Dr Prashant Mishra ( MBBS,MS,MCh)

Ice make refrigeration limited

First we should understand about some basics of Refrigeration industry .( I am not having
enough knowledge in this field so if you feel that I did some mistake here or omitted some
thing then you can rectify it )
What is cold room
A refrigerating chamber or cold room is a warehouse in which a specific temperature
is artificially generated. It is generally designed for storing products in an
environment below the outside temperature.

Products that need refrigeration include fruits, vegetables, seafood, meat, flowers,
pharmaceutical products `

All cool room refrigeration systems have five main components:

1. The compressor, which compresses the refrigerant gas

2. The condenser, in which the hot gas is cooled to a liquid
3. An expansion valve, which controls flow of the liquefied gas and where liquid gas
expands to vapour
4. Evaporator coils, where the liquid gas expands and boils. This process absorbs
energy, cooling the coils
5. Fan or fans, to circulate air over the cold evaporator coils, thereby cooling the cool
room. Air may also be circulated over pipes containing some type of liquid
antifreeze, which have themselves been cooled using the evaporator. Fans also
circulate air around the cool room to ensure even distribution of the cold air and
reduce temperature variations within the
 Dr Prashant Mishra ( MBBS,MS,MCh)
How Refrigerant Works

Without refrigerant, there would be no air conditioning, refrigeration or freezing

technology.

Air conditioners contain refrigerant inside copper coils or Aluminium coil. As refrigerant
absorbs heat from indoor air, it transitions from a low-pressure gas to a high-pressure liquid.
Air conditioning components send the refrigerant outside where a fan blows hot air over the
coils and exhausts it to the exterior.

The refrigerant then cools down and turns back into a low-pressure gas. Another fan located
inside the home blows air over the cool coils to distribute the resulting cold air throughout
the building. Then the cycle repeats.

Types of Refrigerants

The most common refrigerants used for air conditioning over the years include( You must
have heard these name in Navin Fluorine ,BASF,Refex,Gujarat fluro )

• Chlorofluorocarbons (CFCs), including R12. This is known to contribute to the

greenhouse gas effect. Production of new stocks ceased in 1994.
• Hydrochlorofluorocarbons (HCFCs), including R22. Slightly less damaging to the
ozone than R12, but the EPA has still mandated a phase out as a result of the Clean
Air Act of 2010. R22 will phase out completely by 2020.
• Hydrofluorocarbons (HFCs), including R 32 ,R410A and R134. With no chlorine in
the mix, this is safer for the environment and is now being used in place of R22.
• Ammonia Refrigeration

Ammonia Refrigeration- -

In very large cooling systems, like those in food processing facilities, ammonia is a common
choice of refrigerant. There are three major reasons for choosing ammonia as a refrigerant:

• Ammonia’s physical properties make it effective and efficient for large systems.
• It breaks down quickly in the environment, minimizing potential environmental
impact.
• Any spill or accidental release can be quickly identified, because of ammonia’s strong
odor.
• Cost is low and no ozone depletion effect and very low/no global warming
 Dr Prashant Mishra ( MBBS,MS,MCh)
According to the International Institute of Ammonia Refrigeration (IIAR), ammonia is 3 to
10% more thermodynamically efficient than competitive refrigerants. This allows an
ammonia-based refrigeration system to achieve the same cooling effect while using less
power. As a result, where ammonia refrigeration is appropriate, it can offer lower long-term
operation costs.

Most people will notice the pungent smell of ammonia when it’s only about 20 parts per
million (ppm) in the air. While some refrigerants have no noticeable smell, allowing small
leaks to go unnoticed, that’s not the case with ammonia. Even a tiny amount in the air will
be obvious. Importantly, the detectable concentration is much lower than the concentration
that will cause immediate harm.

Blast Chiller

A blast chiller is a piece of equipment that quickly lowers the temperature of food. Blast
chillers are also referred to as blast freezers or flash freezers. They typically have multiple
shelves where food pans or sheet pans can be stored and chilled at extremely low
temperatures.

How Does a Blast Chiller Work

Blast chillers or freezers operate by blowing forced cooled air over food placed inside. These
specialized freezers usually have a number of different settings that can be selected
depending on if your food is room temperature, chilled, or hot.

This rapid cooling process decreases the amount of ice crystals that appear on food. When
defrosting food, large ice crystals melt and cause excess moisture to release, which largely
impacts the taste and quality of your food products.

Blast Chilling Benefits

Blast chilling lengthens the shelf life of food. This allows restaurants to blast chill food, thaw
it, and then serve it at almost the same quality as fresh food. Below are some of the key
benefits of blast chilling or blast freezing.

• Nutrients are retained

• Maintains quality of food products
• Increases the shelf life of prepared foods
• Prevents bacteria from growing rapidly
• Allows you to cool down food products quickly when cooking
 Dr Prashant Mishra ( MBBS,MS,MCh)
Blast chilling can also be used to assist chefs and cooks during making entrees. For example,
you can quickly cool down a pasta dish in a blast freezer and add sauce once it is cooled.
Additionally, you can also make smooth and creamy ice cream and sorbets without worrying
about large ice crystals forming. Blast chilling is also perfect for freezing individual pieces of
food quickly

Copper
Copper conducts heat up to eight times better than other materials. Its thermal conductivity
properties make it the ideal material for the refrigeration cycle, including oil management,
sub-cooling, superheating, and piping of refrigerant.

Now some thing about the company

Company recently listed in NSE main board from SME platform ( was Listed in 2017 in SME)
Company is in business of providing customize cooling solutions by manufacturing
refrigeration products and equipment.
Company is having two manufcating unit
1- Ahmedabad
2- Chennai

Company operates in 3 brand name

1- Icemake
2- Bharat
3- Transfreez
 Infrastructure

Dr Prashant Mishra ( MBBS,MS,MCh)

 Dr Prashant Mishra ( MBBS,MS,MCh)
Sectors where it caters

Business Verticals – Company operates through 5 business verticals

1- Cold Room
2- Commercial refrigeration
3- Industrial refrigeration
4- Transport refrigeration
5- Ammonia refrigeration
 Dr Prashant Mishra ( MBBS,MS,MCh)
1- Cold Room – This is a major revenue segment for company
End users: Dairy, ice cream, food processing, agriculture, pharmaceuticals, cold chains,
logistics, hospital, hospitality and retail
They are having facility to manufacture solar power cold room also , which runs on solar
power and in absence of sunlight it will work on Diesel Generator ( DG) power

solar power cold room that is for the storage of the agricultural product at the farm level as
well as the remote place where there is no power supply or any other facilities are not
available
Revenue contribution from Cold room segment was around 58% in 2019-2020
Product line: Cold Room, Solar Cold Room, Cold Room Puf Panel (Discontinuous Type), Cold
Room Door, Condensing Unit (Air/Water-Cooled), Evaporator Unit, Cold Room Control
Panel, Glass Door Display Chiller, Curd Incubation Chamber, Ripening Chamber, Precooling
Chamber, Blast Chiller, Blast Freezer .
 Dr Prashant Mishra ( MBBS,MS,MCh)
2-Commercial Freezer- Below is the picture of commercial freezer which you must have
seen in Many Restaurants ,another example is vertical freezer for cold drink which you must
have seen in many restaurants and many other types also which you can see in company
website also.

End users: Dairy, ice cream, food processing, agriculture, pharmaceuticals, cold chains,
logistics, hospital, hospitality and retail, among others.
Revenue contribution was around 22% in FY 20 from this segment .
3 industrial refrigeration
Ice water intensively cools the product without any risk and less power load
Storage: capacity of ice building tanks ranges from 5,000 litres to 1,00,000 litres and
capacity of water chilling plants ranges from 5 TR to 200 TR
End users: Dairy, ice cream, food processing, pharmaceuticals and hospital, among others
Revenue contribution around 7 %
 Dr Prashant Mishra ( MBBS,MS,MCh)
4- Transport Refrigeration - End users: Dairy, ice cream, food processing, agriculture,
pharmaceuticals, cold chains, hospital, hospitality and retail among others
A National Centre for Cold-chain Development (NCCD) study, which was released in
September 2015, has indicated a requirement of 62,000 reefer vehicles Volumes of
TCV are expected to grow at a CAGR of 6-7% from 2016-17 to 2021-22 driven
primarily by pharmaceuticals and frozen products which is largely for export markets
as well as in domestic markets
End users: Dairy, ice cream, food processing, agriculture, pharmaceuticals, cold chains,
hospital, hospitality and retail among others
revenue contribution -around 9.5 %

5- Ammonia Refrigeration – Launched in 2018 ( Used in bigger project)

End users: Food and beverage, dairy, ice cream, brewery and pharma sectors
Revenue contribution around 3.5%
Company is very optimistic about Ammonia Refrigeration
Clientele.

•
•
• Market Cap₹ 128 Cr.
 Dr Prashant Mishra ( MBBS,MS,MCh)
• Current Price₹ 81
• High / Low₹ 81 / 25.6
• Stock P/E16.1
• Book Value₹ 35.4
• Dividend Yield1.63 %
• ROCE15 %
• ROE11 %
• Face Value₹ 10.0
• Asset turnover ratio -1.76
• Eps 3.64 ( FY 20)
Last 3 years top line is growing but bottom line are not growing and margins not improving .

Raw Material
Raw material cost is around 68%
Raw Material - polyurethane (PU) chemical and galvanized steel sheets along with
components made from copper and aluminum. ( Polyurethane is a crude derivative)
They started manufacturing Coil in house now so I expect that margins should improve now
Read about management comments on Raw material
FY 20 Raw Material of Rs. 95 crore out of which Rs. 4.5 crore will be total import and from
China on an average total import of 45% is what we had up until now, 40‐50% of the total
imports and slowly we are working towards eliminating the dependency on China and we
have already taken steps. And there was one component i.e. coil, earlier we did not used
to manufacture coil in house, so we used to order readymade coil from China, there was
local procurement also that was done but now since we have started in‐house
manufacturing and our dependency on China has lessen to a major extent. And the raw
 Dr Prashant Mishra ( MBBS,MS,MCh)
material we are now majorly ordering from Thailand and SAARC nations. And for China,
we are planning to reduce our import maximum to an extent upto Rs. 50 lacs to Rs. 1 core.
Employee Cost
FY 20 employee cost is around 7% ( Previous 2 yrs 5%) and according to concall it is more
due to new hiring and read explanation of company about it ( Below)
-company recruited trained professionals and the manpower, so its impact reflected in the
second half of the last year. And in this current year has been impacted completely on their
salary cost. Other than that, our labor cost, rent, interest, commission, even depreciation
has increased a little this time and our expenses have raised a little higher slightly this time,
so because of that our PAT has reduced marginally.

Last 3 yrs it is paying dividend also

Borrowing around 13 cr (long term debt 3 cr)
Receivable increasing and in fy 20 march its around 27 cr
Care Ratings –( Little old but still useful )
Liquidity - Adequate: Despite the working capital intensity of its operations, IMRL’s liquidity
remained adequate marked by low utilization of its working capital limits at around 40-50%
for the trailing 12 months ended September 2019 and a stable operating cycle at around 90
days. Further, IMRL has sufficient cushion in its accruals vis-à-vis its debt repayment
obligations (GCA of Rs.9.96 crore in FY19, as against repayments of Rs.0.36 crore in FY20)
and a cash balance of Rs.4.06 crore as on March 31, 2019. Also, IMRL has low capex
requirements, as it has built up adequate capacity to cater to its planned growth in
turnover over the next two-three years.
.

The debtor days stood at 63 days which is comparatively less than creditor days of 69 days
Current Ratio (Times) 1.53 Interest Coverage Ratio (Times) 6.78
Related party disclosure – I am unable to ubderstand about factory Rent,rent to promotors (
probably tax saving ideas by promotors )

-Export of FY2020 grew by 3 times and stood at Rs. 6 crore versus Rs. 2.19 crore( Growth
with low base )
 Dr Prashant Mishra ( MBBS,MS,MCh)
Some Interesting points which I noted in Concall ( August concall available on their
website)
1- Tie ‐ups with some of the leading manufacturers of vehicle chassis like Ashok Leyland
and arrangement.
2-under process of one of the International brands that is Volvo with one of the projects.
3-We have been using C5 Technology, we have become more competitive in the market.
Last
4-Last year entered in on line business with first few orders from swiggy
5-our pending order book strives as on date is Rs. 28 crore
6- Promotors are waiving off their dividend
7- government business or tender business basically is 5‐6%, .
Explanation of poor cash flow from concall
If we compare the current H1 and H2 cash flow, so it was negative Rs. 6.5 crore, it is now Rs.
1.5 crore negative only. So that means in the second half we had generated a cash flow of
Rs. 5 crore though we could not mitigate the H1 impact, the main reason for that was that
our Rs. 10 crore to Rs. 12 crore of our dispatch could not take place in the last ten days. That
is the reason our inventory is also at an increased level now. Our deters were also like that,
like our realization was nearly Rs. 3.5 crore to Rs. 4 crore which was their commitment but it
could not get realized due to Corona lockdown. Otherwise, our cash flow would have been
positive this year only
competitor,
Transport Refrigeration – Suraksha and Sub Zero
Ammonia Refrigeration – Rinac , Frick India and 3-4 more
Other Verticals- Bluestar, Voltas, Carrier

Possible Growth Trigger –

1- Farm bill – we all know that recently farm bill was passed in parliament which will
allow private players to establish their own warehouse and cold chain ( From Farm
to customer)logistic system
2- Company recently ventured in to ammonia refrigeration for big industrial project
3- Growing need for cold chain in Dairy sector, food sector, pharmaceutical sector .
 Dr Prashant Mishra ( MBBS,MS,MCh)
4- TCW ( Temprature control warehouse) account for 90% of the overall cold-chain
industry and are projected to grow at a compound annual growth rate (CAGR) of 14-
16% over the next five years, driven by proliferation of quick-service restaurants
(QSR), organised retail and rising demand for processed foods
5- Ammonia refrigeration – Recently started and with increase industrialization they
may get more contract .
6- With Recent backward integration for coils – profit margins may improve .

Risk –
Raw Material polyurethane (PU) which is a crude derivative and coil of copper and
aluminium so any fluctuations in raw material price can lead to margin erosions
Very Big established competitors
Very small company with low float shares

My Opinion –
Very Small company with big competitors, with low margin business although
entire cold chain related sector will grow with growing needs of temperature
control ware house ,industrial refrigeration , cold chain logistics and with in house
manufacturing of coils may improve profit margins but buying unknown or less
known microcap may be a risky idea.

Dr Prashant Mishra ( MBBS, MS,MCh )