Cold storage industry feels the heat

Chennai: The cold storage industry has not gone into a deep freeze yet, but indications suggest that could happen soon. This, despite an awareness about the importance of cold storages growing across all walks of life - farmers, traders, retailers and corporates.

If our capacity utilisation was 10 per cent a few years ago, today it is 60 per cent, says an official from Snowman Frozen Foods, which operates from 10 locations in India. While the four metros are using 1,200 tonnes of capacity each, other places use a 1,120-tonne capacity. The usage is coming mainly from the dairy sector, fruits and vegetables, poultry, marine food, ice-creams and food retailers such as pizza chains.

We did not face much recession till last year, but this year the industry has not been encouraging, says a Frick India official. Citing Tamil Nadu as an example, he says last year the state had 14 cold storage projects. But this year there were no applications.

The Rs 40-crore turnover Frick India has set up milk-chilling plants and cold storage facilities and serves markets like Punjab, Uttar Pradesh, Maharashtra, Andhra Pradesh and Himachal Pradesh. It sets up capacity ranges from 500 tonnes to 5,000 tonnes. It is also into big industrial projects such as power, steel and ship air-conditioning, and it is the only company in India to use screw compressor technology, giving it an edge over others.

Talking further on the industry, Blue Stars J Praveen Kumar, a sales engineer says: There are basically two kinds of customers who go for cold storage - one set is attracted purely by the subsidy, while the other opt for it only out of business reasons.

In times of recession, subsidy is an important factor. It amounts to Rs 50 lakh for a 5,000-tonne capacity, coming down proportionately depending on capacity. A 1,500-to-2,000-metric-tonne project would be viable, says Kumar. Awareness of cold rooms as collection centres is also growing. These are facilities where goods are kept temporarily till shipped to cold storage.

In Tamil Nadu, considered a growing belt, almost all districts use cold storages for dairy purposes. These are areas like the Salem-Erode-Namakkal belt, while Hosur, Krishnagiri, Theni and Ooty also use the same for floriculture, fruits and vegetables.

Another segment likely to face pressures from the market is the softy ice-cream equipment industry. Currently it is seeing a boom, but a depression is predicted within a few months. The reason, says Jayesh Mamtora of Snowball Enterprises, a Pune-based softy machine manufacturer, is: The industry got a tremendous facelift due to MTR Foods instant ice-cream mix. Out of every ice-cream sold for Rs 5, the vendor got a profit of Rs 2. But this has attracted a host of equipment manufacturers into the segment to a point where supply could shortly outweigh demand.

Mahendra Jitura of Kunal Industries expresses a similar view. There are already more than 48 equipment manufacturers in this segment and definitely more than four in major cities. Ice-cream sales being largely seasonal, equipments could face a petering out syndrome soon and equipment-makers are now seeking alternative products.