``Cold storage companies in India would do well if they work closely with the customers to identify their offer in the value added services sector,'' said vice- president of the International Associations of Refrigerated Warehouses (IARW), Keith Sunderlal.

The high operating cost factor was quite against the instances prevalent in the cold storage units operating in the western markets like the US and Europe. In the West, Sunderlal said the share of the costs of operations were spread out in areas like handling, leasing, inventory management as well as delivery systems.

Operating costs for Indian units is estimated at a whopping Rs 95 per cubic foot per year as compared to that of those firms in the west where it was about Rs 40 per cubic foot per year.This, sources say, not only makes the setting up cold storage facilities difficult for investments but also was the main stumbling block.

Apart from this, the energy requirements too work out exorbitantly high for these firms. For instance, according to a recent study carried out by the IARW, in Indian cold storage units energy expenses tended to comprise one of the largest components of the costs incurred by a unit--making up as much as 28 per cent of the total expenses.

In the US, the study reveals that the same unit would have incurred an energy consumption of not more than 10 per cent.

At a disaggregated level, the components like labour, utilities, plant maintenance, administrative costs and depreciation as well as leasing totalled up to a little over a dollar per cubic feet per year, the study points out.

The high utility costs involved in the operations of the cold storage business in India was primarily due to the high cost of power which was substantially high as compared to that availablein the US working out to about Rs 2.50 per Kwh.

Apart from this, the study also points out that costs of building a cold storage was itself was a stumbling block for a potential investor. With most of the cold stores in the country being limited in size as compared to the global trend, the economies of scale also proved to be disadvantageous to Indian operators.

The range of services offered by the Indian cold storage was also a moot point, the study says. It points out that many of the cold storage firms operating in the overseas markets like in the US positioned themselves as the `logistics solutions providers' for the sector.

The units provided a host of associated services like handling, freezing inventory management, load mixing, delivery and pelletising quite against the Indian companies that solely provided only storage facilities.

The spreading out of the services was being done at extremely efficient levels by the cold storage units in the US and Europe. However, this required a closecooperation between the cold storage firms with the customers.