Sresta Natural Bioproducts, one of the earliest organic food products companies in India, is diversifying its product basket with a launch of baby and children food, snacks, and frozen foods.
“We are going to roll out these products in the next few weeks,” Raj Seelam, Founder and Managing Director of the company, told businessline.
The baby and children products target ages six months to four years, and up to 10 years, respectively. The frozen foods include bread, rotis, chapatis, and samosas.
The frozen food would initially be restricted to exports, he said.
The company registered a turnover of Rs 330 crore in 2022-23. “Our company has become profitable after 15 years of its inception,” he said.
Raising funds
Seelam said the company plans to raise funds for expansion. “We dropped a plan to tap the markets after filing for an IPO last year as we thought the market conditions were not ripe. The idea was basically to provide an exit route to the investors,” he said.
He argues that prices of organic products were not as high as they were a decade ago. “It used to be double when we started the business. Now it averages at about 50 per cent (more than conventional product prices). It is 20-70 per cent across different product categories,” he said.
The monthly grocery staples for a family of four would cost Rs 2,500 more. The difference could be brought down further but there are some issues involved, he said. “We think a premium of 30-35 per cent is a reasonable balance for the consumer and farmers. One must remember that there are additional costs involved in producing organic products for fumigation, management practices and storage,” he said.
He also cited the huge fee retail chains charge to stock organic food. “These add to the costs,” he said.
A difficult journey
The company, which was established in 2004, rode a bumpy road down the years.
“When I started this venture, I had three objectives — to help farmers find a better and more sustainable livelihood; help consumers access quality and healthy food; and promote sustainable agriculture,” he recalled.
A key challenge was that the market was not ready yet for organic products and there was no established retail network to promote them.
“I vividly remember the initial days when we started our store in Hyderabad. There used to be hardly one or two curious customers who stepped in to check around. That, in a way, was very depressing,” he said.
Unfazed, the company went on to build a network of farmers in Rajasthan and Maharashtra for organic produce. In 2007, it got its first funding of Rs 50 lakh from Venture East. The same year Spencer’s agreed to showcase 24mantra’s products in a two-year exclusivity agreement, giving the company a footprint to 30 cities. “It ended up in disaster because of the infestation problem. It suffered another setback the same year as the attempt to export organic mango pulp to Europe failed due to contamination in packaging material,” he said.
Ethnic market
After its attempt to sell ready-to-eat meals through a joint venture failed in the US, the company decided to tap the diaspora market by diving deep into ethnic stores in that country. “I travelled 30,000 miles across the States and convinced local ethnic stores to sell our products. Now we are available in the major US retail chains too,” he said.
The company’s backend network now spans 12 States with 30,000 farmers growing organic crops in two lakh acres.