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Cold Storage & Cold Chain Business

PROPOSAL FOR

Cold Storage and Cold Chain Business in India

The estimated annual production of fruits and vegetables in the country is about 130 million

tonnes accounting to 18 per cent of our agricultural output. Moreover, the lack of cold storage

and cold chain facilities are becoming major bottlenecks in tapping the vast potential. The cold

storage facilities now available are mostly for a single commodity like potato, orange, apple,

grapes, pomegranates, flowers, etc. which results in poor capacity utilization.

Many of you who don’t know about Cold storage and Cold Chain Business in India, In the

supply chain, the produces hauls at different stages before it finally reaches in the hand of end

user.i.e. Form factory to retailers and retailer to end user. At this process of supply chain it needs

to be originated so as to preserve its freshness and stretch its life. This breath of life and

freshness is provided by cold storage. Produce, seafood, meat, pharmaceuticals and biomedical

products etc. are some items that need cold storage.

Major vegetables and fruits grown in India are Mango, Grapes, Apple, Avocados, Guava, Litchi,

Papaya and Water Melons, Potato, Onion, Tomato, Cauliflower, Cabbage, Bean, Garlic and okra

etc. Mango, accounts for 40 percent of the national fruit production and India is one of the

leading exporters of fresh table grapes to the global market.

Opportunity in India

The changing food habits are discernible. There has been a positive growth in ready –to-serve

beverages, fruit juices and pulps, processed fruits and vegetables products, i.e., dried or

preserved and dehydrated vegetables and fruits such as sauces, preserved onions, cucumbers and

gherkins, green pepper in brine, dehydrated garlic and ginger powder, dried garlic and ginger,

tomato products, pickles and chutneys, processed mushrooms and truffles and curried vegetables.

Out of the 3443 cold storage units in India, 2975 are in private sector, 303 are in co operative

sector and the rest are in public sector. India’s vast produce rot due to lack of cold storage

resulting in increased cost of the same produce as they die before they could even enter the

market.

Govt. of India promoting cold storage warehouse investments by providing subsidies up to 50%

to 75% on Investment. The nationalized banks of India are also proving loans for cold storage

projects. In the recent time cabinet also approved the amount of 6000 crore rupees for mega

food processing projects. The country requires 3.5 crore tonne capacity cold storage facilities and

if somebody is looking for starting a business this is a right time.

Nearly one third of our horticultural produce, especially fruits and vegetables are wasted, mainly

on account of poor cold storage and other storage facilities. Wastage of fruits and vegetables due

to poor post-harvest management and lack of cold chain facilities have been estimated to cost up

to Rs 500 billion annually. The country also experiences wide fluctuations in prices of

horticultural produce, particularly potatoes and onions. The cold storage chain will help boost

exports of agricultural and allied produce, marine produce etc.

PROJECT REPORT OF 5000 MT COLD STORAGE

MODEL / BANKABLE PROJECT REPORT FOR COLD STORAGE OF 5000 MT (50000

Quintals).

Cold Storages are essential for extending the shelf life, period of marketing, avoiding glut, post-

harvest losses reducing transport bottlenecks during peak period of production and maintenance

of quality of produce. It is, therefore, necessary that cold storage are to be constructed in major

producing as well as consuming centres. The development of cold storage's in the country has an

important role in reducing the wastage of the perishable commodities and providing

remunerative prices to the growers and to make available farm products to the consumers at

competitive and affordable prices.

The annual production of fruits and vegetables in the country accounts for 18 to 20% of our

agriculture out put. Varied agro climatic conditions and better availability of scientific package

of practices, there is a vast scope for increasing the production. The lack of cold storage / cold

room facilities is one of the main bottlenecks in tapping the potential.

Location

The project may be located anywhere in the country suitably either near the producing farms or

consumer centres.

Project cost

The project cost for setting up of 5000 MT Cold Storage may be in the range of Rs.5.00 – 6.00

Crore, including cost of the land.

Quantum of subsidy

Back- ended subsidy @ 40% of the project cost for general and 55% in case of hilly and

scheduled areas for maximum storage capacity up to 5,000 per ton under the Govt. of India /

NHB Capital Investment Subsidy Scheme.

Project cost :

Funding pattern under Capital Investment Subsidy Scheme

Through State Government Direct

Assistance NCDC to StateGovt. State Govt. toSociety

GeneralState

s

HS

Area

s

GeneralState

s

HS

Area

s

GeneralState

s

HS

Area

s

Loan 50% 35% 40 % 25% 35% 20%

BES* 40% 55% 40 % 55% 40% 55%

ShareCapita

l

*** *** 10 % 10% *** ***

Total 90% 90% 90 % 90% 75% 75%

10 % by Society 25% by Society

*

subject to availability from Government of India /NHB otherwise loan from NCDC for a cold sto

rage /CA store up to 5,000 ton capacity. HS =Hilly and Scheduled Areas.

Indicative Project Outlay (Rs.in lakh)

1. Land and land development - 130.00

2. Building and civil works - 120.00

3. Plant & machinery - 153.00

3. Utilities - 23.00

4 Technical Know how - 2.00

5. Misc. fixed assets - 20.00

6. Pre-operative expenses - 17.00

7. Contingencies - 13.00

8. Margin money - 12.00

Total - 500.00

CASE 2

The project cost for setting up of 5000 MT Cold Storage may be in the range of Rs.350 – 400

lakh, including cost of the land.

Estimated Capital Outlay (Rs.in lakh)

Land and land development – 50.00

Building and civil works – 85.00

Plant & machinery – 148.00

Utilities – 23.00

Technical Know how – 2.00

Misc. fixed assets – 20.00

Pre-operative expenses – 17.00

Contingencies – 13.00

Margin money – 12.0

Total – 380.00

Unit size

The storage capacity envisaged for a multi purpose / multi commodity cold storage plant is 5000

MT. Plant operation will be on an average of 10 hours / day. Approximately 1 acre of land of

land is required for setting up of a multi purpose / multi commodity cold storage plant.

PROFIT ANALYSIS COOL CHAMBER

Products storage Capacity =50000 Qtls

Option-1

If the product stored on rented basis, the rent charge is Rs.0.50 per kg / day (maximum 300 days

storage in a year and 70% occupancy)

Collected revenue will be = Rs.3500000 x 0.40 x 300 = Rs.42,000,000 per year

Option-2

A- If the products stored on rented basis as well as by own trading. Products stored on rented

basis = 3500 MT

Revenue will be collected Rs. 0.40 / kg / day = Rs.350000 x 0.30 x 300 = Rs.42,000,000/-

B- Products will be stored by own trading = 1000 MT (8 rotation in a year)

Average profit of mixed vegetables = Rs.5 / kg

Profit for 10 MT vegetable = 1000000 x 5 x 8 = Rs.40,000,000/-

Total profit will be A +B

= Rs. 42,000,000/- + Rs. 40,000,000/= Rs. 82,000,000/-

Protocol for Implementation of Technical Standards

The Govt. of India vide letter F.No.45-64/2010-Hort. dated 25.2.2010 has informed that all the

project proposals received under various schemes of Department of Agriculture & Cooperation

for setting up of Cold Chain Projects should invariably comply to the prescribed technical

standards.

Procedure for availing assistance

Societies willing to set up new cold storage / modernization / expansion of their existing cold

storage are required to apply to National Horticulture Board (NHB) for issue of “LOI” and send

copy of DPR and data-sheet duly filled in by consulting engineer to NHB. The DPR and data-

sheet shall also be enclosed with the application by the society to NCDC, seeking financial

assistance.

Financial assistant for setting up cold Storage chain:

Ministry of food processing Industries provides financial assistance up to 50% of total cost and

machinery and other works. 75% grants in aid to North eastern states including Sikkim and

difficult states includes Himachal pradesh, J&K and Uttrakhand subject to maximum of 10 crore.

To get subsidy from ministry the land where you are planning to start Cold storage must be

registered in the name of your or in the name of your any of the partners. Once you get approval

for subsidies nationalized banks will also provide you loan with ease. Nationalized banks

provides loans for cold storage in two ways:

Construction of Cold Storage: banks will provide loan up to 80% of the total construction cost of

Cold Storage.

Cold Storage for Rent :banks will provide loan up to 90% of the total rental cost of Cold Storage.

SBI and Oriental bank of India provides these types of loan for the period of 11 years and 1

grace year also. for this you must have registered land or lease agreement for minimum period of

40 year of that land where you are planning to start Cold Storage.

NABARD Loan for Warehouse and Cold Storage

Consequent to the announcement of an allocation of Rs. 5,000 crore to NABARD in the 2014-15

budget for supporting creation of infrastructure for storage of agricultural commodities, Reserve

Bank of India (RBI) issued guidelines for creation of Warehouse Infrastructure Fund (WIF 2014

-15) in NABARD. The Fund envisages extension of loans to Public and Private sectors for

construction of warehouses, silos, cold storage and other cold chain infrastructure.

Loans will be provided for projects involving creation of storage infrastructure with a minimum

aggregate capacity of 5000 metric tons (MT) for agricultural and allied produce, including

construction of:

Warehouses

Silos

Cold storage, controlled atmosphere (CA) stores, other cold chain infrastructure activities like

pack houses/integrated pack houses, reefer vans, bulk coolers, individually quick frozen units,

chilling/freezing infrastructure, etc.

Construction/ modernisation/ up gradation of Marketing infrastructure facilities of Agricultural

Produce Marketing Committee (APMC).

Modernization/improvement of the existing storage infrastructure projects will be considered on

merit of each proposal provided it leads to scientific/additional storage capacity.

There’s no minimum capacity for projects of Governments/ Government owned corporations.

Eligible Institutions/Entities

State Governments

State/Central Government Owned/assisted entities, Cooperatives, Federations of Cooperatives,

Farmers, Producers’ Organizations (FPOs), Federations of Farmers’ Collectives, SPVs set up

under PPP mode, etc.

Primary Agricultural Credit Societies (PACS) / Cooperative Marketing Societies (CMS) or

similar institutions

Corporate/Companies/Individual Entrepreneurs etc.

Agricultural Produce Marketing Committees (APMCs)

(Source: https://earnsomething.in/category/small-business-ideas/cold-storage)

(Video Link: https://www.youtube.com/watch?v=57ZNbx1mhhw)

SCHEME FOR FINANCING CONSTRUCTION OF COLD STORAGES/ GODOWNS

PURPOSE BEHIND SCHEME FOR FINANCING CONSTRUCTION OF COLD STORAGES

/GODOWNS:-

To meet the production, investment, and consumption needs of the farmer, i.e. cultivation of

crop, purchase of farm equipment, etc., allied activities and consumption needs like marriage,

medical treatment, education, etc.

To cover farmers having proven track record and also new farmers who are either not availing

any loan or if availing finance from some other Bank, can be taken over if the repayment record

is clean and their existing loan account is standard asset. Alternatively they can close their

account with their existing Banks and switch over to us.

Eligibility:-

All Co-Operatives, Companies, Corporations, Partnership and Proprietary Firms, Agriculture

Produce Marketing Committees/Boards, Agro Industries Corporations and Growers'

Associations, Individuals.

Quantum of loan:-

50% of the project cost may be considered as term loan. The eligible amount of subsidy also

would be allowed as term loan as the subsidy is back ended.

Margin:-

25% of the project cost to be contributed by the applicant.

Rate of Interest And Processing charges:-

Please click here to know our latest rate of interest

Repayment Period:-

Maximum 120 months with 18 months moratorium

Subsidy:-

Cold storage unit is eligible for subsidy of 25% of the project cost.

(Source: http://www.unionbankofindia.co.in/RABD_Long_Construction_Cold_Storage.aspx)

Procedure

1. In Principle Approval (IPA) is mandatory for availing financial assistance under credit linked

back-ended subsidy schemes of NHB.

2. Before submitting application, applicants should carefully read and understand Operational

Guidelines of the relevant scheme available on website: http://nhb.gov.in and ensure that

financial assistance sought is as per the notified scheme and they fulfill the eligibility criteria

3. It is mandatory to submit online application for IPA in prescribed application format, available

on website: http://nhb.gov.in . Online application will be accepted w.e.f 01.09.2017 (10:00 AM)

to 30.09.201(6:00PM). With online application, it would be necessary to upload copy of Detailed

Term Loan Sanction Letter (In Principle Sanction Letter/Consent letter not accepted) issued on

or after 01.04.2017 for a new project/activity and a copy of the DD as proof of payment of

application fee in case payment is not made online. IPA applications of those projects will not be

accepted by NHB to whom term loan was sanctioned prior to 01.04.2017 by the lending Bank/FI

as IPA system has been introduced w.e.f. 01.04.2017

4. Upon submission of online application form, applicants will get a computer generated unique

code with acknowledgement for their application. The receipt & acknowledgment does not

necessarily mean the approval of application, unless it is found to be feasible in all respects

during the time of final scrutiny and evaluation. Applicant are advised to take a print of Online

application and submit the self certified and signed copy of the same with all necessary

enclosures to NHB , Head Office within 30 days from the date of submission of online

application on following address :

Managing Director,

National Horticulture Board,

Plot No. 85, Sector-18,

Institutional Area, Gurugram (HR) – 122015 5. On receipt of application in physical form, acknowledgement will be issued by

Mail/Registered Post. SMS alert will also be sent on registered mobile number.

6. Considering the limited budget, existing level of state wise pendency and flow of applications

etc. the Board reserves the option to close the applications for a scheme or component (s) thereof

at an early date on all India or on selective state basis.

7. To ensure that your application is processed in a timely manner, make sure that the application

is fully completed, signed and submitted with necessary enclosures. Each column in the

application form should be filled in with complete information, as required. N.A may be written

in the column, if information in any column does not pertain to applicant.

8. If ineligibility of an applicant is found during scrutiny of the application at the acceptance

stage, it will be informed to the applicant to correct the deficiency/ submit required documents

within 30 days of issue of NHB letter, failing which the application will be cancelled and

returned in original with enclosures.

9. Applications received will be duly scrutinized and will be placed before Pre Project Approval

Committee (PPAC). Applicants qualifying the eligibility criterion and meeting the approval of

PPAC will be issued In Principle Approval (IPA) subject to availability of fund.

10. If you are unsure about any of the information that is required in the application, it is

important that you may contact the nearest NHB Office in your State. List of NHB field offices

is annexed.

11. Please note that Board will not accept proposals of Primary Processing Projects including

projects of Cashew and Spices processing.

12. Due to huge backlog of pending subsidy claims, Board will not accept proposals of Protected

Cultivation projects from State of Gujarat, Madhya Pradesh and Maharashtra except Vidharbha

region.

13. Subsidy will be released only after completion of the project on first come first serve basis as

per availability of fund.

14. Aadhaar linkage of Term Loan is mandatory as per Ministry of Agriculture & Farmers

Welfare, GOI direction issued vide letter No. F. No. 12-48/2016 - MIDH (NHB), dated 7 th

December, 2017.

15. Status of the project is regularly updated on NHB Website and applicants may get latest

status of their project by visiting our website. Applicants are also advised to give their mobile

number for SMS alerts and e-mail ID for faster communication.

(Source:http://nhb.gov.in/coldstorage_scheme_guideline.aspx?enc=3ZOO8K5CzcdC/Yq6HcdIx

GnFC+VjFQvFstMfkdm4FxM=)

Important PDF (http://nhb.gov.in/pdf/SCHEME2Guidelinefinal.pdf)