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Concor arm lines up big expansion in storage biz

Disha Kanwar  |  New Delhi 

FHEL to invest Rs 1,500 crore in opening cold storage units.

With big retail chains as clientile, Ltd (FHEL), a fully owned subsidiary of (Concor), has planned an expansion in its cold storage business.

The company directly sells to Bharti-Walmart, Big Apple, Reliance Retail, Mother Dairy, Future Group and Heritage Foods in the northern part of the country. It has a tie-up with Unifrutti, a multinational company, for sale of fruits in the south.

“The investment will be to the tune of Rs 1,500 crore in opening cold storage units. Capacity expansion at various cities will depend on the location of the place and the quantity of horticulture produce at nearby places,” said a senior Concor executive.

The launch of FHEL in 2006 was part of Concor's attempt at diversification from its core business of container transportation. FHEL offers cold-chain logistic solutions —storage, transportation, inventory management, delivery. It has a 12,000-tonne store at Rai, near Delhi.

FHEL directly buys from farmers and sell to retailers. “The cold storage facility is to develop long-term linkages with farmers, agricultural institutes and government agencies to improve the quality of produce, yield, storability and shelf life of a variety of fruits and vegetables to enable availability for longer durations and at reasonable rates,” said a senior executive.

He said it was an uphill task to break into the entrenched network of intermediaries and commissioned agents. FHEL incurred losses for its first three years but managed to break even last year, registering a profit Rs 42 lakh on a turnover of Rs 65 crore. It procured 9,000 tonnes of fruit last year and is targeting a 12,000-tonne business this year.

With an estimated annual production of 220 million tonnes, the fruit and vegetable business is estimated at Rs 2,60,000 crore in India. Most of this is in the unorganised sector, with a great amount of wastage in post-harvest activity. In fact, 25 per cent of the total produce goes waste. It is here that FHEL sees great potential in being a logistics provider in the supply chain.

Besides apples, FHEL stores kinnow and is also trying with oranges on a commercial scale. During the off-season, it gives the chamber on hire for storage of rice and carrots. It is also importing apples.

First Published: Mon, September 12 2011. 01:14 IST