March 7 2016 : VC Circle
GS Farm Taaza Produce Pvt Ltd, a fresh produce supply chain management firm, has acquired two agri supply chain startups to expand its market share in south India, particularly in Karnataka, CEO Kumar Ramachandran told VCCircle.
The company, which is the wholly-owned B2B subsidiary of Gram Suchana Solutions, has acquired Bangalore-based vegetables supply chain firm Kaivalya Farms and Mysore-based Farm Exotica.
"Our clients were catering to Kaivalya Farms for exotic vegetables. Besides, our procurement from Ooty was delayed due to erratic rains last year," Ramachandran
said while citing the reasons for the firm's first acquisition that took place last month.
He said Kaivalya's owner Ajith Vishwanathan, who was earlier working with a private bank before launching the farm, had "scalability issues".
"Ajit helped us procure supplies from over 200 farmers in Ooty, Nashik and Bangalore, and achieve 75 per cent market share of exotic vegetables supplies to modern retail stores in Bangalore," Ramanchandran said.
Besides, the company acquired three-year-old Farm Exotica, which is run by former Aditya Birla Retail executive Chirag Anand, in February. "These acquisitions not only led us to expand our SKUs to 120, but also helped us dominate the south-west Karnataka market," he said.
"Both the deals, which involve a combination of cash and equity, are in the Rs 75 lakhRs 1 crore range," he said.
The B2B company, which was launched in June last year, is supplying products mainly to retail stores across Bangalore, Ooty, Mysore and Mangalore in Karnataka, and Chennai and Coimbatore in Tamil Nadu in addition to Hyderabad.
"Retail firms such as Big Bazaar, Spar, HyperCity, Heritage, FoodWorld and Spencers buy from us." he said. The firm has also recently started supplying its produce to kirana shops. "We are offering our products to 175 stores across these cities," Ramachandran said.
The company, which has a workforce of over 100 people, claims that majority of its revenue comes from the modern retail space. The remaining is contributed by kirana shops and HORECA (hotel, restaurant and catering) firms.
An alumnus of South Florida University, Ramachandran has been associated with companies such as Vignani Technologies, Applied Materials India and Hitachi Data Systems in the past.
The company, which has received $1 million in its first round of funding from angel investors such as former iGate CEO Phaneesh Murthy and former Asia Pacific chief of Intel Capital Sudheer Kuppam, is in discussion with venture capital firms to raise $6 million in its Series A round.
"We are in term sheet stage with at least three investors to raise capital for expansion to other parts of south India and Maharashtra," Ramachandran said.
The company claims it is going to record net sales of Rs 5.5 crore by the end of March this year.
The fruit and vegetable supply chain space has witnessed a number of investment deals in the recent past. In January this year, Mumbai-based startup White Shadow Technology Pvt Ltd, which runs a fresh farm vegetables and fruits supply chain venture under the banner of Truce, raised over $370,000 in an angel round of funding.
Early this month, Siddhivinayak Agri Processing Pvt Ltd, a Pune-based potato supply chain management company that operates as SV Agri, raised an undisclosed amount in a Series B round of funding led by impact venture capital firm Lok Capital. The deal marked Lok Capital's first investment in the agriculture sector. Existing investor Aspada Investment Company also participated in the round.
Aspada has also clinched other deals in the space in the past. In 2014, it committed to investover $2 million (Rs 12 crore then) in New Delhi-based fresh fruit supply chain company Allfresh Supply Management Pvt Ltd (Allfresh). A year before that Ootybased Lawrencedale Agro Processing India Pvt Ltd, which supplies farm fresh vegetables to organised retailers in south India under the brand 'Leaf', had raised $550,000 from Aspada.
Last year, Bangalore-based agri supply chain firm Ergos Business Solutions Pvt Ltd raised seed funding from Aavishkaar Venture Management.