For Prasanna Rao and Anand Chandra, co-founders of India’s leading post-harvest agritech firm Arya Collateral Warehousing Services, one of the key challenges at the beginning of their entrepreneurial journey was convincing farmers about the benefits of having post-harvest facilities.
“Farmers never really stored their produce after harvest (as they need money). For them to believe that it’s possible and to generate a higher income out of that was a journey we had to traverse,” Rao said recounting the struggle team Arya went through after launching the agritech platform.
The duo worked in the agri-commodities based finance department at ICICI bank, where they found, only about a third of the yields Indian farmers produce reaches the big markets leaving a huge gap for primary and secondary markets.
“We realised banks and other service providers in post-harvest eco-system were serving just about 1/3rd of the total agricultural production. Our belief was that if we had to make a difference, then we had to go a little further down into primary and secondary agriculture markets,” he said.
The agritech platform was launched in 2013 to help farmers store their produce and give them the opportunity to take advantage of time arbitrage in commodity prices. Farmer Producer Organizations (FPOs), as well as individual farmers, use Arya’s warehousing facility to store their produce until they find the right buyer.
Arya Collateral Warehousing Services was previously a subsidiary of shipping services company JM Baxi & Co. In 2013, the duo approached the Baxi group to see if they could take over the logistics company, which was running in loss. The Baxi group was amenable to the idea. The company became profitable from the first year of its operation. Over the last seven years, Arya has seen phenomenal growth. The company clocked revenue of around Rs 125 crore last year.
The company profitably serves the agri-storage and financing needs of smallholders, FPOs, and corporations in the smaller rural markets. The Noida-based company’s clients include farmers, farmer producer organisations, financial institutions, commodity traders. Its post-harvest services include warehousing, warehouse receipt financing, rural storage discovery, collateral management and market linkages.
“Our primary focus is to reach to those locations where others have not reached We currently manage around 1800 warehouses of which, around 1200 come under professional warehousing service while remaining 600 are part of collateral management.” Ritesh Raman Head-Warehousing & Collateral Management told Plunge Daily. Additionally, it has brought in 2,400 more third-party warehouses on a digital marketplace, arya.ag that it launched last year amid the pandemic.
Speaking about the market disruption caused by the COVID-19 pandemic, Rao said he was worried in the beginning but it turned out to be a huge opportunity for agritech firm
” When the lockdown started, we had a bumper Rabi production. We realised when prices went down, a service like ours become extremely relevant. We provided an option to farmers to store their produce and not to sell them immediately. After they decided to store the produce, we also enabled a loan so that they meet their day-to-day cash flow requirement”.
During 2020-21, the company added 15,500 new farmers and 70 new location to its network.
As a collateral manager to 25 banks, Arya helps farmers avail of post-harvest credit through its digital network and also carries out stock audits for various organisations.
Arya Collateral Warehousing Services also offers warehouse receipt financing via Aryadhan, its non-banking financial company (NBFC) subsidiary. Aryadhan provides credit to farmers, FPOs and SME aggregators who have stored commodities in Arya’s warehouse network.
Backed by early-stage investors such as LGT Lightstone Aspada and Omnivore, Arya has so far raised over USD 40 million since its inception.
“In 2016, We raised USD 3 million in Series A round (led by LGT Lightstone Aspada). Over time, they invested another USD 10 million in the company. In 2020, we raised funds (USD 6 million in March) from venture capital firm Omnivore. In Dec 2020, in another round of fundraising, we secured USD 21 million from Quona Capital along with existing partners-Omnivore and LGT Lightstone Aspada,” Arya Chief Financial Officer Sandeep Katiyar said.