CASE STUDY:Winter season only made when

cold weather catamenize

Submitted to: Submitted By:

Dr. Himani Sharma Mehul Srivastava

Dept. Marketing & sales A0102209211

MBA-M&S (2009-11)

Abstract

Cold storage is the technology which is used to preserve food products over the longer duration of time and keep them fresh and healthy, with out losing its key contents.

Frick India Ltd. one of the leading refrigeration solution organizations works on the turnkey projects all over the world. Frick India always focuses on the big giants like BHEL, NTPC, Mother Diary, Vadillal etc. But they have been less focused towards the Small Business Units (SBU) and Moderate Business Units.

Market trend shows that people (cold storage owners) are aware about the organizations but they been looking or using technologies of some other brands.

Key Words

Technological Advancements, Customer Psychology, Small Business Units, Cold Storage Owners, Market Awareness and Switching.

CASE: Winter season only made when cold weather

catamenize Cold storages are meant to preserve the perishable commodities of food items for a longer period with retention of the original color, flavor and taste. However, each commodity or item has certain life and they cannot be stored even in a cold storage for indefinite period. Storage beyond certain period may not be economical as well since payment of rent of cold storage increases the cost of the item. Hence, cold storages are used for high value items or when prices crash down due to bumper crop or for such items which are grown during the season but there is a demand round the year or for products like meat, fish or milk products which are quickly perishable.

Cold Storage is a special kind of room, the temperature of, which is kept very low with the help of machines and precision instruments. India is having a unique geographical position and a wide range of soil thus producing variety of fruits and vegetables like apples, grapes, oranges, potatoes, chilies, ginger etc. marine products are also being produced in large quantities due to large coastal areas. The present production level of fruits and vegetables is more than 100 million MT and keeping in view the growth rate of population and demand, the production of perishable commodities is increasing every year. The cold storage facilities are the prime infrastructural component for such perishable commodities. Besides the role of stabilizing market prices and evenly distributing both the demand basis and

time basis, the cold storage industry renders other advantages and benefits to both the farmers and the consumers. The farmers get opportunity of producing cash crops to get remunerative prices. The consumers get the supply of perishable commodities with lower fluctuation of prices. Commercially apples, potatoes, oranges are stored on large scale in the cold storages. Other important costly raw materials like dry fruits, chemicals essences and processed foods like fruit juice/ pulp, concentrate dairy products, frozen meat, fish and eggs are being stored in cold storage to regulate marketing channels of these products.

Cold storages are being used for preservation of many food products since long. Their location has to be strategic and they should have easy access. Cold storages have demand all over the country. This note primarily looks into the prospects in Assam. Assam grows many varieties of fruits and vegetables. Consumption of meat, fish, chicken etc. is also on the higher side. Hence, a cold storage unit seems to have good scope.

India is the largest producer of fruits and second largest producer of vegetables in the world. In spite of that per capita availability of fruits and vegetables is quite low because of post harvest looses which account for about 23% to 30% of production. Besides, quality of a sizeable quantity of produce also deteriorates by the time it reaches the consumer. This is mainly because of perishable nature of the produce which requires a cold chain arrangement to maintain the quality and extend the shelf life if consumption is not meant immediately after the harvest. In the absence of the cold storage and related cold chain facilities, the farmers are being forced to sell their produce immediately after harvest which results in glut situations and low price realization.

Commodity Units Capacity (lakh tonnes)

Potato 2,012 92.82

Multipurpose 447 7.63

Fruits & Vegetables 198 1.07

Meat 23 0.09

Fish 360 0.73

Meat & Fish 30 0.15

Milk & Dairy Products

272 0.68

Others 101 0.36

Table: 1 Commodity wise distribution

STATISTICS AND INFORMATION ABOUT AGRICULTURAL MARKET

IN INDIA

India, with the second largest arable land in the world and diverse agro climatic zones across the country, has tremendous production advantages in agriculture, with the potential to cultivate a vast range of agricultural products. India has strong base in agriculture and provides a large and varied raw material base for food processing. We are the second largest producer in the world.

We produce over

91 million tones of milk (highest in the world).

150 million tones of fruits & vegetables (second largest).

212 million tones of food grain (second largest).

485 million livestock (largest) and are significant producers of eggs, poultry and fish.

However, processing levels are low. Conservative estimates put processing levels in the

Fruit & Vegetables sector at 2%

Poultry 6%

Milk 35% (only 13% in modern dairies)

Marine products 8%

Buffalo meat 21%

Processing in the areas of food grains, oilseed, tea, coffee, etc., where raw produce has perforce to be processed have the requisite levels of primary processing. Even in these products the demands of modern food processing sector are still emerging.

Employing over 120 lakh persons, the food processing sector though in a nascent stage constitutes 13% of manufacturing GDP.

Gross consumption of food in India is Rs.8, 60,000 crores. Of this the market size of primary processed food is Rs. 2, 80,000 crores whereas value added food amounts to Rs 1, 80,000 crores. Food processing has grown at a rate of 7.1% per annum during the period 1993-94 to 2004-05. The higher rate of growth as compared to the Agriculture growth rate and the GDP growth rate is indicative of the increased availability of surpluses, changing life styles, tastes and higher disposable income with consumers. Within the food basket the growth rate for fruits and vegetables, milk, meat and poultry products and convenience

snacks food have been higher than for staples like sugar, pulse and grains.

And as a consumer, India with a population of 1.08 billion growing at about 1.7% per annum is a large and growing market for food products. Food is the largest component of private consumer expenditure, accounting for as much as 49% of the total. Further, the upward mobility of income classes and increasing need for convenience and hygiene will drive demand for perishable, non food staples and processed foods.

Frick India Ltd. was incorporated as a public limited company in 1962 in collaboration with Frick Company USA, one of the world's oldest and largest manufacturers of industrial refrigeration & air-conditioning equipment. Frick India is now independent and has diversified and developed into one of the front-ranking companies and its equipment is rated amongst the world's best.

Frick India has the unmatched advantage of providing a single source responsibility for turnkey refrigeration and air-conditioning systems covering design, manufacture, packaging, installation and service to standard specifications as well as custom-built to meet customers' special requirements. With collaboration and technologies from U.K., Japan, U.S.A. and Europe Frick India can also provide on line Total Energy Management System (TEMS) for almost all Industrial Refrigeration Applications. The company is presently manufacturing a lot of equipment like various types of Compressors, Condensers, Air handling units, Liquid re-circulation pump, Ice-making equipment, Plate & blast freezers, Packages chillers & A/C's.

Its manufacturing facilities are located at Faridabad (Haryana), an industrial township in the periphery of the national capital & are spread over a 25 acre multi-block complex the performance

of the Company during the current year and various other financials have already been covered in the Directors' Report. The year 2008-09 was significant for the Company for achieving the highest ever turnover in the history of the Company. The profitability of the company has also increased substantially.

Internal control systems and the adequacy

Internal control systems have been a core focus for the Company. Effective/ adequate internal control systems are in place to ensure that all assets are safeguarded and protected against unauthorized use and the transactions are authorized, recorded and reported correctly. Such controls, which are subjected to periodical review, also ensure efficiency of operations, accuracy and promptness of financial reporting and compliance with all applicable laws and regulations.

A regular Internal Audit System is also in place. Outside expertise is availed to supplement internal resources. The Internal Audit Report along with management comments thereon is reviewed by the Audit Sub-Committee of the Board comprising of independent Directors, which also monitors implementation of the suggestions. The Audit Sub-Committee regularly interacts with the Statutory Auditors about the adequacy of internal control systems and to seek suggestions.

Material Developments in human resources/ industrial relation front

The underlying rule of Company's policy towards human resource development is that competent and motivated manpower is the most important factor in achieving business goals. The policies in this regard are evolved and pursued to achieve this objective. Industrial relations remained cordial at all locations during the year.

Emerging Issues

Nearly 72% of the end users i.e. Cold Storage Owners they

want to switch from conventional Techniques to Modern

techniques. And they consider only those refrigeration

companies whose market acceptability is more, where as

Market Acceptability of Frick India is 26%.

Small business unit and Moderate business unit, where

First in First out System is in practice, where there is a

requirement of high cooling refrigeration irrespective to the

fact of advancement.

Market share of blue star is 35% and this is because of their

technological edge over other cold storage companies like

Kirloskar, ICL, Frick India, Voltas etc.

Frick India has fine grip in the market as they deal with the

leading MNC’s like L&T, VADILLAL, MOTHERDIARY,

BHEL, NTPC, ADITYA BIRLA GROUP AND MANY OTHERS.

Still their presence among the Small Business Units is quiet

less.

It has been seen that despite of Frick India’s market

presence it lacks in marketing itself among the small

business units, as they are less favorable in terms of

purchasing equipments they manufacturer.

Competitive Analysis (Market Survey)

Fig: 1 Companies Preferences for Refrigeration solutions

Market acceptability and Technological advancements

KIRLOSKAR22%

FRICK INDIA LTD26%ICL

19%

BLUE STAR33%

Fig 2: Market acceptability and technological Advancemnts

Services

Technology

Design

Services

Technology

Design

Services

Technology

Design

0

10

20

30

40

50

60

70

80

90

100

Comparison among the Best Companies having same products

Services Technology Design

Design 47 25 34

Technology 31 31 45

Services 22 44 21

FRICK INDIA LTD. KIRLOSKAR BLUE STAR

Fig 3: Comparison among the Best Companies having same product

The market analysis clearly gives the insight of the market preferences and its market acceptability and technological advancements of the different organizations.

Blue Star in term of its preferences among the cold storage owners i.e. 39%, market acceptability and technological advancements i.e. 33% of the respondents believe that it has an edge over its competitors because of such factors.

Most of the respondents believe that Frick India Ltd. is well known among 73% of the respondents but they also believe that Frick India is less focused towards the SBU’s & MBU’s. Frick India’s market acceptability

And technological advancements places them in the second position among their competitors.

As a result of the market survey it can be suggested:

FRICK INDIA is a well known brand in the market still they

need to focus on the SBU’s & MBU’s, so for that purpose they

need look up for various alternatives to promote themselves

bit more through various advertisements like contacting Cold

Storage Carriers to promote Frick.

Need to get in to contact with the small scale industries as

79% of the cold storage owners are aware about the Frick

India’s existence but not they are not availing their product

and services and deploy their market their also, so that they

come in to existence at small scale also.

Main focus should be on marketing their product more

among the cold storage owners. As currently Blue Star is the

current leader with market share of 35% and had wide

acceptance among the users nearly 33% of the respondents.

The current scenario depicts that most of the end customers prefer to go for modern technology over the conventional one, and up gradation is the most essential part for any industry to retain its market. Competition is fierce today so every organization is willing to upgrade itself both mentally and technically, in order to have an upper edge over its competitors. Competition is one of the factors which cause any organization to work upon to stay in the market like Pricing and Quality which is the topmost priority of any customer. Customers demand good quality product at negotiable price.

Customer’s i.e. cold storage users they mainly focus on Service Output demand (SOP) i.e. value added services. Excellent Technology, Design and Services can give any org. upper edge towards leading or capturing the market completely. Technological advancements are necessary and these changes attract customers to buy the product. Frick India Ltd is the second most accepted brand after BLUESTAR.

Frick India Ltd is a well known brand among the cold storage owner. But they need to make their presence felt in the market as Frick India only focuses on Big giants like L&T, BHEL,NTPC, BEL, VADILLAL, MOTHER DIARY etc. as they are less focused on SBU’s.

QUESTIONS

QUES1. What are the key factors that make an organization to have an upper edge over its competitors?

QUES2. Why Frick India Ltd lags behind its competitors?

QUES3. Give suggestions to Frick India Ltd. to place its product and create its market presence among the lower units?

QUES4. Does technological advancements is necessary to retain market presence?