 Cold Chain: Opportunities in India

109 The indicative milk value chain costing under the cooperative pattern has been tabulated below: Milk Cumulative Price (INR/kg) Procurement Price (6.5% Fat & 9% SNF) 39 Transportation Charges from Village to Collection Centre 0.8 Chilling Cost 0.4 Procurement Staff Salary Cost 0.4 Other Expenses 0.5 Transportation Cost from Collection Centre to Plant 0.5 Processing Cost(Processing margin, processing cost and packing) 3.3 Transportation Cost to Distributor 0.5 Distributor Margin 1.4 Retailer Margin 1.5 Consumer Price Source: Industry Sources Additional wastages happening at wholesaler, retailer level are covered within the margins. These wastages are difficult to quantify as they differ from case to case basis. Potential for Cold Chain Intervention Dairy industry is well established in Gujarat and has been taken as a model for other states in the country. Anand model cooperative dairying has emerged as one of the successful dairy development programs in India. The Gujarat Cooperative Milk Marketing Federation (GCMMF) network is very strong, with farmer involvement at all levels in the chain. Few private dairies exist in the state in view of the competition from the cooperatives. However, looking to the increasing per capita availability of milk in the state, improved disposable incomes, demand-supply gap and presence of major markets of consumption within the state, there is a good scope of entering into the segment with diversified product mix. Most of the private players have started replicating the AMUL model where the services are not only limited to the procurement of milk from the farmers, but also providing the technical advisory services for enhanced milk production and clean milk production by investing in backward integration infrastructure including bulk milk coolers (BMCs), milk testing equipments, collection vehicles. To ensure that the processed products have enhanced shelf-life, investment in forward marketing and distribution through use of refer vans is required. Cooperatives and existing private players in the state have well established cold chain infrastructure from collection of milk to dispatch of processed products to consumers and the same is being majorly catered through the local suppliers. Dairy players are still looking for cost-effective, energy efficient and space saving technology interventions in chilling and storage of milk at collection level and transportation of raw milk and processed products in insulated and refer vehicles. YES Bank- Dutch Embassy Collaborative Study 97

110 98 Cold Chain: Opportunities in India

111 IX Assessment of Cold Chain Sector in Delhi/NCR YES Bank- Dutch Embassy Collaborative Study

112 IX Assessment of Cold Chain Sector in Delhi/NCR 1. Overview of Cold Chain Sector in Delhi/NCR In Delhi, the total cold storage capacity is 126,158 MT out of which multipurpose and milk & milk products cold storages accounts for 93% and 4% respectively. Over the years due to high land prices, a large no. of cold stores have come up in areas nearby Delhi like Kundli which lie at the outskirts of Delhi. Kundli has over 50 cold stores with an approximate capacity of 300,000 MT, majority of which are multi-purpose cold storages. The key commodities kept in cold storage in Kundli are apples, kirana items (pulses, fresh spices, dry fruits), milk powder, peas, banana and potatoes. Azadpur mandi in Delhi is the largest fruits and vegetables market in Asia which makes Delhi a major distribution hub. Apple and Mango are the major crops arriving in Azadpur mandi. Apple is stored in CA storage after harvesting and is available in the market throughout the year. Mango is another fruit which has huge domestic demand and has potential for storage under cold chain. Delhi/National Capital Region (NCR) also has a huge milk market which requires cold chain across the distribution channel from procurement till the point of sale. Detail of production, seasonality, value chain and potential for cold chain intervention for Apple, Mango and Milk & Milk Products in Delhi/NCR is given in the section below. CA Storage Capacity for Apples in Delhi/NCR, Himachal and J & K In India, CA stores, which use more advanced technologies, are mostly dedicated to Apples, with other commodities being experimented on a very small scale. The Apple CA stores are concentrated in Himachal, J&K and Delhi/NCR. CA storage capacity in India is approximately 70,000 to 80,000 MT which is mostly used for Apples only. Himachal Pradesh and J & K are the major Apple producing states and have CA storage capacity of 28,000 MT and 20,000 MT respectively. The CA storage is expected to increase to 150,000 MT in coming years as currently about 40 projects are under construction. The CA storage capacity in Delhi/NCR is approximately 30,000 MT to 40,000 MT which is used mainly for Apples. Apples arriving in Delhi/NCR region are mainly procured from Himachal Pradesh and J & K. Major players like Adani, FHEL are procuring Apples from Kinnaur region in Himachal Pradesh for storage in Delhi. 100 Cold Chain: Opportunities in India

113 2. Commodity Profile and Value Chain 2.1. Apple a) Apple Production Total Apple production during was 1.9 million MT. Jammu & Kashmir (J&K), Himachal Pradesh (HP) and Uttarakhand are the major Apple producing states. J&K accounts for 70% of total Apple production followed by HP and Uttarakhand with contributions of 22% and 6% respectively. Contributions from Tamil Nadu and North Eastern states like Arunachal Pradesh, Nagaland, Sikkim are negligible. The major varieties grown are Red Delicious (HP), Golden Delicious (J&K, HP), McIntosh (HP) and Lal Ambri (J&K). Most of the orchards, focusing on the popular Red Delicious, Royal Delicious and Rich Red varieties, are 30 to 35 years old. Orchard renovation is slow, despite availability of government subsidies. The indicative milk value chain costing under the cooperative pattern has been tabulated below: State Jammu & Kashmir Himachal Pradesh Uttaranchal Arunachal Pradesh Growing Belts Srinagar, Budgam, Pulwama, Anatnag, Baramullah, Kupwara Shimla, Kullu, Sirmour, Mandi, Chamba, Kinnaur Almora, Pithoragarh, Tehri Garhwal, Uttarkashi, Chamoli, Dehradun, Nainital Tawang, West Kanneng, Lower Subansiri Seasonality State/UT s Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Arunachal Pradesh Himachal Pradesh Jammu & Kashmir Uttarakhand Lean Season Peak Season In Delhi/NCR, Apple is mainly procured from Himachal Pradesh and Jammu & Kashmir. Total Apple arrival in Azadpur Mandi, Delhi was 0,000 MT during The Apple varieties arriving in Azadpur include Royal Delicious and Delicious. Royal Delicious Apple from Himachal Pradesh has the highest arrival contributing to 54% of total arrivals and the remaining is contributed by Delicious Apple from J & K. b) Import Scenario Apple is currently the most heavily consumed imported fruit in India. The major factors fueling Apple demand are growing disposable incomes, improving lifestyle, health awareness and huge vegetarian population. India consumes nearly all domestic Apple production and the remaining demand is met by imported fruit. YES Bank- Dutch Embassy Collaborative Study 101

114 India imported 200,000 MT (INR 11.6 billion) of Apples during China is the major exporting country contributing to 38.7% of total Apple import followed by USA, Chile, New Zealand and Iran contributing 34.7%, 11.0%, 9.1% and 3.2% respectively. About 95-98% of fresh Apple imports enter the market through the ports of Mumbai or Chennai; Chennai s port caters to the states of Tamil Nadu, Karnataka, Orissa, Andhra Pradesh, and West Bengal, while the port of Mumbai supplies the entire western and northern Indian market. c) Storage Conditions Mostly Apples are stored between -1.8 and 0 C, although some varieties are cold-sensitive at this temperature and have to be stored at 3.3 to 4.4 C. To maintain the water content in Apple and prevent shriveling of the skin, the storage relative humidity should be 90% or higher. The storage life of Apples under CA storage varies from 6 to 10 months depending on the variety, stage of fruit maturity during harvesting, time lag in cold storage. d) Value Chain In Himachal Pradesh the private sector is allowed to open market yards in the state and farmers can sell produce to wholesalers, processors and consumers directly. Private players like Adani Agrifresh Limited, Devbhumi Cold Chain Limited, Suri Agro Fresh, Harshna Cold Storage have already established CA storage facilities at different locations in HP and J &K. At present these private players are procuring Apples directly from farmers which are then sold through a nationwide network of dealers. Private players have also established pack houses for sorting/ grading and packing of produce. In some cases, where players like FHEL do not have pack house facility, the primarily sorting, grading and packing of produce is done by farmers at their orchard. In Himachal Pradesh, Apples are sorted and packed in 20 kg capacity corrugated cardboard boxes, while in Jammu and Kashmir growers still use wooden boxes. Grading and packaging of the produce is still done on a voluntary basis and commission agents insist on over-packing of apple cartons, with the result that around 1-2 kilograms of fruit per box arrives in urban markets severely damaged. Apple sale generally takes place through the agriculture markets established and regulated under the state APMC acts. It is estimated that 70-80% of the Indian Apple producers market their produce via organized marketing channels and approximately 85-90% is consumed fresh - while the rest is exported, processed, or wasted. Most domestic produce is traded through the Azadpur Fruit & Vegetable Market in New Delhi, which is in close geographical proximity to most of the Apple producing areas. Generally, the fruit is either sold at the Azadpur market for consumption in Delhi/NCR or is trucked to terminal markets in other cities. Several private companies and growers, however, have started transporting produce directly to other cities without halting at Delhi. There are a large number of intermediaries involved in the Apple supply chain. The supply chain is as follows 102 Cold Chain: Opportunities in India

115 Procurement of Apples from HP and J &K Farmers Commission Agent Ambient Transportation Commission Agent/Wholesaler do pre-harvest contract with farmers for procurement of produce at a pre determined price Ambient Transportation Only 1-2% retail is organized. Retailing is majorly carried out by street vendors, corner shops, and weekly markets Wholesaler Retailer Consumer Some wholesalers also acts as commission agent and has storage facility in Delhi/NCR Own/Out Sourced CA Storage Some wholesalers like Adani Agrifresh have their own brand for retail markets Collection Centre of Wholesaler Ambient Transportation CA Store of Wholesaler Sorting/grading of Apples is done at collection centre and farmers are paid depending on the quality of produce Storage of Apples in CA store in HP & J&K till dispatch to Delhi/NCR market Indicative value chain costing of Apple is shown in the table below Apples INR/kg Cumulative Price (INR/kg) Procurement Price from HP Market Charges APMC Tax H.P (@ 1%) Grading, Sorting, Packing & Local Transportation CA Storage Cost (8 months) Transport (H.P to Delhi) Wastage (@ 3%) Insurance Labour Miscellaneous, if any Commission Charges (@ 6%) Wholesaler Margin (@ 8%) Wholesaler Price 80.0 APMC Tax Delhi (@ 1%) Local Transportation Retailer Margin (@ 47%) Consumer Price Source: Industry Sources Additional wastages happening at wholesaler, retailer level are covered within the margins. These wastages are difficult to quantify as they differ from case to case basis. YES Bank- Dutch Embassy Collaborative Study 103

116 Majority of Apple CA stores in Himachal and J & K are for captive use only. The rental charges in HP and J &K are in the range of INR 1.25 to INR 1.5 per kg. Distribution channels for imported Apples are shown below. Carrying & Forwarding Agent Short term Cold Storage Imports of Apple through Mumbai port Importer Commission Agent Wholesaler Retailer Consumer Own/Out Sourced Short term Cold Storage e) Potential for Cold Chain Intervention Apple is one of the fruits where the supply chain is well established and storage is done under controlled atmospheric conditions. With increase in demand of good quality produce the percentage of Apples going under CA storage is bound to increase indicating a potential for cold storage of the produce. Presently Apples are transported at ambient temperature from the producing regions to consumption markets. Transportation of Apples under cold chain and pre cooling after harvesting are the potential areas where technological intervention is required Mango a) Mango Arrival In Delhi/NCR, Mango is majorly procured from Uttar Pradesh, Maharashtra and Andhra Pradesh. Total Mango arrival in Azadpur Mandi, Delhi was 640,000 MT during The major mango varieties arriving in Azadpur Mandi, Delhi include Dusheri, Alphonso, Safeda, Totapuri, Langra and Cahusa. Dushehri, Alphonso and Safeda variety has the highest arrival contributing to 23%, 20% and 20% respectively followed by Totapuri, Langra and Chausa contributing to 17%, 14% and 6% respectively. From April to June, Delhi gets the bulk of its supply of mangoes from Southern India while June-August mangoes are procured from Uttar Pradesh. Variety Dusheri Alphonso Safeda Totapuri Langra Cahusa Arrival Months May, June, July, August April, May, June, July April, May, June, July April, May, June, July June, July, August July, August, September 104 Cold Chain: Opportunities in India

117 The major growing belts and varieties of Mango grown in Andhra Pradesh and Uttar Pradesh are given in the table below. State Growing Belts Varieties Grown Andhra Pradesh Uttar Pradesh Source: Agmarknet, APEDA Krishna, East and West Godavari, Vishakhapatnam, Srikakulam, Chittoor, Adilabad, Khamman, Vijaynagar Saharanpur, Bulandshahar, Lucknow, Faizabad, Varanasi Banganapalli, Suvarnarekha, Neelum and Totapuri Bombay Green, Chausa, Dashehari and Langra b) Value Chain Majority of the farmers usually sell the harvesting/management rights of their orchards to contractors. The contracts are made in the flowering season or up to three months before the harvesting i.e. in the month of March and April. After contract agreement the contractor bears all the expenses related to crop management. The contract is usually a simple verbal agreement but sometimes there is a written agreement between the farmer and the contractor. The contractors mostly sell these mangoes in Azadpur mandi in Delhi. The farmers who manage their crop themselves bring their produce into the local market and sell through traders. Many wholesalers also act as pre harvest contractors. The main channels followed for marketing of Mangoes are as under: Procurement of Mango from AP & UP. Farmers keep the produce for approx. 24 hrs Farmers Pre Harvest Contractors Ripening Chambers Commission Agent Pre Harvest Contractors take Orchards on Contract from Farmers at a predetermined price and manage all Post Harvest Activities. Some Wholesalers also act as Pre Harvest Contractors Wholesalers Retailer Consumer Wholesalers store Mangoes for 2-12 days Retailers store Mangoes approx. for 3-4 days YES Bank- Dutch Embassy Collaborative Study 105

118 Indicative value chain costing of Dushehri Mango procured from Uttar Pradesh is given in the table below: Mango INR/kg Cumulative Price (INR/kg) Procurement Price of Mango APMC Tax UP 2%) Development Cess 0.50%) Sorting, Grading and Local Transportation Transportation Cost from UP to Delhi Ripening Cost Wastage 2%) Insurance Labour Charges Miscellaneous Commission Charges 6%) Wholesaler Margin 12%) Wholesale Price 27.0 APMC Tax Delhi 1%) Local Transportation Retailer Margin 34%) Consumer Price 38.0 Source: Industry Sources Additional wastages happening at wholesaler, retailer level are covered within the margins. These wastages are difficult to quantify as they differ from case to case basis. c) Potential for Cold Chain Intervention Presently, Mangoes are stored and transported under ambient conditions due to which the storage life of Mangoes is only days. Some players in Delhi/NCR are experimenting to store Mango under controlled atmospheric conditions at a small scale. At the time of harvesting, pre cooling facility is required to delay the ripening of fruit and to reduce storage losses. Pre cooling facility along with refrigerated storage and transportation are potential areas for technology intervention. Though use of carbide is banned by Indian government but presently it is being used illegally for ripening of Mangoes. With increase in health awareness and increasing ability of the consumer to pay higher prices the demand for good quality fruit which are ripened using natural process is going to increase. This will create huge potential for ripening chambers to be used for ripening of Mangoes. 106 Cold Chain: Opportunities in India

119 2.3. Milk & Milk Products a) Delhi/NCR Market Size The total Delhi/NCR liquid milk market size is estimated at 7.6 million litres per day which translates to 2,774 million litres annually. Approximately, 80% of Delhi/NCR liquid milk market is branded as both Amul and Mother Dairy are dominant players. The ice cream market in Delhi/NCR is estimated at 16 million litres valuing INR 2 billion in terms of value. The branded ice cream market share is 75% with 8% of total sales happening through modern retail. The growth rate in branded ice cream segment is 25% to 28% (in value terms). The growth in Ice cream industry has been primarily due to strengthening of distribution network and cold chain infrastructure. Channels such as Mobile Vending Units have been increasing year on year to reach out to a larger set of consumers. Milk being a highly perishable commodity, cold chain is maintained starting from the milk procurement in villages to the retailer level. All dairy companies have in house cold storages for keeping stock of processed milk products like pouch milk, ice cream, curd, butter, buttermilk for 2 to 3 days before dispatch to distributor. As milk is distributed locally and consumed daily hence companies do not outsource storage of milk whereas storage of products which are distributed to long distances and have high shelf life like ice cream, butter and frozen paneer are outsourced to third party players. Large distributors also create storage facility for keeping the products before distribution to retailers. b) Value Chain Cooperative players like Amul procure milk directly from the farmers at village level. Private players procure milk majorly through agents along with some percentage directly from farmers. The cost of milk procurement is higher for a private player who operates through the forward integrated business model as compared to a cooperative or a private player who operates through the fully integrated business model. At village level Bulk Milk Chillers (BMC) are installed for storing and chilling milk brought by the farmers at the collection centre. Tankers collect milk from BMCs and transports to dairy plant for processing. After processing milk and milk products are stored in plant before dispatch. The products are dispatched to distributors and distributor further transports the products to retailers. Distributors of some large companies are responsible for picking products from plant along with storage and distribution to retailer. Private players like Gopaljee have created hubs for distribution of products. Company transports products from plant to distribution hubs and distributor takes the products from hubs for transportation to retailers. Transportation of pouch milk is generally done in insulated vans. Reefer vans are not used for transportation of pouch milk from wholesaler to retailer as vans have to be opened multiple times to deliver products at retailer outlets due to which it becomes difficult to maintain temperature in reefer vehicle. For products like curd, butter milk, paneer etc. chilled transportation is required. For frozen products like ice cream, frozen paneer, butter frozen transportation is used. Ghee and milk powder are transported in ambient conditions. YES Bank- Dutch Embassy Collaborative Study 107

120 Main channels for distribution of dairy products are indicated in the diagram below. Commission Agent Distribution Centre Plant supply products to their distribution centers. Farmers Collection Centre Processing Plant Wholesaler Retailer Consumer Farmers bring milk to collection centers in village Bulk milk chillers are installed to collect milk from farmers. In case of large distance b/w procurement area & processing plant, milk is processed at chilling centre before transportation to plant In House Cold Store for storing packed products. In case of companies having greater market reach in domestic market, Wholesaler is responsible for hiring cold storage facility. Wholesalers generally do not require storage for Milk as it is consumed daily. For products like Ice cream, Butter, Paneer cold storage is required Indicative value chain costing of Milk is shown in the table below Milk Cumulative Price (INR per litre) Procurement Price (6.5% Fat & 9% SNF) 38 Transportation Charges from Village to Collection Centre 1.2 VSP Commission 1.4 Chilling Cost 0.5 Procurement Staff Salary Cost 0.4 Other Expenses 0.5 Transportation Cost from Collection Centre to Plant 0.5 Processing Cost 3.5 Transportation Cost to Distributor 0.5 Distributor Margin 1.1 Retailer Margin 1.5 Consumer Price Source: Industry Sources Additional wastages happening at wholesaler, retailer level are covered within the margins. These wastages are difficult to quantify as they differ from case to case basis. 108 Cold Chain: Opportunities in India

121 c) Potential for Cold Chain Intervention Delhi/NCR is one of the biggest markets of milk and milk products in India. Large dairy players like Amul and Mother dairy dominate approximately 95% of Delhi s organized milk market while others like Delhi Milk Scheme and smaller private players such as Paras, Gopaljee and Kwality account for the rest. All dairy players have well established cold chain including cold storage at plant level. The companies hire third party players for distribution of products. For products with long shelf life like butter, ice cream long term storage is outsourced. With many players are focusing on strengthening their back end infrastructure for milk collection there is a need for low cost technology for chilling and storing milk at village level. Also, in coming years the percentage of value added dairy products like curd, cheese, paneer, butter which is currently 34% is expected to increase which will create a demand of more robust cold chain. Hence, there is a potential to maximize the operating efficiencies in the already established cold chain by introduction of energy efficient low cost technologies. YES Bank- Dutch Embassy Collaborative Study 109

122 110 Cold Chain: Opportunities in India

123 X Conclusion YES Bank- Dutch Embassy Collaborative Study 111

124 X Conclusion The cold chain industry is an emerging and fast growing business sector in India. Considering the current levels of fruits and vegetables wastage along with focus on food safety and security, cold chain facilities will play an important role in meeting the demand of food in the country Development in the food processing sector and organized retail, government initiatives, increasing investments as well as increasing willingness on the part of consumers to pay a premium for higher quality of food products, will drive overall growth for the industry. However, interventions are required to bring down operating costs, to improve quality of end produce, for adoption of new technology solutions and training of manpower. Some of the potential areas of intervention identified for the shortlisted commodities in the study are given below. Commodities Key Facts Potential Areas of Intervention Andhra Pradesh Mango AP is the largest producer of mango with production of 4.4 million MT and supplies to domestic market for fresh consumption as well as for manufacturing mango pulp. New trend of storing mango pulp in cold storage to maintain quality Expansion of mango pulping capacity in Chitoor Marine Fish production 1.6 million MT Exporters expanding capacities Modernization of processing facilities India seafood exports expected to double and cross $ 10 billion by 2020 Ripening chambers, controlled atmosphere/modified atmosphere storage for mango, cold storage for mango pulp Cold storage and transportation (reefer vans), pre cooling infrastructure, ice making plantsflake and tube ice, freezing units- IQF, plate freezers, blast freezer and freezer cold storages 112 Cold Chain: Opportunities in India

125 Commodities Key Facts Potential Areas of Intervention Meat Milk & Milk Products Maharashtra Onion Citrus Banana Gujarat Potato Fish Buffalo meat production 117,690 MT India buffalo meat export 1.4 million MT. AP contributes approx 35% Cold chain well maintained for exports Exporters expanding capacities Milk production 12.7 million MT Well established cold chain in organized market Onion production 5.9 million MT Cold chain is not used for storage. Many players are experimenting to store onion in CA/cold store at a small scale Brought under essential commodities act by the new government which might adversely impact the initiatives for long term storage of onion Citrus production 878,000 MT Maharashtra production caters to domestic as well as export market. Majority of citrus is stored and transported under ambient condition Market needs to be developed Banana production 3.7 million MT Ripening chambers are used for ripening Potato production 2.5 million MT of which currently approx 20% is processing variety being cultivated for specific players. Fish production 788,500 MT Large export oriented units have plans for expansion and modernization of current processing facilities Cold storage and transportation of meat for domestic market Low cost technology for chilling milk at farm level, reduction in space and operating cost for storage of milk and milk products Technology for long term storage of onion Cold storage technology for extending storage time of citrus fruits Modern pack houses and ripening chambers New technologies for storage of processing grade potato will be required as companies expand their procurement from Gujarat. Cold chain infrastructure for processing units, cold chain (storage and reefer transport) for domestic market Milk & Milk Products Milk production 10.3 million MT Highest share of approx. 21% of India s dairy output Prevalence of cooperative model Well established cold chain Low cost technology for chilling milk at farm level YES Bank- Dutch Embassy Collaborative Study 113

126 Commodities Key Facts Potential Areas of Intervention Delhi/NCR Apple Mango Milk & Milk Products Arrival of Apples in Azadpur mandi -0,000 MT which is majorly brought under ambient conditions Pre-cooling is not done at farm level Approx 70,000 80,000 MT of CA storage will come up in coming years in Delhi/NCR, HP and J&K. Arrival of Mango in Azadpur mandi is 640,000 MT which is mostly ripened using carbide. Pre cooling is not done at farm level With increasing demand of good quality produce and govt. regulations there is a potential of increase in use of ripening chambers. Mango is transported and stored under ambient condition Low storage life of days Delhi milk market 2,774 million litres Well established cold chain in organized market Pre cooling solutions at farm level, reefer transportation of apples and CA/MA storage Pre-cooling, ripening chambers, storage technology for long term storage and reefer transportation Low cost chilling solutions for procurement and transportation Space and energy saving solutions As mentioned above, opportunity for cold chain intervention in Indian market exists for all shortlisted commodities like onion, citrus, banana, potato, mango, marine, meat and dairy but depending on potential market demand, interventions in existing supply chain and export potential the following cases appear to be amenable for interventions in the near term. 1. Mango Mango production in India during was 18 million MT, approximately 95-96% of which is used for fresh consumption. Mango is a seasonal fruit and is available for only 4-5 months during the year. Mangoes are stored and transported under ambient conditions due to which the storage life of mangoes is only days. Some cold chain players like Harshna Group, Amrit Humifresh are experimenting to store mango under controlled atmospheric conditions at a small scale but have got limited success. Hence, there is a potential to propagate a storage solution to increase shelf life of mango. At the time of harvesting, pre cooling facility is also required to delay the ripening of fruit and to reduce storage losses. In addition, for domestic consumption ripening of mango is still done by using calcium carbide which is harmful for health and is banned by the government. With increase in health awareness and increasing ability of consumers to pay higher prices the demand for good quality fruit which are ripened using natural process is going to increase thus creating potential for establishment of ripening chambers near urban consumption centers. India is also a major exporter of mango pulp in the world and exported 174,860 MT of pulp during Earlier, aseptic pulp used to be stored in warehouses under ambient conditions but in recent years there has been demand by importers and beverage makers to store aseptic pulp in cold chain. 114 Cold Chain: Opportunities in India

127 Thus, pre cooling facility, ripening chamber along with refrigerated storage and transportation are potential areas for technology intervention. 2. Marine Products Export of marine products from India is increasing year on year. During financial year , exports of marine products reached an all-time high of 983,756 MT (USD 5,007 million) and crossed all previous records in volume and value terms. Frozen shrimp is the major export value item accounting a share of 64.12% of the total USD earnings. Fish is the principal export item in quantity terms and the second largest export item in value terms and accounted for a share of about 33% in quantity and 14% in USD earnings. Andhra Pradesh is one of the major aquaculture production hub, as well as sea food exporting state in India. AP is the leading state in fisheries with a production of 16 lakh MT ( ) contributing 19% to the national fisheries production. It also has highest shrimp production and net cultivable area is growing in the recent years. With the introduction of the Vannamei shrimp the production of cultured shrimp has increased dramatically and has completely replaced the traditionally cultivated black tiger shrimp. The capacity utilization of the shrimp processors has also increased from 20-30% to around 40-60% in the recent past. This is leading to up-gradation and capacity expansion by the shrimp processors. All the major players are planning to expand their capacities by 20-30% in next two-three years. Processors have also upgraded to tube ice as compared to flake ice and block ice which is used traditionally. The growth in aquaculture/processing will benefit the cold chain industry as it is crucial to maintain the quality of produce. There is potential for cold chain industry to intervene at all levels of value chain from grading sorting at farm level to final processed product due to the expansion of the industry. 3. Apple Apple is one of the fruits where the supply chain is well established and storage is done under controlled atmospheric conditions. With increase in demand of good quality produce the percentage of apples going under CA storage is bound to increase indicating a potential for cold storage of the produce. With currently about 40 projects under construction, in coming years CA storage capacity is expected to increase to 150,000 MT from the current capacity of approx. 70,000 MT. Many of these projects are in planning stage and could be actively targeted by technology suppliers. Presently apples are transported at ambient temperature from the producing regions to consumption markets leading to poor quality. Transportation of apples under cold chain and pre cooling after harvesting are the potential areas where technological intervention is required. Other key areas where interventions are required in cold chain sector are mentioned below. Pre coolers for cooling produce at farm level as presently local suppliers are present which do not supply good quality product Blast freezing and IQF technology Light weight and new technologies for reefer containers Efficiency, cost effectiveness, service support & innovation is required in reefer technology Low cost technology for automation of operations in a cold store like automation of doors Research on extension of shelf life for products Humidity control application for ripening zones/chambers Temperature monitoring devices Good after sale service YES Bank- Dutch Embassy Collaborative Study 115

128 116 Cold Chain: Opportunities in India

129 XI Sucess Stories YES Bank- Dutch Embassy Collaborative Study 117

130 XI Success Stories Some of the success stories in storage of perishable produce in India are mentioned below. 1. Adani Agrifresh Ltd. - Intervention in Apple Supply Chain Adani Agrifresh Ltd. has set up three CA facilities for storing 23,000 MT of Apple with an investment of INR 1.8 billion in the Shimla district of Himachal Pradesh. This investment is one of the largest in the fresh produce sector in India. The CA stores are equipped with imported computer controlled grading machines which not only weigh but also measure the size and color of each apple. Based on these parameters the farmers are paid the price. This system is unlike the traditional mandi system where there is an opaque system of price discovery and lots of hidden costs have to be paid by the farmers. Small plastic crates are also provided by Adani Agrifresh, which are used to carry apples to the CA store due to which the damage to the fruit is minimized. The company has also opened its farmer service centers at three locations through which it sells agri inputs and provides extension services to the farmers. Adani sells its apples under the brand name Farm-Pik through a distribution network spread across 40 major cities in India. The existing model of CA storage has resulted in higher remuneration to the farmers an average differential of INR 8-9 per kg. It has also reduced the burden on farmers in terms of procuring packaging material. The model in addition also provides indirect benefits like improved crop management practices and transparent payment mechanism. 2. Danfoss- Technology Intervention to Reduce Electricity Costs Kartarpur region in the state of Punjab has around 450 cold storages with focus on seed potato and onions. One of the older cold storages in Kartarpur decided to renovate its facility by upgrading the insulation. Two new 75 TR, 75kW Bitzer screw compressors were installed controlled by Danfoss VLT 5000 series drives. The diffuser system was replaced by DX type induced draft evaporator units which circulate the cold air into the refrigerated space, and all fans and evaporators were equipped with VLT drives. 118 Cold Chain: Opportunities in India

131 Once the products were cooled down to the storage temperature the cold air had to compensate for ambient conditions and heat loss only. This required part load only and the fans could be run at about 50% of nominal speed. As a result of this technology in the cold storage, the electricity bill decreased from 7,300 USD to 2,200 USD per month, the majority as a result of installation of VLT drives. Besides this, better control of the internal environment gave longer storage life for the products which enabled the company to wait for a longer time, realizing higher returns. 3. Ingersoll Rand Success Story of Banana Ripening Baarath Fruits located in Theni District of Tamil Nadu is known as the pioneer company in the business of Banana ripening. Theni district, popularly known as the banana district caters upto 60% of Cavendish banana marketed in Tamil Nadu, Kerala and Karnataka. Baarath Fruits initiated the Banana ripening business by ripening it at the SAFAL market on rental basis. The company used to transport the banana from Theni district to SAFAL in Bangalore and after a 4 day ripening cycle at SAFAL brought it back to Chennai market. Sensing the opportunity of saving transportation charges to Bangalore and around 80% of the rental charges for ripening, the company started its own ripening facility containing four ripening chambers of 10 MT capacities each. The company did well for the first two years, until it faced competition from other players who ventured into the ripening business. Ingersoll Rand got the opportunity to set up the second set of ripening chambers for the company in 2009 with enhanced technological interventions. It set up forced air pressurized banana ripening chambers with humidity control by means of superior refrigeration designs. The chambers were able to maintain humidity levels upto 85-90%. Moreover, the ripened banana could be held for another 4-5 days after the ripening cycle at fourth stage of ripeness. The process increased the shelf life of banana thereby offering flexibility to face the demand and supply issue. The success gave Baarath fruits the strength to compete in the fast growing competitive banana ripening business. 4. Harshna Group - Apple Supply Chain and Mango & Banana Ripening Harshna Group has been into trading of fruits in the Azadpur mandi, Delhi from the past 40 years. The company procures apples from HP and Jammu & Kashmir from farmers through its long relationship. It has set up CA storage with a capacity of 15,000 MT in Jammu & Kashmir for storing the fresh produce, 10,000 MT cold store and 6000 MT CA store in Kundali, Haryana for storage of apples and other commodities like potatoes and SMP. The company s facility at Kundli has also a grading/sorting line for round fruits and ripening chambers for mango and banana. It procures mangos from AP and UP and banana from Maharashtra and ripens it at its facility in Kundli. It sells its product through its own distribution channel in Delhi and other states. Through its direct procurement the company has increased the benefit to all stakeholders including farmers and improved efficiencies. The company actively runs awareness programs for apple farmers in J&K to improve their cultivation practices. YES Bank- Dutch Embassy Collaborative Study 119

132 5. Innovations in Storage of Root Vegetable Dutch Technology A dutch technology provider, which is the world leader in cold chain solutions for root vegetables like potato, onion and carrot started operations in India in the 10s. The company has bagged many firsts with respect to cold storage of root vegetables and some of their successful business cases are mentioned below. Onion cold storage for a major micro irrigation firm In 15, the company provided its technology to establish an onion cold store of 30,000 MT in Maharashtra for a major micro irrigation firm. This initiative was successful as the company s technical expertise and services provided on ground results which helped the micro irrigation firm in integrating its onion processing along with storage. Potato cold storage for a wafer manufacturer In 2009, it became the first company to establish an 8,000 MT of ultra modern box potato cold store in Gujarat for a wafer manufacturer with an investment of approximately INR 25 crores. The company has been able to increase the shelf life of potatoes to months under cold storage. With this storage facility, the wafer manufacturer has been able to ensure the supply of potatoes (maintaining the required parameters for processing) throughout the year which has been a major challenge in this industry. Potato cold storage for entrepreneurs/farmers The company has been working with entrepreneurs/large farmers in Gujarat to provide innovative and custom made solutions for cold storage. It has done modification of an 8,000 MT cold storage with new technology for a farmer in Gujarat. With the success of this project the farmer is further expanding its storage capacity. It has also developed the technology for bag storage of potato. It became the first company to establish 10,000 MT of bag storage for potato for an entrepreneur/farmer in Gujarat. 120 Cold Chain: Opportunities in India

133 XII Major Deals and Investment in Cold Chain Sector YES Bank- Dutch Embassy Collaborative Study 121

134 XII Major Deals and Investment in Cold Chain Sector Growth in organized retail is one of the key factors driving the growth of the organized cold chain segment. The share of the organized market in retail which was at 10% in FY13, is expected to grow to 30%, with food being the least penetrated segments and poised for high growth. Also, the Indian food processing Industry which is at a nascent stage is expected to grow at over 17%. With most of the processed categories requiring cold chain services, demand is expected to increase at a higher rate. According to Venture Intelligence, private equity firms (PE) have invested about ~INR 9.4 billion (USD 152 mm) in companies in the agri-logistics and cold chain sector from Companies is this sector with a revenue growth in the range of 20% to 100% annually are hoping to raise between INR 150 million and INR 1 billion to scale operations across the country to grow faster. Also, with the opening of retail sector large organized retail players are entering Indian market which will further increase the demand for cold chain. The investment firms are however unhappy with the high valuation expectations, which range between 15-20x EBITDA multiple. Businesses in the sector are mostly family-run and not open to outside control. The balance sheets also tend to be unreliable. This emerging sector is still nascent and in need of professional handholding. Inspite of growth in the sector the gross margins tend to be in the range of 5-6%. PE firm s knowledge and expertise in this domain will help to weed out inefficiencies. Despite of the challenges and the seasonal dependent nature of the business, PE firms are betting on the potential scalability of organized players in the segment. 122 Cold Chain: Opportunities in India

135 Deals in the last five years: Year Segment Name of the Company PE Investor Stake (%) Stake (%) Jun-14 Cold Chain Solutions Snowman Logistics Ltd Norwest Venture Partners Jun-14 Cold Chain Solutions Schedulers Logistics Aspada Investment NA Aug-13 Cold Chain Solutions Snowman Logistics Ltd Gateway Distriparks Ltd NA Jun-13 Cold Chain Solutions Snowman Logistics Ltd. Gateway Distriparks Ltd NA Jul-12 Cold Chain Solutions Mehta Frozen foods carrier Ambit Pragma NA Dec-10 Cold Chain Solutions RR Enterprises Ltd. Kuehne + Nagel International AG NA NA Dec-10 Cold Chain Solutions Swastik Roadlines India Equity Partners Fund I NA Snowman Logistics, an integrated temperature controlled logistics service provider raised over Rs 1.97 billion through the issue of 420 million equity shares. Some of the anchor investors of the IPO include Faering Capital India, ICICI Prudential, IDFC Sterling and IDFC Infrastructure. The issue proceeds will be used towards setting up new temperature controlled and ambient warehouses, long term working capital and for general corporate purposes. As of March 31, 2014, the company had 23 temperature-controlled warehouses across 14 locations in India and it aims to add 4-5 warehouses every year till YES Bank- Dutch Embassy Collaborative Study 123

136 YES BANK, India s fourth largest private sector Bank, is the outcome of the professional & entrepreneurial commitment, vision & strategy of its Founder Rana Kapoor and his top management team, to establish a high quality, customer centric, service driven, private Indian Bank catering to the Future Businesses of India. YES BANK has adopted international best practices, the highest standards of service quality and operational excellence, and offers comprehensive banking and financial solutions to all its valued customers. YES BANK has a knowledge driven approach to banking, and a superior customer experience for its retail, corporate and emerging corporate banking clients. YES BANK is steadily evolving its organizational character as the Professionals Bank of India with the uncompromising Vision of Building the Best Quality Bank of the World in India by 2020! Agriculture Department of Embassy of the Kingdom of the Netherlands, New Delhi Agriculture trade is one of the pillars of the Dutch economy and contributes about 2/3rd of the net revenues of the Dutch government. Our foreign agricultural network works to facilitate that trade. Consumers in Europe demand fresh produce 365 days a year, for which we need to source from across the world. The Netherlands specializes in sourcing, adding value and then exporting these value-added products to neighboring countries at a considerable profit. To secure trade, our strategy is to invest in local production facilities and enhance local capabilities through technology transfer. We believe, we have to be local in order to integrate into the total trade scenario. An established institutionalized public private partnership that involves the government, the private sector and knowledge institutions, together invests in R & D and implements it through collaborative programs and private sector investment. Agriculture office in India functions as a liaison and promotes co-operation between the Netherlands and India/Sri Lanka in the areas of agriculture, food processing, fisheries, nature management, agriculture based research and education. The office also promotes Dutch agriculture exports and agri-business in India and Sri Lanka along with dissemination of information to Dutch and Indian suppliers about Dutch agriculture products, machinery, services and consultancy.

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