DETAILED PROJECT REPORT

ON

MULTI COMMODITY

COLD STORAGE

OFFICE ADDRESS:

1
 Project At A Glance

Name of the Company

Constitution

Date of Incorporation

Office

Unit Location

Name Designation
Promoters

Line of Activity Cold Storage

Storage of Chillies, Coriander, ______ & Tamarind

Services
etc.

Horticulture Sector people (Farmers and traders

End User Segment
involved in horticulture produce)

Project Cost Rs._________ Lakhs

Own Contribution: Rs._________ Lakhs

Means of Finance
Bank Loan : Rs._________ Lakhs

The firm is presently seeking sanction of the

Proposed Credit Facilities following credit facilities
Term Loan : Rs. _________ Lakhs

Monthly Interest payment and Yearly Principal

amount payment. Principal amount paid in _ _
Repayment of Term Loan
yearly installments with 1 year moratorium.
First installment falls due in________ .

2
 Description Amount (Rs. i lakhs)

Land

Building

Insulation
Cost of the Project
Plant & Machinery

Electrical & Generators

Working capital

Total

Description Amount (Rs. in lakhs)

Promoters’
contribution

Means of Finance Term Loan

Unsecured Loans ---

Total

Facility Limit (Rs. in lakhs)

Financial Assistance
Term Loan
Sought

Cash Credit ---

3
1. Introduction

Owing to great diversity in climatic condition prevailing in India, a variety of

temperatures, sub-tropical fruits, vegetables, spices and pulses are being

cultivated. Besides various other subsidiary foods like meat, fish and marine

products; milk and dairy products are also produced in increasing quantity. Fruits,

vegetables and marine products are highly perishable and subject to considerable

loss and wastage. It is estimated that about 25 to 30% of the produce of these

commodities are spoiled every year in India. In this context, in a tropical country

like ours, the importance and usefulness of cold storage plant needs no emphasis.

Cold storages play a vital role in extending the shelf life and period of marketing,

avoiding glut and post-harvest losses reducing transport bottlenecks during peak

period of production and maintenance of quality of produce. Hence, the

development of cold storages in the country has an important role in reducing the

wastages 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. Further, the farmers are also now habituated to store their

commodity in cold storage to avoid quality and quantitative losses.

It is a well-known fact that Andhra Pradesh is one of the leading states in India

for growing crops like Chillies, Coriander, Turmeric, Bengal gram, Vegetables like

Tomato, Potato, Brinjal etc and fruits like Mango, Sweet Orange, Acid Lime etc.

The state has major share in the production of Fruits, Vegetables, Food grains, Oil

seeds, Pulses etc. in our country.

4
Postharvest Management of horticulture produce is most important for

maintaining the quality of the produce and there by getting better price for the

farmers. The gap between the demand and availability of cold storage space is

quite high in the country and therefore needs proper attention. Hence, the efforts

of the government to encourage the farmers/entrepreneurs to establish and use

the cold storage facilities by providing subsidy is time driven and would prove to

be a worthy exercise in meeting the country’s need in the Postharvest

management of horticultural produce.

2. The Indian Cold Chain Industry- An overview

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 162.2 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 caused due to

lack of cold chain infrastructure which includes both storage and transportation

facilities.

5
The cold chain industry in India is still at a budding stage and despite large

production of perishables, 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.

With annual production of around 28.9 million MT of horticulture produce,

nd
Andhra Pradesh (AP) stands 2 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 597 cold storages in the state 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 and Prakasam regions which are primarily used for storing Chillies and

Bengal gram respectively. The commodities for which profiling is done in AP

include mango, vegetables, meat, marine and dairy products.

6
India’s farming community wants a roof over their harvested crops. Instead of

craving for a shelter for themselves, the farmers now seek to cover their fruits of

hard labour. Thus, 21st century India witnessed the birth of warehousing

revolution.

Lack of proper storage facilities often leads to attacks by pests and other

organisms. The damage caused through such infestations leads to a reduction in

market value depending upon the extent of damage. In some cases, the produce

is declared unfit for consumption and has to be destroyed. This leads to a huge

loss for the farmer. Sensible farmers should take pains to store their produce

carefully so as to command the most optimum price in the market.

Warehousing and transportation forms the backbone supply chain of all

industries. Adequate storage capacity and strategic location of the warehouse

enables efficient functioning of supply and distribution network and also provides

strategic competitive advantage to the business. Proper material handling,

storage conditions and timely movement of goods are necessary as improper

handling and prolonged storage can deteriorate the quality of the stored product

especially the perishables goods, biological drugs and food stuffs.

The traditional way of storing the products is outdated considering the

deterioration, damage like color changing; loss of weight and damage by rodents

is also an added disadvantage.

7
2.1 Uses of cold storages

 Scientific storage of produce from the vagaries of weather, rodents,

insects and pests. They prevent quality and quantity losses.

 Meeting the financial needs of people who store the produce by providing

value for the goods stored.

 Regulating price levels by regulating the supply of goods in the markets.

More goods from the buffer are released when supplies are less and less is

released when supplies are more in the markets.

 Offering market intelligence in the form of price, supply and demand

information so that market users may develop selling and buying

strategies.

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

130 million tons. This accounts for 18% of our agricultural output. Due to

diverse agro climatic conditions and better availability of package of practices,

the production is gradually rising. Although, there is a vast scope for increasing

the production, the lack of cold storage and cold chain facilities are becoming

major bottlenecks in tapping the potential. The cold storage facilities now

available are mostly for a single commodity like potato, orange, apple, grapes,

flowers, etc. which results in poor capacity utilization. Present availability of

cold storage capacity is only 130.5 lakh tonnes. Although 90% of these units

are made to store only potato even then it does not meet the requirement of

the single crop, the production of which is about 300 lakh tones per annum.

8
2.2 Other Advantages

By keeping the commodities in cold storages the following benefits will be

enjoyed by the farmers and traders.

 No de-colouring of commodities

 No pilferage in the quantity

 No weight shortage due to drying

 No loss due to rats, rodents etc.

 Fetches better prices than the goods stored in ordinary godowns

 Loan facility from banks at a very attractive interest rate

 Fetches better prices as goods are stored nearer to markets

2.3 Storage of foods and Storage Conditions

For fruits and vegetables one should be very careful about the recommended

storage temperature and humidity, a deviation from which will have adverse

effect on the stored product leading to even loss of the entire commodity.

Products such as apples, tomatoes, oranges, etc. cannot be frozen and close

control of temperature is necessary for long term storage. Some products can

also be benefited by storing under controlled atmosphere and modified

atmosphere conditions.

9
Desired Storage Environment for Fruits and Vegetables in cold storage:

Commodity Temperature (0C) Relative Humidity (%)

Apple -1 - 3 90 - 98
Apricots -0.5 - 0 90 - 95
Avocado 7 - 13 85 - 90

Asparagus 0-2 95 - 97

Beans, green 4-7 90 - 95

Beet root 0-2 95 - 97

Broccoli 0-2 90 - 95
Black berry -0.5 - 0 95 - 97

Cabbage 0-2 90 - 95

Carrots 0-2 90 - 95
Cauliflower 0-2 90 - 95

Cherries 0.5 - 0 90 - 95

Cucumber 7 - 10 90 - 95

Brinjal 0-2 90 - 95
Grapes -1 - 1 85 - 90

Lemons 4 - 15 86 - 88

Lettuce 0-1 95 - 98

Lime 3 - 10 85 - 90
Mango 11 - 18 85 - 90

Melon water 2-4 85 - 90

Orange 0 - 10 85 - 90

Peach -1 - 1 88 - 92
Potato 1.5 - 4 90 - 94

10
3. Area and Production Particulars of Horticulture Crops
in _________________ District

Andhra Pradesh is the largest producer of Chilli in India and contributes about
26% to the total area under Chilli, followed
by Maharashtra (15%), Karnataka (11%), Orissa (11%), Madhya Pradesh (7%)
and other states contributing nearly 22% to the total area under Chilli.

The major Horticulture Crops under cultivation in Prakasam District are Mango,

Sweet Orange, Sapota, Cashew Nut, Papaya, Chillies, Flowers and Vegetables.

AREA PRODUCTION PARTICULARS OF HORTICULTURE CROPS DURING THE

YEAR 2016-17 IN _______________ DISTRICT

EXPECTED
Sl. NAME OF THE PRODUCTIVITY
PRODUCTION
No. CROP M.T’s per Ha.
(In M.T’s)
1 Mango

2 Sweet Orange

3 Acid Lime

4 Banana

5 Guava

6 Sapota

7 Papaya

8 Cashew Nut

9 Vegetables

10 Chillies

11 Turmeric

Total:

11
4. Present Project

________________________ is a ___________ firm promoted by

__________________________________ and his partners who are basically

from farming community and have been in the fruits, chillies and grains

businessman for more than ____ years and also in the public service for a long

time. They have wide connections with farmers and traders of chillies, coriander,

Bengal gram, tamarind, fruits and vegetables in this area. The firm is constituted

with the main object of promoting Cold Storage facilitates to preserve various

horticultural products like Red Chilies, Coriander, Tamarind, Turmeric, Fruits

and vegetables etc. The capacity of the Unit is ______ MT.

4.1 Location Advantage

The proposed cold storage is located in ______________ village on the main

road of ______________ road, __ km away from ____________ and __ km

away from national highway __. ___________ is a village in _________ mandal,

located in ___________ district in the state of Andhra Pradesh. The village is at a

distance _ _ km from Ongole city. This will not only reduce the transportation

delay, but also reduce the cost of transportation. The present location has got

the direct transport facilities to Chennai, Hyderabad and Guntur and Amaravathi,

the capital of the new Andhra Pradesh state.

In addition to Chillies and other crops, fruits and vegetables are the main

commercial crops grown by the farmers in this area. The potential area covered

will be ___________, ___________,________, _ _ _ _ _ _ _ , _ _ _ _ _ _ _ _ ,

12
 ___________________ Villages in _____________ mandal and other villages in

_________________________ and ______________________ Mandals etc.

The proposed area is well known for commercial crops like Chilies, Coriander,

Vegetables, and fruits like Mango, Sweet Orange and Acid Lime and other fruits.

The cold storage facilities in the proposed area will facilitate the economic

development in farmers and help in regularize marketing system.

Though there are some cold storages around __________, there are no sufficient

cold storage facilities near ____________ where the proposed cold storage is

going to be constructed. Still there is lot of scope for installation of cold storage

units in this area. To fill this gap and tap the market potential, the promoters

intent to establish the proposed cold storage, thereby they can cater needs

of cold storage facilities to the farmers and traders at reasonable rates.

Considering all the above facts and considerations of the farmers, the proposed

unit in this area will have advantage and can easily be managed successfully.

4.2 Marketing

In _________ district alone, an area of around ________ Ha is under

horticulture producing _________ MT of horticulture produce. Various fruits

and vegetables ware being exported to other districts and states in India. Chillies

alone are cultivated in ______ Ha and producing ______ MT. Apart from this

__________ and __________ are being imported by the traders and stored in

cold storages to use it throughout the year and to get good price during off

season. Some fruits like mango, sapota and apples and vegetables like

cabbage, tomato, green peas can 13

fetch good market throughout the year by storing them under controlled

temperatures. It is therefore felt that a tremendous requirement for controlled

temperature storage facility for different commodities thought the year can only be

met by construction of the cold storage units.

The proposed unit has well established road and rail network to Chennai,

Ongole, Guntur, Vijayawada and Hyderabad, which enables easy import and export

of the produce.

Being in the seed and fruit business and in the public service for long time, the

promoters have good contacts with the traders and retailers of commodities, fruits

and vegetables. They will provide marketing support to the farmers who store

with them. They will have tie ups with the collateral management companies and

bankers to provide loan on the produce.

4.3 The Promoters

The unit is being is promoted by Sri ____________________ and others who are
having good relations with other Traders and Farmers. The promoters of the firm
are agriculturists and also involved in seed and fruit business and in public
service for a long time, due to which the promoters are having good contacts
with the farming community in the district.

4.4 Financial Assistance

The financial institutions are also extending credit facilities for construction and
maintenance of cold storages. The material stored in the cold storage is also
being considered as security for the growers in raising loans for their next crops.
This is encouraging all the farmers and dealers in preserving the products to
maintain supply and demand gap and to overcome the sale in distress value which
affects the economic growth at all levels.
14
4.5 Incentives

The unit is eligible for the following incentives from the central and state
governments.
1. Capital subsidiary of 35 % from National Horticulture Mission.

2. Concession on power tariff @ Rs.1.00/- per unit of Electricity Consumption

for the First 5 Years from the State Government.

4.6 Backward Linkage with farmers with reference to either providing

services or purchase of raw material

The promoters also engaged in production of fruits and vegetables as well as having
good contacts with the progressive farmers of their area. Lot of farmers are into
Chillies, Coriander, Turmeric, Mango, Sweet Orange, Bengal gram, Maize and
vegetable & Fruits production in and round areas ________ District. Lot of traders
import Coriander, Tamarind, Soapnuts and Turmeric and store them in the cold
storages. The promoters have good contacts with these farmers and traders and
provide marketing support to these farmers by way of storing the material in their
cold storage, and inviting the corporate retailers to purchase the material.

4.7 Forward Linkages- Analysis of domestic and export markets, tie up

made for sale of Produce and branding aspect

Being in the seed and fruit business and in the public service for long time, the

promoters have good contacts with the traders and retailers of commodities, fruits

and vegetables. They will provide marketing support to the farmers who store

with them. They will have tie ups with the collateral management companies and

bankers to provide loan on the produce. Due to the shortages of storage capacity in

the area, the farmers have to go faraway places for storages of their produce. Thus

there is ample of potential for establishing more modern technology based cold

storage units in this area.

15
 4.8 SWOT Analysis Strength:

 Unit enjoys sufficient location advantages.

 Unit is situated in an area which is a predominantly horticulture based

belt.
 Abundant availability of raw materials such as Chillies, Fruits
and Vegetables.
 Sri.____________________, the main promoter of the is basically an
agriculturist and businessman and maintains good rapport with the
farmer’s community.

Weakness:

 Un-expected or un-timely rains or cyclones would affect the crop

production which in turn effects the capacity utilization.

 Inefficient supply chain due to a large number of intermediaries

 High requirement of working capital.

 Seasonality of raw material

Opportunity:

 Opening of global markets

 Large crop and material base

 Rising income levels and changing consumption patterns

 Availability of capital subsidy from NHM

Threat:

 Any change in the Government policies can severely impact the

performance of the industry as a whole.

 Natural Calamity
16
5. Infrastructure Facilities

5.1 Power

The required power will be drawn from APSPDCL. To meet the demand during

power cut period and for continuous supply, the company will make alternative and

stand by arrangements with Diesel Generators.

5.2 Fuel

The unit requires Diesel Oil for operating the Generator in case of power failures.

The required Diesel Oil can be procured locally.

5.3 Water

The total water requirement for the plant can be drawn from the bore well which

will be dug and in case of further requirements it can get the water by tankers.

5.4 Effluents

Since it is a Cold Storage Unit, no harmful effluents will be generated in the

process. Hence the question of disposal of effluents does not arise.

5.5 Man Power

The unit requires One Manager, one Accountant, 2 machine operators, 2 skilled

workers, one Office Boy and one Watchman for administration and operating the

unit. Thus the unit provides employment opportunity to 8 members directly and

about 20 to 30 labour indirectly for loading and unloading products to the cold

storage. The required man power is easily available locally.

17
5.6 Land and Land Development

The promoters have 1.40 Acres of own land in Chirrikurapadu village in Prakasam

District. Out of this 1.40 Ac, 1.0 Ac will be used for constructing the proposed

cold storage, which is quite sufficient to set up the proposed project.

5.7 Buildings and Civil Works

The building will be a multi-storied building with 2 chambers of each 3250 MT

capacity. The project mainly requires construction of adequate buildings for the cold

storage, machinery room and administrative buildings like office, toilets, water

supply facilities, parking facilities etc.

5.7.1 Sizes and capacity of the Cold Storage

Total dimensions of the building are 120’ (L) x 108’ (W) x 60’ (H) and the

capacity of the cold storage is estimated as 6500 MT.

5.8 Plant & Machinery

The machinery will be housed in a separate machine room as well as in the cold

chambers. The plant & machinery is required for the providing the required

refrigeration to the cold storage plant. The promoters have already identified the

established & reputed machinery suppliers.

18
6. Financial Analysis

Total capital investment for this project is estimated to be around Rs 512.08

lakhs, which includes the cost of civil work, insulation, equipment and machinery

and electrical works but excluding the cost of land, which belongs to the

entrepreneur and will be available for this project. Any other cost involved in

consultancy, office furnishing etc. could be managed within the contingency.

Summary of project cost:

Sl. Particulars Cost

No.
(Rs in Lakhs)

1. Cost of Land

2. Building and civil works

3. Insulation

4. Plant & Machinery

5. Electricals & Generators

6. Working capital

Total

Means of Finance:

Sl No Item Amount
(Rs in Lakhs)

(a) Bank Term loan

(b) Promoter Share

Total

19
6.1 Funding of the project

Out of estimated cost of ______ lakhs, the project is eligible for a subsidy

amount of Rs 140.00 lakhs as credit linked back ended subsidy from Department

of Horticulture, Government of Andhra Pradesh under the PHM scheme for

boosting the horticulture production and fetching good market price for the

farmers. (The subsidy amount is calculated as 35% of the maximum eligible cost

of Rs 400.00 lakhs as per the MIDH norms). The entrepreneur shall contribute

an amount of Rs ______ lakhs plus the land required for the project. As the

subsidy is back-ended, an amount of Rs ______ Lakhs would initially be taken as

term loan from the bank. Later on, an amount of Rs 140.00 Lakhs would be

adjusted to the bank from the eligible subsidy that would be made available by

Govt of Andhra Pradesh. Arrangement of working capital would be separately

made for undertaking the business.

6.2 Schedule of Implementation

This project has been planned to implement immediately and site is ready for

work to be started just with the approval of loan by financing institution.

Schedule of civil work, purchase of insulation material and machinery shall be

synchronized to ensure that the unit is ready by ________. Cold Storage

building, boundary wall, front road, machine room, generator room and office

shall be completed immediately within 6 months after approval of loan.

Simultaneously, the refrigeration machinery shall be purchased and installed and

unit will be ready to store the produce by _____________.

20
6.3 Cold Storage running cost

Cold Storage running mainly involves expenditure on electricity and diesel. The

running cost of the cold storage has been analyzed in the financial analysis

tables.

6.4 Repair and maintenance

The required refrigeration machinery shall be purchased with enough spares and

warranty to support 3 years of requirement. A provision has been made for

repair and maintenance to the tune of 1% of the cost of plant machinery and

buildings.

6.5 Semi Variables and Fixed Cost

6.5.1.1 Salaries

A manager shall be appointed by the company at a salary of Rs 15000 per

month. An Accountant / Supervisor shall be appointed at a salary of Rs

12000 per month, two operators shall be appointed at a salary of Rs

10000 per month and two skilled workers shall be appointed at a salary of

Rs 9000 per month. Provisions have been made accordingly.

6.5.2 Administrative and general overhead

A provision, at the rate of 1% of turnover, has been made towards this

overhead from the year 2017-18 onwards.

6.5.3 Selling and promotional overhead

This component will be mainly to popularize the cold storage facilities.

Provision of 1% of turnover has accordingly been included in the project
from 2017-18 onwards.
21
6.6 Other Financial Cost

6.6.1 Depreciation

Depreciation is taken at the rate of 10% for building and 15% for plant
machinery.

6.6.2 Interest on long-term loan

Provision of interest on loan of 100% investment has been made at a rate

of 12% on term loan borrowing from the bank.

6.6.3 Tax

Provision for tax at a rate of 25% on net profit before taxes has been made.

7. Profitability and Economics

The basic assumptions for the calculations and the financial projections in the
form of the following statements are enclosed.

Projected Profitability Statement

Projected Balance Sheet
Funds Flow Statement
DSCR Statement

7.1 Conclusions

 The project has been proposed with the aim to establish a _____ MT
capacity cold storage.

 The project is economically viable and is a bankable project. The cash

generation is sufficient to meet the payment of interest and installments.

 The financial parameters are satisfactory to the promoters and to the

funding institutions. It is evident from the financial analysis that the
project is sound and estimated results are encouraging and hence the
project may be considered for financing.

22
 COST OF THE PROJECT -
Sl. Nature of Expenditure Quantity Rate Amount Excise Insurance CST VAT Frieght Service Total
No Duty @ Tax
12.5% for
applicable
items
A LAND
1 Cost of LAND (Acres) Own
Land

B CIVIL WORKS
1 LAND Development
(Lumpsum)
2 Civil work for Cold 1
Storage, Machinery
Hall, Condenser Tank
etc (Lumpsum)
3 Wood work as per civil
estimation for wooden
floor (sq m)

C Thermal Insulation
1 Insulation material - 1
EPS Sheets (15
kg/cu.m- including
erection charges
(Lumpsum)

D PLANT & MACHINERY

25
 COST OF THE PROJECT -
Excise
Duty @
Sl. Service
Nature of Expenditure Quantity Rate Amount 12.5% for Insurance CST VAT Frieght Total
No Tax
applicable
items
1 Cost of Refrigeration 1
Equipment -
Compressors(Mycom
N4L - 48 TR capacity -
3 No), Seimens Motors
(50HP - 3 No), Star
ACUS - 10No, MS
Pipes, Condenser,
Ammonia Receiver,
Ammonia Liquid
Pump, Control Panels,
Fittings and Earthing
materials, Wiring Etc
(Lumpsum)
2 Erection charges for 1
Machinery (Lumpsum)
3 Mechanical Lifts 2

E ELECTRICALS &
GENERATORS
4 Generator - 125 KVA 1
(Powerica)
1 Electrical Work 1
including Panel
26
 COST OF THE PROJECT -
Excise
Duty @
Sl. Service
Nature of Expenditure Quantity Rate Amount 12.5% for Insurance CST VAT Frieght Total
No Tax
applicable
items

Boards & 11 KV
Yard)

3 1
Generator - 10 KVA /
3phase (Kirloskar)

Total

27