Establishment of

Cold Chain Terminal

Market in DMIC Corridor

Agro and Food

Processing
Government of Gujarat
Contents

Project Concept 3
Market Potential 4
Growth Drivers 6
Gujarat – Competitive Advantage 7
Project Information 9
- Location/ Size
- Infrastructure Availability/ Connectivity
- Key Players
- Equipment suppliers / Plant and Machinery
- Key Considerations
Project Financials 15
Approvals & Incentives 17
Key Department Contacts 19

Page 2
Project Concept

Logistics and cold chain industry

Logistics entails managing and controlling the flow of goods, energy, information and other
resources from the source of origin to the targeted destination in a timely and cost-efficient
manner. Logistics includes streamlining functions such as integration of information, warehousing
(including temperature controlled) and material handling, inventory management and packaging.

Temperature controlled logistics or cold chain facilities entails storage, preservation of quality, and
distribution of perishable products such as food, agricultural produce and pharmaceutical products.
The warehouses can store products at temperatures ranging between -25 to +25 degree Celsius,
with distribution being primary (long haul/inter-city) and secondary (last mile distribution).

Logistics flow of horticulture and floriculture produce

from farm to end-consumer

Aggregation/pre-cooling Reefer transport

(at pack-house, pre-conditioning, (packaged produce in climate
packing, cooling, dispatch controlled transport)

Cold storage Distribution

(distribution hubs, cargo centers) (refrigerated local delivery)

Merchandizing to end-user
(Retail to customer)

Page 3
Market Potential

Indian cold chain industry overview

The cold chain industry in India is at a very nascent stage and is highly India is…
fragmented (~3,500 players) with organized sector constituting 8-10% of Largest
producer of fruits
the sector. As of 31 July 2015, there are 7,129 cold storages in India with a
capacity of about 33 MT, operating approximately 9,000 reefer vehicles in
2nd
2014. The industry was valued at around INR400bn in 2015.
largest producer
of vegetables
The cold chain industry is expected to grow at a CAGR of 28-30% through
2017 to be valued at more than INR600bn. The cold chain sector is being Largest
producer of milk
observed as the sunrise sector with high investment potential. in the world

60% of warehousing capacity concentrated in Warehousing accounts for bulk of

West Bengal and Uttar Pradesh temperature controlled industry
42%
Transport
ation, 10%
18%
6% 11%
7% 5% 4% 4% 2%

Warehousi
ng, 90%

Sources: IIFL Institutional research

Sources: IIFL Institutional research

 India’s cold chain industry is operating below capacity as most

equipment in use are not technically updated and single Key end industry segments
commodity based. Around 36% of the total cold storages in India User segment Growth
outlook
have capacity below 1,000 MT and with the current capacity only
Seafood 12-15%
less than 11% of what is produced can be stored. This represents
Confectionaries 15-20%
a huge market potential in the country. Developing an integrated
Fruits and vegetables 30-40%
supply chain, including cold chain can save up to INR300 bn/yr.
Dairy products 10-15%
 Growth in the temperature-controlled warehousing segment is QSRs 25-30%
driven by single-commodity potato warehouses, accounting for Poultry 15-20%
~75% of the existing cold storage warehousing capacity in 2015. Ready to cook ~15%
Ice cream 25-30%
Pharmaceuticals 12-15%

Source: NCCD, IIFL research

Page 4
Market Potential

DMIC corridor

 Delhi - Mumbai Industrial Corridor (DMIC) is

India's most ambitious infrastructure
programme in collaboration with the
Government of Japan. It aims to develop new
industrial cities as "Smart Cities“ with adequate
Haryana Delhi infrastructure linkages like power plants, water
supply, high capacity transportation and
Rajasthan
logistics facilities.
Gujarat
 Western Dedicated Freight Corridor (DFC)
between Delhi and Mumbai, covering an overall
length of 1,504km and passing through the
States of U.P, Delhi NCR, Haryana, Rajasthan,
Maharashtra
Gujarat and Maharashtra, with end terminals at
Dadri in the Delhi NCR and Jawaharlal Nehru
Port (JNPT) near Mumbai forms the backbone
of the project.

 An Investment Region (IR) is specifically delineated industrial region with a minimum area of
over 200 square kilometres (20,000 hectares), while an Industrial Area (IA) would be developed
with a minimum area of over 100 square kilometres (10,000 hectares).
 24 such special investment nodes - 11 IRs and 13 IAs spanning across six states have been
identified. Following have been taken up for implementation under Phase – I of DMIC Project.

Investment regions:
 Ahmedabad – Dholera Special Investment Region, Gujarat (903 sq. kms.)

 Dadri-Noida-Ghaziabad Investment Region, Uttar Pradesh, (218 sq. kms.).

 Manesar-Bawal Investment Region, Haryana (402 sq. kms.);

 Khushkhera-Bhiwadi-Neemrana Investment Region, Rajasthan (160 sq. kms.);

 Pitampur-Dhar-Mhow Investment Region, Madhya Pradesh (372 sq. kms.)

Industrial areas:
 Shendra-Bidkin Industrial Area, Maharashtra (84 sq. kms.)

 DighiPort Industrial Area, Maharashtra (253 sq. kms.)

 Jodhpur-Pali-Marwar Industrial Area, Rajasthan (155 sq. kms.)

Page 5
Growth Drivers

Key drivers of organized Indian cold chain industry and terminal

market

 Growth in organized retail, pharmaceuticals, growing shift towards

1 horticulture
Evolving  Emerging quality standards and regulations
industries and
regulations

 The industry has been accorded infrastructure status in FY12

 100% FDI under automatic route is allowed since FY11
2
Favourable  Capital investment is eligible for viability gap funding scheme of
government Finance Ministry, funding is capped at 40% of the project cost
policies
 Mega Food parks, agri export zones attracting infrastructure
development including cold chain.

 Growing middle class, urbanization impacting food habits and rising

3 preference towards processed food
Strong domestic  Consumption expenditure is likely to reach USD3.6 trillion by 2020, up
demand and
from an estimated USD1.0 trillion in 2010
export potential
 India’s export of processed food and related items rose at a CAGR of
23.3% during FY11-15.

 India has favourable climate for agriculture and support wide variety
of crops
4
 Large livestock aiding Dairy and Meat Processing sector
Supply-side
advantage  Long coastline and large inland water bodies helping the growth of
marine sector

 Logistics parks and transshipment zones are being developed along

5 the DFC between Delhi and Mumbai facilitating trade
5
 In the first phase six logistics parks are being planned by Indian
Establishment of
logistics hubs Railways for enhancing rail based traffic along the DFC.
across DMIC
corridor

Page 6
Gujarat – Competitive
Advantage
Strong push by the Government of Gujarat (GoG) in the agri and
food processing sector and related infrastructure and services
 The State has identified Agro and Food Processing
Gujarat is..
industries as one of the thrust industries in
Industrial policy 2016-21. Under this policy, the 2nd
GoG plans to develop agricultural clusters and the
largest producer
whole value chain from the farm to foreign of papaya and
countries. Sapota in India
 Gujarat is poised for second agriculture revolution
with the availability of Narmada Canal Irrigation
facilities in 18 lakh hectare areas. This will boost
3rd 6th
largest producer largest producer
horticulture production in the State as it is giving
of banana in of mango in
much higher returns to growers as compared to India India
conventional agriculture crops providing attractive
volumes to the terminal market.

Cold chain industry in

Gujarat
Cold storage industry in Gujarat
No. of cold storages 625
(as on 31 July 2015)
7% share in the India’s cold
storage capacity Storage capacity 23.2 lakh MT
88.3 lakh MT of fruits Total manpower 18,343
production in 2014-15
Average age of cold 12 years
120.5 lakh MT of vegetable storages
production in 2014-15
Product types in cold storages
Horticulture/agriculture 65%
Processed food 10%
Animal husbandry 25%
Source: Gujarat Agro policy 2016

 Terminal Market are a service provider to horticulture growers and buyers of horticulture products in the
districts, forming a critical element in the agriculture marketing system.
 The terminal market is linked to number of collection centers, set up at key production centers allowing
easy access to farmers for marketing of their produce.

Page 7
Gujarat – Competitive
Advantage
 The proposed DFC between Delhi and Mumbai passes through Palanpur,
Mahesana, Ahmedabad, Vadodara, Bharuch and Valsad in Gujarat.
 Key industrial sectors in the state include Gems and Jewellery,
Engineering, Chemicals and Petrochemicals, Oil and Gas, Textiles and 62%
Apparels and Food processing.
area of Gujarat
 Five development nodes have been identified in Gujarat under the
state is covered
influence area of DMIC
within the
Node No.12: Ahmedabad-Dholera Investment Region influence area of
Node No.13: Vadodara-Ankleshwar Industrial Area DMIC
Node No.14: Bharuch-Dahej Investment Region
Node No.15: Surat-Navsari Industrial Area
Node No.16: Valsad-Umbergaon Industrial Area

Planned agro/food processing zones in Gujarat

Surat-Navsari Industrial Area
 Integrated agro/food processing zone with adequate backward and forward linkages
 Integrated logistics hub with multi-modal logistics infrastructure and value added services
 Integrated township
 Captive power plant
 Development of Surat airport
 Adequate feeder road (Industrial Area to NH-8 and NH-6, widening of Hazira-Surat linkage to four-lane
dual carriageway, development of requisite grade separators/flyovers/interchanges and underpasses
along the National Highways/ State Highways)
 Rail links (Surat (Gothangam) and Hazira)

This will allow taking advantage of inherent strengths of the region for horticulture produce (Mango,
Chikoo/Sapodilla and Banana).

Valsad-Umbergaon Industrial Area

 Region has a rich horticulture produce of Mango, Chikoo/Sapodilla
 Integrated agro/food processing zone with necessary backward and forward linkages
 Integrated logistics hub with multi-modal logistics infrastructure and value added services
 Integrated township
 Captive power plant
 Adequate feeder road (Maroli Port to NH-8, augmentation of Vapi-Nashik (NH-3) and Valsad- NH-6
road links, development of requisite grade separators/flyovers/interchanges and underpasses along the
National Highways/ State Highway)
 Rail links (between Maroli Port and the DFC)

Page 8
Project Information

Agro and cold chain projects in Gujarat

Marine-based food
parks
to be established by 2019 in
Ahmedabad and Surat
Ahmedabad

Agriculture export zones

to be established by Agricultural and
Processed Food Export Development
Surat Authority (APEDA)

210
10 cold chain APMCs operating in Gujarat, under the
National Agriculture Market (NAM) initiative.
projects have been approved at
Surat, Kutch and other locations

GoG plans to…

...establish linkage from farm gate to the consumer, end to end, to reduce losses through efficient
storage, transportation and minimal processing.

INR110 million has been earmarked for financial assistance to the Agro industries in 2016-17.

Prioritize public investment in establishment of post harvest storage and marketing infrastructure
at Agriculture Product and Market Committees (APMCs)

Establish multi-purpose and multi control atmosphere chambers, packing facility, cleaning in
progress fog treatment, individual quick freezing and blast freezing facilities.

Page 9
Project Information

Leading players in cold chain sector in Gujarat

Tolsma-Grisnich Omnivent

Kelvin Cold Chain Logistics Pvt.

Gati Kausar cold chain solutions
Limited

All-round vegetable processing

machinery

Plant and Machinery / Equipment suppliers

Global Agri-tech Engineers,
Onion Grading and sorting equipments
Vadodara
Super freeze refrigeration
compressors
Screen protected induction motor 30
HP each
Hand operated immersed starter/ motor starter
Screen protected delivery induction - Frick India Limited, New Delhi
motor
- Or Super freeze Ammonia compressor-
Ammonia oil separator Sheetal Refrigeration Co, Rajkot

Ammonia gas charging type - DCE Refrigeration Pvt. Ltd, Pune

Atmospheric type ammonia condenser
- Rahul Agro Systems Pvt. Ltd., Nasik
Water pipe lines and fittings
Ammonia air cooling units
Slide rail for compressor motors
Valves and fittings for the condensers
and receivers

Humidity control system Bry-Air India-Gurgaon, Delhi

Page 10
Project Information

Project Structure: Terminal market

The terminal market will be located near the major urban center. These markets are serviced by
collection centers established in key production areas. The collection center would get the supply
from individual farmers or farmer associations at the village or block level. The market complex
includes the entire necessary infrastructure.

Typical model of terminal market

Facilities Terminal Bank

Grading, washing and market
packing lines, pack house,
quality testing facility,
palletisation, material  Processor Storage
handling equipment,  Exporter Electronic  Cold storage
parking space  Wholesale auction  Ripening
trader and info chamber
Services  Retail chain kiosks  Temp
Transport, settlement of  Direct selling controlled
payment, banking, ATM, warehouse
Rest house, computer with
internet, kiosk, library

Collection center
Infrastructure
Washing, grading, sorting, electronic weighing
Reefer transport to market/port/airport
Services
Collection and aggregation of produce, settlement of
payment, advisory on inputs, prices, quality and
multi-modal transport

Producers/Farmers and their associations from within and outside state

The terminal market benefit both buyers and sellers as it has fewer intermediaries, lesser handling,
better infrastructure facilities and quality standards.

Page 11
Project Information

Project Structure & Implementation Model

Special purpose vehicle (SPV) is established under PPP model that is responsible for the
acquisition of land for setting up of the Terminal markets and also for the Collection centres. It is
also responsible for the acquisition of land for setting up of the Terminal markets and for the
Collection centres.

The Terminal Market will operate on collection of nominal user charges (determined by commercial
considerations) from market participants and producers and other stakeholders for the
infrastructure and services provided by it. The charges will be for providing the basic services of
aggregation at collection centres and auction at the Terminal market.

Page 12
Project Information

Infrastructure Availability

Logistics & Connectivity: Surat

Rail Road

 The city is connected to Delhi Mumbai

 Surat is connected with other districts of the Industrial Corridor (DMIC) which links
state such as Rajkot, Vadodara and Ahmedabad, Vadodara and Surat.
Ahmedabad by rail.  Proximity to NH-8 and NH-6 further
 Hazira port in Surat is ~16 kms away from the enhances connectivity in the city.
Surat railway station.  Surat also has very good connectivity with
 The Mumbai-Ahmedabad bullet train project other cities of the state such as Vadodara
will have Surat as one of the stations. (154 km) and Ahmedabad (265 km).
 In 2016, the Gujarat government assigned  Proposed four-lane highways which are
Delhi Metro Rail Corporation as a consultant expected to improve connectivity in Surat
for the proposed metro connectivity in Surat. include – Dakor-Savli, Vadodara-Dabhoi &
 Rail connectivity was proposed for Hazira and Surat-Olpad-Bardoli.
Nargol ports in the 2016 rail budget.

Air Port

 Surat domestic airport is well connected to  The nearest port is Hazira which is 25 km
various parts of the country. The city is from Surat.
located ~275 kms from the international  Additionally, Hazira port is well connected to
airport at Ahmedabad. Mundra port and Jawaharlal Nehru Port Trust
Proposed (JNPT) – India’s largest container port
 In January 2015, Airports Authority of India  Thus, it provides a convenient textiles-related
gave an in-principle approval for cargo trade gateway to International (Europe,
terminal at Surat airport worth INR70 million. Africa, America and the Middle East) and
The terminal is will be operational in 2017. domestic markets.
 In February 2016, Surat Airport Action
Committee filed an online petition for an
international airport at Surat.

Utilities
Power
Water
 Water for industrial purposes can be obtained
 The main source for the power supply is
from four sources viz. Gujarat Water Supply
and Sewerage Board (GWSSB), an irrigation Torrent Power Limited in Surat
canal, dams, and surface reservoirs.

Page 13
Project Information

Manpower requirement

Responsibility Number

General Manager 1

Manager operations 2

Business Development 2

Operators (for cold 5

storage plant)

Maintenance (electricians 3
etc.)

Account and admin 2

Security and support staff 6

Total employee 21

Labour 50

Key considerations
 Logistics parks to be set up in three locations in  Large number of Agricultural Produce
Gujarat Market Committees (APMCs) already
 Freight Logistic Parks at six locations along the operating in Gujarat
Dedicated Freight Corridor (DFC) to be set up  Strong government focus and support
by Railways in Gujarat  Incentives being provided for skill
enhancement, reimbursement of VAT,
power tariff and electricity duty

Page 14
Project Financials

Estimated Project Cost

Assumption: As there is no existing terminal market in Gujarat, we have considered projects in
Sambalpur, Odhisa for estimating project financials. The land cost (60 acre) in the project is
taken at INR2 lakhs/acre. For Collection centres, land cost has been assumed as
INR10lakh/acre as these centres will be situated in interior areas.

Particulars Amount in INR Lakhs

Land 145
Land development 917
Buildings 2,787.45
Plant machinery and equipment 2,193.25
Utilities and other fixed assets 528
Contingencies 340
Margin money for working capital 35.86
Total 7,321

Note: The project cost considered for grant does not include margin money for working
capital and non marketing infrastructure cost of INR384 lakh.

Means of finance: The cost of the project is to be financed through a mix of equity, grant from
National Horticulture Mission (NHM) and term loans from banks/ FIs.

Particulars Amount in INR Lakhs Share

Equity 1,464 20%
Grant – NHM 2,761 37.7%
Debt 3,096 42.3%
Total 7,321 100%

Being an agri infrastructure project, it is suggested to have debt equity ratio of 4:1, which is
normally adopted for such basic agri infrastructure projects like APMCs being set up under the
cooperative structure.

The project will have an indicative IRR of 14 to 16%, as per current infrastructure project funding
norms of cooperative financial institutions.

Sources: Maharashtra State Agricultural Marketing Board; iNDEXTb

Page 15
Project Financials

Cost breakup of machinery and equipment

Plant, machinery and equipment Unit No. of units Rate/Unit Amount (INR lakhs)
Cold store – 2000 MT MT 5 5000000 250
Ripening Chambers (8 chambers of 10 TPD 20 640000 128
MT each)
Sorting, grading, packaging facility-5 Nos. 6 4500000 270
MT/Hr
Conveyer based handling system Nos. 5 3500000 175
Electronics Auction System Ls 150
Weigh Bridge (30 MT) Nos. 2 3000000 60
Loading Unloading facilities-Dock Nos. 10 800000 80
levelers
Crate Nos. 200000 270 540

Pallets Nos. 6000 3300 198

Fork lifts Nos. 3 1200000 36

Weighing Machines Nos. 30 30000 9

Testing and certification lab Ls. 75

Vehicles (reefer (2) normal (4)) Ls. 88

Total main market complex 2059

Page 16
Approvals & Incentives

Approvals Required

• APMC Act reforms

• State Government to constitute a committee for setting up of terminal markets and will initiate
suitable measures to provide necessary legal frame work
• State Government to provide seed capital and equity contribution

Incentives from Government of Gujarat

GoG has prepared a Agri business policy 2016 for strengthening agriculture-related infrastructure
and promoting food processing industry. Discussed below are the various subsidies and
incentives established for promoting the industry.

Subsidy
Projects Admissible Maximum Limit
Subsidy (INR crore)
New project in agro food processing 25% 0.5
Cold chain, food e-radiation, packaging houses and 25% 5
food parks
Primary processing or collection centre of farm 25% 2.5
produces at village level
Capital investment subsidy for reefer vehicles 25% 0.5

National Horticulture Board provides capital subsidy 40% • INR6,000/MT (normal

for construction, expansion and modernization of cold storages)
cold storages • INR7,000/MT and
INR8,000/MT
(specialized cold
storages)
• INR32,000/MT for CA
storages

The SPV for Terminal market may approach the State Office of National Horticulture Board
for availing incentives under their different schemes for cold storage and other post harvest
infrastructure facilities including cold chain for horticulture produce transportation from spokes
(collection centres) to hub (terminal markets).

Page 17
Approvals & Incentives

Gujarat Industrial Policy 2015

Government of Gujarat has announced an ambitious Industrial Policy, in January 2015, with the
objective of creating a healthy and conducive climate for conducting business and augmenting the
industrial development of the state, including agro and food processing.
Approvals
• Registration of the industrial undertaking
• Industrial Entrepreneur Memorandum or Udyog Aadhar
• Non-agriculture land permission and purchase deed registration
• Consent to Establish from Gujarat Pollution Control Board
Quantum of incentives
% of eligible fixed
Category of % of Net VAT % of Net VAT to be
capital investment Incentive period
Project Location reimbursement to paid to
entitled for (no. of years)
(Taluka) the unit Government
Incentive
1 100 90 10 10
2 80 80 20 10
3 70 70 30 10
Net VAT incentives
Net VAT incentive will be reimbursed to the industrial undertaking in one financial year will not
exceed one-tenth of the total amount of eligible incentive.
Classification of the Project Amount (in INR crore)
Ultra Mega Industrial Unit 500
Mega lndustrial Unit 400
Large Industrial Unit 150
Micro, Small or Medium Industrial Unit 50

Page 18
 National Centre for Cold Chain Development
http://www.nccd.gov.in/
National Horticulture Board
http://nhb.gov.in/default.aspx
Agriculture and Co-operation Department, Government of Gujarat
https://agri.gujarat.gov.in/
Ministry of Food Processing Industries
www.mofpi.nic.in
Gujarat Industrial Development Corporation
www.gidc.gov.in
Industrial Extension Bureau
www.indextb.com

This project profile is based on preliminary study to facilitate prospective entrepreneurs to assess a prima facie scope.
It is, however, advisable to get a detailed feasibility study prepared before taking a final investment decision.

Gujarat Agro Industries Corporation Limited

Gujarat State Civil Supplies Corporation Ltd Building
2nd Floor , "B” Wing , Sector 10A,
Gandhinagar – 382010, Gujarat, India
Phone / Fax : 079-23240208
Email: [email protected]
https://gaic.gujarat.gov.in/