In an interesting case of foreign investment in the Indian agricultural sector, Nashik-based Sahyadri Farms Post Harvest Care Ltd, a little-known farmer-led agri-processing company, has raised Rs310 crore from a consortium of impact investors Incofin, Proparco, FMO and Korys. The consortium leader Incofin IM is an alternative investment fund manager (AIFM) licensed fund manager and has asset under management (AUM) of €1bn (billion). FMO is a Dutch entrepreneurial development bank. Proparco is the private sector financing arm of Agence Française de Développement Group (AFD Group).
Korys is the investment company of Colruyt family, one of the top in Belgium. The Sahyadri group is the largest exporter of grapes to Europe since 2015.
The investment will be utilised for expanding processing capacity for fruits and vegetables-based products, set up a biomass plant to generate electricity and build packhouses. Farmer, founder and chairman and managing director (CMD) of Sahyadri Farms, Vilas Shinde says, “The idea of Sahyadri Farms is to unite farmers and make them think like professional entrepreneurs. We are building a sustainable, scalable, and profitable organisation for all our stakeholders by making farming profitable and viable activity for each small and marginal farmer.”
Sahyadri Farms claims to service over 18,000 farmers, covering more than 31,000 acres and nine crops. The investment was made by impact-focused investors in the sector of sustainable growth, financial inclusion and agri-food value chain in developing and emerging markets.
Sahyadri Farms’ top-3 customers include: Hindustan Unilever, Dole and EDEKA (supermarket). This investment will be utilised by the company to expand its existing fruits and vegetable (FnV) handling capacity from 150,000MT (metric tonnes) to 300,000MT. The current farmer registration is 18,000 through 48 farmer producer company (FPC) which will be increased to 50,000 from 100 FPC.
Earlier, Sahyadri Farmers Producer Co Ltd owned 100% of Sahyadri Farms Post Harvest Care Ltd. Now, Infocin, Korys, FMO and Proparco are also the shareholders. Out of the total Rs310 crore investment, FMO invested Rs100 crore (32% of the investment), Proparco invested Rs90 crore (29%), Incofin invested Rs67.5 crore (22%) and Korys invested Rs52.5 crore (17%).
The company’s revenue has more than doubled in the past five years, i.e., from Rs321.53 crore in FY17-18 to Rs785.71 crore in FY21-22. The EBITDA (earnings before interest, taxes, depreciation and amortisation) margin has hovered in the range of 8% to 13% in the same period. The valuations of the deal were not disclosed. Its net worth at the end of FY21-22 was at Rs147.84 crore.
“Incofin feels privileged to lead this investor consortium and its partnership with Sahyadri Farms to support its spread as a global role model of a partnership-based approach to farming that results in sustainable financial impact, climate change adaptation and inclusive growth in rural communities while creating a technology-driven, globally competitive business,” says Rahul Rai, partner at Incofin India.
Michael Jongeneel, CEO of FMO, feels that the company has found a long-term partner in Sahyadri Farms. “We are impressed by Sahyadri Farms’ ability to identify and deliver exactly the help farmers need to make their business flourish. We expect this first international equity investment in a farmer-led organisation in India to help Sahyadri Farms reach even more farmers and set a blueprint for further growth in the industry.”
According to Françoise Lombard, CEO of Proparco, their investment in a leading Indian agricultural company committed to a responsible approach will generate many positive social and environmental impacts. “First, nearly 15,000 farmers will be able to enter a modern supply chain, with access to regenerative farming practices and quality equipment, enabling them to increase yields and quality of their production, while reducing farm losses and the use of pesticides and fertilizers. Thanks to this investment, Sahyadri Farms will be able to implement concrete measures to adapt to climate change, but also to mitigate it by increasing its share of renewable energy production to more than 50%, and finally, to implement its zero waste policy."
Hari Subramanian, partner, Korys India, says, “Sahyadri Farms’ journey revolves around an inspiring story of a farmer turned entrepreneur who established a state-of-the-art infrastructure with a vision to transform traditional Indian farming.”
Sahyadri Farms was established in 2010 by a group of four farmers, led by Mr Shinde. It has a central processing unit building at Mohai in Nashik district whose foundation was laid in 2013. Advanced ripening chamber were installed in 2014, initiating fresh table grapes exports to Europe. In 2016, Sahyadri diversified into tomato paste manufacturing. Thereafter, the company imported new varieties of grapes, ARRA-19 and patented variety ARRA-15 & Iniagrape One. It took a big leap after commissioning consumer product lines and commenced production of Kissan Ketchup (HUL brand) and launched an indigenously developed weather station to provide live weather data to its farmers.
After laying a strong business foundation, the company won exclusive rights for distribution of ARRA grape varieties in India. It was supported by agri-processing cluster (APC) allotment by ministry of food processing industry (MOFPI) for food processing units. For enhancing internal efficiency, the group has implemented enterprise resource planning (SAP ERP) platform.
The marginal farmers benefit by coming together as a joint group like joint liability groups (JLGs) dependent on each other to become financially independent. The company offers better logistics, removes middlemen and reduces post-harvest losses sustainably.
The company also works with Tata Strive, which establishes skill centres to impart skills to the youth of the nation. Tata Strive has four skill development centres in the cities of Mumbai, Pune, Hyderabad and Mohali. Sahyadri Farms has established a skills centre at its Nashik premises, providing pilot skilling programme for the youth in Nashik. The centre is equipped with six spacious classrooms, a lab and hostel facility for 180 students.