How to Expand or Start a Cold Storage Business?

Cold storage is a facility where business owners in the food and beverage industry preserve fruits and vegetables for a long duration. Cold storage is a one-time investment option requiring a substantial initial investment. However, the returns are high, and it has good growth potential over time. Apart from fruits and vegetables, food items like tobacco, beer, meat, poultry, fish products, etc, also need cold storage.

If you plan to establish a cold storage business in India, you can arrange the initial capital with a Business Loan. Here is a guide to starting and growing a cold storage facility in India.

Why are Cold Storage Businesses Required?

Food wastage is a major global issue. Since India is primarily an agriculture-based economy, food wastage becomes more prevalent. That is why cold storage is necessary to extend the products' shelf lives, maintain their quality after harvesting, and provide fresh food products year-round. 

A cold storage business minimises perishable waste and preserves produce. Therefore, cold storage is crucial to address food waste and enhance profitability. It helps extend the product's shelf life, avoid gluten, and reduce marketing and transportation time during high production periods without compromising the food quality.

Apart from these, cold storage also offers financial benefits to farmers, making their products more accessible to consumers in fresh states at competitive rates. As the demand for packaged foods increases, the need for cold storage facilities has grown globally.

Benefits of Cold Storage Business

Starting a cold storage business in India offers multiple benefits, including the following: 

• Minimises food waste
• Provides a decent remuneration to farmers
• Stores vaccines and medicines
• Makes off-season produce available at reasonable rates
• Makes packaged and processed foods accessible to customers in fresh condition

Also Read: How to Start a Business from Scratch in Simple Steps

Types of Cold Storages

Cold storages vary by design and purpose, each tailored to specific temperature needs for optimal storage of perishable goods, from chilled storage to controlled atmosphere rooms.

1. Chilled Storage Rooms

Chilled storage rooms maintain temperatures between 0°C and 5°C, ideal for storing perishable items like fruits, vegetables, dairy products, and beverages. They preserve freshness and extend the shelf life of these products.

2. Freezer Rooms

Freezer rooms operate at temperatures between -18°C and -25°C, used for storing frozen foods such as meat, seafood, and frozen vegetables. They prevent spoilage by keeping items in a frozen state.

3. Blast Freezers

Blast freezers rapidly reduce the temperature of food products to -30°C or lower, quickly freezing items to preserve texture, flavor, and nutritional value. Commonly used in the food processing industry.

4. Modular Cold Rooms

Modular cold rooms are flexible, customizable storage solutions that can be assembled to fit various sizes and specifications. They can maintain temperatures from -5°C to 5°C, suitable for diverse storage needs.

5. Controlled Atmosphere (CA) Rooms

Controlled Atmosphere rooms regulate temperature, oxygen, carbon dioxide, and nitrogen levels to extend the storage life of fruits and vegetables. Typically, they maintain temperatures around 0°C to 2°C.

Investment Cost of Cold Storage

Investing in a cold storage facility involves significant upfront costs, covering land acquisition, construction, refrigeration systems, and more. Here’s a breakdown of estimated expenses-

Component	Approximate Cost (INR)
Land Acquisition	10,00,000 - 15,00,000
Construction Cost	20,00,000 - 25,00,000
Refrigeration System	8,00,000 - 10,00,000
Insulation Material	3,00,000 - 4,00,000
Electrical Equipment	2,00,000 - 3,00,000
Labor and Installation	3,00,000 - 4,00,000
Licensing and Permits	1,00,000 - 1,50,000
Miscellaneous Costs	3,00,000 - 4,00,000
Total Cost	50,00,000 - 60,00,000

Also Read: How To Start A Startup In India In 5 Steps

Benefits of Cold Storage Business

Starting a cold storage business in India offers multiple benefits, including the following: 

• Minimises food waste
• Provides a decent remuneration to farmers
• Stores vaccines and medicines
• Makes off-season produce available at reasonable rates
• Makes packaged and processed foods accessible to customers in fresh condition

How To Start Cold Storage Business In India

Do you want to know how to start a cold storage business? Here is a stepwise guide you can follow:

Finalising Location

The first thing you must decide when starting a cold storage business is the location. As a general rule of thumb, you must choose a rural or urban location near your customer base, such as markets, malls, and other shopping areas where you need to deliver the products. It minimises your transportation costs and food wastage on the way.

Selection of Equipment

Machinery and insulating panels consume most of the cold storage cost. Motors, chillers, and evaporative condensers make up a cold storage unit. The walls of cold storage rooms are made of polyurethane insulation panels. An ideal cold storage unit requires the following:

Humidity Level	90%
Size	14 x 10 x 10 ft.
Unit Capacity	10 MT
Refrigeration Power	30000 Btu/hour
Initial Temperature	28-35o C
Outer Temperature	43o C

Also Read: How to Start Your Own Trading Business in India

Cleaning and Maintenance

Since cold storage units store food products, you need to maintain optimum hygienic conditions in them. That is why regular cleaning and maintenance of the equipment are extremely important. You must regularly check the machinery's temperatures, humidity levels, containers, trays, and bins that need time and money.

Promotion and Target Audience

The success of a cold storage business largely depends on your marketing strategy and its effective implementation. At various stages of the business, you must promote efficiently to your target audience, including traders, wholesalers, promoters, retailers, warehouse owners, supermarkets, etc. You may also promote your business to distributors and exporters to increase the demand.

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Arranging Funds

Since a cold storage investment plan requires significant capital, you must arrange the required funds from a Business Loan rather than exhausting your savings. The cost requirement largely depends on the facility’s size, number of chambers or rooms, types of products to store, etc. A Business Loan can provide the required capital to cover various expenses when planning to start or grow the cold storage business. Compare the different loan offers available in the market and finalise one that best suits your cold storage cost requirements.

How Business Loans Can Help You to Expand or Start a Cold Storage Business

A Business Loan helps start or expand a cold storage business in the following ways:

• Excess to ample funds to cover various expenses
• Competitive interest rates to keep the loan cost affordable
• Flexible repayment terms that make EMIs more manageable
• Easy loan process due to simple eligibility criteria, minimal documentation requirements, and 100% digital loan procedure
• Instant approval and quick disbursal

Also Read: How to Start a Food Business From Home in 2024

Steps to Apply for a Business Loan for Cold Storage Business

The Business Loan application procedure involves the following immediate steps: 

• Step 1- Click ‘Apply Now’ to fill out an application form.
• Step 2- Enter a few business-related details.
• Step 3- Scan and upload the necessary documents.
• Step 4- Wait for verification and approval.
• Step 5- Review and accept the loan offer.
• Step 6- Get disbursal directly into your bank account in a few hours.

Conclusion

Due to the high demand for cold storage facilities in India, a cold storage business can be an extremely profitable business to start. Since it has great growth potential, you can make the initial cold storage investment using a Business Loan and increase returns with optimum loan usage. Apply for a Business Loan of up to ₹ 40 Lakh at Hero FinCorp and get the required funding at competitive interest rates.

Also Read: How to Start Your Own Clothing Brand in 7 Steps

Frequently Asked Questions

1. How profitable is a cold storage business?

Cold storage is highly profitable due to high demand and great growth potential.

2. Is cold storage in demand?

Since India delivers lots of fresh produce every season, they need cold storage facilities to prolong shelf life and stay fresh for long.

3. How much land is required for cold storage?

You will need around one acre of land for a cold storage unit of 5000 MT capacity.

4. How can a business loan benefit my cold storage business?

A Business Loan can benefit your cold storage business by providing the required funds at the right time without any branch visits or physical documentation.

5. How much funding can I apply for to start my cold storage business?

You can apply for a Business Loan of up to ₹ 40 Lakh to start and expand your cold storage business.

Disclaimer: The information in this content is for informational purposes only. Readers should verify independently, consult experts, and research before making decisions. Details about loans, terms, and rates may change; check with Hero FinCorp for the latest information. Individual circumstances may vary, and decisions should be based on personal considerations. The creators are not liable for consequences from using the information.