Shelf-life: IDF to take 49% in Concor's cold chain project
SHALINI SINGH
TIMES NEWS NETWORK[ THURSDAY, FEBRUARY 19, 2004 01:09:05 AM ]

NEW DELHI: The Rs 1,000-crore India Development Fund (IDF) is making its first investment in the Container Corporation of India’s (Concor) nationwide cold chain project. IDF is the country’s largest domestic private equity fund. It was set up in March ’03, with the help of the finance ministry, to facilitate the development of infrastructure in the country. 

For the cold chain project, a new company is being formed. It will have an equity base of Rs 100 crore. IDF will be an equal joint venture partner with Concor in this company. Each will hold 49%. Concor first announced its intention to launch cold chain operations in May ’02. The project entails an investment of Rs 300 crore in phase I.

Concor’s managing director AK Kohli told ET that the joint venture agreement would be inked by mid-March. By ’05, three Controlled Atmosphere (CA) stores will be operational in Delhi, Mumbai and Bangalore. They will have a combined capacity of 37,370m tonnes. Concor plans to take the total to 14 CA stores India-wide by ’08.

Luis Miranda, CEO, IDF, said the business rationale for the project is strong, considering there is no national cold chain solutions provider in India. Besides, the company proposes to go beyond setting up storage and logistics facilities to become India’s first giant organised trader in fruit and vegetables. It intends growing the domestic market and later tapping the  international markets. The company is creating an all-India sourcing and marketing network for fruits and vegetables to support its cold chain project. This move promises to turn this highly-fragmented and largely unorganised marketplace on its head.

The opportunity seems promising, considering India is the largest producer of fruits and vegetables in the world, though it has just 1% share in the global market (China and Mexico each boast of a 5% share). The country loses 20-25% of total production to poor harvesting techniques and inadequate handling and storage facilities. This leads to poor off-season availability, thereby forcing imports — in fact imports are  growing at more than 20% and at high price realisations of 2-2.5 times the seasonal rates.

 A study by Feedback Consulting has been conducted from the supply and demand side.  Fourteen demand centres have been identified and a business plan for phased growth has been prepared.  Technical consultants have also been engaged —  Agrotechnology & Food Innovations, the agrotechnology wing of the Wageningen University, Netherlands, and Logistic Consult of Germany. SSKI is Concor’s financial consultant.

The consortia consists of leading Indian and foreign companies, which specialise in CA storage technology, refrigeration, insulation and associated areas. The company received 23 expressions of interest for the turnkey contract when it put up a global tender last year. These companies have not been identified. Phase II involves extending the CA store chain to Ahmedabad, Kolkata, Chennai, Hyderabad and Nagpur. These stores will be networked by inbound and outbound logistics consisting of reefers and refrigerated trucks.

Sourcing at the back-end and marketing at the front-end will initially be done in association with state agencies though a direct retail push by Concor at a later stage is not ruled out.

Fruit and vegetables continue to respire even after being harvested. CA stores, a new technology for India, slow down this respiration. They  control the temperature, oxygen, carbondioxide and ethylene levels, thereby prolonging the shelf-life of apples from three months in conventional cold storage facilities to as much as nine months. In the case of carrots, shelf-life increases  from 2-3 weeks in cold storage to six months in a CA store.