InI Farms: A fruitful venture for this couple

For Purnima and Pankaj Khandelwal, their entry into the horticulture business happened by chance.

The husband and wife team had started their first venture, a consulting firm, InI Consulting, in 2003. InI stood for Insight and Intellect and the company helped clients with their India entry strategy, agri-rural consulting and infrastructure services.

One of InI’s assignments was to help a group of Swiss-German investors that was looking to invest in a Gujarat-based horticulture company. Pankaj was involved in running the horticulture company for the investors. “That is where our initiation into agriculture happened,” says Purnima Khandelwal.

This prompted them to start their second venture – InI Farms Pvt Ltd – in 2009 as they realised that horticulture, especially round-the-year fruits, was a good business to be in. InI Farms deals in pomegranates and bananas and is involved in the entire value chain. It has its own farm, sources fruits from farmers, sorts, grades, separates, packs, brands and exports them to large importers and retailers in Europe, West Asia, New Zealand, the US and South East Asia. It also sells the fruits under its own brand name – Kimaye, which is Sanskrit for divine – to large supermarket chains in India. InI also exports Arils – the seeds of the pomegranate fruit.

“Our thesis was to pick a commodity, work across the value chain, do some bit of your own farming, work with a large number of farmers at a scale, get the quality and productivity parameters right and be completely integrated,” says Pankaj, Managing Director, InI Farms.

They decided to deal with three fruits – pomegranates, bananas and pineapples. They started with the first two and have just got into dealing with pineapples. Just to give an idea of the size of the opportunity, says Pankaj, pomegranate is about ₹5,200 crore ($800 million) and banana, about ₹65,000 crore ($10 billion), annually. This size, the couple felt, gave them enough opportunity to build a business of scale and make it successful. “We wanted to work with fruits, and within fruits, these three have more than 30 days of shelf life, in case you get everything, the supply chain, right,” says Pankaj.

According to him, they believed that considerable value can be added in the supply chain, ensuring that the fruits are kept and handled in a temperature-controlled environment. They were also clear that each one of the fruits was an industry by itself and hence has separate teams to handle them. “Just to give you an idea,” adds Pankaj, “30 per cent of the value is added in supply chain in the case of banana, whereas it is 10 per cent in the case of pomegranate.” The company has farms spread over 550 acres in four locations in Maharashtra and three in Madhya Pradesh, where it grows pomegranates. It works with over 2,000 farmers in Madhya Pradesh, Maharashtra, Gujarat, Andhra Pradesh and Karnataka for pomegranates and bananas, covering nearly 5,000 acres. It has just started trials for pineapples with farmers in Siliguri in West Bengal and in Kerala and hopes to start working on a commercial scale in this fruit shortly.

According to Pankaj, in the case of bananas, the company starts working with the farmers from the time they plant the sapling, as they need to do a whole lot of things to get the quality right. The engagement becomes intense at the time of flowering and three months before harvest, “we start to work very, very closely with the farmer to get a set of things done in a disciplined manner. We buy it ex-farm after harvest. We buy it at a price which is a premium compared to the market because they have done all the work to get the quality,” he adds. Since over 90 per cent of their business is from the export markets, the company educates farmers on food safety standards and quality certifications.

InI Farms hopes to handle 25,000 tonnes of fruits this financial year, up from 16,000 tonnes it did last year. “We have been growing at 70-75 per cent per annum,” says Pankaj, a graduate from IIT Kanpur and an MBA from IIM Calcutta, who had worked as a software engineer and in consultancy firm McKinsey, before turning an entrepreneur.

The company got angel investment even at the idea stage, says Purnima, Chief Executive Officer. An economics graduate from St Xavier’s Kolkata and an MBA from TA Pai Management Institute, Manipal, she says Ashish Gupta of Helion Ventures was the first investor in the company, followed by Pavan Vaish, co-founder of Daksh. This was followed by investments from venture capital firms Unilazer Ventures, Aavishkaar and Aspada. The company has raised about ₹57 crore and is looking to raise funds to grow the business, especially establish the brand in the domestic market.

InI Farms’ story, says Pankaj, is a long-term branded play. As a trade brand, it has been there from Day One, but has just made a beginning as a consumer brand. Its branded pomegranates and bananas are available in supermarkets run by the Future and Aditya Birla groups, and Star Bazaar. The company, says Purnima, has floated an equal joint venture with the Future Group to work with farmers in Andhra Pradesh on pomegranates and bananas. “Over a period of five years, we are targeting to work with 10,000 farmers in Andhra Pradesh,” she says.

As they expand their operations, Purnima and Pankaj say the challenges are many, primarily execution oriented. “It is not trivial to do it at scale. It takes multiple cycles for farmers to get convinced about it,” says Pankaj. The other challenge, says Purnima, has been establishing themselves in the international market. Earlier, anything that went out of India used to be on a commission. “We did not want that to happen, ever. We were conscious that anything that goes out, the price discovery needs to be with us. We can’t send something not knowing what price it is going to sell. To change that into a fixed price, long-term contract model has been a challenge,” she adds.

When they started, there were many who scoffed at their idea of exporting branded fruits out of India, but the couple are convinced that they are well on their way to making a success out of it. Pankaj says that the company is profitable on a month-on-month basis and hopes it will be profitable on an annualised basis this year.