An ICE Manufacturing Unit is situated in Chennai, near to major fishing harbour in north Chennai.

The ice making Unit in caters to two different sectors — one set of plants dependent almost
entirely on the hospitality sector — hotels, clubs, private caterers — and retail sales, which is a
much lesser quantity and deals with the street corner shops selling a variety of fresh fruit juices.

Item Sold Quantity in Ton

Fisheries 42 Ton
Hospitality 11 Ton
Retail Shop 4 ton
Others 3 ton

Even ice sales to the fishing industry is of a cyclical nature and depends largely on the size of the
catch and when the fishing boats reach the harbour.

Ice is generally made in blocks of two sizes — 140 kg and 50 kg. Typical Ice making plant will be
using Ammonia as refrigerant and Coolant for Ice Maker Cabin will be Brine water (Which is
cooled via Ammonia Refrigeration System Outdoor Unit)

Ice making is Power intensive and power requirement will vary as per outside temperature,
refrigerant, material to be cooled etc. For a General Purpose, we can assume following will be the
cost pattern for ICE:

INR/ton of Percentage
Cost Components ICE %
1. Electricity 413 33
2. Labour 128 10
3. Water 99 8
4. Depreciation (plant at 10 years, buildings at 15
years 186 15
5. Capital interest 224 18
6 Maintenance 45 4
7. Land, rent, taxes and insurance 22 2
8. Other Admin and Overheads 125 10
1242 100

Cost Efficient Manufacturers are able to make one Block of Ice within 30-36 Hours.

Selling Price for fisheries sector for 1 Kg of Ice will be in 1INR to 2 INR per KG. However, Hospitality
and retail sector it can be 2 INR to 3.5 INR per KG.

Main Issue is Due to Build it cold storage facilities, demand from Hospitality sector is dropping.

Since Cold Storage and associated facilities are going to increase in coming days, ICE Making Unit
is feeling that demand from this segment will continue to drop and need to find alternative
solutions.
Another issue is the low cost new suppliers, who are getting successfully into fisherman sales. This
is also causing lower sales and losses to the company.

This was the scenario of the unit. This time Mr. abc from MGR Uty, joined the company and took
a varierty of steps to restore profitability.

What can be the steps?

Whats the refrigerant and economy considerations?

What are all the options for the company?

What are all the ways to reduce cost of production to the company?