Fully owned by Container Corporation of India (Concor), Fresh and Healthy Enterprises Ltd (FHEL) is a first of its kind initiative in India, which aims to provide complete cold chain logistics for fruits and vegetables — from farm to retailer. Incorporated in 2006, FHEL is drawing its expansion plans after tasting success with its pilot project, says Concor managing director Rakesh Mehrotra in an interview with Smita Aggarwal• After having set up the first Controlled Atmosphere (CA) facility at Rai, how do you intend to extend the cold chain solutions network across the country?The expansion is part of the present project itself, where we would like to set up a network of such facilities (CA) all over India. We will be covering almost every state. We have plans for about 13-14 such facilities, maybe of smaller size, maybe not all for 1,000 tonnes, depending upon the types of fruits available. Next year, we aim to fully utilise the current capacity (12,000 tonnes at Rai) along with diversifying into other fruits like pears, cherries and mangoes. • Initially for the pilot project to establish the Rai-HP cold chain, Concor invested Rs 100 crore. What kind of investment is FEHL envisaging for fuelling its expansion and diversifying its current fruit basket?This is the first project and the idea was to run a single facility first, run it for about a year, see what the processes are that need to be debugged or refined, ahead of a pan-India network. We will review the current operations by the middle of 2008. The investments will depend on the size of CA stores to be set up and other infrastructure facilities. It will roughly be of the order of Rs 1,000 crore-1,500 crore, depending on the size of operations that we envisage. • Since marketing is not your core business, how do you intend to market the fruits procured by FHEL?We have to rely on some associates who will market our fruit in other states. We have three marketing associates. And our fruits even today are going to Chennai, Hyderabad, Mumbai and other places in a limited quantity. But we will finally have tie-ups with retail chains, for instance WalMart, Subhiksha, Mother Dairy and Reliance Fresh, with whom we are in dialogue. As retail demand picks up, we should be able to provide those fruits. With Bharti-WalMart, we are on the verge of a commercial agreement. All over India, we will be supplying fruits to Bharti-WalMart Retail.• Given the growth projected for modern retailing, do you think the spurt in demand for cold chain solutions is driven by it?It is not completely driven by the growth of organised retail. The basic purpose of setting up cold chain logistics in India was the low remuneration which the farmer was getting for his produce. the consumer too was not getting good quality fruit at the right price. In the process, 30 per cent of the food was getting wasted. This is a national wastage. We are trying to bridge that gap. But when the retail chains take off in a big way, people will get used to buying fruits and vegetables only from these retail stores and not from the mandi. Consumer habits change over a period of time. I will say, it will take two-three years for this change to take place, that too if somebody can make a success of the retail chains.• Are there any partnerships you are seeking with food processing industries as well?Yes, ultimately what happens is that when fruits are stored in the CA facilities, there will be a certain percentage which cannot be sold for the retail market and can easily be converted into food processing input for apple fruits, jams, jellies etc. I foresee the growth of ancillary units near our facility at Rai, which will take lesser grade fruits and convert them into processed items like jellies, jams, juice, pulp. Currently, a very small percentage from our facility goes to the food processing industry. It will also act as a catalyst to the further build-up of food processing industries around such stores. A partnership with the food processing industry is part of our plan. • Do you see competition heating up in this space, given the spurt in demand for cold chains?There are some other players. But the point is, it not an easy business to do. One has to be prepared to bear the initial shocks. Like this year, the crop from Himachal Pradesh was very good and the Jammu and Kashmir crop comes much later. So by the time we were ready to take the fruit out from the CA stores, the J&K apples were still coming. So we had to postpone the release. Obviously, when you store it in CA stores, you incur extra costs. So you can’t be competing with fresh fruit during the season. There are several variables which one has to reckon with — prices may vary, there may be a year when crops get damaged.
