Cold Chain Industry

Power-Pack

Table of Contents
Industry Segmentation
Key End-User Markets
Temperature Controlled Warehouse
Temperature Controlled Vehicles
Growth Drivers
Costs and Profitability
Future Outlook

Industry Segmentation

Cold chains provide storage and transportation services for perishable

goods
A cold chain is a temperature-controlled supply chain that serves as a

vital link between production center and enduser market.

It involves storage and distribution related activities at pre-determined
temperatures depending on the nature of the product.

A cold chain does not alter the essential characteristics of the produce
or product handled, but preserves and temporary enhances the
product's life.

A cold chain can be broadly classified into two broad segments:

a) Temperature controlled warehousing (Immovable Infrastructure)
Includes static infrastructure at the farm-gate (pack-houses with

precoolers, value adding units), Cold storage bulk (to store products for
longer period), Cold storage hubs (Cold stores for last mile access to
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end-users).

Cold chains provide storage and transportation services for perishable

goods
b) Temperature controlled transportation (Mobile Infrastructure)
- Involves temperature-controlled transportation (primary and lastmile) of perishable produce.

Cold chain process

Key End-User Markets

Key end-user markets

Key end-user markets

Traditionally, wholesale traders and a few exporters, especially of
meat and fish products, constituted key users of cold chain services.
Over the last few years, the organised retail and food processing
industries have emerged as prominent end users.
Growth in these segments has been driven mainly by the gradual
shift in consumption pattern in favour of frozen meats and fresh
vegetables in malls and other retail stores, and also the emergence
of leading fast-food chains such as Pizza Hut, Dominos,
McDonald's, Subway, etc.
The increasing trend of 'eating out' has contributed to the growth of
the cold chain industry, as well, as a significant portion of raw
materials used by the food service segment are procured in frozen
form.

Key end-user markets

Modern formats in retailing require distributed sourcing, centralised
holding and dispatch followed by de-centralised sales.
Hence, cold chains are essential to maintain quality of the produce.
Currently, 15-20 per cent of the organized retail industry's revenues
are contributed by the food and grocery vertical.

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Competitive Scenario-temperature Controlled Warehouse

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Competition in TCW (cold storage) segment

Temperature controlled warehouses (TCW) / cold storage industry in

India can be broadly classified into two segments; single-commodity

cold storages and multi-commodity cold storages.
As on 31st March 2014, cold storage capacity in India was estimated

to be 31.8 million tonnes.

Single commodity cold storages which account for about 72-77% of
the total capacity is dominated by unorganised players.

Single commodity cold storages are almost synonymous with potato

cold storages as nearly all of the capacity is created towards handling
of potatoes.

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Mix between single-commodity and multi-commodity cold

storage capacity

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Mix between single-commodity and multi-commodity cold storage

capacity

Potato cold storages, concentrated in key potato producing states, is

fragmented in nature.
As on FY14, Uttar Pradesh and West Bengal account for about 60 per
cent of the overall warehousing capacity, of which 90-95 per cent is
created for handling of potatoes.
Besides, other states such as Bihar, Gujarat, and Punjab also have
significant capacity created towards handling of potatoes.
Other single commodity cold storages stock products such as fruits &
vegetables, meat & fish, milk & milk products etc.
Multipurpose cold storages which store a diverse mix of products
account for about 23-28 per cent of the overall cold storage capacity.
Organized players such as Snowman Logistics, ColdEX, Dev Bhumi,
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Competitive scenario-temperature Controlled

Vehicles

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Highly fragmented TCV industry

Temperature controlled vehicles segment is fragmented with a large
number of small, unorganized /non-integrated private players
focusing on select commodities or regions.
The presence of large number of players has resulted in intense
competition among existing players.
The unorganized players have a weaker bargaining power due to
use of older technology and inability to provide end-to-end cold
chain solutions.
On the other hand, organized players such as Gati Kausar,
Snowman Logistics deploy modern reefer vehicles which are

equipped with data loggers which help to ensure continuous

monitoring of temperature.
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Highly fragmented TCV industry

In addition, the vehicles are fitted with GPS technologies that enable
the players to track and monitor progress of reefer vehicles.
Certain organized players offer end-to-end cold chain solutions
which enables them to differentiate themselves from other
unorganized players.
The organized players cater to end-user industries such as
pharmaceutical, meat & poultry, QSR, retail, FMCG & dairy etc.

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Key players - number of reefer vehicles

Note: (i) Snowman Logistics and Gati Kausar data is as on FY15, rest are as per the latest
available data published on company websites
(ii)* Gati Kausar is foraying into Temperature Controlled Warehouse segment by setting
up 10 warehouses across India
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Huge requirement for reefer vehicles in India

Temperature controlled vehicles segment is at a nascent stage in

India.
As per a Task Force Report on Logistics by PHDCCI (PHD Chamber
of Commerce and Industry) and industry estimates, approximately

104 million MT of perishable produce is transported in India each

year.
Of this, about 100 million MT moves via non-reefer mode and only 4

million MT is transported by reefers.

However, the lack of adequate reefer vehicles to deliver the produce
has resulted in significant post-harvest losses.

According to a study by NCCD, total number of reefer vehicles in

India was estimated to be 9,000 units as against a requirement of
61,826 vehicles.

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Huge requirement for reefer vehicles in India

Reefer vehicles are used to transport products such as ice-cream,
meat, dairy products, pharmaceutical etc.
Meat to account for about 50-55 per cent of the total reefer market (in
value terms) in FY15.
The combined share of dairy and pharmaceutical products of total
reefer market (in value terms) is estimated to be about 37-42 per cent.
About 35-40 per cent of total number of reefer vehicles to be engaged
in primary transportation (long haul).
The rest of vehicles are engaged in last mile-connectivity (short haul)
i.e. from the distribution center to the end-user markets.

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Mix between primary and secondary reefer vehicles (FY15)

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Growth Drivers

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Key growth drivers and inhibitors for cold chain industry in

India

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Costs and Profitability

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Cost structure of TCW players

Note: Other costs - hire charges, lease rentals, maintenance costs, loading / unloading charges
and permit charges.
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Profitability of organised player - Snowman Logistics warehousing

division

Note: As of 2015-16
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Profitability trend of unorganised TCW players

Note:
15 companies in the set include: Brahmanand Himghar Ltd, Dakshineswari Cold Storage
Private Ltd, Dandapat Cold Storage Private Ltd, Jaldhaka Cold Storage Private Ltd,
Jotesriram Himghar Private Ltd, Joyguru Cold Storage Private Ltd, Khukhrain Cold Storage
& Ice Factory, Mahabir Cold Storage Private Ltd, Nanibala Cold Storage Private Ltd,
Nirupama Cold Storage Private Ltd, Ratanpur Cold Storage Private Ltd, Sadashib Cold
Storage Private Ltd, Shyamali Cold Storage Private Ltd, Sonar Bangla Cold Storage
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Private Ltd, Subha-Soumya Cold Storage Private Ltd.

Future Outlook

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Temperature controlled warehouses drive cold chain industry

Rs 225 billion cold chain industry in India (as of 2015-16) to increase at
a five-year CAGR of 15-17% to Rs 490 billion in 2020-21.
The identified growth drivers are: proliferation of quick service
restaurants, organised retail, rising demand for processed foods,
government policies and schemes in the form of capital subsidy, grant
of infrastructure status to the industry and viability gap funding.
Overall growth is expected to be led by the temperature controlled
warehouses (TCW) segment (15-17% five-year CAGR) which accounts
for over 90% of the cold chain industry.
The TCW segment's revenue is likely to be led by multipurpose /
multi-commodity cold storages -- their share in total revenue is
estimated to rise from 77-79% in 2015-16 to 84-86% by 2020-21.
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Growth in cold chain industry to be led by TCW segment

E: Estimated
P: Projected

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