National Horticulture Mission

A DETAILED PROJ ECT REPORT

FOR ERECTION OF A COLD STORAGE HILLY AREA

Projects for cold storage with capacity from 10 M.T. to 5000 M.T. are eligible for
subsidy assistance from the National Horticulture Mission. A model project on cold storage for
submission to the financial institutions or to other related organizations may be prepared on
following lines.

Purpose of cold storage :
1) To install a cold storage of specific capacity with approved design and technology, to
get benefit to the entrepreneur and nearby farmers, operating in a cluster.
2) To store the perishable horticultural products which require cold chain arrangements for
maintaining the quality and extension of shelf life.
3) To follow the hygienic practices of cleaning, sorting, grading, packing and pre-cooling
cold storage for getting easy accessibility and market surplus to the farmer.

Introduction :
India, in spite of being second largest producer of fruits and vegetables in the world,
its per capita availability is lower than the normal requirement. One of the main reasons for
this situation is the high degree of wastages due to low technology application in Post harvest
Management. The scientific cold storage facilities made available to the farmers shall
therefore go a long way in controlling the losses and extending the shelf life resulting into
higher returns to the farmer.

General Information :

Should include -
a. Name of farmer, entrepreneur growers association, SHGS, NGOS etc.
b. The Sy. no and village where it is proposed.
c. The total cost and the major components covered.
d. The contribution of the applicant in the total project cost.

Promoter - Entrepreneurs - details - background -
a. Past experience in the agriculture related entrepreneurial activity.
b. Previous loan availed and the reputation with financial institutions, Outstanding dues if
any.
c. Total acreage and progressiveness based on the crops grown and cultivation practices
followed.

Particulars of the cold storage project -

In brief about the :
1. Range of commodities likely to be handled in the peak season. and the number of
chambers proposed.
2. Type and capacity of chambers with temp range.
3. The location, area and its connectivity to the main road.
4. The components of construction cost, machinery, equipment, communication facilities
etc.
5. The availability of basic utilities such as electricity, water, telephone etc.


Market survey, scope of activity :
The scope and potential to cover own agri products as well as for giving facility to
nearby farmers. Comment about the existing cold storage and their experience and
capacity utilization may be mentioned to justify the decision.
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Cost of project :
The following physical provisions with their cost are considered for a cold storage unit :-
Land (cost not to exceed 10 % of the total cost )
Site development including leveling fencing, road, drainage etc.
Civil structure including main cold storage building, rack provisions , drying shade,
machinery room, store for consumables, generator room, office, security cabin etc.
Insulation of main cold store building
Machinery for cooling, air movement, loading, grading and weighing.
Electric supply arrangement including deposits for requisite connection.
Stand by DG set
The water supply arrangement and treatment plant, if required.
Pollution control and waste disposal equipment.
Miscellaneous fixed assets including office equipment and furniture.
Preliminary and pre operative expenses.
Contingency
Margin money for working capital.

Broad technical parameters for a typical 2500 M.T Cold Storage
Land Requirement 1.5 Acre
Storage Space 8500 Cum.
Technology preferred Gravity circulation/ Bunker type/fin. coil
Cold storage room height 12.2 to 18.5 m
Electrical Load 90 kw


Desired storage environment of common fruits and vegetables in cold storage
Commodity Temp OC Relative Humidity %
Grapes -1 to +1 85 - 90
Lemon 4 to 15 86 - 88
Mango 11 to 18 85 - 90
Orange 0 to 10 85 - 90
Apple - 1 to -3 90 - 98
Cabbage 0 to 2 90 - 95
Cauliflower 0 to 2 90 - 95
Cucumber 7 - 10 90 - 95
Brinjal 0 - 2 90 - 95
Beans, green 4 - 7 90 - 95
Broccoli 0 - 2 90 - 95
Carrots 0 - 2 90 - 95


Assumptions for working out economics of a multi Chamber cold storage
1) Life of machinery and equipment is assumed as 7 years on conservative basis and
depreciation 15% and that of civil works as 20 years with depreciation @ 5%
2) For simplification purpose maintenance and repairs, insurance and expenses on fuel,
water, lubricants etc may be assumed on per M.T. basis
3) Labor changes for loading unloading of goods in the cold store may be assume as Rs
15/M.T
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National Horticulture Mission
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4) The normal period required to complete the installation is one year
5) Capacity utilization in the 2
nd
year shall be 80% in the III
rd
year as 90 % and 100 % from the
4
th
year onwards.
6) 30% of the capacity will be used by the farmer, promoters for their own horticultural
products while the 70 % remaining capacity will be engaged for renting out to other
farmers at the prevailing rate in the market.
7) The average rent worked out for calculation of income is Rs 650/ per M.T
8) The marketing margin or surplus on the own produce kept in the cold storage may be
assumed, on an average @Rs 3000 per M.T per year.
9) The total repayment programme of 9 years, including one year gestation period may be
considered. The interest during first year can been capitalized and repayment of
Principal to be considered from the third year onward.
10) The rate of interest on the term loan will differ from Bank to Bank and the status of the
borrower.
11) To work out financial analysis the subsidy eligible from the Govt agencies like NHM etc is
not taken into account. The subsidy will be back ended and shall be an enabling
component on the viability of the project. and shall normally take care of the last couple
of installment.

Cost of operation -
The following are the items included in operational or running cost of the pack house
which can be sub divided into fixed cost and variable cost :-

Fixed Cost :
a. Depreciation
b. Repairs and maintenance
c. Salary
d. Interest on borrowed capital.
e. Lease rent if any, fees etc

Variable cost :
1. Electricity
2. Wages of casual labour (seasonal)
3. Raw material or any consumable items like diesel, fuel, gas etc.
Total operational cost =fixed cost +variable cost

Environmental Aspects :
Agro climatic conditions its impact if any on the cold storage such as flood
occurrence, cyclone, earthquake, hailstorm etc. Any measures taken for pollution control
and recycling of wastages.

Project implementation schedule :
Comments on whether the work has been already started, and the probable date
of completion of the work in all

Financial Analysis and profitability estimates should include -
a) Horticultural produce to be handled through
b) Assumptions made for working out the projected income and cash flow.

For the total project along with the statement of income and cash flow year wise work out
the :-
i) Benefit cost ratio : (B.C. ratio)
ii) Debt Service Coverage Ratio: (DSCR)
iii) Internal Rate of Return : (IRR)
To mention whether the project is found financially viable based on the above ratios.
(e.g. The BC ratio should be more than 1:1, DSCR more than 1:1.75 and IRR more than 15%)