Indraprastha Cold Storage Limited
2. Issues with IPCSL
3. IPCSL pricing strategy
3. Non Price Strategies for long term growth
4. Economic value to customer of improved services.
12 5. How IPCSL can communicate values to customers
14 6. Conclusion
Set up in Shidipura, Delhi in 1944 by Devi Prasad Aggrawal, Indraprastha Cold Storage Ltd (IPCSL) was a pioneer in the Indian cold storage industry. Devi Prasad, who initially started a sugar mill and went on to establish Asia’s largest sugar factory in the 1940s saw a huge potential for preservation of the agricultural produce of India and the need for cold storage facilities for the produce to be stored for longer duration of time. He imported the latest cold storage equipment from the UK to set up IPCSL and pioneered the Cold Storage industry in India. Initially for almost a decade IPCSL was used for the storage of potatoes. In 1958, his son Jagadish Prasad Aggarwal took over and successfully extended his facility to the fruit traders in Delhi to preserve fruits which generally are more perishable. Around 1960, the cold storage market had grown and intensified as lot of new players and competitors started to set up new facilities. In 1968 the government in a drive to improve the city plan shifted the location of the cold storage market to Azadpur, Delhi. IPSCL was allocated two pieces of land measuring up to 6456 sq feet of land. In 1977, Jagadish’s son Sanjay joined the company’s Board of Director and finally took over the company. Inspired from his visit the cold storage facilities in the US where he noticed and learned that the technology was much advanced and the companies were more cost effective and thus were able to pass on the benefits to the customer, Sanjay undertook a modernization and expansion drive within IPCSL in 1998. His main vision was to differentiate IPCSL from the rest of the competition to avoid a price war and transform the company such that IPCSL is able to provide higher value to customers and charge a premium for the better services. With financial assistance from NABARD and other national banks, IPCSL upgraded its cold storage facility by installing Controlled Atmosphere (CA) and Gas Controlled (GC) cooling units which provided superior cold storage services and doubled the storage capacity to 5000MT by 2001 with an investment of Rs 60 million.
Problem with IPCSL:
IPCSL started modernization in the year 1998 and it was completed in 2001, during which huge investment was done and construction work also hampers diversion of customers. Following are problems faced by IPCSL when construction was completed.
a. Loss of customer base-as IPCSL’s storage capacity was affected by the ongoing reconstruction work. They also lost the direct export business that had been cultivated with customers in the Middle East. b. Competition-competitors’ aggressive pricing
c. Fixed Cost Increase- as better trained and higher paid staff were required to operate modern equipments. d. Debt of Rs 55 Million.
For reaching conclusion whether IPCSL should reduce its prices or not we will first analyse market potential, IPCSL cost and effect of underutilization and rates in market.
Market potential: According to National Horticulture Board total fruit produced in India is around 81285.33 (lacs in nos) 5 or 77Million MT3 commonly produced varieties are apple, mango, banana, pineapple, chikoo and grape. Fruits like mangoes, bananas and grapes perish faster - ten days from harvest in ordinary cold storage - while...
References: 1) Indraprastha Cold Storage Ltd Case Study
2) Market Orientation: Transforming Food and Agribusiness around the Customer
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