‘E-com for grocery deliveries driving demand for refrigerated transportation’ 

New Delhi, April 24:  

E-commerce for grocery deliveries, need to save energy costs, more awareness among farmers and investors about benefits of cold chain is driving the demand in India for its products, according to Danfoss, a Danish company which provides refrigerating and cooling solutions that are used cold chain warehouses, transportation and supermarkets. Ravichandran Purushothaman, President, Danfoss, India shares with Business Line in an exclusive interview the trends in Indian cold chain market and India-specific innovations that the company did in its products. Edited excerpts:

What are the sectors that drive demand for your products?

Storage and transportation demand for meat, milk, dairy products, horticulture, supermarkets selling processed foods; and the need to meet food safety standards. Also, at the farm-end, farmers realisation that they get much better prices for their products when they invest in in cold chain storage. Many farmers come together and invest in such storage solutions. Also, traders at the mandis-such as Azadpur Mandi in Delhi-drive the demand.

How is the demand in India different from what you see in other countries?

In developed markets, they usually have large warehouses for single products. In evolving countries such as India, usually people want multi product storage facilities - facilities that can store meat, dairy products, horticulture. The variation is, if the facility is close to farm, the customer wants a single product storage facility. If it is closer to market, they want a multiproduct facility.

What is the profile of investors that you see in this space? Can you share some of your large customers?

Mostly, it is aggregators closer to the market. Most investors are entrepreneurs, or players like Snowman Logistics, larger farmers joining hands. But we are yet to see the large players come and invest. Back-end investment is required. Our customers could be original equipment manufacturers such as Voltas, Ingersoll-Rand, players in reefer truck segment such as Carrier Transcicold. They supply the products to the end consumers.

Specifically for your product, what is the demand driver?

Energy cost is the largest operating cost for operating cold storage-upto 40-60 per cent of operating cost. With electricity costs going up, people understand the value of saving energy costs and our products help save energy by up to 20 per cent. Ninety-nine per cent of our customers who have bought a product from us want a second one. We saw a 10 per cent growth last year, and expect 12-14 per cent growth this year. We have even increased the localisation component to 10 per cent in India.

Can you share some local innovations that you did specifically for the Indian market?

For the sealed pack collection centres for milk collection that farmers use, we came out with a product that operates well in low voltages as well and helps save energy. We saw a huge demand for this in Gujarat and Tamil Nadu in the last one and half years. The demand for this product also increased in other countries such as Brazil, Russia, Iran, Pakistan, among others. The products are shipped to our warehouse in Singapore from where they are exported. This was also a case of reverse innovation. We have 300 people involved in R&D in Chennai, of a total of 650. Similarly for airports, buildings, we came out with products that work well in varying voltage conditions.

Given that you have a market and facility in China, why do you manufacture in India?

It is a myth that we can’t make products with high quality levels in India. We make pressure switches and export them to China.

Some new areas from where you expect demand?

We are seeing solid growth in reefer segment (refrigerated vehicle segment) after e-commerce firms have started delivery food products, and groceries-particularly smaller reefer trucks. West Bengal Government is interested in investing, particularly for potato storage.