Market Research Report :Cold chain market in India 2012

Cold Chain Market IndiaCold Chain Market – India

July 2012

Executive Summary

MarketCold chains have become extremely crucial for the improvement in the preservation process of agricultural production in IndiaThe market is expected to attain a CAGR close to xx% to reach a valuation worth INR xx bn by the end of 20‐‐ It is going to witness strong growth in capacity creation backed by government policies It is going to witness strong growth in capacity creation backed by government policies

Current & FutureScenario

Owing to the shortfalls in the existing cold chain infrastructure massive amounts of food grain, fruits and vegetables get wasted every year, thereby creating ample scope for vendorsPrivate participation is expected to raise the storage capacity of the sector by a large extentGovernment has classified cold chain as ‘infrastructure’ as announced in the 2011‐12 union

Drivers & Ch ll

Drivers:– Growth in Organized Retail– Shift towards Horticultural Crops

Challenges:– Lack of Logistical Support– Uneven Distribution of Cold Chains

Scenario Government has classified cold chain as infrastructure as announced in the 2011 12 union budget

Challenges

d

– Growth in Processed Food Sector – Demand from Pharmaceutical Sector– Changing Consumption Pattern

– Cost Structure– Deficit in Power Supply

Entry of Foreign Players Rail based ReefersTrends Rail based Reefers Cold Chains Facilities at AirportsBackward Integration

Major Players

2COLD CHAIN MARKET IN INDIA 2012.PPT

Competition Player A Player B Player C

Player D Player E Player F

•Introduction

•Market OverviewMarket Overview

•Current & Future Scenario

D i & Ch ll•Drivers & Challenges

•Government Initiatives

•Trends

•Competition

•Strategic Recommendation

•Appendix


•Appendix

Cold chains help to preserve edible products by maintaining a consistent surrounding temperature

Supply / Procurement Storage Transport End‐customerTransport

xx xx xxxx xx

Cold Chain Definition

Segments

Segment 2Segment 1

xxxx

KeyActivities

Activity 2Activity 1


Activities xxxx

Types of Cold Storage

Cold Stores

Type 1xx

Type 2xx

Type 3xx.

Type 4xx

Type 5xx

Type 6xx

Type 7 xx


Cold Chain Logistics Services

xxxx

xx

xxCold Chain Logistics Services

Cold Chain Logistics Services

xx

xx


xx

Cold chain market in India is going to witness strong growth in capacity creation backed by government policies

• Cold chain is an important infrastructure forenhancing the preservation process of agricultural

Cold Chain Market – Overview Market Size and Growth

400

INR bnz66productivity in India

• Cold chain comprises of mainly 2 activities – storageconsisting of about xx% of the market share andtransportation comprising about xx5%

100

200

300X%

y6

x6z5

y5

x5z4

y4

x4z3x3z2

x2z1x1

• Cold Chain market is expected to grow at about xx%CAGR from INR x bn in 20‐‐ to INR y bn in 20‐‐

• The last two announcements made by Governmentof India (GoI) in the last two union budgets will

0

100

20‐‐20‐‐20‐‐

y4

20‐‐

y3

20‐‐

y2

20‐‐

y1

x1

Segment BSegment A( ) gprimarily boost capacity creation Following the announcements several multinationalcorporations and PE firms have invested in cold chainservices

Market Segmentation (2011)

X%

Segment BSegment A

•With the actual production capacity being 10 timeshigher than the present storage capacity, Indiawitnesses huge spoilage of about xx% agriculturalproduce

X%

Segment B

Segment A


Close to xx% of fruits and vegetables and 5% of food grainaccounting for approximately INR 500 bn get wasted inIndia on a yearly basis

Y%

Player’s Opportunity in Cold Storage Facility (1/2)

Huge scope to tap the cold chain market

in India by focusing on the improvement

in food processing as only xx% of fruits

and vegetables in India get processed as 70X3%

X2%

% Share

Processed Fruits & Vegetables

a d egetab es d a get p ocessed as

compared to xx% in USA and xx% in Brazil

30

40

50

60

0

10

20

X1%

Country A Country CCountry B

While xx% of fruit and vegetable

production in USA go through cold

storage, only xx% of it goes through in

Fruits & Vegetables going through Cold Storage

80Y2%

% Share

g , y g g

India

20

40

60

80


0

20Y1%

Country A Country B

Government backing to boost the capacity creation for cold storages in India Surface Storage

• Surface storage accounts for majority of the coldchain services in India

d h d ld h

Surface Storage Market – Overview Cold Storages Distribution

• In 20‐‐, India had 5,386 cold storages with a capacityof about xx mn MT

•Majority of the cold storage facilities are utilized forpotato storage and are scattered in states of UP,Uttaranchal, Maharashtra & West Bengal

8%

5%, g•Over xx% cold storages are in the private sector• Cold storage infrastructure is set to undergo majorrevamp with government backing

30%2%

7% 5%

5%

6%

10%

Commodity Wise Distribution

9%

5%

2%

C i 2 % f l

Co od ty se st but o

x3%x4%

x6%Commodity AC dit B 3%

3%3%

Comprise 2 % of total cold storagesCommodity C

Commodity DCommodity E

x5%

Others

x1%x2%

Commodity B


Others

Note: Figures are as on 31st Dec, 2009

Number of Cold Storage in India – State & Product wise (1/2)

Sl. No. States Potatoes MultipurposeFruits & Vegetable

Meat & Fish

Milk & Milk Products

OthersTotal No.

1Andaman & Nicobar Islands (UT)

xx xx xx xx xx xx Xx(UT)

2 Andhra Pradesh xx xx xx xx xx xx xx

3 Arunachal Pradesh xx xx xx xx xx xx xx

4 Assam xx xx xx xx xx xx xx

5 Bih5 Bihar xx xx xx xx xx xx xx

6 Chandigarh(UT) xx xx xx xx xx xx xx

7 Chhatisgarh xx xx xx xx xx xx xx

8 Delhi xx xx xx xx xx xx xx

9 Gujarat xx xx xx xx xx xx xx

10 Goa xx xx xx xx xx xx xx

11 Haryana xx xx xx xx xx xx xx

12 Himachal Pradesh xx xx xx xx xx xx xx

13 Jammu &Kashmir xx xx xx xx xx xx xx

14 Jharkhand xx xx xx xx xx xx xx

15 Kerala xx xx xx xx xx xx xx

16 Karnataka xx xx xx xx xx xx xx


Note: Figures are as on 31st Dec, 2009

Current Rankings of India’s Food Production w.r.t Global Scenario

ction (M

T)

xx MT

xx MT

Food 2

India, holding a large food basket for global consumption creates huge demand for cold

Food

Produ

c

Food 1chain In order to

sustain the production trend

xx MT

Food 3

Rank1 2 3

xx

India’s positionIndia s position

in perishable food

production

in comparison

xx

xx


with world xx

New players are now venturing into the more profitable refrigerated transport services Refrigerated

Transport

• Refrigerated transport involves usage of refrigeratedvehicles for transportation of goods

Refrigerated Transport Market – Overview Refrigerated Transport Process

Procurement

• Key products that move through reefers include Product A

Product B

Product C

Product D

Grading/Sorting/

Precooling/ Product D

Product E

Product F

• In terms of volume, current reefer transportationbusiness is about xx mn MT and is expected to reach

g/Packing

Refrigerated Transportpxx mn MT within xx years

• Refrigerated transport offers the largest margins incold chain logistics At least xx companies are offering refrigerated transport

i i I di

Refrigerated Transport

Cold Storagesservices in India

• Key players in this segment include Player A

Player B

Player CDomestic Supply Exports


Player C

Major Deals in Cold Chain Market in India (2009‐2012)

Date Target Investor/Buyer StakeDeal size(INR mn)

Dealtype

Jun 20 Company A Company B xx xx xxJun 20‐‐ Company A Company B xx xx xx

Jun 20‐‐ Company C Company D xx xx xx

Feb 20‐‐ Company E Company F xx xx xx

Dec 20‐‐ Company G Company H xx xx xx

Dec 20‐‐ Company I Company J xx xx xx

Mar 20‐‐ Company K Company L xx xx xx

Aug 20‐‐ Company M Company N xx xx xx

Jul 20‐‐ Company O Company P xx xx xx


JV – Joint Venture; PE – Private Equity; M&A – Mergers & Acquisitions

Focus on Investments

• Investment of INR xx bn is expected by 20‐‐ to set up

bottling plants and cold chain infrastructure in IndiaCompany X

bottling plants and cold chain infrastructure in India

•Planning to build cold chains at its existing plants in xx and in xx to increase xx

•Construction was planned to be completed by May Company Y

p p y y20‐‐

•Entered into the cold chain consultancy segment in

India in 20‐‐ with plans to deal with issues of storage,

transportation and delivery of perishable productsCompany Z


Drivers & Challenges – Summary

Drivers

G th i O i d R t il

Challenges

Lack of Logistical Support

Growth in Organized Retail

Shift towards Horticultural Crops

Uneven Distribution of Cold chains

Cost Structure

Growth in Processed Food Sector

Demand from Pharmaceutical Sector

Deficit in Power Supply

Changing Consumption Pattern


Growth in organized retail has created a demand for cold chains in India

•Finding 1

Growth in Organized Retail Impact

• Finding 1

• Finding 2

• Finding 3

• Finding 4

Growth in Organized Retail

10

12 x2

INR tn

xx

2

4

6

8

x1


020‐‐ 20‐‐e

Shift towards horticultural crops by farmers to evade risk boosts the demand for cold chain

•Finding 1

Shift Towards Horticultural Crops Impact

•Finding 2

•Finding 3

Sub‐finding

Growth in Horticultural Crops

250 25

‘

x5x43

Area (in mn hectare)

150

200

x4x3x2x1

Production (in MT)

Area (in mn hectare)

0

50

100

0


0 020‐‐20‐‐20‐‐20‐‐20‐‐

Food processing sector is the major target segment for cold chain market

•Finding 1

Growth in Processed Food Sector (1/2) Impact

• Finding 1

• Finding 2

• Finding 3

Growth in Food Processing Sector

INR tn

6

8

10 xx% x5x4

x3x2

x1

0

2

4

2020202020


20‐‐e20‐‐e20‐‐e20‐‐e20‐‐

Food processing sector is expected to show huge growth in each of its segments

Growth in Processed Food Sector (2/2) Impact

Fruit & Vegetables DairyFruit & Vegetables

400

600

INR bn

x1%x3

Dairy

4 000

6,000

INR bn

x2% y3

0

200

400

20‐‐e20‐‐

x2

20‐‐

x1

0

2,000

4,000

20‐‐e20‐‐

y2

20‐‐

y1

20 e2020 20 e2020

Snack & ready to eat foods

INR bn

Marine Products

INR bn

200

400

600x3%

z3

z2 200

400

600

x4% m3

m2m1


020‐‐ 20‐‐e20‐‐

z10

20‐‐e20‐‐20‐‐

m1

Rising demand for cold storage in pharmaceutical sector is pushing the growth in cold chain market in India

•Finding 1

•Finding 2

Demand from Pharmaceutical Sector Impact

•Finding 2

•Finding 3

Sub‐finding 1

Sub‐finding 2Sub finding 2

100

INR bn

x% x7

Growth in Vaccine Market Growth of Pharmaceutical Market

INR bn

2 500 y2

20

40

60

80

100 x% x7x6

x5x4x3x2

x1

2.500

2.000

1.500

1.000

500

y%y2

y1


0

20

20‐‐e20‐‐e20‐‐e20‐‐e20‐‐e20‐‐e20‐‐e

500

020‐‐e20‐‐

Changing consumption pattern is expected to create huge demand for cold storage in India

•Finding 1

•Finding 2

Changing Consumption Pattern ImpactSales of Packaged Food (20‐‐)

g

•Finding 3

Sub‐finding 1

Sub‐finding 2

x4%

x1%

Sub‐finding 3

•Finding 4 x2%

x3%

WestNorth

SouthEast and Northeast

WestNorth


Higher operating costs make setting up cold storages difficult and unviable

•Finding 1

Cost Structure Impact

• Finding 1

• Finding 2

• Finding 3

• Finding 4• Finding 4

Operating Cost per Cubic meter per year Share of Energy Expense of Total Cold Storage Expense

80

100

INR

x1

p g p p y

25

30

% Sharey1%

gy p g p

20

40

60x2

5

10

15

20

y2%


0Western CountriesIndia

0Western CountriesIndia

Power shortage is expected to pose challenges for the development of the thriving cold chain market

•Finding 1

•Finding 2

Deficit in Power Supply Impact

•Finding 2

Sub‐finding 1

•Finding 3

Sub‐finding 2Sub finding 2

Future Power Demand‐Supply Scenario Demand Supply Gap ~ xx%

y1

y323%

x3

45%y2

x2

Base

Peak

GenerationAverage Energy Demand

600800Energy (BU)

2007 2012e 2017e

46%

Supply

y1

74%

26%

Demand

x1

59%41%

Supply

77%

Demand

55%

Supply

y2

76%24%

Demand

54%0

200400

XIXVIIIVIIVI


Trends – Summary

Backward Integration Entry of foreign players

Key Trends

Cold Chains Facilities at Airport Rail based Reefers


The market is dominated by the private sector with minimal presence of the public sector

z%y%• Investment and growth opportunity for cold chain is huge as it is still not yet developed in India

Competition – Overview Sector Wise Split – Surface Storage

Investments have been announced by Reliance, Bharti, ITC, Godrej, Tata, Aditya Birla Group and Future Group to offer a ready market for third‐party cold chain logistics players

• Cold chain capacity in the organized sector was around 60,000 tonnes in 2009

x%

Capacity additions & investments in next 3 years with existing players expanding capacities as well as new players

Highly capital intensive industry with an average payback period of around 5 years

• Distribution offers the largest margins in cold chain• Distribution offers the largest margins in cold chain logistics At least 50 companies are offering refrigerated transport services in India

• 3 types of companies operates in cold storage and

Sector C

Sector B

Sector A

transportation sector namely, Integrated Companies, Stand alone Companies and 3 PL Service Providers

•Major companies have shown interest in cold chain market in India, including Snowman Frozen Foods, Fresh and Healthy Enterprises and Apollo Everest

• More than 90% of the cold storage capacity in India is owned and maintained by the private sector

• Government of India encourages and supports the participation of private players to develop the highly capital intensive cold chain sector

bli i l i d i l i i i i


Fresh and Healthy Enterprises and Apollo‐Everest Cool Solutions

• Public sector is also gearing up and actively participating in the development of cold chain solutions

Major Public Companies ‐ Summary

1 800

2,000

2,200

Net Profit/Loss

Size of the Bubble represents Market Capitalization in INR mn

1,200

1,400

1,600

1,800

m1

600

800

1,000

,

0

200

400

m3m2

‐200

‐1,000 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 11,000 12,000 13,000

Total income

Player CPlayer BPlayer A


Note: All figures are in INR mn and are based on the latest financials available

Public: Domestic Company – Player A (1/3)

Company Information Offices and Centres – India

Corporate Address

l

Tel No.

Fax No.

Website

Year of Incorporation

Products and Services

Head Office

West Bengal p

Ticker Symbol

Stock Exchange

Key People


Category Products/Services

Cold Chain Logistics

N D i tiName Designation


i i l S h K i


Financial Snapshot Key Ratios

Particulars y‐o‐y change (2011‐10)

2011 2010 2009 2008

Profitability RatiosOperating Margin 5.61 14.64% 9.03% 7.88% 16.85%

Net Profit/LossTotal Income

49 266.571.0

60

80

6

8

INR mnINR mn

Net Margin 0.55 1.94% 1.39% 1.03% 9.07%

Profit Before Tax Margin 0.53 2.98% 2.44% 1.91% 11.13%

Return on Equity 0.13 0.78% 0.65% 0.65% 6.44%

Return on Capital Employed 1.96 4.52% 2.57% 3.12% 7.48%

Return on Working Capital 0.57 1.24% 0.67% 0.72% 8.13%

Return on Assets 0.15 0.54% 0.38% 0.40% 3.77%

42.849.2

0

20

40

60

0

2

4

6

2011201020092008Financial Summary

• The company earned a net profit of INR xx mn in FY 2011, as compared to net profit of INR xx mn in FY 2010

• The company reported total income of INR xx mn in FY 2011, registering a decrease of xx% over FY 2010

Return on Fixed Assets 0.79 3.08% 2.28% 2.05% 17.56%

Cost RatiosOperating costs (% of Sales) ‐5.70 85.21% 90.91% 92.12% 83.15%

Administration costs (% of Sales)

‐1.29 2.56% 3.85% 2.30% 2.19%

Interest costs (% of Sales) 5.37 11.16% 5.79% 5.25% 5.31%registering a decrease of xx% over FY 2010

• The company earned an operating margin of xx% in FY 2011, an increase of xx percentage points over FY 2010

• The company reported debt to equity ratio of xx in FY 2011, a decrease of xx% over FY 2010

Interest costs (% of Sales)

Liquidity RatiosCurrent Ratio ‐77.19% 5.21 22.84 20.92 8.23

Cash Ratio ‐73.35% 3.47 13.00 8.85 4.96

Leverage RatiosDebt to Equity Ratio ‐33.83% 0.46 0.69 0.65 0.71

D b C i l R iKey Financial Performance Indicators

Indicators Value (09/07/2012)Market Capitalization (INR mn) XX

Total Enterprise Value (INR mn) 129.5

( )

Debt to Capital Ratio ‐35.04% 0.26 0.40 0.38 0.40

Interest Coverage Ratio ‐15.62% 1.33 1.57 1.50 3.17

Efficiency RatiosFixed Asset Turnover ‐3.78% 1.57 1.64 1.99 1.94

Asset Turnover ‐0.18% 0.27 0.27 0.39 0.42

Current Asset Turnover 11.72% 0.51 0.46 0.66 0.79


EPS (INR) 0.29

PE Ratio (Absolute)‐10th July, 2012 26.62Working Capital Turnover 32.20% 0.63 0.48 0.70 0.90

Capital Employed Turnover ‐13.97% 0.40 0.46 0.64 0.71

Improved Decline


Key Business Segments Key Geographic Segments

100%

Segment A

100%

India

100%

India is the only geographic segment in which the company has been operating for the last

five years

100%

50%

100% Segment A is the only business segment in which the company has been operating for the last

five years

100%

50%

100%

Business Highlights

0%2011

0%2011

Description News

Overview

Name Change


Major Private Companies ‐ Summary

Size of the Bubble represents Total Assets in 50

60

Net Profit/Loss

INR mn

20

30

40

50

t2

‐10

0

10

t4t3

50

‐40

‐30

‐20

t1

‐60

‐50

0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 2,000 2,200 2,400 2,600 2,800 3,000 3,200

Total income

Player GPlayer FPlayer EPlayer D


Note: All figures are in INR mn and are based on the latest financials available

Player GPlayer FPlayer EPlayer D

Private: Domestic Company ‐ Player B (1/3)

Company Information Offices and Centres – India

Corporate Address

Tel No.

Fax No.


Website

Year of IncorporationMumbai Head Office

Key People


Category Products/Services

Air Freight and LogisticsN D i ti

g gName Designation


i i l S h K i


Financial Snapshot Key Ratios

Particulars y‐o‐y change (2011‐10)

2011 2010 2009 2008

Profitability RatiosOperating Margin 91.41 180.87% 89.46% 87.23% 88.08%

Total Income Net Profit/Loss

2938.5

2500

3000 10

INR mn INR mn

Net Margin 0.65 ‐1.28% ‐1.93% 0.13% ‐2.16%

Profit Before Tax Margin ‐0.39 0.11% 0.50% 0.48% ‐3.99%

Return on Equity 0.25 ‐5.69% ‐5.94% 0.97% ‐12.23%

Return on Capital Employed 248.97 443.85% 194.88% ‐436.01% ‐149.64%

Return on Working Capital 1.24 ‐5.80% ‐7.04% ‐1.35% 7.00%

Return on Assets 0.68 ‐1.97% ‐2.65% 0.38% ‐12.23%

2033.7

500

1000

1500

2000

2500

‐30

‐20

‐10

01936.7

1129.5

Return on Fixed Assets 1.42 ‐3.12% ‐4.54% 0.33% ‐5.21%

Cost RatiosOperating costs (% of Sales) ‐89.61 ‐82.09% 7.52% 12.61% 11.71%

Administration costs (% of Sales)

0.91 8.43% 7.52% 9.08% 7.46%

Interest costs (% of Sales) ‐0.42 1.78% 2.21% 1.26% 0.14%Financial Summary

0

500

‐40

30

20112009 20102008

Interest costs (% of Sales) % % % %

Liquidity RatiosCurrent Ratio ‐5.41% 1.91 2.02 0.82 0.60

Cash Ratio ‐48.80% 0.11 0.21 0.01 0.02

Leverage RatiosDebt to Equity Ratio 52.28% 1.89 1.24 1.48 0.00

b i l i

• The company incurred a net loss of INR xx mn in FY 2011, as compared to net loss of INR xx mn in FY 2010

• The company reported total income of INR xx mn in FY 2011, registering an increase of xx% over FY 2010

Debt to Capital Ratio 18.09% 0.65 0.55 0.60 0.00

Interest Coverage Ratio 143.76% 102.23 41.94 69.43 640.18

Efficiency RatiosFixed Asset Turnover 6.65% 2.43 2.28 2.64 2.40

Asset Turnover 15.06% 1.53 1.33 3.07 5.63

Current Asset Turnover 20.56% 2.15 1.78 2.31 2.19

• The company earned an operating margin of xx% in FY 2011, an increase of xx percentage points over FY 2010

• The company reported debt to equity ratio of xxin FY 2011, an increase of xx% over FY 2010


Working Capital Turnover 27.71% 4.51 3.53 ‐10.79 ‐3.23

Capital Employed Turnover 48.37% 4.42 2.98 7.73 5.63

Improved Decline


Business Highlights

Description News

Overview

Plans

FundsFunds


Strategic Recommendation (1/2)

An integrated cold chain infrastructure covering major production areas, processing units and distribution centers should include the following:

xx xx

With integrated cold chains and supply chain management, an amount of INR xx bn can be saved every year

by cutting xx% wastage of perishable horticulture produce, besides generating further export revenue of over INR xx bn


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Market Research Report :Cold chain market in India 2012

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