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Ice make Refrigeration - Picks & shovels for cold storage infrastructure

Ice Make Refrigeration is an micro cap stock listed on the NSE SME exchange, it entered the market earlier this year with an IPO priced @ Rs. 57 and is currently trading around Rs. 80. It is a manufacturer of refrigeration systems, the kind used for cold storage. There are 4 product categories

  1. Cold rooms – 65% of turnover
  2. Commercial refrigeration – 15% of turnover
  3. Industrial refrigeration – 10% of turnover
  4. Transport refrigeration – 11% of turnover

The company has 2 plants one near Ahmedabad & 1 in Chennai. The purpose of issue was to backward integrate into manufacturing of coils for captive use as well as upgradation of manufacturing facilities. Current capacity utilization is only around 50% or so (varies as per vertical) and so there is not likely to be much capex in near future.

Most attractive thing about the company is the macro picture for its industry. India is desperately short of storage facility for food, around 18% of food & vegetables go waste every year and the number is substantial for other food categories also.

Most parts of India are under penetrated (see attached report for details) and even in states like UP which have adequate storage facilities they are largely used for a single product only (potatoes). There is a desperate need for more cold storage and this is a critical component of the framework required to ensure that farmers get better price for their products and do not get squeezed on account of perishability of their produce. While we have been talking of a need for more cold storage for a few years now, the improved rural road networks, better power connectivity and greater visibility of farmer distress (both from an economic and political standpoint), are enabling factors that may speed up the creation of more warehouses. Essentially we are looking at an industry that may have 15-20% growth visibility for the next decade.

Company has shown good growth over the last 4 years with improving margins, debt has historically been comfortable and post IPO there is zero net debt.

In attached concall the company has guided for 30-35% topline growth next 2-3 years, they seem confident of maintaining or increasing margins at current levels by focusing on the businesses other than cold rooms which have higher margins. Also they indicate lack of capital was holding back business expansion which is now not the case post IPO funds.

On flip side the business is quite competitive and there are numerous local as well as imported players, entry barriers are not very high though like everywhere else GST should help organized players.

In summary cold storage per se may not be a high margin or attractive business with long gestation periods et al but this company going by the apocryphal story is the guy who supplied picks and shovels during the gold rush and made more money than the actual miners. At 16 trailing PE given scale of operations it may look fairly priced but it is a business that has lot of near and medium term growth potential and no listed peers. Worth a dekko…

Disc - not holding

fy2018-conference-call-transcript.pdf (132.8 KB)
investor-presentation-may-2018.pdf (2.1 MB)
Annual results FY18Food wastage & cold storage industry.pdf (2.3 MB)


Nice write up. Can you please post the actual production of cold rooms and other products in last 3-4 years, especially FY 2018? I think it was something like 175,000 sq. mt in 2016-17 and they have a capacity close to 500,000 so I was expecting a good jump in revenues in FY 18. Topline growth is declining so trying to understand what is holding them back since they have the capacity.

These are just the numbers of the top of my head. I think they were planning to boost the production close to 400,000 by 2020. Any update on that in the conf call? The transcript is difficult to read.


I have been looking to play the cold storage idea (because India is not getting any cooler). Burnt my fingers in Snowman logistics. A better analogy IMHO for supplying picks and shovels in the cold storage gold rush will be the air compressor space. The barriers to entry are also higher in companies like Ingersoll Rand and Elgi

Data & projections for the Ahmedabad & chennai unit are as under - you are right they are projecting 400000 in the cold rooms vertical and there is no update in the concall, they only guide at 30-35% topline growth.

Frankly i did not take the projections very seriously because if you see across all verticals they have projected 70% utilization in 2018-19 & 80% in 2019-20 (for main Ahmedabad unit). Looks more like a lazy formula drag than the product of serious sales estimation, also as i understand there is some customization that goes into these things so utilization may vary as per the same .

Ahmedabad unit

Chennai Unit

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I run a business in logistics, the return ratios for cold storage or reefer vehicles are not superior to standard warehouse/ vehicles while capex is higher, which is why Snowman doesn’t make money. But nevertheless there is a lot of demand for the same and capacities are coming up, which is why I believe a storage infra play made more sense than a pure operator play. Air compressors is a related area definitely but this is more unique & more niche area, has higher growth chances IMO.


Snowman Logistics is in the business of operating and maintaining cold storage units. But ICE make is in the business of manufacturing Cold room, Commercial Refrigeration & Industrial Refrigeration for retail, pharma, logistics, ice cream, milk producers etc.

Industries they cater to:
Dairy, Ice-Cream, Food Processing, Fruits and Vegetables, Logistics, Horticulture/Floriculture, Hospitality, Hotel-Restaurant, Retail Outlet for Dairy – Ice Cream, Plastic, Pharmaceuticals, Biological Research, Chemical Processing Industry.

ICE Make Product Segment Revenue Split
Cold rooms 64.90%
Commercial Refrigeration 15.19%
Industrial Refrigeration 9.39%
Transport Refrigeration 10.52%


Latest AR -

CFO salary is too low just 4.42 lac (despite being a CA & 8 years experienced) & secretary salary just 2.55 lac.

Why promoters drawing interest from company?
What interest rate they are charging?
Company earning very low interest on FD, why they can’t pay loan to promoters and stop syphoning of company money to promoters?

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Company has series of investors meet and company visit with many well known investors and MF but till date no one invested in this company…do they know weakness which we don’t know?

Wouldn’t read too much into it, in these SME kind of companies any normal employee will be classified as a CFO etc for regulatory purposes.

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Message to be read that CFO is CA with 8 years of experience. low salary as per AR means either there is some cash component in the salary or CFO might be working for other group companies and drawing salary there also.


I think you are referring to the 218 lakhs loans and advances from directors.

  1. Based on the related party transactions on the interest received, it is 20% interest rate. From FY17 to FY18, this borrowing has been reduced from 412.21 to 218.64 lakhs. Hope they will remove it completely soon.

  2. Current debt/equity ratio is almost zero (0.05) which is healthy.

In Cash flow statement :
Interest and Finance Charges: 178.13 (FY2017-18) v/s 126.49 (FY2016-17)
Why this increased ?

Did small number crunching and others notes while applying IPO. Now i lost track. Just reproducing for user purpose.

Pl find the Another boring company SME IPO but i liked a lot due to growth potential. It is all fresh issue and not a offer for sale.
I am very much interested to apply for this IPO. Since it is micro cap, High risk to exit at appropriate time. There are few red flags and good qualities which i mentioned. Kindly read the RHP and share me your views. I liked their ROCE and ROE levels for this micro company with not bad payment terms. I liked their cash conversion cycle too.

RHP Link: Here
2017 Annual Report: Here

Issue Detail:

»» Issue Open: Nov 28, 2017 - Nov 30, 2017
»» Issue Type: Book Built Issue IPO
»» Issue Size: 4,160,000 Equity Shares of Rs 10 aggregating up to Rs 23.71 Cr
»» Face Value: Rs 10 Per Equity Share
»» Issue Price: Rs 55 - Rs 57 Per Equity Share
»» Market Lot: 2000
»» Minimum Order Quantity:
»» Listing At: NSE SME
»» Retail allocation: 50%

Incorporated in 1993, ICE Make Refrigeration Ltd is Ahmedabad, Gujrat based manufacturer of refrigeration equipment under the brand of ‘Ice Make’. Company provide cooling solutions for cooling systems and accessories used in industries such as dairy, ice-cream, food processing, agriculture, pharmaceuticals, cold chains, logistics, hospital, hospitality and retail, among others.

ICE Make classifies its business into the following 4 verticals:

  1. Cold Room
  2. Commercial Refrigeration
  3. Industrial Refrigeration and
  4. Transport Refrigeration.

Company’s top 5 products are Cold Room, Commercial Freezer, Chiller, Refrigerated Vehicle and Ice Cream Hardener.

The manufacturing facilities of our Company are located at Dantali, Gujarat and the manufacturing facilities of our Wholly Owned Subsidiary are located at Chennai, Tamil Nadu.

Key strengths

  1. Manufacturers of wide range of refrigeration equipments
  2. Providing customized solutions with a focus on after sales service
  3. Well established manufacturing facilities
  4. Strong marketing and distribution network
  5. Catering to clients from diverse sectors and industries

Company Promoters:

The promoters of the company are:

  1. Mr. Chandrakant P. Patel
  2. Mr. Rajendra P. Patel
  3. Mr. Vipul I. Patel

Objects of the Issue:

The proceeds of the Issue are proposed to be deployed for financing the following objects:

  1. To finance the capital expenditure;
  2. Expenditure towards enhancement of brand through brand building activities;
  3. Investment in Bharat Refrigerations Private Limited (Wholly Owned Subsidiary);
  4. To meet the incremental working capital requirement;
  5. General Corporate Purposes.

It gives great pleasure to announce that “ICE MAKE REFRIGERATION PVT. LTD.” has been awarded as “Top 100 SME’s of India, 2015-16”.
It is a truly honor to be ranked among total 41832 nominations.

Clients All Marquee Clients Link here
Revenue Contribution FY 2017
Cold Room 63.40%
Commercial Refrigeration
Industrial Refrigeration 13.50%
Transport Refrigeration 5.80%

Key Raw Materials
Stainless Steel, PUF Chemical, Condensing Units, Evaporator Units, Condenser Coils, Evaporator Coils,
Compressors, Exchangers, Copper Fittings, Refrigerant Gases, Heaters, Plywood, Colours, Cables and Pumps
Remarks Copper and Crude is major commodity
Top Ten Customers
FY 2017 25% Not too much concentrated

Value Chain across Business verticals where all Company can give their products.
It is kind to get more more business from single customer

thanks and regards


promoter Mr. Chandrakant P. Patel getting 27,00,000 (revised to 30L) and 1% of company profit
while Mr. Nikhil Bhatt (53 year old and 32 year of exp and is VP) is getting just 4,36,890


Latest Annual Report :

FY19 Segment wise revenue:


FY19 Financials:

  • Op Revenue: 131.63 Crs (YoY Gr% - 28%)
  • EBIDTA: 14.18 Crs (EBIDTA % - 13%)
  • PAT: 7.48 Crs (YoY PAT Gr% - 13%)

Key Positives:

  • Good growth exhibited by the company
  • Management is focused on customer delight, which is an important success factor for the business
  • Management efforts towards verticlal integration (i.e. setting up coil manufacturing unit) is encouraging and quite positive from growth perspective
  • Management efforts towards business diversification and scaling up in value chain (i.e. venturing into ammonia business - next big thing) is catalyst for long term growth of the company
  • Significant managment efforts towards “ICEMAKE” brand building

Key Risks:

  • Business concentration risk: majority portion of business is coming from western region / Ahmedabad plant
  • Scalability Risk: To scale up the business to different league (from SME to Midcap) might be challenging for the company

Disc: holding