Are you looking for a business opportunity that will grow over time? If so, then a cold storage business plan is a good idea.
The Indian cold chain market was worth more than INR 1,285 billion in 2020, and it is expected to reach a value of INR 2,865 billion by 2027, growing at a CAGR of 14.3%. Cold storage may be the perfect business opportunity if you want something with high profit margins and long-term growth potential. It requires a one-time investment, and once your business starts making money, it will continue to grow indefinitely.
Wondering how to get started with your cold storage business plan? Here’s a complete guide to cold storage businesses, the investment required, and a step-by-step guide to starting your business.
What Is the Importance of Cold Storage Business in India?
The cold storage industry is one of the most essential industries in the world. It prevents vegetables and fruits from spoiling over an extended period of time.
Here are the two types of cold storage facilities:
- Fruits and vegetables
- Poultry, seafood, meat, and other packaged foods, such as cigarettes and beer.
But how does the cold storage industry add value to the world, you might wonder? Well, it majorly reduces food waste. Food waste is a severe global problem, and fruits and vegetables are a significant cause.
Food loss is more common in nations with high production rates. Cold storage is essential for maintaining quality during post-harvest processing, extending the shelf life of processed or packaged commodities and ensuring year-round access to fresh fruit. Cold storage is vital to increasing profitability and reducing food loss since it preserves produce and reduces perishable waste.
What Is the Cost of Starting a Cold Storage Business?
When investing in a cold storage business, the initial investment is much higher than in other companies. You’ll need to purchase land, build the facility, and obtain utility permissions for electricity and water. Also, cooling equipment is a mandatory investment for cold storage businesses.
Longer-term stability and superior quality are guaranteed by modernized cooling equipment. Investment costs could include various charges, like operating costs and fixed costs.
The size of your cold storage unit will have the most significant impact on the price and investment. It will cost between Rs. 3 and 4 crore to put up a 5000 MT cold storage facility.
Typically, banks will lend you money to start a cold storage business. Additionally, determine if this business is eligible for government grants or subsidies in your state or district.
Procedure to Start a Cold Storage Business
Starting a cold storage business is a great way to start a new business and make money. But it can also take time to know where to start or what to do to get your new business up and running.
Here’s the procedure for starting a cold storage business:
Step 1: Business Plan
Write an elaborate business plan that includes all relevant company information, specifics on the goods and services to be used, and information on the personnel (full names and addresses).
Step 2: Choosing a Location
Choosing an ideal location for your business is crucial. You want it to be close to consumer hubs or production farms so that you can keep cold storage facilities close to where the food is shipped in or produced. It takes about one acre of land to construct a cold storage facility with roughly 5,000 metric tonnes of capacity.
Step 3: Funding Arrangements
Funding arrangements are complex because the cold storage industry demands substantial capital expenditure. Savings are typically intended to cover emergency expenses or in times of cash stress; thus, managing the overall investment for the cold storage firm from savings is neither a practical alternative nor a recommendation.
Step 4: Equipment Choice
When choosing equipment, it is essential to consider the age of the equipment, its light source, fan speed, product load, and heat generated by stored goods. These factors should be considered when determining which equipment best suits your situation.
Step 5: Regular Upkeep and Cleaning
Regular maintenance is essential for the upkeep of cold storage facilities. That includes frequent servicing and cleaning of containers, storage bins, and trays. Temperature, humidity, and preserved goods should all be examined regularly.
Step 6: Marketing
Marketing and advertising are the keys to the success of a cold storage business. Dealers, wholesalers, and retailers in urban and rural locations are just a few of the marketplaces that entrepreneurs should focus on. Business owners can also advise farmers, distributors, exporters, producers, and consumers to boost sales and profits.
Things To Keep In Mind While Starting a Cold Storage Business Plan in India
You must remember certain things when planning to start a cold storage company. They are as follows:
1. Area of the Storage
The space should be big enough to accommodate the installation needs, loading goods or raw materials, and easy access for delivery trucks.
2. Temperature
If you store your materials in an orderly manner, finding what you’re looking for will be easier. The number of products stored also affects a cold storage room’s temperature, so be sure to size the room appropriately if you store many products.
3. Ventilation
Long-term storage of raw materials and frequent product removal can lead to the presence of unidentified compounds. To ensure the best product quality, a cold storage facility must have a reliable ventilation system.
4. Power Supply
Cold storage facilities use 380-volt electricity. Ensure power is continuously supplied and there are no short circuits to prevent damage to other electronic items nearby and extend their lifespans.
5. Maintenance
It is vital for only certified engineers to do maintenance on the cold storage every month, checking its capacity and looking for breakage or damage.
FAQs on Cold Storage Business Plan in India
Below are some questions commonly asked about the Cold Storage Business Plan:
Why is cold storage so important?
A cold storage facility aims to keep produce, typically food, at the optimal temperature and prevent it from rotting. In contrast, a freezer warehouse must maintain a steady temperature for the product to be preserved and not harmed.
What is the minimum size of a cold storage facility?
Cold storage requires 1800 to 2000 square metres of land.
How profitable is cold storage?
Although the initial investment is high, cold storage is a lucrative endeavour. The return is also higher and more substantial than at other firms.
What is the cost of starting a cold storage business?
To start a cold storage business in India, you need an initial investment of between Rs 3 and Rs 4 crores. For that, you can take out bank loans.
Does cold storage fall under MSME?
In India, cold storage can be considered an MSME service provider. Therefore, offering services for cold storage qualifies MSMEs for registration.
If you’re an investor looking to enter the cold storage industry, now’s your chance! While the market is still in its infancy in India, it’s a good time for potential investors to enter the market. You can turn a one-time investment into a long-term income stream with the right business strategy.
If you’re building a new cold storage business, you can easily make it profitable with the information provided here.
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