Become a Creator today!Start creating today - Share your story with the world!
Start for free
00:00:00
00:00:01
How to Build a Profitable B2B Marketplace in India: FarMart
1 Playsin 37 minutes
Alekh Sanghera spent his early career as a digital payments consultant at MicroSave, working on Bill Gates Foundation and World Bank rural finance mandates, before realising that the smallholder farmer's biggest problem was not credit but market access.
The Indian agritech startup he co-founded, FarMart, is now the country's largest output linkage platform, supplying Britannia, Reliance Retail, ITC, biofuel distillers, and animal feed giants while running a zero-inventory, asset-light business model.
In this conversation with host Akshay Datt, Sanghera explains why most B2B marketplaces fail by chasing the trade spread, how FarMart pays farmers same-day by securitising enterprise invoices through SEBI-registered NBFCs, and why the village retailer is infrastructure rather than friction in the Indian food supply chain. The timing matters: India just hit 20 percent ethanol blending, maize and broken rice are now the largest grain feedstocks, and capital-efficient agritech models are the only ones still attracting growth funding in 2026.
👉How FarMart hit a ₹3,600 crore revenue run rate without owning any warehouses, trucks, or inventory while running on a team of just 320 people.
👉Why every Indian B2B commodity startup that tries to make money on the trade spread eventually destroys either its farmers or its buyers, and how FarMart instead monetises a stack of platform, logistics, and finance origination fees.
👉What forced FarMart to pivot four times, from an Uber for tractors to a rural BNPL card to a retailer SaaS, before landing on the output linkage model that powers its current scale.
👉How FarMart turned 14,000 village retailers into a decentralised procurement force and why Sanghera refuses to disintermediate them despite a decade of startup orthodoxy that says otherwise.
👉Why the ethanol blending mandate, the AgriStack rollout, and the Bharat Mart trade corridor are quietly creating a multi-billion dollar pipeline for grain-based Indian agritech founders.
Subscribe to Founder Thesis for weekly founder conversations and follow Akshay Datt on LinkedIn for daily insights.
00:00 - Inside India's Largest Agritech Output Platform
03:00 - FarMart's Four Big Buyer Industries
09:35 - The $400M Asset-Light Run Rate
16:45 - Why Mandis Fail Indian Smallholder Farmers
28:00 - Same-Day Payments Through Invoice Securitisation
36:00 - The Zero-Inventory Agritech Playbook
43:00 - Why Trading Spreads Never Make Money
1:07:00 - From Failed Tractor App to Profit
1:19:00 - FarMart's Public Listing Roadmap
#FarMart #AlekhSanghera #FounderThesis #AkshayDatt #IndianAgritech #AgritechIndia #B2BMarketplace #AssetLightStartup #IndianStartups #FoodSupplyChainIndia #IndianAgriculture #RuralEntrepreneurship #StartupPivot #EthanolBlendingIndia #AgritechFunding #SmallholderFarmers #IndianFoodIndustry #AgritechFounder #StartupIndia #B2BSupplyChain
Disclaimer: The views expressed are those of the speaker, not necessarily the channel
Recommended
Transcript
Introduction to Farmart and its Founder
00:00:00
Speaker
What exactly is Pharma? Alliance Retail, Britannia, Parlay, all these large food FMCG giants are basically our customers. Currently we operate in dollar terms about 350 million. That's about 3000 crores in scale. At any given one point in time, about 1 lakh trucks are on the shipment. Alex Sangeira is the founder of Farmart. Farmart is India's second largest agricultural products procurement platform and they did this without owning a single warehouse or truck.
00:00:25
Speaker
This is a masterclass on asset light disruption. We are competitive is because we don't deploy physical assets. Essentially what you built is something like a Rapido except it's for agri products. If you try to make money on the on the trade, you'll never make money. What you have to make money is on services. All we do every day is kind of create trust. How are you any better than Amandi?
Farmart's Operations and Industry Focus
00:00:54
Speaker
Alek, welcome to the Founder Thesis podcast. You are the founder of FarmArt. I want to ah get like a big picture view. What exactly is FarmArt? What space are you operating in? Let's start with that.
00:01:07
Speaker
So, me at FarmArt, we've been you know in the agri-food space for the greater a part of a decade now. So, we ah basically work in the intersection of agribusiness, which is basically you know farm produce and farm produce linkages. and with the intersection of basically food business once the food is obviously processed and gets closer to consumers. So basically agri-food is generally the space we work in but because food is such an essential driver ah ah not only for nutrition um but also for energy value chains now. um you know So we basically operate in the space of agri-food and energy um and then that's basically the the whole the whole you know industry, which basically we try to power through ah through our to our innovation.
00:02:03
Speaker
You need to be simpler, man. Yeah. kisco based still cal based still ya butta whos yeah ne is So basically at a from fundamental level, v work across four industries, the food FMCG, but like on the buyer side, right? ah Food FMCG, value way then we have the biofuel, which is one of the large energy sectors now with ethanol blending happening in the and the petroleum market. Then basically Alcobev and then ah animal nutrition, which are feed. So basically our customers on the on the buy side buyer side. And what are you selling to each of them?
00:02:44
Speaker
ah So basically food, I would say commodities, mostly dry commodities across. So FMCG would be like this Aata Dal Chawal types. Yeah, so yeah, basically Reliance retail, away apka basically Britannia, Parley, all these large food, FMCG giants, those are basically our customers. and But on the supply side, or we work with ah like you know both farmers and farm level aggregators.
00:03:10
Speaker
yeah We'll come to supply. First, let's stay with whom you're selling to. tiga So, FMCG, you're selling Aata Dal Chawal, etc. Which ah you would be… And also like Gahum, Rai, Patty, Oil Seeds, basically. Though a raw processed ke across, we operate in both categories, but… And you sell in bulk or you white label it for them also? So we do both solutions. it'ss It's the customer leadership, but bulk of the business is is bulk basically because they have their own ah you know infrastructure processing and so on and so forth. So bulk of the business is basically B2B. But we for our ah some customers in India and some customers globally, we also do private labeling with the end-to-end
Farmart's Role in Ethanol and Alcohol Production
00:03:51
Speaker
solution. So basically, We have sold it from the farm, processed it, and then we do the last mile logistics and shipment. So we across like i said we operate both across across those those two pieces.
00:04:06
Speaker
so guys Now, second you said is biofuel. Biofuel, yeah. So what do you sell to them? So basically what's happened over the last, I would say five, seven years is, you know, there's 20% blending, a minimum of 20% blending that, ah you know, all ah for basically India being an energy self-reliant country, there'll be 20% blending of all all um or all petrol, diesel in the future. right And because of which there are many larger industry which has come of which is ethanol or blending.
00:04:37
Speaker
So we basically sell both maize, broken rice, rice to these guys to basically make sure that they use food grains for crushing and then basically producing ethanol out of it and then obviously blending and selling to large petroleum companies. So they send them this. I thought ethanol is made from sugarcane.
00:05:01
Speaker
It's made from all this also. Basically, initially it was mostly made from molasses of like sugarcane, basically. But up basically, ethanol may, lot like I would say, larger part of the contribution is coming through maize and rice. ah That's like become the larger contribution now. ah And sugarcane has actually reduced.
00:05:21
Speaker
Maize is corn? Corn, correct. OK. That high fructose corn syrup. that Correct. OK. Which syrup is basically like ah fructose or thing for human consumption plus like ah like you know your are your beverages and so on and so forth. ah But the one maize component is made of ethanol. Between maize and then... You can use any food grain but basically due to the ah content, mostly maize and rice. They would have high sugar content.
00:05:53
Speaker
Yeah. tika Got it. Okay. tiga So that is the second. What's the third? um Alcobev, basically. ah So all the... This is again, in a way, ethanol production. Yeah, basically, in in a way, but at a different distilled way, in a different distilled manner. And that last is obviously animal nutrition, which is your feed companies.
00:06:12
Speaker
So Alcobev would be, again, like say, I think whiskey is made from wheat. Whiskeys, then... barley for Barley for beer manufacturers, your Hennequins and so on of the world, basically, Carlsberg, Hennequins.
Farmart's Commodity Supply and Market Strategy
00:06:30
Speaker
So mostly between wheat and barley. Those are basically the two key raw ingredients that go into into that.
00:06:39
Speaker
um And then basically is the animal feed industry, which is animal nutrition, whether it's to basically, you know, chicken feed or it goes into ah fisheries, basically in a big way. So those are basically the feed industry. And what what are you selling?
00:07:01
Speaker
What goes into chicken feed? but rock raw commodities like maize, rice, wheat also, then some some part of like you know specialized bhajra and so on and so forth basically which is your alternate I would say like protein, alternate protein requirements in in that. So those two are basically, so if you look at it, we operate across almost 40, 45 categories, but mostly we dry, so fruits and vegetables or like stuff like that we stay away from because that's a different ballgame to to play in. But ah value chains, which are much more dry, across I would say staples then oilseeds which is basically lentils then and spices is basically our forte and in what we operate more aggressively and spices like raw spices or like actual masala like both both basically so we supply to all the larger enterprises but also do raw spices across across these these things so
00:08:11
Speaker
Yeah, across mostly South India, but some parts of Gujarat as well. Okay. Okay. And what's your top line like? How much do you expect will be current year? So currently we operate in dollar terms about 350 million basically. um And that's about 3000 crores in scale. um so income yeah So in terms of like domestically, um ah net of I would say one private enterprise which has been there for 25 years, we are the largest now player in terms of scale and volume.
00:08:42
Speaker
at least on the output linkage space, because we only operate in the output linkage space. So that's the kind of the scale we operate at right now on an analyzed basis. So getting closer to, I would 500 million in the next six, eight months. So 500 million is basically, I would say, roughly the like going run rate right now and in terms of the business amazing what do you mean by output linkage so basically there are two linkages in uh in food basically it's in agri i would say let's say agri not food uh so in whenever and someone talks to about input linkage it's basically getting
00:09:21
Speaker
let's say seeds, fertilizer, agrochemical to the farmer basically so you're providing the ingredients for growing the crop and so that's how input linkages are basically kind of defined in our space and output linkages once the food or the produce is ready how do you get that produce to the market um across buyers and consumers and so on and so forth so We operate purely on the output linkage side and and across those you know raw, processed and consumer categories. So basically, that's how we categorize or how the space categorizes if you have to bucket people into into into what they do and how they do it. can Can you name that company which you said is bigger than you, the legacy business, 25-year-old?
00:10:10
Speaker
It's ITC, basically. ah So ITC is... So your only competitor in India is ITC. That's phenomenal. In terms of scale, so they do about 16 to 20 lakh metric tons of ah food. ah We do about 11 to 12 lakh metric
Farmart's Demand-Side Focus and Farmer Benefits
00:10:27
Speaker
tons now. And ITC is doing this for their own procurement or they also sell to others?
00:10:32
Speaker
Because ITC itself has brands of like daalata, etc. Basically, ITC's 40 to 45% consumption goes into their own categories. ah But 60% is actually sold to other B2B businesses. ah So inherently, everyone looks at ITC like a consumer or a food play. but behind they have a very large uh b2b business uh which actually obviously gives you cross leverage right uh but but that's how big basically they are split in terms of uh their organization so they have an agri business and they have food business so the food business obviously agri business can sell to the food business but it also sells to basically customers uh across across the across the market Okay, okay, okay. Amazing. Okay. um So what about say like ah in the startup space, like say, Dihart, Agnext, what are they into?
00:11:34
Speaker
ah So like a Dehat is basically, obviously does both. They actually put number yeah so they have a franchise network, which they sell their inputs marketplace through. And then they also you know ah take the offtake from the farmer and sell to things. So if you look at how the industry is function, right? So agri-tech, if you speak about agri-tech, whether it's Dehat or AgroStar,
00:12:02
Speaker
uh of or like ah absolute foods right uh they are focused more on the on the farmer uh and they're focused much more on you know how do you increase uh access to import finance or productivity tools for the farmer and then ah because they want to help the farmer they would also try to be the off take of the farmer uh Whereas us, we have a little bit of a different thesis, I would say. We obviously, ah we started with the farmer, our first four, five years was you know predominantly focused on you know different services for the farmer. But we believe that a lot of the value creation or
00:12:42
Speaker
how the farmer will benefit is actually through tapping into the flow of the money. And the flow of the money, fortunately, unfortunately, sits with you know who's buying, basically. ah So our focus has been over out the last three, four years has much been much more on the on the on the demand side because for us supply is kind of infinite in this in this way, right? But but because you have a good demand, you have good payment, you have good offtake, you automatically get a better benefit milai basically in in this in this way. So we basically operate much more on the on this leg of of that. And our thesis has been that you know in food and agri has been going on for 100, like whatever, 100 or centuries, right? So it's not like it's an industry which has been created.
00:13:34
Speaker
ah but But because of you know low entry barrier or lack of information or a lot of, I would say, a lot of entrants in the space, trust is a huge issue across this value chain or getting you know paid on time or basically getting the right quality of the product. So basically we operate in creating a trusted network ah where you know whoever we come on and work on and create the services for um you know eventually ah you know gets serviced on time, or gets processed on time, gets paid on time so that the farmer eventually can benefit being part of the farm art network. So that's kind of in simple ways. uh you know all we do every day is kind of create trust right so more trust we create the more people want to get associated with us the more people want to get associated with that and more buyers come on board the more buyers come on board the more sellers want to work with us so automatically that flywheel kind of works for us uh and because the scale keeps on increasing uh so like you know you if you look at how our journey has been but
00:14:39
Speaker
We went almost from a zero revenue to doing like 50, 60 million nine months or 10 months. And then basically going to 100 million, 200 million, 300 million, basically. And the last, would say 50 or last 100 odd million we've added, actually added in less than six months.
00:14:58
Speaker
ye This is like operational leverage kind of a business. here gijitnaa trust up create karthero way You will be able to like scale faster and and become bigger. And because this is a food industry, this is a massive TAM, right? So we are not talking about like a few hundred billion as few like billion industry. right This is like a 400 billion kind of annual industry. So scale matters, basically. If you're not operating at scale, ah you know, the pricing, the competitive advantage and so on so forth doesn't work for your customers. So that's kind of how the evolution has been and what our learnings have been as we evolved into into who we are right now.
00:15:37
Speaker
So how are you any better than a mandi? You're saying that there's a trust deficit. I think mandi is fairly like what you see is what you buy. A farmer gets paid cash immediately at the mandi. I mean, for a farmer, there there wouldn't be a trust deficit in selling through a mandi, right? So how what is the value add you're doing rather than a farmer selling through the mandi?
00:16:06
Speaker
So... there are a couple of things right so in india if you look at how the mandi system works right uh average farmer has to travel basically they are like roughly 4700 mandis in the country uh divided by you know per state and roughly uh so and so forth so a market yard or a mandi is basically average farmer has to travel about 75 to 80 kilometers basically from the farm to the mandi uh that's the national average so in Punjab that will be closer to like you know 20 kilometers in UP that might be 120 kilometers basically and it obviously varies based on this now you have to look at how what the farmer has to go through to sell to in a mandi right first basically the produce they because mostly eighty five ninety percent are small holder So they don't even fulfill a truck load or like a full tractor load, right? So basically fragmentation of their produce and all of them don't want to sell at the same time because they want, yeah, I'll sell 60% of my harvest the year, right? So basically it's fragmented. the lakeja abaai
00:17:17
Speaker
then most of these farmers don't have access to transport. So they have to then basically rent a tractor or get five, ten farmers together. cat kill jahi and dimi beach there Now basically market like um how Mandi operates, right? Pricing opens every day basically. arch kahaa ka kabahaa and Pricing also depends on your quality. So if I buy mandi, I don't know about mandi. Once I go there, basically, it's a little bit of a trap, basically. Because the moment you enter the gates, firstly, obviously, there are only like limited people who are licensed to buy. So if there are limited people who are licensed to buy, the time for you to get to a licensed dealer is is a very long time. um then basically once you put your produce there the person has to bid basically in a way they say that today's price was $2600 but the basically
00:18:18
Speaker
Eventually, he will bid for 2-3 people and then he will say, no, he will get the price of quality. Then basically, he will get the price and then he will say, okay, I want to sell it in $25,000. Then he gets typically paid like 20-30% of the value at that point. uh looks like a token amount basically then basically you have rest of the amount maybe 15 days 30 days 60 days because most of these products also both sell to the government right so so that's already cash out i to sell but 20 30 percent token and then basically that keeps on going right and then obviously when he goes comes back
00:19:03
Speaker
from a customer experience standpoint, it's not a very fulfilling experience.
Procurement and Pricing Strategies
00:19:08
Speaker
Basically, if you look at the whole friction that is there to actually make a sale, right? Our thesis is very simple, right? Can you create this ah a much higher customer experience ah at the village level, basically? um And how we do this is um simply our k So the way we did it was that is center like an aho wearing a yani monday whenanahu wearing a po ma eto it's an infiniteite passageage yogava ah obviously and u nai basicallypo to source a yo mobilize currentlylia for india may
00:19:41
Speaker
so the way we did it was the arck ah you know There can be a partner we can work with. so The one way to think about it is that there is LIC agent. to thyid ah So LIC became LIC because they have this massive agent network. the our bbas like the opening family me or opening friends me So your have the village, who already knows business, who is enterprising, who is getting less money. And in our case, these are small these retail shops basically, which also sell food and then sell their output. bigrion we right So we started to build actually software for these guys. So we said, if we capture this, we will be able to give a much higher experience to a farmer.
00:20:26
Speaker
ah it took in a village level and also the person doesn't and the and the person doesn't have to forcefully sell to us basically. So how do you create a mandi experience deep in a 5 km radius? That means, within his village or outside his village, he has to as much as he has to make sure that the price he gets is higher.
00:20:48
Speaker
the customer experience he gets is higher and the most important point in this is that he gets paid for the full produce the moment the offtake takes place basically the unique uncertaintyty niacgar payment up key these then may are as hard than me are yes a q areria so that experience because of which we've been able to create through our network or through our partner network is why we have created value in the market basically for ourselves and and the brand in the market and then basically obviously the rest of those things along with it okay okay tiga i understood uh the farmer uh piece that you've done um for uh the customer base like say fmcg or animal feed companies and so on uh they would also probably be able to buy directly from small traders, right? Yeah.
00:21:38
Speaker
So what is the value that you are providing to that group? So interestingly, this industry, right, is actually very broker driven. Basically, happens is that because traders are also better at one level. So how the value chain works is...
00:21:54
Speaker
a farmer is a village aggregator ishar connected to a He is a trader but like a little bit micro aggregator.
00:22:05
Speaker
Then he has big man. In the has 70-80% produce. flew through qha basically through but major tradedirect you license to that fear ocuas broker ro there basically your broker is like a counterparty player kr seller head byer me capital kuchni leangwa meva asho kberg main duoka I mail it in a way. Think of it like Uber matchmaking but in the physical world basically. Like a property dealer basically. Yeah, property dealer basically. And then basically you have a company. go to a team so hard then yeah but passerin upni factory gilaia yaferonoia don't go harro by incarniaia well how could jada li linngic which see make which come li lina but by uno team so passset then pu india say material che yeah aj you a season,
00:23:08
Speaker
Now the whole order of taking obviously is done by this broker and a network of brokers. So every broker will be in your state, will be a further broker. hoge you know So he works with typically a company or a purchase manager, which is of a plant or a large organization, works with 20, 30, 40 brokers basically. So he says every day, plant ki buying kar raha hon basically aaj mera ye rate hai tu market me float karke me ko material likhva basically to woh broker ko bhejtah hai woh broker phir aapne trader ko bhejtah hai phir aise gare ki na her oz but bhoot sophisticated hai very fast very efficient so let me just say kye it's not like a network joh aise lag raha hai ki mutsalab aapko
00:23:47
Speaker
Within ah hours and minutes basically these this this flow of information gets into the market and then basically the broker is now responsible for but matchmaking and fulfillment basically. If there is a 1000 ton requirement, he will give 10 brokers to write 100 ton basically. And then he will write all the traders from his own. this is how happens.
00:24:14
Speaker
ah What we said is we will basically ah consolidate this experience for you at the demand level basically. So, we have a network in India. We play multi-category and we will basically guarantee fulfillment. So, where you have to work with 20, 30, 40 brokers,
00:24:34
Speaker
you will probably work with 5 brokers and we will give the rest of the fulfillment of the rest of the rest. Because obviously you need a diversified supply chain a and so on and so forth. So if you net net if you look at it, we are creating experience of bulk purchasing basically with the professional services that a company requires and the reliability.
00:24:55
Speaker
ah Reliability is very important here. We will give you access to the whole country sourcing network. It's not that we are only going to be single point of We will give you multi-category and a volume. And we will give you a professional service. For example, service which is tech-led. Now, you will know exactly how much booking we have done. It will be organized to go the PO. Then every shipment that goes into you will have a live tracking indicator for that. you can click that experience and see quality reports. Before the offtake takes place, we send a quality generated report and say this material is coming.
00:25:54
Speaker
this is now plus plus i we give you carbon emission report yeah ai value g make yeah carbon emission hey you know kahane i guess a i is farmerma sayi so do all like plus plus plus plus i would say but fundamental i will pay up ko home you know accessing a um you know fulfillmenting and volume nega basically riia the hammao on did at obviously at volume of co quality volume So if we give these three things, we don't have work 50 people, or 10 people.
00:26:24
Speaker
Your workload is reduced. And obviously professional services are done. So we are basically in a way professionalizing the experience of procurement for these guys and these companies.
00:26:35
Speaker
Do they, ah are you price competitive for the buyer? You have to be, right? Otherwise they wouldn't buy. Yeah, yeah. Entry barrier. a Entry barrier. area Basically, if not price competitive, why would I buy you? I'd like buy a product later. So we have to stay price competitive because of which we don't have, like, the reason we are price competitive in a simple manner is we don't have assets on ground because of which we will have to price in our pricing basically so our dynamic right basically my physical infra is not so many people
00:27:18
Speaker
matchmaking, I'm doing that. Obviously, I feel different things our services. But fundamentally, the reason we are competitive is because we don't deploy physical
Financial Management and Capital Strategies
00:27:29
Speaker
assets. And if because of which we don't deploy physical assets, we are super competitive in pricing, basically, and dynamic in pricing.
00:27:35
Speaker
Is this a negative working capital business? Like your client would pay you after 30 days, but you pay the farmer upfront? Unfortunately, no basically. ah So there is a level of working capital which goes into the business. ah But the way we manage it is like there's, you know, just recently we closed a huge deal on securitization because we have such institutional clients ah that we don't want to stress our own balance sheet. meup Basically, like, let's say, you have to pay If you want to raise 500 million, you will raise money. Let's have a business of 500 billion, right? Basically, in a way, how much capital you have to raise. So that's why we work with partners, financial institutions, and so so forth who want to basically lend in this space or who want to directly access this value chain. And then what we do is because we have such institutional clients, we receive their receivable or invoice. put it in a pool and rate it and then we basically sell it to private investors and then that money basically keeps on getting rotated so it's sophisticated tool where our balance sheet is very light yet private investors are able to access that capital sorry access those value chains for deploying capital and then basically the benefit goes to both our customers right for for increasing throughput and so so forth This, how soon are you able to sell off your invoice? Like if there is an invoice worth, let's say 10 crore from a customer today, which he will pay after, I guess, 30 days, 90 days. What is the payment period?
00:29:06
Speaker
So the way this tool works is it's, it's like, we sell papers basically. So we sell papers for nine months, 18 months. ah So us basically we say that these are 10 customers, which is let's say 10 crore invoice so 10 customer 10 crore invoice 100 crore pool now that pool replenish oai basically for 9 months basically if someone has 30 days then 10 times replenish will be 10 customer and multiple invoices pay so then we give a portal to or the viewing to the the institution customer investor that you can see. But these are very like, you know, SEBI regulated. can't do it individual investors like you and me cannot invest. This must be with NBFCs or something.
00:29:54
Speaker
NBFCs or institutional private investors and so on so forth who obviously you have a mandate to do this. We we don't do it to individual because it's obviously the risk factor is too high for anyone to cover but only that SEBI registered funds and and so on so asset managers, banks typically in this in this space.
00:30:12
Speaker
And how much discount do you give on the invoice? Pricing, do basically pricing vary so it's between i would say 10 and a half to 13% based on your rating i be pay paper per ah basically so ah certain papers can be very high like doubleub a rating over are obviouslyly interested come over a very paper cup will it double so double B, triple B We don't do A's below, but we don't do typical A's below, because that's like you know just making you sure that the tool is very safe. But if there's a triple A, you don't increase the pricing higher. So it's just how any like loan product works in the in the market. For a 30 day invoice being paid upfront roughly cost you 1%. Yeah, roughly roughly.
00:30:55
Speaker
Okay. Okay. Well, the 1%, actually 0.8% roughly, I would say to be precise, but but that's kind of kind of the range we operated. Okay. Okay. Okay. Very cool. um Are you able to meet all the demand with your own sourcing? So you do your own sourcing where you are going, ah you have these pickup points. You run those points yourself or they're like franchisee run? Like they're partners. We don't have our own people or like we don't run. We we have like...
00:31:26
Speaker
ah Just think of it like we have a how bank relationship managers are. So we have about 90 of them who manage about 110 districts in the country. But those are basically relationship drivers, not like service points because service points that we have more than 10,000 for 14,000 app users. We have about three lakh app users. They're basically multiple. with them But if you look at the service points about obviously 10, 11,000 is what we operate at through the 90 quality inspectors.
00:31:57
Speaker
So the farmer would go on the app and he would see the nearest service point where it is and what's the price being offered and if he likes it then he... In fact, that's the that's the magic pill, right? so The partner, which is the retailer, he does everything. The app interface and all is actually towards these guys because we really don't believe that if you acquire a farmer, you will trust. chief ahwe Like told you that you want to sell your material.
00:32:24
Speaker
You have been working for 6 months and you have been working for 3,000,000 rupees. You can see the app, you can't buy it. So, our magic that we give retailers information and they disseminate it from farmers. So, we give them the tools, they can do marketing SMS, marketing WhatsApp, which is like the app interface. But, fundamentally, we have to say that they are a partner. They will drive it from farmers side.
00:32:52
Speaker
SMS is the interface. It's never an app interface for the farmer because like it doesn't work, to be honest, in our industry. Even though the beneficiary is the farmer, but our customers are still these aggregators we work with.
00:33:06
Speaker
these In a way, I could call them a procurement agent for you. exactly Exactly. And they earn a margin on volume procured, something like that. Yeah, they they basically earn, yeah basically if you just net net, they double, triple their income ah working with us for every shipment. They get a value for a part of of payment for for for think based on obviously volumes.
00:33:31
Speaker
So they would on the app input like this is or you would give them that procure this. How does it happen? So it's actually a little bit of a reverse bidding mechanism. um So we say, okay these are the five buyers or 10 buyers or 20 buyers or 50 buyers in the location. These are the categories you want to operate in And then we push pricing every day into the market. So so then there's a bid that takes place. Someone says, let's say, I want to pay 26.50. Similarly, how I would say Mandi system would work, work ah but the bid has to be obviously higher than the local Mandi pricing. So we don't offer a price which is lower than typically a Mandi pricing because that's the value which you add in the market. And then the but hes the bid basically, we lock in orders based on quality.
00:34:17
Speaker
ah quality, say quantity, quality and the location basically. So based on these three things, we lock in the price with the seller and then the aggregator takes case takes care of the first mile and then when the materials are ready, hujaha ah Then we basically send our pickup truck to the location for loading, get the payment done and the delivery takes place.
Quality Assurance and Technology Utilization
00:34:41
Speaker
So in the whole business model, we are a zero inventory model. So we don't go anywhere, we don't have warehouses, no infrastructure, it's just in time delivery basically. So when order from a buyer,
00:34:57
Speaker
orlito we have to fulfill this within seven days. So my TAT for end-to-end, basically you can imagine from procurement to delivery is seven days. So it's a very ah tight shipment ah timeline we we basically fulfill the order on. So because of which ah the market has, if you look at it, the market has also shifted towards just-in-time models, right? I agree maybe. um And that's a warehousing storage. hey But it's becoming much more ah much more just in time. And in the last like seven, 10 years, we've operated in the space.
00:35:34
Speaker
And ah so you have like some 10,000 procurement agents. ah How do you ensure consistency in the grading? Because you're probably telling them, I want grade A basmati rice, for example. And then they have to decide if that basmati rice which is being sold to them is grade grade B. uva How do you ensure that consistency? So I think it's a combination of two factors, basically. First is, I would say, data, ah historic data. That is one.
00:36:05
Speaker
ah And the second is obviously quality training and business model, basically. So when I say data is... ah Basically, if you look at what a quality of a of a product is, it's basically a combination of two or three things, basically. First is soil type, alivallo um then is obviously the air quality and the location which it comes in. And then basically the seed type.
00:36:29
Speaker
ah That's kind of how ah you know roughly output quality in three factors in elega basically. So what happens in historic data, one ah Let's say Britannia example, if you have some HL quality, HL is basically the thick mix of wheat grain, then typically historically, he let's say 20 districts are sourcing. the ra Because it has set up that if you have factory here, basically, this material is in this base district, may he available hosu there based on the soil type and so on and so forth. so a part of it is historically driven data insights basically yeah yahae is quality um material ni th right basically and because of which we have to target for britannia we have to target these districts basically that is one the second is basically uh training and quality and and services which we provide so we do at two levels one is these 90 quality inspectors are also responsible for
00:37:31
Speaker
quality auditing but also training the agent right so what we give them is we give them like different machines like small machines HL meter you know moisture meter so and so forth so that it's basic quality basically that is one but the second layer is as his the the you know volume on the on the platform one and his aging on the platform of the seller keeps on increasing it's like this makes sense that the size of this material
00:38:02
Speaker
janai Basically, because of that, the person, how we get ah get the person in the business model is that we don't make 100% of the payment on the pickup. We say we'll make 90% or 85% of the payment on pickup.
00:38:16
Speaker
The 15% gap is after delivery, after the final quality report that comes in basically. So that's where the skills start to kick in basically. These 90 inspectors don't have to go to every location. They train people and then basically move them on to this self-reliant model basically. And on top of it, we also provide this app solution to these guys to say that, okay, you take a small sample of a batch of 400 bags, take a few pictures and based on historic data of basically the last 30 shipments or 50 shipments or 100 shipments, we can tell you roughly what the quality specs of this product is basically.
00:38:56
Speaker
So it's basically pure on sample, but it gives you, ah like I would say, the way to think about this is ah quality is always subjective in a way, basically. But it's a high it's always historic, basically. So if there is plant pay historically approved, it will also, basically. So it's it's actual science in a way, basically. up pila valueo so And that's the technology solution which we provide on top of this, like two, three layers which we try to do.
00:39:24
Speaker
Okay, okay, okay, got it. You don't use like say computer vision? Yeah, that's what basically computer vision is basically. ah So you take a picture with, ah so it's a computer vision led AI kind of model where historically it processes about 5 million images to come to conclusion that roughly this is the up to 85 to let's say 97% accuracy. What is the approval level of this product?
00:39:51
Speaker
okay cook Okay, got it. Very interesting. um So you don't ever buy from other traders. Everything you buy is direct from farmers through these procurement agents. You are able to meet 100% of your demand.
00:40:03
Speaker
Yeah, so basically the only rule we have is we won't buy from Monday. That's just like, otherwise what are you building, what value are you creating? So village level aggregator, village level retailer, village level trader, that is the target.
00:40:22
Speaker
audience so all our procurement happens to those partners ah the only rule we have is that mandi is not an area which we we which we think we want to operate in and that's like generally because we're creating this petal ecosystem of a sort right basically for for the market what is typically the margin in agro commodities so you are selling 350 million dollars worth of agro commodities in a year how much would be your margin in that?
00:40:52
Speaker
Like gross margin? So we make on blended basis about 12%, 11.5%, 12% on that, which is then we have logistics, packaging, all the other fees. But basically that's the margin we make. In our processed and our exports category, obviously we make much higher. if We make about 25 plus percent on the processed exports.
00:41:14
Speaker
And this and so on would also be asset light. Like you would work with some third-party processor. Exactly. So we work with about 70 processors across the country in a similar model, basically. And then we export the material and then we have some consumer products also, which we sell through quick commerce. And that's obviously like a 35-40% cross margin business. So it's a layered kind of approach in this. There are obviously some high margin categories and then they are basically... But NetNet, it's a... i mean there's conventional knowledge but like basically you are able to obviously extract that much in the in the value chain for the value you're adding um and and obviously it's layered so it's not like
00:42:02
Speaker
the way to think about margin in these businesses is you don't actually if you try to make money on the on the trade you'll never make money basically ah because bought thinnova basically your spread so what you have to make money is on services basically so how we make how we think about internally we make money on services so we make money on you know, offtake, we make money on platform fees, we make money on finance fees, we make money on logistics fees. So vo sara stack java basically garo so we make money on the services we are providing rather than ah spread which we're trying to make because if you're trying to make a money of the spread, right, kahina kahi you will like either be, you know, not benefiting your your farmer or you will be not benefiting your buyer basically. So that's kind of how the how the revenue structure works in in the business.
00:42:55
Speaker
So there's like the UPI model, like these all these UPI payment apps don't make money from UPI, but they're able to sell other products to their user base. and So I would say the only difference in that analogy is You know, we still make money on the UPI, like on the transaction basically. So we're not cross-selling or up-selling basically. So we're making money that transaction. But we're taking the service, we're taking the money. If you don't need logistics, we won't take logistics. Basically, if you need payment for 30 days, then you'll take it on 30 days. Why don't we take the fees from that thing? Basically. Whom do you give financing to? To the farmers? Yeah, so because you want the payment upfront, right? Basically, there's a cost associated with it. So we charge the farmer and then we charge the finance company also. But why would...
00:43:51
Speaker
bywor ah but See, I can imagine finance companies want to do bill discounting if, for for example, you're selling to Britannia. So, Britannia's paper has value. Yes, they would want to do that bill discounting. But that's the payment of the This is not a farmer. You don't have lend farmer.
00:44:14
Speaker
upto her to Basically the way farm finance companies also who operate is origination fees basically. So if you are able to originate ah a transaction for me basically. yeah Invoice is a cut from a dollar in a way.
00:44:29
Speaker
So farmer not financing, it is basically payment against invoice. Okay. So, what I originate for you, I will charge you for that. Basically, this is my transaction, I originate for you, and I need a fee. Basically, that is how much you can pay for your negotiation power, how much volume you can pay for it, how much throughput you can pay for it. But it's a very common practice. Origination will always charge you. Like what happens in insurance? Origination will always get a fee. So that's how we basically operate on the, on at least the revenue side of the finance companies, basically, who are lending directly through a platform.
00:45:11
Speaker
I'm still not fully clear. I'll tell you where I'm getting confused.
00:45:16
Speaker
An Adani is giving you a like a purchase order for 10 crores of oil seeds and they their payment terms are that they will pay this to you after 30 days.
00:45:31
Speaker
you don't want to wait for 30 days. You want to be paid. You, as in Pharma, wants to be paid today. So you go to a financier and say that I have this bill from Adani of 10 crores, which is payable after 30 days. Pay me today 9.9 crore.
00:45:46
Speaker
Why would you are, it's like me going to a bank and saying, I want a loan and also pay me an origination fees. So, basically, you said that I'm sending my invoice. But there are companies which lend directly on my platform also.
00:46:03
Speaker
To? They lend to whom? So basically against the invoice they will make the payment to the farmer. Basically, the only thing is that they flow through my balance sheet. Doesn't ah all transactions flow through your balance sheet only?
00:46:15
Speaker
The farmer will directly sell Adani. any My balance sheet mother invoice basically doesn't come directly maryi baron sheet penara basically many directly will an invoicek sco beria to my to that I am selling for my balance sheet.
Service Offering and Revenue Model
00:46:28
Speaker
That will not pay me for any finance company. will pay me for the value chain.
00:46:37
Speaker
but eventually see like i said, we don't want to take everything on our balance sheet basically so we are saying that you have a platform, you land it and you basically have 0.5% as much as i originate for you basically so you pay me on that let's say it's like a processing fee which we charge to these partners if you have to take 13 bucks then you will take it for you basically but i will give 0.5% origination fee for the full volume which i am providing to this person basically so that's kind of how the at least the but revenue stream on that side works but i still don't see how the farmer is taking a loan here adani's invoices like there is a farmer invoice to adani right yeah so basically if i have made it that you need payment now let's say zero day then will say my fees is 1.5 percent
00:47:30
Speaker
Okay. Right. 1% I pay for finance company. go But the 0.5% processing is my fees. Basically, I have originated. I am going to pay for it. Basically, in a way. Understood. Okay. So, the payment on day zero to farmer is not by default. They have to pay for it. Exactly. And some people even choose that I need 7 days. Some people say that I need 30 days. I don't need it up front. Basically.
00:47:57
Speaker
Then, then, then, then,
00:48:01
Speaker
the services get stacked in that way basically joe apuche apukaic slow basically gar girl and for logistics whoop is the farmer pay or the buyer pay so it's almost like a fixed fee basically okay iss transaction code deliver or ne lay aco basically so it's it ranges between four and a half percent to seven percent based on distance so In a way, I would say like the farmer is or the retailer is only paying, right? Because he has delivered it. He has the material value. So the buyer is actually not paying.
00:48:31
Speaker
Okay, okay. Buyer only pays for doorstep delivery. but give I will pay a thousand rupees per kilo for maize at my doorstep. He doesn't care what it costs you to transport it. Yeah, yeah, correct. He will say that when I reach the gate, I will take it from you. I mean, I will take it before.
00:48:49
Speaker
Got it. Okay. Take care. Understood. ah And you said there is some offtake fees also that you are earning. What does that mean? So it's like, it's not the matter that you don't charge kata basically k platform you're active on your platform. So we take some platform fees from some of the sellers on the platform. If you're giving so much volume, you're giving so much income, so basically we'll charge some value of that. So like I said, different different streams is how how money keeps on adding up.
Operational Complexity and Risk Management
00:49:18
Speaker
Okay, okay, okay. Very interesting. So essentially what you built is something like a rapid O. Except it's for agri-products. No one has ever used that analogy with me. But yeah, I mean, it's impressive. Something something on on on on the on those lines, basically. ah Essentially.
00:49:38
Speaker
Yeah, I mean, the the beauty of... that I'm a big fan of the Rapido model because Rapido understood the Indian entrepreneurial DNA.
00:49:49
Speaker
yeah You know, you are an entrepreneur, so you sell it as a service to him. He will pay you for that service instead of saying that I will give 25% of your car. yeah So Rapidot charges a fees to the drivers.
00:50:02
Speaker
Exactly, exactly, exactly. So 100% aligned to what you are saying. So what is the...
00:50:11
Speaker
Percentage of your revenue from institutional would be the highest, right? That would be the biggest part of... 85-90% basically. woi And the remaining 10-15% is quick commerce or export. Export basically. So about 10% is exports. And then 5% is are our consumer private label, which we sell through quick commerce. So that's the rest of the revenue split.
00:50:33
Speaker
it its me ah It sounds like a relatively simple business. Why don't you have competitors here? What is the challenge here? what muja As an outsider, I'm not seeing the challenge. where You have to show me what the challenge is. Because it sounds simple. You're getting to the procurement agent, taking the company, and it's all asset light. So it's not like capitalism mode here.
00:50:57
Speaker
So I think the couple of... but I would say, let's talk about risk. Basically more than anything else. You just understand the competition or not. Basically, the most important is the counterparty risk. Basically, where many companies have spent a lot money. If you're not able to first onboard a client of that quality, and then underwrite the client basically. Because that's where agritech or whatever models are because they were subprime lending or subprime services model. Because you leave P2B in India, agri doesn't have your payment negative working capital.
00:51:45
Speaker
So it will always be a positive working capital business. jahivoh steelho jahivoh chemical zo yahevo basic which show So the entry barrier of a very high sort actually starts with how do you onboard high quality buyers. Now, high quality buyers, you need a can give consistent volume, a consistent service. they buy So it becomes a little bit of a chicken and egg problem in a way, basically. And then on top of it, basically, how do you make sure that you are able to make money in this business? It's not easy to make money in this business in a way. And then and as you scale, like then the third layer of complexity starts as you scale.
00:52:27
Speaker
ah Because if you look at it, it's itself Almost like ah like you said, what is It's the single unit which we operate in. Now, you just imagine the multiplier effect of the single unit we have to operate at to get to 350 or 500 million scale. So at any given one point in time, basically, you say,
00:53:03
Speaker
but like I would say, about 1 lakh trucks are on the shipment basically. ah kahina kahi wo ah egg point pick kahina hijare Basically point A to point B, point D C and now multiply this into like the unit of scale we operate at, right? which is your technology infra at a unit level, basically, you have to, it has to be very sophisticated basically. ah So order matching,
00:53:34
Speaker
say, to get the delivery, say, to get the payment, anniu that's how a full transaction closes, right? Without any leakage, without anything is where you make money. Because even if you lose one truck, basically, your margin structure is gone for the next seven days, right? Basically. So I think if I have to just basically summarize it in a very simple aim, it's counterparty risk, then it's shipment risk. And then basically it's the fulfillment risk.
00:54:03
Speaker
No one has been able to, I would say, maybe there are companies, but what do we do? Companies ship pitch. They don't want to deal in a truck, basically. What do we do? They take a ship, like your Olam, or your own ship. They want to say, where do I take a truck? I have 50, it's a whole India team. I will buy a ship or train. I will not buy truck business.
00:54:30
Speaker
So because we operate at a layer which is unheard of in the industry, is why I would say we've been able to create a space. Because if we play the game, we will ship ships and will do that. Then we are playing in no man's territory which these guys have perfected for years in a way.
00:54:50
Speaker
Okay, okay, okay, got it. It's a pretty solid tech play over here. there the the The matching algorithm, the route logistics, planning, etc. All of that.
00:55:01
Speaker
If I do my business, it's called FarmArt
Technology and Infrastructure Development
00:55:05
Speaker
OS. It's going to be on OS, basically. Quality matching, you know delivery, shipment. So... like The journey we've also gone through, right? We are also now... ah Actually think about it, like we are actually because we have so nuanced understanding of the industry, we've transitioned from let's say a software pure software to now like AI workflows. So what are we doing? We're making workflows for this.
00:55:31
Speaker
And then those AI workflows are basically then just embedding into the system, right? so like If you look at the agentic space or whatever is happening in the agentic space, this is exactly what is going to push us to actually, or the industry at least, to become bigger and bigger, right? Because what is the fundamental unit of an agent, right? Agent can multiply in millions, basically, and work with millions of people at the same time. and that really sits well with our thesis that there is a unit, a truck, a seller, a buyer attached but it's a very big scale on the aggregated level so yeah it's a very interesting time we live in right now in terms of building in this your tech would also be I mean you would have your own fleet management solution as well where you'd be working with a lot of fleet operators and
00:56:20
Speaker
telling them this is pickup point and this is drop and they would be starting the trip and all of that. That that whole, like the Uber kind of stack would be part of your fleet ah ah management. yeah Correct, correct.
00:56:32
Speaker
Okay. There also we did was that you don't need an app. Basically, it's a SIM-based system which we haven't built it. Obviously, the industry has built it. But any truck driver or someone else will send an SMS or a message on WhatsApp and it will start a free tracking. Rather than the app download and then it doesn't work basically. And then have to keep the phone charged on the whole time. Then the battery, if the app is closed, then the tracking is closed. So it's just sim based approval mechanism which basically gives you, let's say not by 0.1 meter, but it gives you a distance of the tower to tower basically. Okay, okay, okay. Got it, got it, got it. Yeah, yeah, yeah. Understood. So you're tracking his SIM based the tower location instead of his phone GPS. GPS, exactly. So that's how it works.
00:57:24
Speaker
Okay, okay, okay. Fascinating. And how many truckers or fleet operators are there on your platform? we work with about uh 3800 fleet operators uh and average lee average basically fleet okiba anywhere between two to i would say 50 trucks of there but typically india may have like uh fleet operator but operate operated like seven to ten ten trucks now pre-covid different well a covid kid i make different ah of noga but mill up anyway seven to ten trucks is what average fleet operator works on right now
00:58:00
Speaker
What's your headcount? Totally, we are about 320 people now. Wow. So, it's more than um a million dollars of sales per headcount. Per revenue. Yeah, yeah. Basically, that's what that's what we operate in right now. Amazing. i mean And this is just because of the pharma to us.
00:58:18
Speaker
That you don't need a lot of manpower. Correct. And but how many like I said, that plus Infra didn't set up, here right? We were very sure, yeah, that if were going to Infra, then mean,
00:58:30
Speaker
So we just said that we will not touch anything which
00:58:37
Speaker
you know oh fraud or useub coffee pelin hey oh you know joehigar kiba someoneana i is kind of is is is norm in the industry in a way so we just said okay we will not touch anything which we cannot control through like a tech solution right and the moment you could get into the inventory business in whatever industry uh it's not agri you there's underlining risk of of you not scaling number one and then obviously a lot of fraud that happens at different levels You are basically like an on-demand procurement platform.
00:59:14
Speaker
Yeah. You want something in the short term, you will acquire in the short term, give it to them, basically. Yeah, so exactly. What's the ah ah profitability level? do you Are you currently ah like EBITDA positive or something?
00:59:28
Speaker
Yeah, so we are profitable or as an asset. um like We should get to that also in the next i would say two to three quarters. That's kind of what the goal is. um But our core business is profitable. The reason we are not profitable, i would say, is thing because we are investing into the
Profitability and Business Evolution
00:59:48
Speaker
consumer business. we investing into the processing business, right? But if you look at the core platform business, that's profitable in itself and generating cash flow on on that business. Is there a ceiling on the platform business? Because you want to work with high quality customers, so there's a ceiling or...
01:00:06
Speaker
In India, you have 16 tons of 600,000,000 tons of liquid production. oti basically was may say a moal i rather non locktan ah Your government takes 8-9 lakh metric tons. So, you have to take 7-8 lakh metric tons. There are 3 lakh metric tons of subprime, SME, all these are all. But, 6 lakh metric tons is basically what the ceiling with enterprise customers itself. And then you add exports and then you add lot of work.
01:00:51
Speaker
but up a bba smart with simpley they don't give me platform pay my platform pay I we have monthly demand. Monthly, our customers are crores. Basically, you can say that at the current rate, that's a visibility of crores. And how much I am doing? I mean, 200-300 basically.
01:01:13
Speaker
in a way so a b may mill ah would demand free failure that may key capacity like we have to increase Tophir, why are you spending on all these like the processing and quick commerce and export? although Why not just focus on this? This is like one of the analogies which, you know, I saw from, I mean, I obviously read a lot and so on and so forth. If there's not vertical integration is a moat of a sort, basically, if you're not vertically integrated or for your customers, Obviously, you will have the quality of service you can give, the kinds of services you can give, and also the revenue that you can meet at a bottom line level, basically. So if you really want to be a very large, very profitable business, the revenue has to be ah sum of parts, basically, in a way. ah So that's one. And then your customer, basically. So the more vertically integrated you are, the more amount of like moat you can create in this business basically so that's the two fundamental reasons we are continuing to invest uh in these in these spaces uh and which will eventually in let's say three three four five years uh give you that that moat number one uh for your customers and then basically also the
01:02:33
Speaker
profile of a free, like massively profitable free cash flow throwing company, basically. ah That's kind of how we've thought about building it, right? So you're inspired by ITC from what I can understand. Like ITC has their own branded like atta travel etc i would say would say trajectory wise it's not itc itc who has come up with it it's just like there are two very large profit pools like absolute profit pools and then there are scale uh drivers basically two absolute profit pools have your processing and brand will be absolute but absolute scale is very difficult business basically and the services business it will be absolute scale So you don't have to play like this game. So where to pick and choose is how you want to play. But if you want to play a big outcome, at some level you will have to play both. And it's not very different from each other because you control the value chain at a certain level and certain way both in quality and price so you can do all this because network bhi bhan jata hai operation and i say operation leverage burs ye hai ke aagir mein kahi jake kuchh bhajna chaahun to koi factory Allah muhjhe mana nini karayga ke miktir saath kaam nini karna basically in a way so ITC ka kya hai right eek leverage banti hai naam ke wajay se on ke brand ke wajay to leverage banana bhoh zhruuri hai in industry mein because phil hi aapko mtlap bhao milega mtlap in a way
01:04:04
Speaker
okay Okay, very interesting. How much have you raised till date? In total equity value we've raised about 47 million ah dollars ah and then in terms of debt value we've raised about 35 odd million. ah ah So that's kind of the combination. So in income total we raised about 78, 80 ish million in in capital.
01:04:29
Speaker
So this current business model which you run, this is a post-COVID discovery, right? Like like you were trying other things before. So this fundraise was on the back of this model or like? Yeah, only this these models these models. Okay. okay So all of this fundraise was largely post-COVID fundraise. Correct. That's correct. um ah So pueel we had raised some angel investment.
01:04:53
Speaker
Take me through your journey. Like what did you start with and how did you discover this model? Yeah, so it's been actually ah two things I would say about our journey. One is it's been a journey of massive pivots.
01:05:07
Speaker
but And the second, it's been a very painful journey as well. I mean, right now I can, for the last one hour, I would tell you all the sophistication and what all we have built and it's super and awesome. But the amount of pain and the amount of pivots and the evolution we have done to get here has been like you know obviously uh when i think about it kind of gives me ah shivers right but if you look at it fundamental level we were two founders um have known gender for 25 years went to same boarding school
01:05:42
Speaker
and we have obviously done a few years in professional careers and we obviously being city kids or whatever because we said okay we will build something in the rural space rural, may healthcare, education, agri is kind of the three main economy drivers first two we had no idea about book because both of us come from Punjab so agri was something which we felt was large enough and also close to us enough in our heart because we and you know we we come from that DNA um and that blood ah so that's why food and agony was kind of what we picked now in this work we started with saying that we and both both of us were consultants right at some level ah we used to be very data driven in terms of macro kre because macro kind of defines you know in a way you know whether you're
01:06:36
Speaker
thinking so the right way for building for the right
Early Business Models and Pivots
01:06:39
Speaker
reasons and so on so on so on macro level we knew that you know uh machinery or uh the level of machinery penetration in india uh in terms of farm level equipment is fairly at a very early inflection point tractor hang but machinery uh uh mechanization is a challenge So we started with Uber for tractors. We said from a P2P model, we will basically have people like my grandfather who had ah farm equipment, had lot of them, but were being super underutilized. And then we have farmers who basically are mostly small holder, don't have access to these machineries and they rent it on per hour, per day basis. So why don't we basically create a P2P model?
01:07:27
Speaker
uh build that uh realized it's a very credit heavy very low ticket size order uh so po k payment niari though a mill case drive on bri worldbanawi so what okay is say calmjana ah let's ever you like let's tweak this little bit to director plus plus basically so we went into working with these store owners and we said yarr ke aap ke paas khad bish dawai hai aap basically obviously udhaar pe bhech te yoy aapne farmers ko aur woh piisa aata hai nahi challenge hai to aapke free cash flow improve karne ke liye hum different
01:08:09
Speaker
uh financial institutions who ya it or because
01:08:33
Speaker
Buy now, pay later kind of. BNPL, exactly. BNPL we made. And then up basically payment different models. Like three three time payment and like a bullet payment. ah was maybe Basically, we'll a payment back.
01:08:49
Speaker
In fact, like I would say it was a very good model. It was a beautiful world profitable. We were making money on that business. You would make money from the financial institution. and also from the retailers who are buying products. picture Yeah, exactly. So we used to make subvention from the retailer, we used to make money from financial, then we used to make money on the card itself, basically. The farmer would pay ah annual fees for the card. So we were actually, like said, a beautiful, profitable business model.
01:09:18
Speaker
The only issue we identified was that it won't scale, nova basically. yay mala sort of micro financeance type of business banjaga yaha up which state to me a chagariway or but agar pan india So, but nade the reason gives a scaling area area because aka a customer acquisition a bb bought off lata koyard j fa who convince kna okco card bena subna or second day whose time p you p and all na heatha basically so payment repayments were also coming in cash basically uh so deposit kaa ca i noticed you didn't mention underwriting risk here like how do you underwrite the farmer not all farmers will be worth giving this loan to no
01:10:02
Speaker
of Correct, correct. Basically, your default rate in this business was 3-4%, but you were making a spread of like eighteen percent a qui but okay net neta as havevannaway basically ah and usten card fiii ui retailer sallei So acquisition style was that we went to retailer but you're right like but cost in etheria banalli the day uska naa called
01:10:34
Speaker
or ammnipantar shaar are the do million die million key disbuement guithi i see do he then mayor like as atoa scale to hitto other but how many layers here kiutlab but the yeah other multi-million multi-billion type of storycalling ah so yeah essential kiddo niga basically So then we
01:10:57
Speaker
phly bought banallia yeah ye scale and now bought mukele But jo honi app and i three retailer clay we were just surprised by the utility of that app basically. Our customers had to buy their bookkeeping, at in like yeah basically add, material what they had, what they had. So Realizer was very sticky in the product. Basically, that was a cut kind of an app. Yeah, kind of a kind of a model basically for the app.
01:11:25
Speaker
And that basically is where we thought that if we have made this product or service, which is an app based, then basically scale it. In a way, what we will do in a way, what we will in the future. And our idea was that we will do off-take. This was our idea that we will do off-take companies. holding it but that's where we flipped the user or the customer we were servicing and that app we worked on 6 months pre-covid and we had different features on the app so the first feature we kind of launched which became obviously very big is marketing sms basically so what was you the or they would basically you know message or buy
Client Acquisition and Relationship Building
01:12:17
Speaker
it. So the inventory turnover of this guy flipped basically. The moment or at least the feeling he got was that I'm buying lot. So that product was very viral. Basically I remember COVID-19, 2021.
01:12:32
Speaker
and was free for us to send SMS now it's free now we use it as an acquisition channel use curte and the moment were watching the India using it, it's doing it, it's doing it
01:12:49
Speaker
what you feeling oti I can never forget that feeling first time. It's a It's a PMF. And product PMF is a feeling the feeling was very good. And then basically, we said, okay, we made software. nadia But then we studied different models and we saw a book. The book was almost 5 million users. with mo ji yaha Basically.
01:13:21
Speaker
But they didn't make money. Because India didn't pay for software. fundamentally it. Their model didn't have to pay for software. Their lending was also itself.
01:13:34
Speaker
but we tried everything eventually, we went to the lending, basically, but we tried it, it was that we would pay the software. Micro SaaS was a term which was used for SMEs and so on and so forth. But we realized obviously is that the money is very difficult to make money. The money that have to buy, if we don't buy our subscription, how do a subscription to rural person?
01:13:59
Speaker
So we realized very quickly that we have to make a lot of commerce. Because India is only making money on commerce. Basically, you are giving a service, you are doing something, you are doing something, you will make money on it. Then we decided to play on the output. Input, we have known our experience, that it is very heavy, bear, monsanto, and genta, own like 70% margin market. Then we need farmers get money. So what we said was that we will make money on the output see it on the pilot launch. As we launched the pilot, we obviously had success there. The network was very different on the app, so Amityar Network and Avana Capital gave us our first larger check, which was 2.1 million, 2.2 million.
01:14:47
Speaker
And then we started scaling very quickly. We got to, like I would say, $30-40 million run rate, Matrix Partners, which is now Z47. But how did you go and acquire these big names like Adani, etc., buyers? Honestly, journey. Like I said, you cannot go to them directly. We started with SME. We started with SME customers.
01:15:12
Speaker
Because they run your flywheel little bit. Because they have a small requirement. And then eventually, as volume increases, you can go to them. So that flywheel started to work. We started to acquire these guys and eventually get to the business we are built now.
01:15:29
Speaker
said It's a very relationship driven and industry still. so one of the moat is also your relationship with these clients and customers and how how closely can you service them? Basically, technology and everything will drive ah service quality.
01:15:44
Speaker
But technology will not drive relationship building, basically. So like enterprise SaaS or enterprise AI, you will have to have enterprise people who are doing enterprise sales to build relationships and go deeper. Because there is no CAC in a way, right? You have built one relationship, day zero, you don't have CAC in your first truck, basically. And then it's like you're just generating cash flow. So it's obviously oh sales plus plus plus service plus plus technology plus plus ah solution.
Future Aspirations and Public Listing Goals
01:16:17
Speaker
and Do your customers place order online directly or they speak to somebody and say, I should.
01:16:24
Speaker
So basically, there are two models that works on the buyer side. One is basically we have an AI chat port for order taking basically because the industry is on WhatsApp basically. So the user is sitting on WhatsApp basically. So that is one. But we also have an app called SodaBook. which basically gives you that insight once the delivery is confirmed, so basically eventually what is happening is that the user tracking their truck and shipments, they are going to go there and put their requirements there. But we have no push here, you can put it there or do it. We can put it on WhatsApp, our bot and our consumer, our system, it's all that. or you can put in your app. But we will meet the user where the user lives, not try to alter too much of that behavior.
01:17:21
Speaker
It's impossible impossible layer because ah butha allla by now case ah so so soa exactly nine fifteen up na eight hol day per up for within thirteen minutes ogen from karna to in What text do you plan to raise more funds or do you plan to do an IPO?
01:17:42
Speaker
What's on your roadmap? Yeah. So right now, I think we are on a very strong strong trajectory ah to to go public. And I think there's a, I would say, and the reason not only going public is like for any kind of like whatever's happening nowadays, I think.
01:18:00
Speaker
ah the way me and Matab think, right, is the industry deserves ah like, you know, winners and they deserve people who can show examples and basically be there um and and and also inspire a lot of you more young people to start up in this space. I think one challenge like any industry is talent, right?
01:18:22
Speaker
So I think aspirationally, we want to be a public company because we want to show that I don't know to whom really I don't know but that you know this can be done because you know there's a lot of skepticism there's a lot of people who think that in this industry it was going to happen so I think there's an inherent there been some incidents also I think Vekul has almost shut down or something like that right correct and Vekul was also in commodities what was it operating in I think we were doing a lot of things, but mostly I think fresh was fruits and fresh was... But they were also doing our categories, but they were doing a lot of things in that way.
01:19:05
Speaker
But inherently, like globally, we target but like globally, there hasn't been examples uh in fact like if i'm just seeing a report where total in the last 10 years 18.5 billion dollars uh has kind of uh like gone in and there hasn't been outcomes of that 18 million dollars so it's a lot of amount ah Even though it's not much in macro, but innovations have not really arise resulted in that that outcome. So I think one is very yeah as we are definitely aspirational.
01:19:41
Speaker
And the second thing is the scale, the financial support that aspiration right now, basically. ah And based on that, like you know we we want to obviously be in public markets soon. but We have to obviously have a certain level of profitability, a certain level of predictability in the business, which is a journey right now of about, would say, six quarters or so before we can finally do it. But or from a management perspective or like from founder perspective, we want to be there soon.
01:20:13
Speaker
Amazing. More power to you. Thank you so much for your time, Alek. Thanks so much, Akshay, for having me and had ah had a really insightful and great conversation with