written by | October 11, 2021

How to Start a Cold Storage Business With a Good Plan

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Table of Content


Cold storage has become an indispensable business because of the increased demand for ready-to-eat vegetables and meals, especially in the case of working professionals. The cold storage business has always enjoyed good returns as they ensure the preservation of non-vegetarian as well as vegetarian products, drinks, milk, as well as milk products. The temperature at which these products are preserved helps extend the shelf life of such products. The cold storage business has proved to be extremely lucrative across the world. There are two types of categories of cold storage. The first is utilised only for single products, whereas the second is used for numerous assorted products. In the absence of cold storage, the rate of wastage is enormous. India produces almost 260 million metric tons of vegetables and fruits every year. India is the 2nd largest producer of vegetables and fruits and experiences a large amount of wastage because of a shortage of the proper infrastructure of cold storage. A cold storage business is highly rewarding and this article details all the essential guidelines for anyone interested in setting up this type of business.

Did you know?

The United States of America holds the record for having the second-largest cold storage business globally!

Also Read: 200+ Small Scale Business Ideas with Low Investment

The Inherent Features of a Cold Storage Business Plan

The primary considerations for starting are cold storage business include:

  1. Eligibility
  2. Finances
  3. Premises
  4. Licences and permissions
  5. Water supply and electricity
  6. Know-how of the equipment and maintenance
  7. Types of cold storage
  8. Location
  9. Promotion and marketing

Eligibility

  • A person must be at least 18 years of age, and the upper age limit extends up to 65 years.
  • The person must hold a very good credit score of at least 750 or above.
  • The person should have a good credit history to establish the person's creditworthiness.
  • The individual must not have any earlier records of non-payment of loans or credit taken.
  • The person’s business capability will be scrutinised by the said money lenders, whether banks or other financial entities.

Application Process of Loans for Starting a Cold Storage Business

Different banks will have their own set of applicable interest rates. These will be imposed in accordance with the person’s creditworthiness. Given below are the various guidelines to follow in order to obtain loans with the most reasonable interest rates:

  • At the onset, it is always wise to draw a parallel between the various business loans that are offered by the financial lenders.
  • Scrutinise the details of the various loans and select the ones which are most feasible and in accordance with your monetary requirements and business plans. Once you make a selection, you will have to furnish all relevant, personal details like your postal address, smartphone number, email id, anticipated business turnover, amongst others.
  • The details you furnish are verified by the financial lenders. The verification process is completed by the representative of the financial institute. After that, the representative will assist you with the formalities of the loan application.
  • Once the finance-lending is satisfied with the details provided by you, it sanctions the loan and the amount is transferred to the bank, as mentioned by you.
  • You can also apply for a subsidy. Nationalised banks offer loans upto 80% of the entire investment. If you rent the premises, the loan amount is extended to 90% of the total costs.

Process of Setting up Your Cold Storage Business

Licences

All necessary licences will have to be obtained by the individual. These will include government licences as well local authorisations.

Premises

The size of the premises depends on the size of the business you intend to set up. A small-scale business would require a lesser area. For a large-scale business setup, the minimum requirement is one acre. The ideal site for setting up your cold storage business would be proximity to farms known for producing large quantities of vegetables and products and even proximity to poultry farms.

Selection of the Right Equipment

The fluctuating temperatures across seasons necessitate the selection of equipment that can function flawlessly throughout the year.

 Things to consider for appropriate cold storage equipment:

  • The size of the cold storage unit is dependent on the size of the premises
  • The product load
  • The levels of efficiency as well as the age of the equipment
  • Insulation material and its thickness
  • Storage capacity
  • Temperature settings

Proper and Consistent Maintenance and Hygiene

  • Regular maintenance and servicing of the equipment
  • Proper cleaning of the storage units inside the unit like trays and containers
  • Ensuring there are no leakages or spillages
  • Ensure the interior of the cold storage unit is free of unwelcome odour

Marketing and Promotion

A well-laid-out marketing and brand promotion plan will help spread the word about cold storage. An awareness will have to be created amongst the wholesalers, traders, supermarkets, as well as the retail outlets across the neighbouring areas and vicinity. You can come up with special promotional schemes to attract long-term associations with the said target audience. This will assure you of a steady stream of income and also help to strengthen business relations.

Also Read: How to Start a Vegetable Business in India

Provision of Working Capital to Meet Everyday Expenses

You can expect various expenses in the form of initial breakages and transportation to collect the produce, among others. You should have a reasonable amount of funds to be able to bear these expenses.

Advantages of the Cold Storage Business

  • Helps to preserve perishable products
  • Non-vegetarian products like meat, fish, milk, milk-related products are vulnerable to extreme temperatures. These decay very fast if they are not stored in freezers set at appropriate temperatures.
  • Helps to protect the nutrient value of the products when they are frozen
  • Protects vegetables as well as fruits in a manner that they do not get frozen but are maintained well at a distinct cool temperature. The monsoons as well as the summers bring about numerous power outages and therefore the right equipment to sustain contingencies should be a priority.

Conclusion

The cold storage business in India has always been neglected. There is immense scope in this business as it benefits the farmers to preserve their range of products and helps to reduce wastage. A cold storage business loan is also known as an agricultural loan. The details of this article outline the requirements and the process of setting up such a business. This type of loan is made available to individuals, farmers, and even a group of two or more individuals who are keen to set up a cold storage business.

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FAQs

Q: Is it possible to store medical supplies in cold storage?

Ans:

Yes, it is possible. However, you will have to understand the temperature settings to ensure that the medicines do not get damaged.

Q: What would be the mini cold storage plant cost in India?

Ans:

Such a cold storage business plan would involve a minimum investment of at least ₹50 lakhs, but the amount varies in accordance with the size and scale of the business operations.

Q: What is the process of applying for a subsidy to set up a cold storage business?

Ans:

This can be done online. You will have to key in all the details on the Industrial Promotion Assistance (IPA) form and apply for a subsidy.

Q: Can a person obtain a subsidy to set up a cold storage business?

Ans:

The Board of National Horticulture provides this facility. You can always apply to this Board for a subsidy.

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The information, product and services provided on this website are provided on an “as is” and “as available” basis without any warranty or representation, express or implied. Khatabook Blogs are meant purely for educational discussion of financial products and services. Khatabook does not make a guarantee that the service will meet your requirements, or that it will be uninterrupted, timely and secure, and that errors, if any, will be corrected. The material and information contained herein is for general information purposes only. Consult a professional before relying on the information to make any legal, financial or business decisions. Use this information strictly at your own risk. Khatabook will not be liable for any false, inaccurate or incomplete information present on the website. Although every effort is made to ensure that the information contained in this website is updated, relevant and accurate, Khatabook makes no guarantees about the completeness, reliability, accuracy, suitability or availability with respect to the website or the information, product, services or related graphics contained on the website for any purpose. Khatabook will not be liable for the website being temporarily unavailable, due to any technical issues or otherwise, beyond its control and for any loss or damage suffered as a result of the use of or access to, or inability to use or access to this website whatsoever.
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Disclaimer :
The information, product and services provided on this website are provided on an “as is” and “as available” basis without any warranty or representation, express or implied. Khatabook Blogs are meant purely for educational discussion of financial products and services. Khatabook does not make a guarantee that the service will meet your requirements, or that it will be uninterrupted, timely and secure, and that errors, if any, will be corrected. The material and information contained herein is for general information purposes only. Consult a professional before relying on the information to make any legal, financial or business decisions. Use this information strictly at your own risk. Khatabook will not be liable for any false, inaccurate or incomplete information present on the website. Although every effort is made to ensure that the information contained in this website is updated, relevant and accurate, Khatabook makes no guarantees about the completeness, reliability, accuracy, suitability or availability with respect to the website or the information, product, services or related graphics contained on the website for any purpose. Khatabook will not be liable for the website being temporarily unavailable, due to any technical issues or otherwise, beyond its control and for any loss or damage suffered as a result of the use of or access to, or inability to use or access to this website whatsoever.