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The Full Story of Reshamandi's Ambitious Dream | Mayank Tiwari (Reshamandi)
235 Plays3 years ago
This episode is a time capsule. We had the chance to sit down with Reshamandi's founder, Mayank Tiwari, at the peak of his company's hyper-growth. Listening to his vision now, after the company's widely-reported collapse, offers a unique and powerful lesson for every founder. It's a chance to understand the brilliance of a startup's dream, the conviction that drives it, and the hard realities that can cause even the most ambitious ventures to fail.
Mayank Tiwari is the founder of Reshamandi, a startup that rose to incredible heights before its dramatic collapse. A gold medallist from NIFT, Mayank leveraged his deep industry expertise to build a company that, at its peak, raised over $70 million in equity and debt, achieved a $186 million valuation, and impacted the livelihoods of over 60,000 farmers. This conversation captures his ambitious vision just before the company unraveled, providing a crucial lesson on the pressures of blitzscaling and the pitfalls that can follow.
A Cautionary Tale: Key Insights from the Conversation
- The Seductive Vision: Mayank eloquently details a full-stack model to solve every problem in the silk supply chain. In hindsight, this ambition to be everything to everyone stretched the company's resources thin, a key factor in its downfall.
- The "Growth at All Costs" Mindset: The episode showcases a founder laser-focused on growth, scaling, and raising large rounds. This mindset, while celebrated during the funding boom, led to a reported lack of focus on unit economics and sustainable cash flow.
- Belief vs. Reality: The founder's conviction is palpable when he says, "I want to raise thirty. I will raise thirty." This conversation reveals the power of founder belief, but the company's fate underscores the danger when that belief isn't grounded in financial and operational reality.
- The Seeds of Collapse: Listening closely, you can hear the strategic choices—heavy reliance on debt for working capital, rapid expansion into multiple verticals—that, while framed as strengths, contained the seeds of the company's eventual financial distress.
chapters:
(00:00) - The Grand Vision Before the Fall
(01:01) - Identifying the Market Gaps: The Startup's Mission
(03:24) - The "Jackpot" Moment: The Genesis of a Bold Idea
(08:09) - The Ambitious "Managed Marketplace" Model Explained
(11:24) - The First Transaction: How the Hyper-Growth Journey Began
(18:03) - The Tech Strategy That Attracted Millions in Funding
(21:07) - The $30M Series A That Fueled a Risky Expansion
(27:30) - A Founder's Philosophy on Blitzscaling
(32:00) - The High-Stakes Strategy of Using Debt vs. Equity
(34:20) - The Dream of an Embedded Fintech Arm
(42:34) - The $100 Billion Market Opportunity They Chased
(59:26) - Final Words on Ambition and Risk
Hashtags for YouTube:
#FounderThesis #Reshamandi #MayankTiwari #StartupFailure #CautionaryTale #VentureCapital #AgriTech #CorporateGovernance #StartupIndia #FounderStories #Blitzscaling #BusinessPodcast #WhatWentWrong #IndianStartups
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Transcript
Introduction and Sponsor Shoutout
00:00:00
Speaker
Before we start today's episode, I want to give a quick shout out to Zencaster, which is a podcaster's best friend. Trust me when I tell you this, Zencaster is like a Shopify for podcasters. It's all you need to get up and running as a podcaster. And the best thing about Zencaster is that you get so much stuff for free. If you are planning to check out the platform, then please show your support for the founder thesis podcast by using this link, zen.ai slash founder thesis.
00:00:27
Speaker
That's zen.ai slash founder thesis. Hey
Resha Mandi's Market Entry and Funding
00:00:32
Speaker
guys, I'm Mayankthi Vari, founder and CEO of Reshamani.
00:00:45
Speaker
The first time we heard about a startup called Resha Mandi, it was due to the massive $30 million Series A funding that they had closed. During the course of our conversation with Mayantiwari, the founder of Resha Mandi realized the massive opportunity that he is chasing.
00:01:02
Speaker
Think of Resha Mandi as a company like Amul. It is digitising a highly fragmented and unorganised supply chain of silk and other fabrics by using cutting-edge IoT and machine learning technology. But what makes them unique is how closely they are working with existing stakeholders in the supply chain.
00:01:17
Speaker
They
Empowering Farmers and Artisans with Technology
00:01:18
Speaker
are not replacing the small farmers and artisans working in this space, but augmenting them with better technology, market access and financial inclusion. Listen on to get a deeper understanding of building truly large and disruptive businesses for both Bharat and India. I knew that nobody is solving the quality issues, be the transparency issues. Nobody is setting out the price in the market. Nobody is educating the customer about it.
00:01:45
Speaker
So if I need to do something, I need to basically focus on these core four areas and then being able to go very deep into a supply chain and then be able to work there. Now I needed to basically look for one thing. You need to start some.
00:02:01
Speaker
By February, March, I had come down to a point where I said that, OK, silk is a good market to get into. There are not traditionally very large players available in this market. In cotton, you will find a lot of big players. In jute, you will find that India's business is shifted to Bangladesh. So I can't go to Bangladesh. Silk, I was in Bangalore.
Discovering Opportunities in the Silk Market
00:02:25
Speaker
Silk is in Karnataka. It's the highest producing state.
00:02:29
Speaker
I was like fabulous. Are there people around? I found some textiles mills, but I literally didn't find a lot of players. And okay, this is surprising. Why are people not here? I have broke central cell board and asked them, would you be able to help me understand this industry better? They were, and India wanted to log down. Great thing to have. Have you heard about this device? And
00:02:58
Speaker
What it did, the COVID lockdown, the first time lockdown was, it gave me a lot of opportunity to be able to talk to people. People are free. I could reach out to a VC and he's free. I could reach out to an advisor in anywhere and he's free. I could reach out to a scientist in central street board and he's free. He's able to talk. I was like, this is good, right? This is fabulous. Now let me use this one month and start talking to everybody.
00:03:24
Speaker
So I started creating some presentations. I started floating around my idea here, there, everywhere. Whosoever I could get hold of, and I was not apprehensive and reaching out to anybody. So, and Central's report was very up.
00:03:37
Speaker
4th and the very 4th coming on this and they were like, you know, if you want to solve for this, why don't you do one thing? You come with us. We will show you around the farmer's phase. We'll show you around the Monday that we have in Ram Nagar. We'll show you the testing mechanisms and then see what you want to solve for, right?
00:03:56
Speaker
And after those field visits, I came back and Saurav was in US. He was working with Cisco. So I called him to win the afternoon. And I said, listen, I have just hit the jackpot. I know
Addressing Silk Industry Inefficiencies
00:04:09
Speaker
this will work. Let's just focus on silk. Let's just start with farmers. Ramnagar does 40 tons of daily transactions. This produce is going at 300-400 rupees at kg.
00:04:22
Speaker
Look at the daily volume of money that is getting translated in this process. Just imagine we get a pie of this. Just the piece of the pie would help us scale this further. We got excited sitting in the US. How did you know, Sarun?
00:04:39
Speaker
Sort of when I have schoolmates, we know each other since 1998, and when I went to Ramnagar, what I realized is this, when 40 tons of produce is coming to you on a daily basis, and you have two people doing the testing, you are not able to scale it. You're not able to test the entire lot. So what would happen essentially is, it becomes a buyer's market. A realer would walk in, and realers will cartilize against a farmer, giving them whatever amount they want to give them. What is a realer?
00:05:08
Speaker
Reeler is the guy who is basically drawing out yarns from the cocoon of sub. They will boil it, then draw out yarns, stands of yarns. That is what goes to a weaver who will then essentially create the cloth or the fabric or the sardines that you see. Yeah, so the supply chain is like this. You have an egg producing unit which basically then supplies the eggs to a chaki rearing center.
00:05:35
Speaker
These rearing centers think of them like nurseries who are basically nurturing these eggs for 7 days, 10 days and then making silkworm out of them and these silkworms in their second instar is given out to the farmers because then they don't require a lot of hang. I mean the issues are a little lesser and hence the farmers are given second instar range of the silkworm. What is second instar?
00:06:01
Speaker
It's a stage of silkworm growth. So second instar is basically a larva. The larva gets towards farmer. Farmer on a 21 day cycle will feed mulberry leaves and then in 21 days you will hatch out the cocoon.
00:06:19
Speaker
These cocoon are basically transported to an amnagar mandi or a sibhagata mandi or a kular mandi. And there you will have real community come together on daily basis, do bidding on the different lots that the parmata can. And buy the cocoon essentially.
00:06:39
Speaker
And then go back to their production units, dip them into boiling waters, draw out the yards, try the yarn, package it, and then work with the trader in between, who will then give them the money. The yarn will then get through the viewer at the end, who will basically put them into a warp or a weft. And warp and weft are nothing but your horizontal and the vertical threads that goes past your topic, right?
00:07:09
Speaker
Then, essentially, you have your fabric called the Sadi come out of a loom, whether it's a head loom or a bar loom or a shuttle-less loom, whatever. That's all technical jargons here. And that Sadi is what comes to your retail store in Nali, Pothi, Chennai, sir, which then comes to your house. That is the supply chain. Now, what I wanted to basically start with when I gave a call to Saurav, I said, listen,
00:07:39
Speaker
This much of money movement happens out of the supply chain only at the farmer's left, which means that there is much larger market that is available if we scale this product into the entire end-to-end supply chain. And then I said the other problem statement is nobody does the testing.
00:07:59
Speaker
Nobody is setting out price for the farmer. Farmer, when he is walking out of his house and going to Ramnagar, does not know how much is he going to get for the students. If we are able to give them convenience at their doorstep by getting the gradation done, being able to set the price there and then do the logistic of it to the realers, I think this will work.
00:08:27
Speaker
So he said, OK, let's start slow. Let's start somewhere. And on
B2B Marketplace and Operational Model
00:08:31
Speaker
13th of May, we kind of registered the campaign. There's like a B2B marketplace, essentially, where you are connecting the oil. We're not a B2B marketplace, no. We're not a B2B market. So I won't say that. We are a B2B managed marketplace. Right. Because you're doing quality grading, and you're setting the price, which in typical practice doesn't happen.
00:08:57
Speaker
Correct. In a typical marketplace, you will connect the buyer and the seller in dark. I don't connect the buyer and sell. I am the buyer and I am the seller, in this case, at each of the nodes of the supply chain.
00:09:08
Speaker
which means I will buy the cocoon, I will assimilate the cocoon in my centers, I will do the quality testings, I will set up the price and then ship it out to the realers. We will go into the realers and buy the yachts, grade them, test them and then distribute that to the viewers. Go into the viewers and tell them that we would be more than happy to buy our sarees.
00:09:30
Speaker
But we will do the quality testing again. We will do the quality assessment and the pricing mechanisms there and then ship it out to the retailers at the end. So that is what Reeshamandi created in its first year of incorporation.
00:09:48
Speaker
Okay. For the end buyer, like say a Nalise, it makes sense to work with you because you are going to give them consistent quality. We don't work with Nalise. We work with SME segment of retailers. We don't work with essentially the large corporate buyers. Primary reason, this was the starting point. Now we do work with few brands.
00:10:12
Speaker
But essentially we started with the SME segment of the tailors primarily because they had an issue of not getting a lot of coverage in terms of different SKUs coming. So somebody sitting out of Bangalore will never have a great access towards Banarsi Sadhguru's or a Kota Durya from Rajasthan.
00:10:31
Speaker
or a patterning from Maharashtra, we were able to penetrate these clusters, get these, you know, different variety of saris, test them, degrade them, and then being able to ship it to them. So that is how most of the SME segment of the Taylor scandal started working with us. So let's talk about how you went about this step-by-step journey. Like you obviously did not do everything on day one. So what was it that you started with on day one? Like when
Innovating with Farmers through IoT
00:10:59
Speaker
you started?
00:11:01
Speaker
We started with farmer life. I went back to Central South Bora. I said I want the database of the farmers open article. And I want to be able to give them quality testing at their doorsteps, set up the price, and then become the digital layer on top.
00:11:19
Speaker
Thankfully, Central Cell Board was very helpful and they were able to give me a first set of data. They said, okay, experiment with Sarajapur at the availability. I said, okay, fine. This is 20 kilometers away from my house. Fantastic. And he sort of was in the US though, but he had a house near Sarajapur. And when I called him and I said, you know, I have a database of Sarajapur, which basically suggests that there are 350 farmers. He's like, are you kidding me? I have a villa there and I have never seen our cell farm.
00:11:48
Speaker
In my life, I have seen flower farms there, but I've not seen silk farms. What are you talking about? I said, no, there are silk farms around and let me do one thing tomorrow morning. Let me venture out. The COVID wave had come down. Lockdown had got lifted.
00:12:05
Speaker
13th of May, we registered the company. And I went out on 30th of May, thinking that whichever I will find, the first guy I will find, wherever I will find Mulberry's silk leaves on a farmland, I will stop my car, talk to the farmer. That is how I actually approached. I went into the farmer and I said, okay, when is your cooking ready? He said, tomorrow. I said, brilliant. I found my first guy.
00:12:33
Speaker
I said, okay, how much are you expecting for that? He said 390. I said, okay, I did some testings and I realized I said 380. Are you okay? Because this is what the grade looks like. He's like, then he started doing some calculation in his mind. And of course I didn't knew Kannada and he didn't knew Indian English. So I started using my mate to become my translator in between. I would basically get her on the call and, uh,
00:13:00
Speaker
We did the negotiation. I took the samples and that same day I went to Ramnagar. Of course, I didn't have connection to the reeling community. I had no clue how to approach that. So again, I went to the Monday and I asked whether they can give me 510 connects of the reelers. Nobody gives their customers base that easy. So what I did is I waited till 12 o'clock till the time the third bidding was over and then
00:13:29
Speaker
When people were on their way out, I started pinpointing few of the realers and I started following them to their houses. I showed them this samples of cocoons that I had with me. I said, this is the red data of this. This is the red data of the slot. This is the red data of the slot. What is the red data? Red data is nothing but how many kgs of cocoon you need to buy to make one kg of yarn.
00:13:51
Speaker
It basically is a physical test that you need to conduct on the Puco. And it was a very simple test, but it was not a scaled test. So I was able to conduct that test myself.
00:14:02
Speaker
I went into the realers and told them, okay, this is the rent data. This is the price. This is the rent data. This is the price. And people said, yeah, I will buy. And he said 390 rupees. It's like getting 10 rupees per kg. I said, how many kgs? I said approximately 350 to 400 kgs is what I have. And I can ship this to you tomorrow morning.
00:14:23
Speaker
It's like, okay, let's do the deal. I came back to Bangalore and I called up the farmer. I said, listen, you don't have to go to Ramnagar. I will come tomorrow morning. I will back it for you. I will do the logistics and I'll give you the money for logistics. I want to use your own tempo.
00:14:40
Speaker
and he was kind enough to come with me and we basically took his 400 kgs of lot went to our first realer sold the lot realer made the transfer to my current account and that was the first money that hit our account on 1st of June 2020
00:14:58
Speaker
and I paid off my farmer and I still made money and all the while Saurabh was on the call with me and I used to tell him what exactly I'm doing, how am I doing it and we used to brainstorm or things like that. Same night when after selling the lot, I came back and then I started receiving calls from the farmers saying, I also have the lot ready, can you come?
00:15:25
Speaker
I started receiving calls from the realer community saying, you know, do you have the lot? I was like, brilliant. Here is a buyer. Here is a seller. And both of them are giving me a call, which means that my sales work. I called a sort of, I said, we, I can scale this. This is easy. All it takes is a quality gradation to happen. I can do this. And I did this for around three, four days at a stretch. I used to go to the farmer. I used to go to the realers. I used to do all that. And, uh,
00:15:55
Speaker
Then we said, okay, let's take a pause for seven days in between. And I called up, I again was talking to Saurav, I said, until we open a simple warehouse, which we're wherein the farmers can actually walk in, we won't be able to consolidate this and I would basically burn out myself. So we opened a small shop of 200 square feet in Sarajapur, that is still our flagship store, flagship collection center.
00:16:22
Speaker
farmers started walking in after seven days and by that time a bare bone inventory management solution was prepared by sort of sitting in US and
00:16:34
Speaker
We started doing the trade and when we started doing the trade, we realized that the farmers are working and we were able to do daily logistics of it.
Securing VC Funding and Business Growth
00:16:43
Speaker
We were able to convince our buyers very, very easily. We used to ship out on a daily basis and first month itself, we saw a 35 lakh of business happening through us.
00:16:53
Speaker
This is good, we are scaling, we are getting farmers, we are getting realers. Then I called up, I was basically looking for somebody to be a translator in between because that was a problem. So I got a hold of a very young NGO in Holberga.
00:17:11
Speaker
This girl called Divya Rani Kulkurdi, she used to run that NGO called Divya Foundation and she used to train these rural women to come together, get trained on various other skills and then she would work with the corporates. So I said, can you give me one person?
00:17:31
Speaker
And can you yourself be involved in the process? I basically, I'll give you a database of the farmers. You will have to just call them in and around Bangalore and set up my appointments with them. By that time I had hired my first hire also, the guy who would sit in my warehouse. So I could actually venture out now. So she started setting up my appointments. I used to go out, meet the farmers. And next month we looked at our balance sheet. It was 65 lakhs.
00:18:00
Speaker
as great, I am not ruined. And I am a guy like I said, about 5% like 5% type of margin would be yours. Yeah, so you make it by 8% margin and we were happy. You're basically giving out 15,000 rupees as rent, 7-8,000, now it's 15-20,000. And one guy who has a salary of 15-18,000.
00:18:29
Speaker
and my petrol expenses. That's it. That's the expense. And this was fairly easy for us to do. Then I said, OK, what else can I do here? We started realizing farmers have issue on their input side. They were not getting the right quality of input. They were facing a lot of crop failures. So then we started reading about it as to why does the crop failure actually happen.
00:18:56
Speaker
There is a lot of research that Central's recorded CSTR had already done on why the crop failure happened since. And the research suggested that all you had to do is maintain temperature and humidity over that 21 day cycle in a pound level. And then I started reading up and I started realizing that an IoT device can solve for this. And Storab has 15 patents on TCP IT stack itself.
00:19:26
Speaker
I was like, dude, you need to make this IOD device or let's buy it off the shelf and start implementing. We bought some five to 10 devices from a vendor in Mumbai and got it implemented, started writing our algorithm on top of it, started advising the farmers. They said, you know, you buy the device and we will give you an assurance of 80% out.
00:19:52
Speaker
without doing any survey, without doing any experiments. We said 80% out. Assured. And we realized that the government is telling them that 65% output is expected.
00:20:06
Speaker
15% uptick on a farm level is huge for a farmer. So people started working with us on these devices. This was basically a subscription sale. We would pay upfront that vendor. But all I need you to do is follow my advices. Make sure that you're working with me on the crop. And the farmers started liking that.
00:20:34
Speaker
Farmers also started seeing that 10-15% difference in the revenue. Like you would get from the IoT data and then if there was a red flag, then you would call the farmer and say, like it was the communication so far was manual between you and the farmer. No, so we've made a SMS based program, which will send out SMS's to these farmers because we realized they don't use smartphones.
00:21:02
Speaker
At that point, they weren't using smartphones after that. Everybody switched to smartphones and now we have an app which actually advises them. But we also continue to send out SMS even today. We continue to give them call even today. We continue to send our field executive even today to the firm. Because that's what's more important, giving that connection to them.
00:21:28
Speaker
From that point on, we started realizing that the IoT is working. The farmers are happy. Let's scale this further on. And we scale that to a further few devices. And our business was also scaling in terms of the network. And at that point in time itself, I started approaching the VC world for funding.
00:21:51
Speaker
saying, I have 35 lakh, I have 65 lakh. Let's see how it goes. Omnivore surprisingly was like, when I spoke with Shubhadeep, I actually did a cold reach out to Shubhadeep in Omnivore on LinkedIn saying, this is what I'm planning to do moreover. Can we have a word? And he gave me a call next day. He started talking and then he said, you know what? I will send my team.
00:22:19
Speaker
I was like, are you sure this is COVID times and physical meeting? He said, no, I'm sure. I'll send the team. I said, okay, great. Your team is in Bangalore. They will come. I don't mind. They came over. They did talk to the farmers. They spoke with our realers. They saw our warehouse. They saw our testing mechanisms. They saw our IoT device. And then Shubhavi gave me a call saying, listen, you need to scale this up more before we actually fund you.
00:22:48
Speaker
I said, okay, fine. That's okay. That's absolutely fine. But what are you looking for? He said, no, just some bit more scale. I said, okay, fine. Then we'll do that. So the other problem statement that we started looking at was that the realers were selling out their yarns to a trader without getting the quality testing done because there is no quality testing lab nearby the array.
00:23:13
Speaker
So on the reverse logistics, we started telling regulars that why don't you ship out your yarn stores. Sample based. Right. We will test it. We'll put it up live and we will sell your yarn for you.
00:23:28
Speaker
Now, the trader would basically not allow him to test. So, he will basically give him a 2A grade quality pricing while he might be doing a 3A grade. So, the difference between a 2A grade price versus a 3A grade price is 500 rupees per kg. Which is better? 2A is better or 3A is better? 3A is better. 3A, 4A, 5A are much, much better. As you are higher the number, the better the grade. Yeah. Yeah.
00:23:56
Speaker
So he said, we'll do denier testing, we'll do CV ratio testing, we'll also know what is the grade of the TSEAN and ship it. I already knew the viewers community. That was the good part. Yeah. So viewers were easy because I had worked with them in the past, right? So I started approaching the viewers and we did wanted to scale that business very, very rapidly. We took time on that and just started experimenting, but the scale kind of started happening.
00:24:22
Speaker
Similar to Omnivore, others were also talking to us. Omnivore formed conviction very fast. On the next month, we started talking. October 8th or something. How much revenue did you generate from the Vivaal community? Like picking up their product and selling it? Not much. I think we worked with the real us community at that one in time with 5 lakh, 10 lakh.
00:24:46
Speaker
for the yarns. And I was the guy who was experimenting. Then I went to a printing unit and I said, here is the print card. Then I made around 30 sardis. The cost was around 1200 rupees. And I didn't tell the price to anybody. I just sent those sardis images to a few of my friends and few of their wives. And my wife. And to some other people.
00:25:16
Speaker
all the saadhi got sold at 100% profit margin. I was like, wow, we have a lot of money. So I didn't venture into it deeply because I did wanted to move it at that point in time. Plus by October 8th, we had signed our term sheet. So we had to go through the diligence and every day, every day. And for me, everything was happening first time. When I was talking to Shubhadeep, she was like, what are you talking about?
00:25:44
Speaker
And I had no clue what the term sheets say. Thankfully, I had the ecosystem which understood. My brother-in-law is a founder of a company, a co-founder of a company. He's a serial entrepreneur. So he used to guide me as to what are the discussions basically looking at, how you need to approach it, what you need to do, how things are. He made our connections with the CA, TAs, lawyers, and other wife.
00:26:14
Speaker
So, we went into diligence. That was like a seed round or a seed round? No, no, no. This was a seed round. We didn't do an angel round. I had an angel in Saurabh. Very simply, he was earning in dollars. For me, I was a stock bitch. I was a bitch. Over the stock, I was a bitch.
00:26:37
Speaker
But no, this was a seed round, 1.7 million raise at that time. Stripe joined hands. Mr. Nadir Godrej came in onto the cap table at that time. Good round. And by the time we were closing the round, this was December timeframe, December end. And we had hit around one crore in GMV, constantly growing a month, one month. And 8th of Jan money hit our account.
00:27:05
Speaker
I had a blueprint, which cluster I needed to go into, which reelers I need to talk to. And people called me a fool when I started hiring people just after signing my term sheet. So I'm hoping he'll keep his word. But if I don't,
00:27:29
Speaker
Hire the team now. By the time the money will hit my account, it will be two months from there. I need to move fast. So by the time I'd hired 12 people in the team. And the first hire after signing the term sheet was basically an HR. So she started hiring and she still is director of recruitment with us.
00:27:56
Speaker
great person. She's seen our journey from like literally three founders and nowhere else in the team to where we are today, right? So that's, that's where we were. And then we started expanding in clusters. We started expanding to the farmer's base.
00:28:14
Speaker
By February, we knew how to present the yarns, how to work with the weaving community. The team was also there scaling. So I set up a small team for yarns vertical. I divided the vertical between Agri and yarns. Like the farm to relay transaction.
00:28:36
Speaker
Yeah. Yarn is Relay to Weaver transaction. Relay to Weaver transaction. At the same point in time, we started supplying silkworms also to the farms. The Chaki to farmer connection and that became our vertical one. All the inputs to the farmer, including our IoT device, will go into vertical one. Cocoon trade
Expansion into New Verticals
00:28:56
Speaker
will become vertical two. Yarn trade became our vertical three.
00:29:00
Speaker
And we went out to clusters like Banaras, Sale of Dharmavaram. Started working with the viewers that there was an amazing, there is an amazing guy with me right now. His name is Mani Sheke. He can sell anything. You tell him to sell anything he can sell. And his interview process was an amazing process for us because he wrote a cover letter to me.
00:29:24
Speaker
like I did within Konik. And with such deep thoughts there in his cover letter that there was one line that I wrote on top of it before sending it out to Saurabh saying, interview the Vanthai bosses. To look at his cover letter, forget about his resume. He has done his research, he knows exactly what we want.
00:29:48
Speaker
He came in, I did an interview of 5 minutes and I said, listen, I am giving. Today we are on Friday. Buy Monday if you can get me 5 customers out of the checkpad market. People who are ready to buy yarns. I will hire you. He had no clue. This guy was coming from a tech background selling SaaS products.
00:30:08
Speaker
to basically selling yarns, he had no clue what he is getting into. All the way into the weekend, he used to text me, what are the grades? What is this? What is that? But he was able to basically come back with five customers who were ready to buy yarns.
00:30:26
Speaker
I was like, boss, you're all right. Let's, let's move. And that's the guy who set up our yarn vertical. Today is our VP of strategy. He looks at all our zero to one journeys. All our experimentation service. And so that's how our yarn vertical started. And then we were hitting clocking numbers every month on time. Amazing growth from one growth 2.5 to 528. And.
00:30:52
Speaker
It was an amazing growth. You're literally going all over the place. Like more than double every month. Yeah. We were at such a past trajectory that people started coming in, we started expanding as a team. By the time we did our second All Hands, in March we were already hunting, like 70-75 people.
00:31:13
Speaker
I was like, wow, man, we're growing. And we set up our fourth vertical at that point in time, which was basically working with the beavers and the returns. This is the time I called a friend of mine and a batchmate of mine from NIFT. She used to run her own brand at that time. And I said, let's work together.
00:31:33
Speaker
She is our VP of design and product development. She works with the viewers and constantly gives them design inputs in other ways. But she set up that vertical for us. That's what our vertical for. We started expanding from there. India went into second lockdown. Amazing, right? It's a COVID to COVID story of Resha one day.
00:31:56
Speaker
So, for us, that lockdown was basically, we are in essential commodities, so nobody can stop our farm trade, our yarn trade was anyways happening because we were giving a buy-back guarantee on the viewers saying, you know, Abhyan Leelu, saadiyam khudyado, apu gaya varakparthar. Abhna Prophet Leelu. And then we started calling up retailers saying, listen, the day that retail shops will open, if you have the old stock, nobody would buy. Right?
00:32:23
Speaker
Let me start supplying you the new stuff and I'll give you some credit cycle more than what your traders are giving. So we started underwriting the credit cycles for them, gave them 90 days credit terms and things like that and started expanding that site. Numbers went crazy up and this was around May, June timeframe where we thought that we should now look at raising another round. Our numbers are good. We are on a solid path. What were you doing? Like the GMV by that time? Around 20 crores a month.
00:32:55
Speaker
And we said, okay. The margin must have also increased because the viewer to retailer margin would be much higher. Like you told me 100% in that experiment you did. Obviously, it can't consist. So basically, when you work with the viewers and the retailers community, we wanted to leave the margin on the table and make sure that we are growing when it does the business. But from April onwards, we were a bit positive.
00:33:22
Speaker
For us margin expansion was anyways up. So April, May, June, July, August, I think we remained a bit positive while we were scared. And by that, by August, I think July, August timeframe, we started talking to people, started talking to a lot of fans. We closed around at that point in time. India was getting into a festive mode. And I was behind everybody saying, listen,
00:33:47
Speaker
Come October, November, December, India is on a festive mode. If I need to scale this business, I need the money. Now, thankfully creation heard my plea and they said, okay, we will fund you and we got our money in. We did a...
00:34:02
Speaker
We did a very large round, not seriously. People again said this. Yeah, people said that you're crazy. You are skipping a round in between. You should have ideally done a 5-7-10 million round. And then go towards this. But I am a guy who has beliefs in himself. So I'm like, no, I want to raise Thakti. I will raise Thakti. I needed enough capital for me to grow fast.
00:34:29
Speaker
This push in October was basically a validation of whatever we had done in the last 1-2 months, 1 year 2 months and 3 months. At that one in time, we also started thinking that we are already doing commerce. What we are seeing is a huge gap is working capital and Capex not being provided to the farmers, realers, weavers, nobody is underwriting them.
00:34:57
Speaker
We have transactions which we can underwrite. Can we start becoming nbfs? Can we create a fintech layer on top of this? And people were surprised that so early in the game we were thinking fintech, but I had my convictions there. We started giving out, loaning out something from us through partnerships and otherwise and working with banks and working with nbfs.
00:35:21
Speaker
And it started scaling in some fashion of format and by that time, a round also happened. What is the tech play there? Give me examples at each player level. There are two, three products that we have. One is Bino emulator on a B2B site, which basically means that for a realer, they need a rotating capital of 7D.
00:35:45
Speaker
For a viewer, they need a rotating capital of 30-40 days. And for the retailer, they need a rotating capital of 60 days. We give them that. We help them buy the inventory and fast rotate it to make sure that they don't feel crunched just by the money. But by the thought process, they should be able to expand further.
00:36:07
Speaker
The second product that we have is asset-backed loan with basically a collateralized loan that normally all the buyers would. We would give the bank our transaction and tell them that to underwrite a collateral, then they will give the cadets loan. We will find our fee there and the guy will get it. It could be landed, it could be planted machinery, it could be anything. It's just that, you know, people are anchoring on us, but giving out loan through estate.
00:36:36
Speaker
Right. And the anchor is primarily giving them the transaction data that this guy has been working with me for six, eight months. So these are two, three products that we had launched till now and scaling now the team's getting set up. So today the business has four verticals again, but we have rebranded everything after our series.
Diversification into Cotton and Other Fibers
00:36:54
Speaker
We call it ratio farms, which basically means input to the farmers, and all comes under ratio farms. And why we call it ratio and not ratio is primarily because we are into fiber as a category, not silk as a category. And hence, after series A, we diversified into cotton, we diversified viscous, we're diversifying now further on, and looking at adding two more categories of fibers in the next couple of months.
00:37:22
Speaker
What is Viscose? Viscose is a regenerated fiber. It's a cellulosic fiber regenerated and basically it allows you would have seen here your wife must be wearing kurtis and the colors don't bleed and things like that. Generally they are viscose or rayons and they are both regenerated cellulosic fibers. They're like petrochemical products basically.
00:37:50
Speaker
No, not petrogram. Regenerated cellulosic fiber. Cellulosic means that it's a plant-based fiber. It's just that it's regenerated to create the longevity more into the fiber.
00:38:06
Speaker
So basically, that's where we are. So you were telling me the four verticals. Yeah. Yeah. Yeah. So Resha Palms is the first vertical, which basically works with the farmers on the input side or on the output linkage. Then there is Resha Palms, which works with the realers on their output linkage and giving them advisory, making sure that they're producing the right quality of yarns that we need to supply. What is the second vertical count? Resha yarns. Resha yarns. Okay.
00:38:35
Speaker
Then we have Resha Weaves, which is divided into two parts. One is D2R, which is direct-to-retailor, which is where we work with the SMA segment of the tables. Then there is Exporter and Corporate Division, which basically works with the brands or the exporters on their fulfillment of fabrics or whatever. And then we have the fourth vertical. We call it Resha Mudra, which is our fintech. We are basically an ecosystem now.
00:39:03
Speaker
simple platform play that we are in, primarily an ecosystem play where we've just launched insurance as a product for the stakeholders. With onshoreity, we are expanding further on our offerings to the stakeholders, whether it's through FinTech or whether it's through other things. The idea is to keep them happy, keep them engaged, make sure that they're loving their journey with Resha Manji.
00:39:25
Speaker
Because if they love it, they will do it over and over again. And our GME will constantly go up. Our gross margins will constantly go up. As long as people are engaged, you know that you're going to be in it. What kind of insurance? Like insurance, I guess, crop failure and stuff or like health?
00:39:42
Speaker
So not right now under the cold yield based insurance, no, but yes, it's a health insurance. It's primarily a health insurance that we are distributing, but we are planning to get into warehouse based insurance as well, where we are giving warehousing solution to the viewers. They have a big challenge there. Nobody gives them insurance. What if there is a fire or anything of that sort.
00:40:08
Speaker
Nobody is giving them insurance for that, so we would be able to provide insurance while consolidating their supply at one virus locally so that if they want to distribute it through their own mechanisms, we are more than happy for that. But if they want to utilize our platform, more than happy. Help them on the output.
00:40:29
Speaker
If you like to hear stories of founders then we have tons of great stories from entrepreneurs who have built billion dollar businesses. Just search for the founder thesis podcast on any audio streaming app like Spotify, Ghana, Apple Podcasts and subscribe to the show.
00:40:48
Speaker
Okay. I think a good way to help listeners understand the potential would be like to compare with say like an ABOL, which is organizing the dairy supply chain.
00:41:01
Speaker
You know, so they are like, you know, the dairy sector where you have companies which are organizing farmers, collecting, grading the milk, and then eventually taking care of that whole cold supply chain till the end consumer. Of course, there they own more of the processes here. You are working with stakeholders at each of the stages, but like that would help people see how big this opportunity is. Right. So basically, see,
00:41:32
Speaker
If you want a parallel to what we are trying to do, the challenge is there is no parallel. That's the problem. There has been no solution of this kind available because there aren't no supply chain with this much of complex. You don't get to see five or six different stakeholders in one supply chain, which are actually effectively doing either production or processing.
00:42:00
Speaker
for any of the products. On the Amul side of the story, the processing happens in a factory. The factory is owned by Amul.
00:42:08
Speaker
or is owned by their people who are doing it for them. It could be an FPO, it could be anybody else. Similarly, the milk is getting accumulated through an FPO process. In our case, we work with an individual farmer, we don't work with it. We work with individual realers, we work with individual viewers. And if you want parallel, then from the viewer-retailer angle, you can think of us as Iran. Or things like that.
00:42:35
Speaker
But if you're going a little deeper into it, you will basically start feeling that this has on the farmers like we, we kind of work like the heart. But when you come to yarn industry, we kind of work like a B2B managed market. So it's very different flavors that we have in the company. And Resha Mudra is completely of intact, completely different from what we are doing in the commerce side. So
00:43:02
Speaker
There is a lot of evolvement there and that's why when I compare myself, I compare myself to Tata. So how big is this market that you are tackling? What do you think? What is your current turnover? In the closer dunes of around 50 crores.
00:43:24
Speaker
And how big is this market? How big do you think you will get? Like, what is the potential here? What is that? You know, the VC term of total addressable market. What is that like? Natural fiber market has a total potential of around $100 billion. This is like the entire from the from farm to consumer value chain. Yeah, it could be more than that. It could be the
00:43:50
Speaker
The saddest part of this whole story is that you don't find data very easily because nobody has seen the sector of it. Plus the data that is available in GST portal or exports or anything of that sort is also very flawed because these are very rudimentary supply chains, very, very disorganized. Primarily what happens is, you know, people work on black money as well.
00:44:17
Speaker
There is a lot of cash transaction. It's a cash economy. Yeah, it's a cash economy. Absolutely.
00:44:22
Speaker
Right? And to be able to change that much of behavior takes time, takes a course. And then being able to tell them that, you know, you'll be able to earn more, able to get your family a lot more convenience. Like today, when, when farmers come to me and tell me that, you know, instead of doing six crops, I'm doing 18, I am, I feel threaded. I feel elated that, you know, at least we made that impact if nothing more.
00:44:50
Speaker
or a retailer comes to us and say, okay, you know, I have customers walking into me on 15 days basis every time to just look into my new inventory that I can. Or a viewer comes to you and say that, you know, I've just replaced Chinese. These are the stories that, you know, gives you the thrill of doing this, of what you're doing. That's what we aim to do.
00:45:17
Speaker
I think we have just started to scratch the surface. So is technology like a key driver or an enabler in the company?
00:45:28
Speaker
For us, technology is two ways. One, on the IoT side, it's the driver, but when it comes to our transaction, it's an enabler. Got it. Do you have an app and all also where farmers can get real-time visibility and probably a marketplace on the app where they can upload quantity that they want to sell or people who want to buy can place orders. Tell me about that app of yours.
00:45:59
Speaker
Yeah, so we have an app called Resha Mandi itself. It's
Supporting Stakeholders with Technology
00:46:03
Speaker
available on Google Play Store. The idea of the app was basically to give out the technology in the hands of all the stakeholders. So today the retailers can also order their inventory, see their inventory. We can list their inventory or buy ads that are listed there.
00:46:17
Speaker
or the realers can buy their cocoons or sell their yarns on bank, basically be able to list them. And farmers also can set up appointments, buy their inputs, fertilizers, disinfectants, silkworm, whatever they're looking.
00:46:33
Speaker
It's all available. We also do distribution through our local offices in terms of, right now, 25 plus collection centers in and around farmers location. We have warehouses in Ramnagar, Siddhla Gautapula. We have warehouses in Salem, Dharmao and Rajasthan in Banaras. Today, we service around 1,000 plus pin codes and we work with retailers in more than 10 plus cities. And still, there is so much more to lose, so much more.
00:47:03
Speaker
So in this 30 million, I guess part of it you need for the physical infra because you need to set up collection centers in every cluster of farmers. So you need to spend on that. We don't really spend one lakh rupees, one and a half lakh rupees on awareness. We have few of them, but most of our collection centers cost us around 50-20,000.
00:47:31
Speaker
Right? And then we have two people team, the one to do quality check and second to do the second, unloading, unloading, or to test. That's two or three people team in each of these centers. So what are these five different like working capital?
00:47:47
Speaker
No, so basically we don't utilize our equity capital for working capital. We use equity to be able to do all the burns. If we need to have burns in the picture, then we take care of our corporate expenses through that or any of the, you know,
00:48:02
Speaker
In the VC world parlance, anything beyond our sales and marketing is spent. From the marketing spend to our abitta burn is what we try and cover through our equity money. But whenever it's the working capital that needs to get out, then that is from the debt.
00:48:19
Speaker
We raised debt. How's that? How did you learn stuff like this? That working capital should be funded through debt and this should be done through... Oh, very hard way. Very, very hard. We did our siege round. We were growing that fast that we exhausted all the money. Then we raised our series and this time I was very peculiar saying, okay, I'm putting my foot down. Nobody touches my equity money.
00:48:50
Speaker
and you know raise debt and that is what you want to use in the business and for the other expenses I'll manage through equity so today our runway is huge we are sitting at a runway of anywhere close to 24 months so even with 310 people in the team and also
00:49:13
Speaker
It kind of helps if you have those thought processes come together very early in your game. It takes time to reach to, you know, these kinds of conclusions in your mind. But once you are there, you kind of are able to manage the money better. So what is the money going to be useful? Like what tech team or what like? Oh, R&D, tech, some acquisitions.
00:49:39
Speaker
Acquisitions like what like to buy more deck or what like No, so there are two three different kind of acquisitions that we are looking for one Wherever we see us in a just a can answer in terms of getting our top line up or our bottom line up second is what like give me give me examples that like what what could be something which would
00:50:04
Speaker
which would be appealing, a textile mill is appealing. See, I am not afraid on becoming asset-heavy. It's just that, will that asset help me in my bottom or the top? And what kind of growth are we going to look at? Will that asset get reconstructed in some fashion or format? And then will I be able to create a subsidiary which I can eventually sell? Or things like that. Am I more very different? I have a very different thought process.
00:50:31
Speaker
The other kind of acquisitions that we are, of course, looking out for is technology, equity hires, and other ones that we constantly look for. Plus, of course, we are looking for an NVFC license. So, an equity capital will have to be flushed in there as well. So, things like those will be what the equity money would be. But let's see how it goes. Remind you back to the market.
00:50:58
Speaker
Okay, okay. While you don't like the dairy comparison, but it still sticks in my mind. See, right now, because a lot of work is manual, so you have so many stakeholders, but you actually now have that investor backing
00:51:15
Speaker
to bring it all in-house. Actually, why is Amol different? Because they are taking care of that entire processing. They just procure the milk, the grading of the milk, whether the milk is sold as milk or ghee or butter or paneer. They take care of all of that and also deliver it right till the retailer. So they own their supply chain because they're able to do it through automation. Machines can do it, so you don't need so many people and stakeholders to do that for you.
00:51:43
Speaker
which is something which you could achieve in this market. You could create more... Interesting proposition, Akshay, but the problem is, India is a labor intensive economy. Plus, there are stakeholders that depend on us. I don't want to leave them. Do I want to start running my own factories? I don't think I want to.
00:52:05
Speaker
why a textile company might be an interesting proposition is primarily because if I can get into value-added fabrics with that and then being able to utilize their customer connect to make sure that I can then give it out to the other viewers that are working with me, it just makes more sense. I'm not in
00:52:30
Speaker
a mind where I will start creating assets after assets and then become a mole or reliance or anything of that sort. I am a guy who would constantly work on asset-like model, make sure that the stakeholders are enjoying the ride with us. I am delighted when people say that the lifestyle has changed with station. Getting them in-house, putting them on payrolls might not work.
00:52:59
Speaker
They're all entrepreneurs unto themselves, right? A farmer today, when he earns one and a half lakh rupees out of his one acre land and tomorrow and I tell him that, you know, why don't you divide your production runs in two parts on a 15 day, 15 day cycle. And, you know, we can give you some money on the rearing shed side to basically install some more capacity. And he starts earning 2.25 lakh. He's excited. I am excited. His daughter and son is excited. I mean,
00:53:29
Speaker
I have seen people who have been with us for 18-19 months now, first few sets of the farmers whose daughters and sons have actually gone ahead and applied into engineering colleges, medical colleges. They come to us, they talk to me in English.
00:53:46
Speaker
and I feel so excited about it. It's that what I'm aiming to do here. Of course, I'm not running a charitable organization, but it's not that that genesis will go away at any... You want to remain a...
00:54:02
Speaker
technology partner, not just a technology partner, but technology partner, supplier, market access partner to all of these stakeholders. I want to be the happiness provider. Yeah, yeah, that's a better way to say it. Okay, okay. Are you also seeing like a D2C play here, like directly selling finished products to end consumers?
00:54:30
Speaker
or you want to go through retailers only? Well, go through retailers. We are launching a website which is going to be targeted towards details, basically the consumer base.
00:54:43
Speaker
But at the end of the day, we will basically help out our retailers in selling their products on, which basically means that it would be the inventory that Resha Mandi might have supplied to them, or it could be the inventory that they themselves carry, which we will host on our website and make sure that we are the technology enablers again.
00:55:02
Speaker
to make sure the consumer is moving in. But what we would basically offer the consumer is a traceability, end-to-end traceability. They will know when they are buying a sadi, where the self-wamp got produced and where the cocoon got produced and where the realer was and who was the realer and who was the realer. You will know how many families you are supporting when you are buying one sadi.
00:55:26
Speaker
Second thing is that we will also be able to give them the benefit of the cost reduction that we have already done in this supply chain.
00:55:34
Speaker
and pass that benefit directly to the funds. Which goes back to your Novika experience of creating the story around the product. So like on your website, you'll be able to list out each stakeholder when someone clicks on a product because your ERP would have all of that information in it. Correct. Correct. Okay. Amazing. Amazing.
00:55:57
Speaker
And if a retailer wants to increase his customer base, then he can just share a link and say, then go to my online shop. And he would have some sort of an online store where his inventory can be listed and sold through your website, basically. Right. There will be SME segment of retailers who will have their own retail fronts with us. And basically, the idea is that I want to aim for that people go to Google and say, where is the Resha we've stored here?
00:56:27
Speaker
When that starts becoming a trend, that is when this whole idea would be successful. You want to brand retailers or at least have retailers carry some sort of a branding of ReshaWeave to like build the consumer awareness and preference.
00:56:44
Speaker
So we will have five retailers this month who will basically be changing the back to ratio. We partnered with ratio. So things of that sort. How drastic a makeover. Is it like say all your rooms level makeover or is it just adding an extra signage makeover? No, no. So basically, no, it's not adding extra signage makeover. It's basically a makeover in terms of
00:57:12
Speaker
giving them inventory management solution, giving them a POS solution and also making sure that the dead inventory that they carry is called for. It will be a technology solution rather than just being a branding proposition.
00:57:30
Speaker
Okay, so I mean, so that's more like all your rooms, five hotels, what they do when they onboard a hotel, like they provide branding to the hotel, they provide technology to the hotel, customer base to the hotel. So something like that. Something like that. Sorry, I love comparisons. I know you're not. That's what I'm making. But it just helps listeners to relate better, you know, so
00:57:58
Speaker
Yeah, I know, I know, I know, I know. People want to benchmark people against people. It's like a shortcut to understand, you know, so... It's a shortcut to understand, but it's also a shortcut to basically not understand somebody. Yeah, yeah, I know, I know. He starts judging the book by just the cover.
00:58:25
Speaker
So, what do you think is your timeline till you raise your unicorn round? Obviously, the total addressable market is massive. Do you have an investor? Let's talk. Unicorn, no unicorn. It really does not matter. I won't call you becoming a unicorn valuation a success. I would call probably having a turnover
00:58:55
Speaker
equivalent to reliance as a success. Creating that kind of a legacy is a success. Otherwise, if I'm in the game of just taking an exit and making money, I can make money. If I go out and do a job somewhere, I would earn money. I would also be able to get some shares and then make some money out of that. But I am in this to basically make sure that there is some kind of a legacy getting created.
00:59:25
Speaker
And if that legacy continues with somebody else, I'm fine with that. But that legacy needs. What's your turnover target for 2025? Like how much top line do you want to see? 2025. That's way far off here. Way far off. Too far off. I think we will be approximately a billion dollars in annual GMV or revenues next year.
00:59:59
Speaker
from April to March next year. So my last question, any advice to people who are aspiring to be founders? Are you ready to take the risk?
01:00:15
Speaker
It's a risky proposition and it's a rewarding journey, nonetheless. But you need to be in a phase of life or you need to have partners with you who are ready to support every up or down that you go through.
01:00:32
Speaker
Essentially, we are now talking after a couple of months since the original conversation, and there has been additional part of the story, which is why we are meeting again to talk about those evolutions since we last spoke. So why don't you talk about some of those evolutions since we last spoke? You had
01:00:51
Speaker
You had briefly talked about how you are getting into branded stores at a retail level. I think that is one major revolution which has happened. So maybe you could start with that and then we'll cover the others also.
01:01:03
Speaker
See, from the evolution standpoint of Resha Mundi, I think where we are right now is we've started our lifestyle business, which basically is going to cater to the consumer, but primarily using our same retail base. And we're trying to basically work with the retailers that we've been working with. We've till now worked with them on the B2B side, giving them the supply and not really capturing on their demand. Now our focus is on their demand as well. And how do we?
01:01:29
Speaker
get to do more football, make sure that they don't get any dead inventory issues as such. And then being able to also help them understand what are the trends and what are the forecast that's going to come into the market, which allows them to continue to churn the inventory and make sure that there is a more sales throughput that they could get. So that is what one of the evaluations that has happened. Apart from that, this business is called what? The lifestyle business.
01:01:54
Speaker
Currently, it is branded as Resha Weaves by Resha Monday. It's basically, even the co-branding activities started, there are around 30-40 retailers across around 12 plus cities that we've co-branded with. These retailers carry around 70-80% of the inventory that has been given out by Resha Weaves. These are primarily the inventory. This is basically our private label going to them and then it allows us to help them capture the footfalls as well.
01:02:21
Speaker
because then we can play on the digital forefront and say, okay, here is the brand and here is the connectivity to the retailer as well. So rather than just being a digital player, we thought that we might as well become a digital player and use the retail base that we have. It allows our B2B business to grow while also expanding on the demand side for the retailers.
01:02:41
Speaker
Got it. So this would be something similar to say a mobile handset company like Xiaomi does. On Xiaomi's website, you can find a retailer near you and you have these retailers who carry the Xiaomi branding. Although they are not exclusive Xiaomi, they carry other brands also, but something on similar lines to that. Got it. Okay. And the other revolution has been in the piece, I believe. So tell me about that.
01:03:02
Speaker
So FinTech, we started around November-December last year and the idea was to basically that the stakeholders in our supply chain requires a lot of working capital solutions to be created for them. They were primarily working with unorganized players, right? Like players who were basically charging them either 24% if they're a registered NBFC or if they're not, then basically they're going to an organized Lalaji somewhere who's basically giving them around 2.5-3% on a monthly basis and that
01:03:31
Speaker
It's non-sustainable for most of the supply chain. When your margins are around 15-20% or 25%, you don't want to let go of 3% on a monthly basis, just for the heck of having your cash managed. So with that, what we did is we have Resha Mudra as a setup. Now we're looking at our own NDFC license, that's right.
01:03:50
Speaker
We started giving out these working capital lines to people so that they can continue to basically interact with us. It's basically not a money transaction that is happening, but allowing them to basically take the input on a credit basis, what the underwriting shows us. So if the underwriting shows us that you make around 20 crores on a yearly basis, then we will be more than happy to underwrite a three month working capital for you.
01:04:15
Speaker
So something in that lines, it allows for the transactions to move on our B2B side and it also allows these guys to get a better access to the capital. Our interest is very, very phenomenally low and it's on a per day basis. So as long as you're paying on a daily basis and you're churning more,
01:04:34
Speaker
inventory and you're focusing on your production, your revenues will go up, your profitability will go up and you will continue to hold only a very small interest rate onto that and that allows most of our stakeholders to be healthy at any given.
01:04:50
Speaker
Amazing. And you have an NBFC tie-up for this or you're going to have your own NBFC? So today we have NBFC and bank tie-ups, but now we have applied for our own NBFC because another challenge that we wanted to solve for, while we will continue to have a cool landing option with the NBFCs and the banks that we work with, we're not going to be solely focused only
01:05:12
Speaker
doing it through our NBFC. But the idea is that we want to do a little more fast-track when we are giving out a small working capital solution to somebody. Somebody who is a yarn manufacturer requiring a PILAC limit does not really need our NBFC or a bank to go through our 120 parameters underwriting.
01:05:30
Speaker
It requires a 30-parameter underwriting. You can pretty much do it in five minutes and all. And if you have the market intelligence on it, then basically what are you underwriting? You're underwriting your own transactions. Then you have a balance sheet or whatever the other card, bank card that you're pulling out. But it allows you to basically see what is the health of his business and accordingly be able to work fast with. And you can control collections because he is dependent on you for supplies. So he's not going to just run away.
01:05:59
Speaker
See, I think we briefly touched upon it last time also and this time again I'll touch upon this. When we work with any of those stakeholders, whether it's the farmer or the animal producers or the textile mills or the exporters, we try and work on both the side or one on the demand side and second on the supply side.
01:06:17
Speaker
At the end, the supply is coming from Resha Mandi and the demand is also getting pulled by Resha Mandi, which means that you are focused on the job at hand, which is basically doing your right amount of production at the right quality that is expected to come out, while having a surety of the quality coming to you in terms of the inputs. And then there is a better access to capital, which allows you to pass track your entire transaction and move along in that side.
01:06:42
Speaker
And are you also looking at other financial products like insurance and all? We have an insurance product, but this is in collaboration with Onshorety. The idea again here is when a stakeholder, think of a stakeholder as a human being. Now the human being requires finance, they require
01:07:04
Speaker
Now, what is the other thing? How do you safeguard them? And how do you safeguard your own supply chain? How do you safeguard the money that you have given out or the credit that you have lent out? You safeguard that through an insurance program. Now, our insurance program is a multi-fold program where there is a health insurance, there is term insurance. We are also getting into crop insurance with collaborations now. We are exploring that side.
01:07:26
Speaker
The idea was to basically have this insurance program running to get as much of a KYC done for even for the labor in that stakeholder. So if you are a viewer and you have 200 labors working with you, your problem is that this guy is on a daily wage basis with you, right? So if somebody is paying him 5 rupees more, he'll move out of your ecosystem very, very fast.
01:07:48
Speaker
So how do you control that? You can only control it by giving him a health insurance program, which is basically offered in collaboration with Rishamandi. Now, because your attrition rate is going down, I get the KYC and I'm able to tell the world that there is no child labour involved. It kind of enhances the India's outlook in the international market as well. So when we talk to an international buyer, it becomes very, very easy to tell them that
01:08:14
Speaker
We are ESG compliant and there is no child labor. We're working on the solutions for zero waste state. We're working on the solution of sustainability and things like that. Amazing. Currently, how much export do you do of your revenue? What percentage is export?
01:08:29
Speaker
It's a very phenomenally low percentage. We've just started last month about exports and we've done first couple of shipments actually. But as we see moving forward, we've just gone to Dubai as well for its affair that happens for referrals and textiles. Now, the idea was that while we are talking to these international buyers, what are they really looking for? And why do they not work in India? Now, most of the time, why do they not work in India is a very simple philosophy that India does not provide consistent quality
01:08:57
Speaker
Nobody has a control on what their supply chain and nobody knows whether there is a sweatshop that is getting involved in that supply chain. Imagine a very big player in the international side. He or she works with you and the company
01:09:14
Speaker
then get into ISD problem because of your supply chain. They don't want to take that risk. And that's why they don't come to India. While India right now should be in the, you should be the top of the mind recall for most of the buyers, but it's not happening after that for the last two years also. So even during COVID, while China's demand was going down, India could have taken that demand.
01:09:40
Speaker
No, no, please. I was just asking that. Like, who is the leader right now? Which country is the leader?
01:09:46
Speaker
See, you have China, right? That leads exports in most of the areas in the textiles and afterals. Now, the problem is Chinese demand has dipped after the COVID. Everybody wanted to shift out of China in terms of the supply base, but are they able to move out of China very, very easily? No, because there has to be other countries telling them that we can provide you the consistency in quality. We can provide you the consistency in pricing. We can also help you on the ESG side. We can give you the transparency of our supply chain.
01:10:14
Speaker
In India, we still don't talk that language. I mean, we talk the language of... and we don't really... we play that card of marginalization so much that in international market, people think that India is still the snake charmer's country. So because of all this data which you have of the entire supply chain, you are able to assure buyers about ESD compliance.
01:10:42
Speaker
So now what revenues are currently silk focus and what is like non silk like what has been the diversification and again last time we had spoken about this briefly that you were going beyond silk. So I want to understand the update there.
01:10:58
Speaker
Perfect. So in three months, I don't know how the evolution cycle works, but for Rishamandi, I think we kind of evolve every 15 days sometimes. So from the very simple standpoint of the supply chain, self-crystall contribute to a large portion of 80% of our revenue coming.
01:11:16
Speaker
But 20% has already been diversified and we've moved into cotton. We have the farmer to detail of cotton working with us. Similarly, we've gone into a regenerative fiber category with Biscaus. Now we are exploring angles on Banaraju, Cecil wool as well.
01:11:33
Speaker
And we'll continue to add these categories as we move forward and self contribution. We'll continue to hold a significant significance on our revenues, at least for the next couple of years. But we see that the diversification is also playing a lot of, it's a lot of synergistic and alliance that automatically happens when you're working on a supply chain and you solve for one issue at each node of the supply chain, then you know exactly how to replicate and solve for the other problems that you're seeing.
01:12:02
Speaker
Like if you go to cotton, there is a very different problem that you might just be looking at from the farmers standpoint because it's a cyclic rotational crop. It's not a crop like silk, which can happen every month, right? It's a cyclic. So you need to accordingly set your mindset and be able to work with that. But a farmer being a farmer is still trying to understand and trying to gather thoughts around whether I can do precision farming, whether I'll be able to get the right inputs, whether I'll be able to sell my output at the right price.
01:12:30
Speaker
and things like that. And it's the perennial problem of everyone. It's not only a rustled farmer or a cotton farmer. It's the problem of a jute farmer. It's the problem of a bull shepherd.
01:12:41
Speaker
everybody has the same issues. And the markets have not been able to reciprocate to that mindset as such. So that's a reciprocal way of working towards diversity. But cotton, if I'm not mistaken, is already a pretty mature industry, right? Like in terms of the supply chain, there are like large players at the nodal points already like organized. There are. Sorry.
01:13:07
Speaker
There are large players and Cordon is one of the supply chain that India has kind of flourished every day. Sorry, but the challenge here is the same retailer for him, the cost has not come down even though there are large players working. These large players have a mindset of working with contract farming and contract manufacturing.
01:13:32
Speaker
not having the mindset of being able to work on a free trade basis with everybody and let them decide whether they want to work with you. Are you even helping them generate more revenue? Are you even helping them generate more profit? It is not the mindset that we go by. We go by the mindset of I am I generating more profit.
01:13:49
Speaker
Now with the company like ours, we are more focused on are we adding more value to the stakeholders because the more value that gets added into our supply chain, the more value we are able to generate out of that supply chain automatically.
01:14:03
Speaker
And also, to do with the fact that the retailers who've been working with us, they are also looking for diversification. They can't just work on one category of silk sardines. They need diversification, they need cotton to come in, they need viscous to come in. And you want to cater to different demands, you want to cater to different consumer psyches and then be able to work with it. So, like I said, it's a reciprocation of what the market demand looked like to us and then accordingly being able to work on.
01:14:31
Speaker
Right, right, got it. So, from a... If Makan was so, so organized, no? I wouldn't have been able to make the entry to, to be very sure. Yeah, yeah, yeah. Essentially, your retail offering becomes a more holistic offering that, like, it becomes a one-stop shop for fashion, basically, like, irrespective of what fabric is.
01:14:53
Speaker
Yeah, so basically initially we started with silk sardines as a category on the retail side, then we diversified with fabric and we've been able to offer fabrics at a better margin, better discounts to people and then we started working with exporters, we started working with garment factories and then be able to work with the retailers as well.
01:15:14
Speaker
Now there is another diversification that we have done towards home and apparels as well where we are trying to cater to the demand of the brands as to what they are looking for and then be able to work with the suppliers in the back end to help them get the right input whether it's the fabric or whether it's the design intervention that they are looking for whether it's the
01:15:35
Speaker
forecasting that they're looking for. We have a separate division of design and product development, which kind of works towards it. We work on data mining on this and then being able to forecast as to what's going to work in Indian market as such. And India does not have a forecasting agents, but that's a very sad state of pair. We've been doing retail and organized retail has been in India for last 20 years now.
01:15:56
Speaker
But there is a sad state of affairs where people don't even know how to forecast for the Indian market as such. So my last question to you. As a founder, what are the metrics you track on Resha Vandy as a business? Do you look at ARR? Do you look at... I mean, what are those metrics which you track? I'm a simple guy. I look at my top line, I look at my avatar. And the moment the avatar goes positive, I'm happy.
01:16:19
Speaker
Okay, so what is your top line right now? And is there a beta currently? We are at a monthly run rate of around 100 plus crores.
01:16:34
Speaker
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01:16:55
Speaker
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01:17:11
Speaker
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01:17:32
Speaker
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