INTEGRATED COLD STORAGE CUM MARKETING FACILITY AT NAGPUR, India

INTEGRATED COLD STORAGE CUM MARKETINGFACILITY AT NAGPUR

VJTI, Mumbai- Project Management

PROJECT submitted for the fulfilment of M.Tech (Proj. Mgmt ) under the mentorship of Prof.Mr. BALAJIRAMADURAI, ([email protected]), VJTI, Mumbai and Prof. Narkhede ([email protected])

Trishala Zende

[email protected]+91-9029207571

Vivek Lanjewar


Amol Dhoble


Harshal Zade


Ruturaj Bhaskare


Dec 3, 2015

mailto:[email protected]

mailto:[email protected]

PROJECT SCOPE


To construct 5000 MT single commodity coldstorage plant at Nagpur.

To establish marketing and trading division.

To assure a Fixed Remunerative Price for theproduce to the farmers every year.

To actively engaged in marketing of NagpurMandarin at global level and promoting export.

To facilitate setting up of small scale Orangeprocessing industries in the Nagpur.

To work in close collaboration with NRCC forResearch and Development of Mandarin Oranges.

Dec 3, 2015

An Introduction - Why Orange?


India is a second largest producer offruits and vegetables in the world.

Orange is one of such fruit which isproduced in India at significant scale.

Currently India ranked fourth in terms oftotal orange production besides Brazil,China and Indonesia (source: IFTO report)the latest production being 34.31 LakhTonnes.(source: NHB, Report 2014-15)

Dec 3, 2015


India is a secondlargest producer of

fruits andvegetables in the

world.

Orange is a fruit whichis produced in India at a

significant scale.

India ranks fourth afterBrazil, China & Indonesiain Orange production – in2014- 34.31 Lakh Tonnes

(source: NHB, Report 2014-15) & source: IFTO report)

LEADING ORANGE PRODUCING STATES IN INDIA

Maharashtra has 1.35 lakh hectares of orangecultivation in 2013-14 while the production hit7.425 million tonnes of production which hasincreased from 4.43MT of 2011-12.

The productivity in this region is particularly lowas compared to other states. It is 5.5 MT/Ha asagainst 21.6 and 17 for Punjab and MadhyaPradesh.

Dec 3, 2015

An Idea to Change Lives


Orange (Mandarin) occupies thesecond position among allfruits cultivated inMaharashtra which has 1.38 lakhhectares area under orangecultivation with production of8.26 lakh metric tons with theproductivity of 6 MT/ha.

(National Horticultural Database, 2010).

The major orange producing belt in Maharashtra is Vidharbharegion comprising following districts Amravati, Nagpur,Akola, Wardha and Yavatmal, Buldhana and Washim.

Five lakh tons of orange is cultivated in Vidarbha regionin near about 80,000 hectares area. Most lives depend onOrange cultivation, in this region. Hence failure affectslarge number of farmers in this region.

Dec 3, 2015

Crop Rotation

Cold Storage

Refine Supply Chain

•In addition to Mandarin oranges the soil &environment is also suitable for cultivationof sweet lime (“mosambi” in local lingo).Hence, Mosambi can be safely recommended as aneffective “rotation crop” to mitigate farmerdistress

•Install Cold storage facilities to ensureyear-round utilization to normalize supply &price conditions. Naturally staggered seasonalpattern and requirement of similar Coldstorage conditions, help in this effort.

•Re-orient the supply chain to ensurefair, proper, year-round returns tothe farmers

Threemeasures, tomake adifference infarmer’slives


TYPICAL SCENARIO AT NAGPUR

Dec 3, 2015

Orange Farmers in Distress – News Articles


News Item from local newspapers say -“Fall in Prices – Oranges Selling free of cost” Dec 3, 2015


Orange Farmers in Distress – News Articles

Dec 3, 2015

Month Orange Sweet lime

Jan 4,391 2,590

Feb 4,930 4,738

March 5,722 8,250

April 104 10,020

May 0 5,090

June 0 1,410

July 0 1,860

August 0 5,290

September 952 13,120

October 4,470 14,910

November 7,430 9,630

December 10,325 6,960

Average 3,194 7,056

MONTHLY PRODUCTION OF ORANGES AND SWEET LIME INNAGPUR REGION

Source: national horticulturedatabase, 2015 VJTI, Mumbai- Project Management

Dec 3, 2015

43914930

5722

104 0 0 0 0 952

4470

7430

10325

2590

4738

8250

10020

5090

1410 1860

5290

1392014910

9630

6960

0

2000

4000

6000

8000

10000

12000

14000

16000

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Orange Sweet Lime

AVERAGE PRODUCTION OF ORANGE AND SWEET LIME(MOSAMBI) FOR THE YEAR 2014


Source: national horticulturedatabase, 2015

HARVESTING SEASONS OF ORANGES AND SWEET LIME IN CROP ROTATION

Peak

Medium

Low

Dec 3, 2015

2322

2095

2818

3938

0 0 0 0

19301763

1574

1313

1709

1234 1250

1980

23812524

2190

17841919

2134

18511737

0

500

1000

1500

2000

2500

3000

3500

4000

4500

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Mosambi

Orange

PRICE VARIATION OF ORANGES & MOSAMBI


Dec 3, 2015


Demographic advantage

Nagpur is the Divisional HQ ofthe Central Railway and South EastCentral Railway of Indian Railways

Nagpur is located theoretically inthe geographic centre of India.Two major National roadwaysintersect in this city :

North-South NH7 connectingVaranasi - Kanyakumari and

West to East NH6 connectingHajira-Kolkata

This provides excellent National

connectivity.

In addition, National highway NH-26B connecting Savner-Chhindwara-Narsinghpur in turn connectedwith NH 69 at Savner near Nagpur,provides another optionalconnectivity to Northern part ofIndia.

Nagpur is the largest city incentral India and the thirdlargest in Maharashtra in termsof population as per the 2011census.

Nagpur has Dr. BabasahebAmbedkar International Airportand a Multi-modal InternationalCargo Hub and Airport (MIHAN).

Dec 3, 2015

VJTI, Mumbai- Project Management Dec 3, 2015


CURRENT SUPPLY CHAIN PROPOSED SUPPLY CHAIN

• What we aim in our proposed structure isreducing the number of links in the SupplyChain, alongwith introduction of “ColdStorage”. Mini “Cold storages” can beintroduced in a mature “hub” model in thenext iteration.

• Additional cost benefits can accrue onaccount of year long transportation andconsolidation.

Note:• This is an approximation. There could be

more links in the current Supply Chain,increasing price at each stage.

Dec 3, 2015


27%

4%

8%

12%10%

27%

12%

PRICE BREAKDOWN FOR DIFFERENTSTAKEHOLDERS NOW

FARMER PHC TRADER/WHOLESALER

RETAILER COMMISSION AGENT WASTAGE

OTHER COST

Dec 3, 2015

INTEGRATED COLD STORAGE CUMTRADING FACILITY

PRE FEASIBILITYSTUDY

FEASIBILITYSTUDY

SELECTION OF SITE/LOCATION

PROPOSED PLAN

FINANCIAL VIABILITYREPORT

ECONOMIC VIABILITYREPORT

PROJECT RISKANALYSIS

SWOT ANALYSIS

CONSTRUCTION OF COLDSTORAGE FACILITY

PURCHASE OFLAND

STATUTORYCLEARANCE

INTEGRATEDPACK HOUSE

PRE COOLINGUNIT

CA GENERATOR

SPECIALISED CADOOR

CA TENT

WDRA-NWR EQUIPMENT

SPECIALISED PACKAGING

CONSTRUCTION OFBACK OFFICE

DESIGNLAYOUT

AWARDCONTRACTS

SUPPORTING SYSTEM

TRADINGDIVISON

DATA ANALYSIS

COMMODITYPRICING

MARKETINGDIVISION

DEMAND ANDFORCASTING

MARKETINGFACILITY

CUSTOMERINTERFACE

WORK BREAKDOWN STRUCTURE


Dec 3, 2015

GANTT CHART FOR THE PROJECT

1/1/16 4/10/16 7/19/16 10/27/16 2/4/17 5/15/17 8/23/17 12/1/17

PRE FEASIBILITY STUDY

PURCHASE OF LAND

STATUTORY CLEARANCE

DESIGNS OF LAYOUT

CONSTRUCTIO OF BUILDINGS

INTEGRATED PACK HOUSE

PRE COOLING UNIT

CA GENERATOR

SPECIALISIED CA DOOR

CA TENT

WDRA-NWR EQUPMENT

SPESIALISED PACAGING UNIT


Dec 3, 2015

Particulars Qty.

Super freeze refrigeration compressor 1

100 HP screen protected Induction Motor 1Hand operated oil immersed starter 1Ammonia Oil Separator 1Atmospheric Type Ammonia Condenser 12

Ammonia Air Cooling units 16Valves & fittings for Condenser 1Ammonia Receiver 1Valves & fittings for Receiver 1Instrument with Dry & Wet Thermometers 6

5HP Monoblock centrifugal pump 2Ammonia valves & fittings 1Insulated cold storage door & fittings 4Slide rail for compressor 2Ammonia interconnecting pipe 1Water pipelines & fittings 1Material Handling equipments (Forklifts, High lifts,

Stackers, Towing tractor, etc)2


Plant & Machinery Requirements

Dec 3, 2015

COLD STORAGE PROJECTCOMPONENTS


1. Land Requirement 3 Acre

2. Storage Space 1500 Cum.

3. Technology preferred Gravitycirculation/ Bunker type/fin.coil

4. Cold storage room height 12.2to 18.5 m

5. Electrical Load 125 kw

Desired storage environment oforange and sweet lime

Temp : Orange 0 to 10

°Relative Humidity %: 85 - 90

BROAD TECHNICAL PARAMETERS FOR A

TYPICAL 5000 M.T COLD STORAGE

ASSUMPTIONS FOR WORKING OUT

ECONOMICS OF A MULTI CHAMBER COLD

STORAGE

1. Life of machinery and equipment isassumed as 7 years

2. depreciation assumed @ 10% andthat of civil works @ 5% (assuming alife of 20 years for Civil)

3. For simplification purposemaintenance and repairs, insuranceand expenses on fuel, water,lubricants etc are assumed on perM.T. basis

4. Labor changes for loading unloadingof goods in the cold store may beassume as Rs15/M.T

5. Installation assumed to happen inone year

6. Assume Capacity utilization in the 1styear as 80%

Dec 3, 2015

TOTAL CAPITAL INVESTMENTSUMMARY


Sr. No. Particulars Value (In Lakhs)

1 Fixed Capital 1,164.5

2 Working Capital (3 times ofWC/ month)

671.53

Total Cost 3,179

MEANS OF FINANCE

EQUITY Value (in Lakhs)

Promoter's contribution 250

Subsidy (NHB 35%) 1,112

Unsecured loan 228

TERM LOAN

Bank/FI 1,590

Total Project Cost 800Dec 3, 2015

Utilities per month and Year


Sr No Description Units Bill(Rs/month)

Value

1 Power (125KW @3.6)

34,000 1,22,400 14,68,800

2 Water 2,500 30,000

Total Utilities 1,24,900 14,98,800

Other Expenses per month and year

SrNo

Description Expenses(Rs/month)

Value(Rs/Year)

1 Insurance Charges on stored product 40,000 4,80,000

2 Stationary and communication 1,500 18,000

3 Conveyance and Transport 5,000 60,000

4 Advertisement and Publicty 2,500 30,000

5 Other Unforeseen expenses 1,000 1,200

Total- other expenses 35,000 5,89,200

Dec 3, 2015

Additional Info

FIXED REMUNERATIVE PRICE (FRP) MODEL

The fluctuations in Orange prices is one of the main reasonfor orange grower farmer distress, as they often are atreceiving end.

We have tried to develop a FRP model for compensation oforanges and sweet lime for farmers.

The Marketing and Trading Unit will work out FRP for eachyear considering the prevalent production cost of oranges.

The price will be announced prior to the harvesting season.

Pre-harvest contractee will be additionally providedinsurance cover for their harvest.

FRP will be given only on high quality 1ST grade oranges.

The lower grade oranges if required will be purchased atprevalent market prices, duly considering profit margin


FRP ESTIMATION PRICE FORYEARAverage Production cost

Sr. No. Production Per Acre 4-5 Tonne

1 Production cost per tonne 10,080

1 Market Price Per Tonne(High Grade Orange)

4,500-10,000

2 Profit Margin per Tonne 3,000

3 FRP for first year 13,080


Sr. No. Particulars Cost

1 Marking and Layout 900

2 Cultivation 1,500

3 Labour (plantation) 2,000

4 Irrigation 30,000

5 Cleaning 6,000

6 Insecticides 9,000

7 Grading 1,000

Total (cost) 50,400

Source- Kalmana market, Nagpur; report in leading newspapers

Dec 3, 2015

Raw Material Cost per Month andYear


Sr. No MonthlyIntake(80%capacity)

FRP @ Rsper MT

Cost perMonth(InLakhs)

YearlyCost(Inlakhs)

1 3,500 MT 13,080 457.8 5,493.8

2 500 MT 9,500 47.5 570

Total 505.3 6,063.8

Dec 3, 2015

Profit Analysis Revenue per year – total cost of servicing per annum

= 1,06,20,00,000-8,21,80,000 = Rs. 24,02,00,000

Depreciation cost – 25.13

Tax on Profit@ 30% = Rs. 720.6 lakhs

Net Profit = Rs. 1680.4 lakhs

% Profit on sale = 1680.4/10620=15.80%

% ROI = 1680.4/ 3179.2 = 52.82%


PROJECTED CASH FLOW STATEMENT

Sr. No 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR

Revenue 10,620 11,682 12,850.2 14,135 15,548

Cost of Servicingper annum

8,218 8,875.44 9,585.47 10,352.3 11,180.48

Depreciation 25.13 25.13 25.13 25.13 25.13

EBT 2,376 2,961.43 3,239.6 3,757.57 4,387.52

EAT @30% 1,663.81 2,073 2,267.72 2,630.3 3,057.26

CASH INFLOW 1,688.94 2,098 2,292.85 2,655.43 3,082.39

CCI 1,688.94 3,786.94 6,079.85 8,735.22 11,817.61

DCF @ 10% 0.909 0.826 0.751 0.683 0.621

DCF@10% 1,535.24 1,726.95 1,703.05 1,796.5 1,914.16

CDCI@ 10% 1,535.24 3,262.19 4,965.24 6,761.74 8,675.90

DCF @ 45% 0.689 0.475 0.328 0.226 0.156


NPV = 8675.898 – 3179= 5496.898 LakhsPI = 11817.608/3179 = 3.71Simple Payback Period 1.71 years

Figures are in lakhs

Dec 3, 2015

Project risk analysis(What-if analysis)

CASE 1: Considering Supply exceeding demand

In general the production of citrus per acre of land is60,000 to 70,000 per year, in excess production period.

In the period of winter season the orange productionreaches its peak. In this approach if demand is lesserthan the supplied quantity due to excessive amount ofproduction the cost of citrus fruit will decrease atcertain extent which will lead to fluctuation in marketprices of other mandarins also.

This excess amount of mandarin have to be stored forcertain period of time in cold storage plant until theyget into market.

The cold storage will increase the storage time of fruitinside the plant for extra two months. These inventoryoranges will be taken out for selling in period of lesserproduction i.e july to august.

.VJTI, Mumbai- Project Management

Dec 3, 2015

The excess of orange can be used tomake several consumable productssuch as orange bars, certain localproducts this will be done by thelocal labourers. It will be asource of income to them andgenerate employment. This can bedone in period from June toJanuary.

Even if fruit demand in market isless but those can be supplied tothe juice industries which requiresthese fruits throughout the year.The juice industry such as NOGA,Tropicana, Real, which will requirethe pulp And also to the cosmeticsindustry.

Main storage is the daily supplyfor the plant, which will go outfor selling it at the market nowthe excess of oranges will be keptin cold storage as inventorystorage.


Main Storage

Inventorystorage

Fulfilmentof currentdemand

Dec 3, 2015

CASE 2: Considering the demand exceeds supply

SPOKE AND HUB (MITIGATION PLAN)

The oranges will be bought from the nearby states, as Nagpur iscentralised place for all the cities and states such as Madhya Pradeshand Karnataka.


Nagpur

betul

chindwara

Ujjain

MandsaurRatlam

Chikmaglore

Bijapur

In this period itself theinventory storage oforanges will come forselling in market. So thestock of stored orangeswill go down.

In extreme case scenario,the last resort will be toclose down some sections ofCold storage system.

In this case the marketdemand may not getfulfilled will responsiblefor less supply to thecitrus industry.

Dec 3, 2015

Inter cropping


Conclusion

Mandarin oranges grow well in a frost free, tropical to sub-tropicalregion, 1500 meters above sea level. The ideal annual rainfall forsuccessfully growing mandarin oranges is 100-120 cms and atemperature between 10-35 degrees Celsius. Mandarin oranges growbest in medium or light loamy soils with slightly heavy sub-soil.

By the availability of such plant the storage problem will be solvedat large extent.

Plant and storage cost of cold storage required for citrusindustries will be saved. Cost of Inventory will be saved.

Since cost of inventory is reduced they will be able to buy it athigher cost. This cost could be transferred to farmers as they willget the benefit of commodity. Same facilities can be used by othermarkets such as vegetable and other fruits.

Manpower has to be recruited as per industry norms so the benefit ofCTC.

For orange and fruit market 16.38 Acres available. Storage capacityis of godown at Mkt Yard 1000 MT


References:

Data base of existing Kalamna Market at Nagpur.

Paper published by National Centre for Cold-chain Development(NCCD).

Modern cold storage (KSIDC).

Indian Horticulture Database 2014.

International Journal of Emerging Research in Management&Technology ISSN: 2278-9359 (Volume-2, Issue-3)

Kaur A., Sethi K. and Karan S.K. (2006). Marketing pattern ofgreen peas in Punjab. Indian Journal of AgriculturalMarketing. 20(2): 118-123

Websites:

www.nhb.gov.in

www.wikipedia.com.


http://www.nhb.gov.in/

http://www.wikipedia.com/


THANKYOU

In case of extra queries orbreak-ups , you maycontact the student authors/ mentors in the contactdetails provided

Dec 3, 2015

Engineering

INTEGRATED COLD STORAGE CUM MARKETING FACILITY AT NAGPUR, India