Passion keeps organic food venture going for eight years

Amid multi-storied shopping complexes and malls that attract thousands of customers every day on road no 12 of Banjara Hills in Hyderabad, a low-profile shop with almost no activity is easy to miss everybody’s view. Unlike the showrooms in its neighbourhood, the outlet of Sresta Natural Bioproducts attracts just about 70-80 customers everyday. But Rajashekar Reddy Seelam, the managing director of Sresta, says there has been a significant improvement in footfalls.

“Everyday I thought it was my last day in pursuing the business I was passionate about. But it is the same passion that kept me going for all the eight years,” Seelam said.

Sresta is an organic foods company. Though it sounds fashionable to be in the business of selling organic food products, that are still being seen as products meant for the upmarket population, it was not easy for Seelam to keep the lights lit in his office.

“Organic foods is a back-breaking business. It is many times easier to do any business related to food than growing and selling organic foods. Every aspect of the business makes it extremely difficult by the day. Right from farming of organic crops to selling them burns every calorie of energy. Unless one is passionate about the sector, it would always make an unviable business,” he said.

Seelam, an agriculture graduate with a management degree from IIM, Ahmedabad, worked for EID Parry of the Murugappa group like many of his friends. But his family background rooted in agriculture forced him to look for an innovative activity related to agriculture. Not willing to go away from what he was doing, he had started Inza, a company focusing on CRM solutions and Promuk Hoffmann International, an Indo-German joint venture focusing on light engineering sector.

“Though I was into engineering and technology business, I was still glued to the idea of doing something in agriculture. Eventually, I had to sell these companies and make use of the sale proceeds to set up Sresta in 2004,” he said.

It took almost three years for Seelam to understand the difficulties in pursuing organic foods business. To grow food grains without using a grain of fertilisers or a drop of pesticide was indeed difficult. For about three years, the yield in organic farming was disappointing since the soil in the farms they were farming was not ready. Growing a crop naturally using a combination of traditional farming practices was one part of the difficulties, harvesting and warehousing the product was another.

“The issue is not just about growing crops organically. It is also about offering them in pure and no-chemical form to the end-users. It is not just easy. A house wife will tell you how difficult it is to store a food product in a container without using a chemical to keep away ants, flies or even rats. When we handle tonnes of products, it is those many times more difficult,” he said. It took more than a couple of years to find a way to warehouse the harvest in a proper condition.

“Recently we found out that the environment in the warehouse has to be altered to ensure that there are no pest problems. The modified atmosphere technique cuts the oxygen level in the warehouse to less than 3% to ensure pest-free storage,” he said.

Currently, Sresta has farming agreements with about 10,000 farmers in about 11 states offering 30,000 acres of area. These farmers grow about 67 varieties of crops including all kinds of grains, millets and pulses. The yield is said to be about 6-7,000 tonnes. Based on these crops, Sresta has developed about 200 food products.

“We have to spend a lot of time on training farmers. They are used to a particular type of farming. Our requirements are greatly different. Of our 120 employees, about 70 focus only on farming while maintaining constant interaction with the farmers,” he said.

Sresta sells organic food products under its own brand - 24 letter mantra. The brand name is derived from the sum total of the Sanskrit spellings of all the five basic elements in nature.

On the retail front, the company sells these products through 350 shop-in-shop outlets in major cities in addition to its own store in Hyderabad.

“We are planning to have 1,000 such stores by March 2012,” he said. But is there market for these products? “Globally, the organic foods business is valued at about $54 billion. It is said to be growing at about 6-7%. In India it is estimated to reach $5-8 billion in the next 10-15 years. But, this is an urban-focus business. The demand is said to be coming from about 30 major cities. However, we still depend on exports to a large extent though our interest is in offering these products to the domestic market,” he said.

Pricing of the organic food products has been a major issue making it unremunerative for those in the business of selling them to customers.

“They are expensive. Unless there are volumes, there is nothing much we can do about the prices,” Seelam said. The difficulties increase as the company expands its export footprint. In India about 95 tests are done on samples to ensure that they are really organic. However, the European exports go through about 350 tests.