Companies

Danfoss riding on India’s cold-chain boom

M Ramesh Chennai | Updated on January 10, 2018

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Company expects18 per cent growth in the current year



Danfoss Industries, the Indian arm of the €4.6-billion Danish company of the same name, which makes a range of industrial products for heating, cooling and energy efficiency, seems untouched by the economic slowdown in India.

Turnover

The company, present in India since 2002, crossed a milestone of ₹1,000 crore in turnover in 2016, and expects 18 per cent growth in the current year. Danfoss does not give segment-wise revenue figures. However, its President, Ravichandran Purushothaman, told Business Line that the company is riding a boom in India’s cold-chain infrastructure. The company makes products such as controls and compressors that go into the manufacture of refrigeration solutions.

“The heart of the cold chains is with us,” Purushothaman said, noting that Danfoss cold-chain-related business has been growing between 20 and 25 per cent since 2014.

“There is no recession in this industry,” he said.

Purushothaman, who also heads a task force on cold-chain development of the Confederation of Indian Industry, says the business is huge. In the last 3 years, India added about 4.5-5 million tonnes of cold-chain capacity. He said there are three drivers for this growth – the biggest being the changes in the lifestyle of people and the growing demand for products such as ice-creams. Also, large retailers of fruits and vegetables, such as Pazhamudir Cholai in Tamil Nadu, need cold-storage facilities. Farmers have also been getting government subsidy for setting up cold rooms.

Cold chain today is a ₹62,000-crore industry in India and is growing at 20 per cent. According to Danfoss, India has 6,300 cold-storage facilities with a capacity to hold 30 million tonnes of products, two-thirds of which is in Uttar Pradesh and West Bengal.

About three-fourths of the 30-million tonne capacity is used to store only potatoes and onions. Further, a third of the cold stores are small, with capacities below a thousand tonnes each, and are largely in the hands of the unorganised sector.

However, the market is gradually shifting towards organised players, and becoming multi-product facilties, which augurs well for Danfoss.

The company sees itself as an “enabler” in the country's mission for doubling farmers’ income because cold rooms can prevent wastage of agricultural produce.

Roughly 40 per cent of fruits and vegetables, worth about ₹13,000 crore, go waste. However, setting up more and more cold chains will not do the trick, cautions Purushothaman.

The country needs about 60,000 packhouses close to the farmlands where the produce could be brought, cleaned, graded and stored in cold rooms for a few days until they are dispatched to the markets.

Setting up packhouses is an emerging business opportunity, he says, but notes that there are issues such as upfront investment and capacity utilisation.

India needs some 10,000 ‘ripening chambers’, where fruits could be ripened safely and scientifically. Danfoss has a play in both packhouses and ripening chambers.

For the packhouses and ripening chambers to be viable, there needs to be anchor buyers. If multi-product food retailing is opened up for foreign direct investment, a crop of anchor buyers would evolve, he said.

Published on September 26, 2017

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