IPCSL Case Study Essay

In 1944, Debi Prasad Aggarawal had realized the need for a frigidity transshipment center inst alonement. Consequently he established a zeal with the latest insensate storehouse equipments from the UK which was mainly engaged by the potatoes harvest.Debis son, Jadish, succeeded him as Managing manager in early 1960. Jagdish had successfully opened unused marts and brought spic-and-span clients when he started promoting the rapidness to fruits producers.In 1977, Sanjay Aggarawal, Debis grandson, joined the comp both with the task of oversight and the construction of the new 2500 MT quickness in Azadpur.Fruits & Vegetables marketThe growers of fruits and vegetables in India mostly harvest their produce manually, transporting to orchards for grading & packing. Afterwards, the fruits and vegetable are shipped to sell markets by road.India being worlds second largest fruits producer with descend of 44 mn MT (approx 10% of worlds production) and whiz of the largest vegetabl e producers in the world with around 86 mn MT, the new Sabji Mandi at Azadpur is Asias and one of the worlds biggest fruits and vegetable market in sight of produce handled contributed to the huge demand for cold terminus facilities.Commission elementsAt the arrival of fruits at Azadpur, the rush agents take nominate of the produce by offloading, fund and sale at a stray of 6% of the sale criterion. During this process all the expenses involved are borne by the growers.As a way to get business, some of the fit out agents hug drug growers advance loans at the commencement of the fruits season and deduct the same amount when the produce is sold in the market.As the fruits reach the market, some lead be sold on the same day while round 45% 60% need cold fund facility to be sold at a later date or at the off-season.WholesalersWholesalers buy the produce from commission agents which in turn they sell to sub-wholesalers. mothy storage IndustryA conventional cold storage fac ility can preserve fruits for a period of 10 days to 2 months depending of the type of the fruits while a CA or GC storage facility can double or triple this period respectively.The contribute capacity of storage facilities available was nearly 10.35 mn MT against resume produce of over 130 mn MT, this can demonstrate the genuinely high demand of storage facilities.IPSCL has differentiated itself from the market by upgrading the facility to state-of-the-art Gas Controlled cold storage (3900 MT, around 78% of the capacity), Controlled melody Cold Storage (100 MT, 2% of the available capacity) and a Deep deep-freeze storage (1000 MT, 20% of the capacity). anyhow, there was a lack of refrigerated trucks to garner the produce from the growers location to the wholesale markets and from the markets to sub-wholesalers or retailers. The refrigerated trucks play a vital role in ensuring the freshness, role and firmness of the produce.GovernmentAimed at encouraging the growing industry , the GoI offered a capital investment Subsidy organization for the construction, expansion and / or modification of cold storage units.CompetitionBesides IPCSL, no other cold storage facility is operate under the GC or GA technology. However due to this technology differentiation, IPCSL was operating at a very high address in proportion to the other facilities. In fact, the conventional cold storage facilities where offering their clients a determine almost equal to IPCSLs operating cost.CustomersIPCSL has two types of customer, commission agents & wholesalers who store their fruits to sell at a later date or off-season.The fruits and vegetables market has seen ab protrude 60% growth owing to the increase in income of the middle-class category in India.ObservationsThe cold storage services is a price driven over quality driven market, the cold storage service providers currently in business are not having any points of differentiation which led to a price war and very abridg e margins. The very low profit margins have restricted the competitors from changing out their old technology storage facilities to an international standard facility.Some of the customers (wholesalers & commission agents) are not highly appreciating the cold storage services specially during the winter season where the fruits and vegetables dont get affected such(prenominal) due to the very low temperature.In the case of conventional cold storage facility, the only way to make decent profit is by maximizing the sales volume and effectively utilizing capacity available (dynamic facility management system). This would give some cost preference over competitors allowing to engender bigger market share and make high profit margin.In the case of IPCSL, the GC & CA storage technology is giving them a market edge to charge a premium price. However the customers should comfort the added services provided over the difference in charges.Other than the limitation in the period fruits and vegetables can be stored in the conventional cold storage facility, there are additional quantities wasted during storage & handling which ordain not be the case in GC or CA operated facility. This depart decrease the cost per kg and increase the wholesalers / commission agent profit margin.IPCSL didnt localise much on marketing of their new state-of-the-art cold storage facility instead, they focused on the survey they add to the fruits and vegetables industry.As rightly quoted by one of the companys senior managers to Sanjay, the fruits and markets industry lack formal education. It takes time to show nurture and build confidence. However, to speed up the learning curve and attract customers, price & marketing strategy can play a crucial divisor especially in the introductory stage.Recommendations & SuggestionsMarketingIPCSL should offer the large, large-middle or all clients a free, discounted or at-cost trial to demonstrate the difference in quality between the convention al facilities against the GC & CA operated ones.IPCSL should organize visits / tours for the large wholesalers to the facility to show how differently can they store the fruits and vegetables and exhibit the benefits to the prospective clients.As IPCSL is a high-end cold storage service provider, the marketing strategy should focus on the clients of the same level i.e. the wholesalers and commission agents dealing with organized retail stores, hotels etc. these clients are willing to pay some extra charges for higher quality fruits and vegetables which cannot be matched by any other cold storage facility in the market.PriceIPCSL should strategize a price discrimination establish on the volume similar to what the competitors are doing. The price discrimination will attract the large exporters, high volume wholesalers and commission agents towards IPCSL.From IPCSLs tax revenue statement it is obvious that more than INR 6 mn is fixed cost while variable cost is around INR 7.5 per 20kg box. IPCSL priced their services at INR 60 for merchandise fruits and INR 20 for Indian fruits against INR 10 per 20kg box by competitors for imported and Indian fruits. Alternatively, IPCSL should price their services at the point where they maximally utilize their 5000 MT facility. The determined price along with the 5000 MT sales volume (if achieved) should cover up for the variable cost (INR 7.5 per 20kg box) as well as the very high fixed cost.