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How To Start Cold Storage Business?

The cold storage industry is one of the most essential industries in the food and storage department. With the help of precision machines, the temperature is maintained low to preserve edible items like fruits, vegetables, meats for many months. It is a vital link between the production and consumption of perishable products. We have illustrated below, a detailed Cold storage business plan to get you started in this booming industry.

It also helps in increasing the market period of commodities and ensures availability to the
consumer over a long period. The Indian cold chain market was calculated to be worth USD 19.6 Billion in 2020 and is further projected to reach USD 36 Billion by 2024, growing at a CAGR of 16%, as per the Indian Cold Chain Industry Outlook 2024 Report.

What Is Cold Storage Business?

The cold storage business is a business whereby service is imparted by preserving fruits, vegetables, dairy products, meats, etc for a longer period of time. The cold storage business is necessary for any country because it helps in decreasing the wastage of food by preserving it for a long time and also saves agriculturers from losses.

cold storage importance

Such business is a boon for seasonal vegetables and fruits which have a growing season like mangoes get ripe only in the summer season, so seasonal fruits and vegetables are oversupplied in their particular growing season but the demands stand less so due to this farmer or fruit grower have to sell their products at a lower price and thus suffers losses.

But with the help of cold storage, such seasonal items can be preserved and can be sold when the demand is significant so the producers do not have to incur losses.  Due to gaps in the cold chain such as poor infrastructure, insufficient cold storage capacity, unavailability of cold storage in close proximity to farms, poor transportation infrastructure, etc, It is estimated that over 30% of edible items get wasted every year.

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How Cold Storage Business Works?

To start this business along with cold storage, you will also need a cold chain facility, which is a system of storage and transportation of edible items or drugs. The pharmaceutical industry relies heavily on the cold chain facility because such a facility helps in maintaining the required temperature which would otherwise be compromised before they reach the market.

so there are two ways you can make money from this, either you give on rent and earn rental income or you can buy edible items directly from the farmer and store it in your cold storage and sell it when the demand is high.

The cold storage business works like this:-

The first item is collected from the farm and then it goes to the packaging center and then the process goes as follows first of in the process, all the product is unloaded according to the variety, quality, and size then after segregation the products is then checked, in this, products shelf life is checked and we learn, whether the product can be stored for a long duration or not.

 

And in the next step, the selected products get labeled according to their slot and batch, and after this, from all the products their heat is taken out, this process takes place in the precooling center, and this process can take around 24 hours of time in this process time is dependent upon the products internal heat, it means, in how much hear and temperature, the product is brought, after taking out the heat from the products, it is stored in cold storage.

When the demand for the stored product rises in the market then stored items are transported Through refrigerated transportation to market.

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Things required to start Cold Storage business

Investment

The minimum investment required to start cold storage business is 3 to 4 crore Indian rupees or 4 to 5 hundred thousand dollars that too for a small facility and if you want to open a big facility then you would be required 45 to 50 crore Indian rupees or 60 to 66 hundred thousand dollars.

Land

You can open such facility big or small on your own land or on rented land or you can take land on lease. The minimum land to build such a facility is 15000 square feet.

Machine

1. Insulated Chamber

2. Refrigerator system

Machines and equipment will be required to run cold storage facilities like Fan coil unit, Air handling unit, compressor, water pump, etc. From equipment, you will be a required cooling tower, condenser, expansion valve, Evaporator, Special thermometer, tray, Gates, etc.

Manpower

You will be required 50 to 60 workers. Among them, 10-15 should be skilled one, 3-5 unskilled and 25-30 helper.

Electricity

On a minimum basis, your facility would require 650KW of electricity to run and make sure you have a generator and all the backup to supply electricity because otherwise, it would lead to heavy losses.

cold storage business facts

Profitability

Whether your cold storage business will be profitable or not will entirely depend on how you manage. If you are working effectively and wastage is very low and you sell things when the time is right then you would definitely be able to fetch a 40% margin.

Factors that will determine your profitability:-

1. Location

2. Customers

3. Marketing

4. Management

5. Client

License

You are required to have the following licenses:-

1. Factory license

2. Labor license

3. Firm registration

4. NOC Fire and Pollution

5. GST

Subsidy

The amount of Subsidy depends on the country you reside and the geographical area and the governmental scheme through which you have applied and which category you are in. If you are general that you would be given a 40% subsidy and if you are a woman or ST/SC then you would be given 60%.

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Major cold storage companies in India

• Allana Cold Storage Ltd.
• Anjaneya Cold Storage Ltd.
• Asvini Fisheries Pvt. Ltd.
• H M G Industries Ltd.
• Hindusthan Ice & Cold Storage Co. Ltd.
• Ideal Ice & Cold Storage Co. Ltd.
• Indagro Foods Ltd.
• Jindal Steel & Alloys Ltd.
• Karnimata Cold Storage Ltd.
• Kisan Cold Storage & Refrigeration Service Ltd.
• Mohan Meakin Ltd.
• Nav Bharat Refrigeration & Inds. Ltd.
• Prabhu Hira Ice & Cold Storage Ltd.
• Ram’S Assorted Cold Storage Ltd.
• Sri Vatsa Hotels Ltd.
• Universal Cold Storage Pvt. Ltd.
• Uptown Trading & Investments Ltd.

Saquib Ahmed
Hi, I am a business student, currently learning about Finance and Digital Marketing. I have also a keen interest in technology too. I enjoy reading and presently I am reading "The Psychology of Money". With these blogs, I am trying to make a journal for myself so that later when I look back I can see how due to my small initiative, helped to shape people's life and how much I grew.
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