India: IG plans new facilities to plug infrastructure gaps - FreshFruitPortal.com

India: IG plans new facilities to plug infrastructure gaps

IG International director Tarun Arora reveals some details of further expansion plans, as well as the reasoning behind an Australian JV in the works. 

After building a new strategic cold storage facility outside Mumbai in just 120 days, leading Indian fruit importer IG International has four more planned in a bid to keep up with “phenomenal” growth.

The newest operation has been launched in Khopoli on the Mumbai-Pune Expressway, and according to IG director Tarun Arora it will be mostly used for apples in the first half of the year, followed by kiwifruit in the second.

“It’s a very strategic point and it’s used to cater to the entire southern India. It saves us a lot of time…it’s just on the point of the exit of Mumbai, allowing us to maneuver very quickly and to be able to reach the market much faster,” he tells Fresh Fruit Portal.

“Going into Pune itself from there, it’s just 1.5-2 hours, however if I have to go from Mumbai, especially on rainy days, it can take five to six hours.”

“The Indian market is very different – it’s not even daily but hourly, so every hour if there is a requirement you need to upgrade your stocks, because there isn’t much cold storage.”

He adds that out of around 400,000 metric tons (MT) of fruit imported by the entire industry in India, around 60% of it goes through Mumbai.

Some of the new operations will be even larger than the Khopoli facility, with works in the pipeline for Krishnapatnam, Chennai, Kolkata and Delhi.

“Krishnapatnam we will be inaugurating that in the next one quarter or so, and then we have Kolkata and Delhi,” Arora says, adding Krishnapatam will also include value-added operations like juicing.

He says land acquisition is yet to occur for Kolkata and Delhi sites. 

“We really want to do it quickly because Kolkata especially is becoming a gateway to the entire east of India, and currently the existing government has a very strong focus towards that market.

“In Chennai we’re building the second one now. Chennai and Krishnapatnam I think will be bigger than Mumbai. Mumbai is just 2,000 pallets, and at the locations we’re looking at 3,000 pallets.”

With these new locations he says new capacity will grow to 12,000-18,000 pallets

He says sales value growth for IG has been at around 30% per year and the bottom line is also getting better.

“It’s important for us to consolidate as much as possible because we’re currently facing a huge shortfall on the infrastructure side of things, and with the phenomenal growth on volume which we’re experiencing I think we’ll need more infrastructure to support growth for the next decade,” he says.

“With us being the largest importer and one of the biggest food conglomerates in India, with 15-20% in overall growth we need to upgrade ourselves in terms of overall facilities.

“We need to be efficient in our operations and adopt new technologies - how are we able to evacuate a much higher volume in a day if we are handling 15 or 20 containers at one location?”

He says IG’s growth has been through a combination of increased overall imported fruit consumption in India as well as “taking quite a lot of ground” in market penetration.

“My only limitation right now is infrastructure; this year I could have accommodated another 200 containers of apples and the only limiting factor was that I didn’t have enough infrastructure, despite having the largest infrastructure in India.

“Also my capabilities on growing efficiency in the labor operations is kind of limiting, because labor itself can only perform that much of an operation; we have hand-stacked facilities and automated facilities in which we have forklifts and forklift operators.

“We are upgrading our capacity so we can take it to an automatic storage retrieval system where our throughput is much higher and our efficiencies are much higher.”

Australian JV in the works

When asked about ongoing negotiations with Australian companies to form a joint venture for fruit production in India, he says the overall goal is to “have control over each and every function we are engaged in” with volume, as well as getting the right varieties.

“Growing in India comes as a very fascinating alternative for us to overall grow our total bottom line – we’re already very strong in India, so you’re already able to control the quality of the product at the time of growth.

“As the infrastructure rises with the cold chain and the post-harvest management, I don’t think there is anybody else who is able to offer that kind of value so end-to-end – if we are also a grower I think we’ll be able to do things at the consumer level.

“That’s how it came to us and we thought it’s a great idea, and since it’s going to be a trial run, in phase one it’ll not be a phenomenally high capital expenditure,” he says, adding plans for phase two would likely be two to three years after the trial’s commencement.

He says the main fruits in focus will be blueberries and avocados.

“These are fruits that are largely not grown in India overall. If you see there are no avocados and blueberries so there is no competition at all,” he says.

“Number two, these are cash crops so they’re already being sold by us and imported at a very high price in India. There is a market price we’ve already captured.

“We just want to move that bandwidth so that by the time we have our own production we have enough market capabilities to be able to evacuate that production, but the key line will be to grow the best varieties that are available.

“That is why we’ve gone ahead and identified key companies which are able to give us those varieties.”

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