Restaurants like Nirula’s, Papa John’s, McDonald’s and others stand to benefit from the incentives given to cold storage and refrigeration companies in this budget to develop infrastructure for transporting agricultural produce.
Naveen Agarwal, Chief Financial Officer, Nirula’s, said: “Such investment-related incentives do help Nirula’s to an extent in both direct and indirect ways. These incentives will attract more investment in cold storage infrastructure. Nirula’s restaurants follow cold chain systems for their ice-creams and other temperature -sensitive products. More investment allows access to more facilities, thereby ensuring better product handling and transportation.”
In this Budget, the finance minister proposed that all capital expenditure — other than expenditure on land, goodwill and financial instruments — to build and operate such facilities can be fully treated as deductions for tax. India is the second largest producer of fresh fruits and vegetables in the world, and the proposal is aimed at reducing wastage of perishables.
The total Indian cold chain industry is worth $2.6 billion, according to Sanjay Sethi, VP food and agriculture, Technopak. Surface storage consists of 88 per cent of the total,while mobile transport comprises the remaining 12 per cent. The overall industry has a potential to grow to $12.4 billion by 2015. The space is small as of yet counting few big names like Snowman, Blue Star, Carrier, Crystal, Refcon, Bulkani Deep Freeze, RK Foodland, Trans Cold Chain, Sensitech, Fresh & Healthy(Concor), Apollo Everest Kool Solutions, GATI (Kausar) and Tata Voltas. Glacio Cold Chain is also planning to enter the space.
Steps like extending investment, linked tax incentives in cold storage and hike in income-tax ceilings will attract new players. It will end monopoly in the space. Rakesh Gadoo, Business Head of Papa John’s (world’s third largest pizza chain), says: “Eventually the costs will come down which will reduce our transport and logistics cost. As we save, we will pass on the benefits to consumers.”
Abhijit Upadhye, Director- supply chain and menu management, McDonald’s India (North-East), also calls it a fantastic move. “5-7 per cent of our total operational cost goes into managing cold storage units. Incentives given in the space will bring down cost of setting up cold storage units. It will promote faster growth in the space which was strongly needed. Goods could be moved by road and rail in a better fashion which will have direct impact of quality of products.”
