Cold Storage Business, Cold Storage Subsidies, Loans

How To Start A Cold Storage Business in India:

Today, let us discuss Cold Storage Business, Cold Storage Subsidies, Cold Storage Loans, Coldstorage Construction etc..

What is Cold Storage?

Cold storages are the high sized freezer, which are commonly used to storage purpose. Cold storages are used to store fruits, vegetables, processed meat, frozen foods and for pharmaceutical uses. Cold storages have an important link between the farmers and consumers. Due to the rapid growth of food and their industries, cold storages are gaining huge demand.

Cold Storages are essential binders that extend the shelf life, period of marketing, avoiding glut, post-harvest losses and avoids transportation troubles during peak period of production and maintenance of quality of produce.

Types of Cold Storages:

Basically, Cold storages are classified into two different categories based on the types of items stored. Below are the types;

Food and Agri Products Cold Storages: These cold storages are used to store products like fruits, dairy products, meat etc. which have high demand round the year. These cold storages are built near to the local markets and should be built with delivery infrastructure.

Off Season Products Cold Storages: This type cold storages are used to store products like chilies, seeds, corn, potatoes, etc., to meet the demand in the off season. These storages are built close to the source/farms. All most all the cold storage comes into this category.

You should make a study about the market, customer demand and business models before to start this business.

Machinery and Equipment for Cold storage business:

There are two important components in cold storage equipment: Machinery and Insulation Panels. The machinery includes compressors, evaporative condenser, and motors. The walls of cold storage should be fabricated with insulation panels that are made of polyurethane.

You contact the machinery supplier that take contract to set up the machinery, to do offers civil works and provide insulation.

Cost Analysis of Cold Storage Business:

The cost of the cold storage is mainly influenced by following factors:

• The Capacity of the cold storage and the number of rooms present in the cold storage.
• And also, the types of products stored, the products stored are categorized into two types, plus temperature cold storages are used for veges/fruits/seeds and minus temperature cold storages are used for frozen goods. The cold storages used for storing frozen products need high cost, then the plus temperature cold storage.
• Other operational cost includes electricity and manpower.

Cold Storage Business Plan:

Cold Storage business is a one-time investment business. In this business, the initial investment will be bit high, compared to other businesses. In the cold storage business, you can ensure a constant return on a long-term basis.

Cold storage is a highly profitable business, in the both developing and developed countries. There is good demand for two types of cold storages as per the storage facility. One model is used for specific products and another is multipurpose model. However, multi-purpose cold storages will have good returns and profitability overall.

Demand and Profitability of Cold Storage

As the usage  of fresh vegetables and fruits is huge. In food crop growing countries to keep the products fresh for more days, the usage of cold storages is high. Cold Storages are highly essential for to keep the products fresh for long periods, and makes to available in unseasons, it also reduces the products wastages, and solves the transport bottlenecks during the peak period of production and maintenance of quality of produce.

The cold storages play a key role in reducing the wastages of the perishable commodities. It also helps in providing remunerative prices to the farmers and to make products available to the consumers at competitive and affordable prices.

And demand for cold storages increased due to the change in lifestyle and increased demand for processed or packaged food. Consumers showing great interest packed and processed food, creating the need for cold storage solutions globally.

Read: Agricultue cold Storage Project Report.

Investment Cost for Cold Storages:

The initial investment for starting cold storage is very high. The investment for cold storage includes acquiring the land, building construction, obtaining permissions and licensing, arranging utilities like water, electricity, etc. And the other needs are, you will need to invest a major startup capital in purchasing the cooling machinery. Generally, modern and updated machinery will show better performance and long-term sustainability.

Apart from the above investment costs, you will need to consider the working capital expenses also. And the other major considerations are staffing, utility bill payment, and promotional expenses.

First Create Business plan for Cold Storage:

For Starting a cold storage business, you need a strategic planning and very careful implementations. For crafting a business plan or project report is a highly important aspect of starting this business. As per your investment capacity, you will need to decide the business size. First, you should do the financial planning with a projected ROI and payback period. A business plan guides in many ways. It helps in implementing business steps properly, and in getting financing and ensures smooth business operations.

Find a Suitable Location:

You should choose an appropriate location for the cold storage business, location plays a key role. Choose a secured a location that is either near to farms or the consumer centers. So that you can cater the local producers for your warehouse. The land should be capable to hold a huge five to 10 storied building. 0.5 Acre land that is enough to build an efficient cold storage.

Obtain Permissions & Licenses:

To start this business, you need different licenses and permissions. These permissions and licenses required depends on the location where you are starting the business. And check with the upcoming compliances and tax liabilities also.

Financial Arrangement:

Cold storage is a high investment business. The investment capacity of 3 to 4 Corers for starting this business. You can set up this business with the financial assistance of banks. And additionally, check whether there is any subsidies or Govt. grants are available for this business.

In India, National Horticulture Board offers financial assistance for cold storage business for the new entrepreneurs.

Build the Cold Storage

For building the warehouse and the machinery setup. Appoint an experienced architecture firm for planning and constructing the business. Get the quotes from all the reputed machinery suppliers, you check the internet for the supplier details. The machinery plays a key role, so select a right that is an important part of the overall performance of the store. And also, check the price, customer reviews, and warranty periods. Check with the machinery supplier for on-site training.

Read: Vegetable Farming Information.

Marketing Your Cold Storage Business

The success of any business depends upon its marketing strategy, for successful running of a cold storage it needs right advertising and promotion. And you must plan for promotional campaign when you start to build the store. According to the products you want to accommodate, identify the target customers.

You should target the clients, like supermarkets, wholesalers, warehouse companies in urban as well as electrified villages. In the cold storage business, you should also target the growers, producers, retailers, distributors, exporters etc.

Financial Assistance:

For this business, Ministry of food processing Industries provides financial assistance up to 50% of the total cost and machinery and other works.

In the Northern states, Sikkim, Himachal Pradesh, J& K, Uttarakand, etc.  you get 75% grants in aid subject to a maximum of 10 crore.

For acquiring the subsidy from ministry, the land where you are planning to start Cold storage must be registered in your name or in the name of your any of the partners. Once you get approval for the subsidies the nationalized banks will also provide you loan very easily.

Subsidies for Cold Storage chains from the Government:

The Ministry of Food Processing Industries (MOFPI) India is offering Financial Assistance for the Establishment of Cold storage Chain. These integrated Cold storage chains from the farms to the consumer ensures the safety and preservation of the food product s.

The government  also offers a grant-in-aid ranging from 50 to 75% of the total cost of plant and machinery installation along with the technical civil work depending on the location. The subsidy amount limit is up to Rs. 10 crores.

The main facilities involved in the cold storage chain are  Production facility, Transport facility and the Distribution network, and you need to set up at least two of the three facilities to get a  grant of assistance scheme.

Nationalized banks offer loans for cold storage in two ways:

1. Construction of Cold Storage: Banks will provide loans up to 80% on the total construction cost of Cold Storage.
2. Cold Storage for Rent: Banks will offer the loan up to 90% of the total rental cost of Cold Storage.

The nationalized banks like SBI and Oriental bank of India will provide these types of loan for the time span of 11 years and 1 grace year also. For the loan approval, you must have registered land or lease agreement for a minimum period of 40 years in that land where you are planning to start Cold Storage.

How to get FSSAI and the Food Safety License:

Food Safety License is a compulsory license for all food business operators (FBOs) and establishments under section 92 of the Food Safety and Standards Act, 2006 and Food Safety & Standards Regulation, 2010.

This license ensures that the FBOs assure the safety, hygiene, and sanitary conditions as per the said Act.

Read: How To Get NABARD Subsidy For Dairy Farm.

The registration application process:

• First Download the Form-B from FSSAI website and submit it online filling complete details.
• You should have an active personal e-mail ID and Mobile Number.
• Before submitting the applications, you should carefully check the correct spelling of the name of the FBO.
• Now submit the filled in the application form online and save the unique Reference Id for future reference.
• The application will be submitted to your State Authority or Regional Office of Food Safety and Standards Authority of India (FSSAI), within 15 days from the date of online submission of application.
• The document required are the “Acknowledgment” copy, “Online Application Form” and fees in the form of Demand Draft or the online payment proof; license copy and other supporting documents.

NABARD Loan for Warehouse and Cold Storage:

There is an announcement for allocation of Rs. 5,000 crores to NABARD in the 2014-15 budget for supporting the creation of infrastructure for storage of agricultural commodities, and the Reserve Bank of India (RBI) issued guidelines for creation of Warehouse Infrastructure Fund (WIF 2014 -15) in NABARD.

There is an extension of loans to Public and Private sectors for construction of warehouses, silos, cold storage and other cold chain infrastructure.

Loans are offered for provided for projects for creation of storage infrastructure with a minimum aggregate capacity of 5000 metric tons (MT) for agricultural and allied products, including construction of:

• Warehouses.
• Silos.
• It offers loans for construction of 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.
• It also offers the loans for Construction/ modernization/ up gradation of Marketing infrastructure facilities of the Agricultural Produce Marketing Committee (APMC).
• It offers the financial assistance for Modernization/improvement of the existing storage infrastructure projects will be considered on merit of each proposal provided it leads to scientific/additional storage capacity.

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)

Cold Storage Licensing Criteria:

• The process for obtaining the licensing/registration for a Cold Storage Unit is mainly based on the turnover rather than the storage capacity (MT).
• If the annual turnover is up to Rs. 12 lakhs, then you can get FSSAI registration Certificate.
• If the annual turnover of your business startup is more than Rs. 12 lakhs and up to Rs. 30 crores, then you get the license under the State Licensing Authority is required.
• If the annual turnover of your business startup is more than Rs. 30 crores, then you get license under the Central Licensing Authority.
• If you are planning for multiple units spread across more than one State, then you need a State or Central license for each Food Business Unit, as per the above criteria and you need a Central License for your Head Office.

Read: Integrated Farming of Fish and Livestock.