What are the trends in Indian cold chain segment? What is the penetration level of temperature controlled cold storage in India?
Cold chain industry in India is evolving. With rising income levels and growing awareness of hygiene, there is a change in consumption trend from conventional to processed foods. The food processing sector is witnessing double digit growth rate in the recent past. This has resulted in more than 20%+ growth across categories such as value-added dairy products, ready-to-eat or ready-to-cook foods, breakfast cereals, confectionery items and fruit beverages amongst others. Thus, we see a significant private investment in cold chain in sectors like integrated packhouses & logistics warehousing, food processing & export oriented companies. To serve this segment, there is an increased focus on providing reefer trucks and logistics with enhanced monitoring and tracking of food supply.
The govt is also playing an active role by initiating several measures such as recognizing the cold chain as a sub-sector of infrastructure, providing subsidies for food processing by setting up large scale mega food parks (MFP), Integrated Cold Chain Clusters etc.
Penetration
Though, India is the world’s second largest producer of fruits and vegetables, only four percent of India’s fresh produce is transported through cold chain. The rest has to be delivered locally and eaten quickly or it simply goes to waste. For that to change, the country faces the steep challenge of doubling its cold chain capacity. Adding to the challenge, more than half of India’s 6,300+ cold storage facilities are concentrated in just five states. Building cold chain infrastructure and linking it effectively to regional demand is the key to India’s food security and public health for its more than one billion citizens, as well as to its future as a world-class economy.
What role can organized retailers play in building cold chains in India?
While the government is seeking to increase investments in infrastructure and improve the food logistics chain, the adoption of proven and efficient technology solutions can help in reducing operating costs, improving quality of produce thereby helping to alleviate the food wastage problem. The government & private sector, through bodies like NHB NCCD, are already moving in the right direction with more and more emphasis on developing cold chain standards in terms of technology & efficiency.
Organized retail players who are already building complete cold chain infrastructure support backward integration. Organized retail can take stewardship in developing food traceability across the back end, optimize on operating expenditure across the supply cold chain, and specify energy efficient and environmental friendly technologies so that these best practices can percolate throughout the back end infrastructure. Emerson is also leveraging the Internet of Things and intelligent store technology to help retail customers in optimizing operating costs and protect food safety by using real-time monitoring throughout the food cold chain.
What are the stumbling blocks faced during setting up of cold chain logistics infrastructure? How do you overcome these challenges?
Building cold chain infrastructure is the key to India’s food security and public health for its more than one billion citizens, as well as to its future as a world-class economy. While financial investment in cold storage facilities and refrigerated transport is vital, some of the additional challenges faced by India’s cold storage industry today are high lifecycle costs, uneven distribution of cold storages, low awareness of best storage and handling practices, frequent power outages, outdated refrigeration technologies resulting in high maintenance and high energy costs etc.
To overcome such challenges, we at Emerson are offering project design services by our highly specialized and experienced team of design engineers that assist contractors, end users in ensuring that cold chain projects are optimally designed, focus on best lifecycle cost refrigeration solution. We also offer education and training services free of cost for contactors & technicians working in the industry. It combines class room training along with simulation equipment so that one learns best practices in terms of deployment of technology, troubleshoot, and play around with the diagnostics to really understand how to operate the equipment. We had trained over 1500 engineers, technicians, contractors and end-userswith topics ranging from basics of refrigeration to advanced cold storage design and maintenance practices.
Though, India is the world’s second largest producer of fruits and vegetables, only four percent of India’s fresh produce is transported through cold chain. The rest has to be delivered locally and eaten quickly or it simply goes to waste. For that to change, the country faces the steep challenge of doubling its cold chain capacity.
India is one of the largest producers of agricultural products and one of the global leaders in the pharmaceutical sector. Yet, it is known to have fledging cold chain, which results in supply chain losses of food and other resources. So, what are the solutions offered by Emerson in order to stop these losses?
We need to shine the spotlight on food wastage and work together in finding ways to alleviate this problem. As a leading technology provider for the refrigeration and cold storage industry, Emerson wants to highlight how intelligent and energy efficient technologies can help India address these challenges.
Emerson is already leveraging the Internet of Things to help the industry solve the challenge of food wastage and protect food safety by using real-time monitoring throughout the food “cold chain.” We are working with retailers and end users globally to make it possible to preserve food safety by using technologies like Intelligent Store, ProActetc to constantly monitor the surface temperature of foods throughout the back end of supply chain.
Energy efficiency is also paramount as much of the country experiences warm weather, frequent power outages and has to often rely on costly backup generators. To address that issue with energy-intensive process like chilling and freezing, Emerson continues to focus on energy efficient technologies like Multi compressor racks with Variable Speed technology, Digital Scroll Mini Racks and condensing units which can save energy costs upto 25%.
The company has also invested in two dedicated Cold Chain Centers in Chakan, Pune, & Gurgaon, for project design and planning, locally develop and build the latest cold chain equipment, and provides training and aftermarket service support. The facility offers design and training support to cold chain operators and contractors to the most technologically advanced, reliable, and efficient cold room possible and maintain it at optimal cost and energy levels.
The Government of India launched ‘Make in India’ campaign in order to make the country manufacturing hub. So, what are the products that the company manufacturing in the country? Do you have any expansion plans?
Our main manufacturing plant is located at Atit, about 160 kms from Pune. It not only meets all our India reciprocating compressor requirement, a substantial portion of its production capacity is dedicated to serve the Middle East, Africa & Latin America markets. We manufacture more than two million compressors to cater to global markets.
At Chakan, we design and manufacture energy efficient refrigeration units for the cold chain sector. All our products are manufactured in India using the latest energy efficient and quality components. These have been well received in the Indian market for their robust and reliable design. They are designed for diverse refrigeration applications like cold rooms, banana ripening, fruits or vegetables, integrated logistics. We are clearly supporting the government’s ‘Make in India’ plans.
Cold storages are dependent on steady supply of power. Apart from this, fuel constitutes a major portion of operating costs. So, what are measures taken by the company to make them energy efficient and superior?
For years Emerson’s compressors and units have been the efficient choice for refrigeration applications. Copeland Scroll & Stream™ compressors have led the industry in terms of energy efficiency for decades. These also come with capacity modulation features like Digital technology which helps in saving on energy costs. At Chakan, we manufacture advanced refrigeration units like multi compressor racks with capacity modulation to allow end users to save on energy costs by responding smoothly to fluctuating demand, loading patterns, ambient temperatures etc.
Emerson constantly strives to innovate its products by including on-board diagnostics in our compressors and condensing units which can help in providing real time field support to our customers. This can help in reducing costly maintenance costs and increase uptime. For instance, The CoreSense™ Diagnostics modules in Copeland Stream & Scroll® compressors are designed to help contractors troubleshoot refrigeration systems. The modules use the compressor as a sensor to deliver active protection and diagnostic capabilities improving overall system reliability.
By optimizing and combining refrigeration compressors, energy-conservation control systems, remote network monitoring systems and flow control elements, Emerson’s integrated solutions offer best-in-class performance and reliability to the cold chain solutions.
Emerson constantly strives to innovate its products by including on-board diagnostics in our compressors and condensing units which can help in providing real time field support to our customers. This can help in reducing costly maintenance costs and increase uptime.
What are the technological innovations that you would like to bring in your company to make the operations of cold chain logistics more efficient?
Refrigeration systems are more energy-intensive in a tropical climate like India than in milder climates. Peak power outages are also routine, often forcing cold rooms to operate off costly backup generators. All of which is to say that energy efficiency is paramount. To address that issue with regard to compressors—a key, energy-intensive technology in chilling and freezing—Emerson has introduced Copeland Scroll compressors, which are designed specifically for refrigeration and therefore significantly reduce energy consumption. We are also investing in new technologies which help to save energy costs and Op-Ex costs like CoreSense™ Diagnostics allowing for compressor protection, predictive diagnostics, and communication with Emerson’s supervisory controls, and refrigeration products with stepless capacity modulation through Digital & Variable Frequency Modulation.
Food safety is also more top-of-mind for consumers than ever. Each step on a food’s journey introduces opportunities for foods to rise above safe temperatures, but advanced technology is making a major impact. Emerson recently bolstered its cold chain capabilities, making it possible to preserve food safety by using small, Internet of Things-enabled sensors to constantly monitor the surface temperature of foods. Imagine an exporter from India who is sending pomegranates or grapes from Maharashtra to a buyer in Europe. Customers want to make sure that an appropriate temperature is maintained throughout the journey. For this purpose, Emerson enable them to provide real-time temperature tracking and a full suite of temperature monitoring solutions to protect perishable goods through the supply chain
Emerson is continually updating its Copeland compressor range in the light of the move to make the cold chain environmentally sustainable allowing the wider use of natural and alternative refrigerants like CO2, propane, low GWP refrigerants like R407C, R407F, R448A and R449A etc.
What is your outlook for the sector for the fiscal 2017-18?
India offers immense potential for cold chain industry to grow. The changing consumption trend from conventional to processed foods is going to drive the growth of the food processing sector further. The Government of India envisages an action plan to double processed foods turnover from USD 280 billion to USD 480 billion. The government has identified food processing sector as one of the key sector and is focusing on growth of this sector. Till now India got 42 mega food parks with allocated investment of Rs 98 billion. India is expected to see an investment of between USD 6 billion and USD 10 billion over the next five to 10 years, excluding the cost of land and a few additional components.
The Indian Cold Chain Industry is currently valued at close to USD 6.5 billion which is expected to grow at a CAGR of 25%+ over the next 4-5 years due to substantial growth in the production of perishable products such as fruits and vegetables, meat, milk and pharmaceutical products (vaccines). Additionally, the rise would be complemented and supported by the rising retail in India which would generate huge infrastructural demand resulting in increased levels of revenue for the cold chain industry.
What are your expectations for the sector in order to bring the sector on growth trajectory?
Because of consumer perception about food in India, processed foods did not appear very attractive or delicious to Indian households. There was a belief that food had to be natural, prepared by hand and cooked. More recently, with increasing affluence and growing middle class, we are seeing a higher demand for processed foods. The journey has just begun. The government is also very committed and actively enabling the growth of the food processing industry and has committed to set up over 30 food parks in various states.
The industry is moving in the right direction with successive governments playing an active role by initiating several measures such as recognizing the cold chain as a sub-sector of infrastructure, providing subsidies for setting up mega food parks (MFP). We believe that government has created a lot of confidence in investors including cold chain investments. We believe that with right implementation of these initiatives, the cold chain sector will grow exponentially.
What are the expansion plans of Emerson in India?
There are quite a few verticals in the HVAC&R business at which we continue to look closely, to expand our business. After setting up our footprint in the cold chain business, we are looking at long distance railways and metro rail as areas of growth. We already have a solid presence in rail coach air conditioning business. As metro rail expands in India, we expect this to be an area of growth for us.
Over the last three years Emerson has invested USD 400 million dollars in our operations and plants here in India. We plan to invest an additional USD 200 million over the next few years.
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