It takes nearly an hour to reach Medchal, the nothern suburb of Hyderabad where large warehouses of corporate houses are located. At this warehouse and logistics cluster Origo warehouse, spread around 40,000 sq. ft., has been undergoing major transformation with installation of state-of-art food processing and packaging plants for the company’s new division-Origo Farms. Manual processing and packaging will shortly be replaced by new machines. The entire area and workforce at the warehouse seem extremely vibrant and busy to cope up with doubling of sales of every passing week. The trend is inspiring and leads to innovations. The company is transforming from its core business of warehousing and procurement to retail and other verticals for providing integrated agricultural services and solutions.
If ‘Farm-to-Fork’ refers to the stages of production of food like harvesting, storage, procurement, processing, packaging, sales, and consumption; then Origo has accomplished that in a very short span of time.
Origo Commodities is essentially a post-harvest solutions and warehouse management services company. It operates over 350 warehouses and has over 3.5 million tonnes of commodities with a value of USD 1.5 billion under management. Its services include commodity handling, collateral management and procurement services to farmers, producers, processors and corporate houses.
Foray into Retail
In January 2016, the company entered into retail segment for commodities with the launch Origo Farms in Hyderabad and the products include spices, pulses, rice and groundnut.
“There were several anomalies in our food supply chain in the country. There are many intermediaries and they also influence pricing which could inflate the retail price. We created a retail brand for both – farmers as well as consumers. We seek to eliminate middlemen by hand holding farmers from the procurement, storage, warehouse receipt finance, and connecting them to the consumers,” says Sunoor Kaul, Co-founder and Director of Origo Commodities, while showing the unit of the company’s retail brand Origo Farms.
The company has tied-up with all leading stores in Hyderabad including Heritage (52), SPAR (3), Hypercity (2) & MORE (90) and the products are available at nearly 150 retail stores in the Telangana State capital. Apart from retail format, Origo Farms plans to set up its own Distribution Centres (DC) in rural districts of Telangana soon and gradually it will enter into Pune (Maharashtra) by end of the month. The DC model will help the company to reach last mile kirana store of its own.
Origo Farms is investing Rs 5-8 crore for DC in each district. By June this year, it will cover rural districts like Nizamabad, Triputi, Maboob Nagar and one in Maharashtra (Pune-Mumbai Highway). The company will be investing nearly Rs 100 crore for infrastructure, plant machinery and people for these DC. It aims to reach Rs 350 crore turnover by 2020.
“We plan to have Pan India presence in times to come. By October-end, we will launch our products in Tamil Nadu, Karnataka and hopefully in Delhi-NCR as well,” says Kaul.
“We entered into retail with a vision to get products which are natural, use less chemicals and could be managed at farm level. Origo wants consumers to know the source where you are getting it from and of course at a reasonable price,” explains the Director.
Customer at the Centre
The unit carefully screens the source for best practices to obtain the best quality produce and its quality experts pick the healthiest ingredients from the farm. During the first quarter of the launch, the company got very encouraging feedback on both quality and pricing fronts for its premium products. “The products are procured using our traceable value chain. Every package’s origin can be traced back to the farm, ensuring that only the healthiest food products reach your home,” he adds.
The six-year-old company currently has a packaging and distribution centre in Medchal near Hyderabad. It has invested around Rs 5 crore for plants and other facilities in this centre and would invest Rs 40-50 crore for other centres it is planning to set up. Origo Farms expects to have a market share of 2-5 per cent in the premium category with high penetration and multi-states presence.
The company is enabling an effective agri-supply chain across the country for grains & perishables and will bring in its expertise in logistics handling, procurement and quality assaying to offer high standard pulses and produce through retailers to households.
Origo’s success lies in its long and direct association with farmers through its network of farmers, Farmer Producer Organizations (FPOs) and co-operatives. That strong relationship is key to providing consistent and best quality produce.
As companies would directly tie up with farmers, the producers will get around 20 per cent more than what they would get by selling their produce through traditional channels. Apart from this, farmers can also avoid post-harvest loss due to wastage, which amounts to 12 per cent in staples and 40 per cent perishable products like fruits and vegetables, etc.
Kaul says that the farmer can get better prices by storing his produce at our warehouses for a couple of months. “Since there would be an initial oversupply in the market after the harvest, farmers get low rate if they sell it immediately. So we allow farmers to store their produce at our warehouses and raise loans on our warehouse receipt to pay off input costs,” he adds.
Entry into retail does not complete entire agri-chain. Going forward, the company plans to enter into financing with a separate NBFC that is Origo Finance. Beyond finance, within the flagship company Origo Markets will complete the whole chain. It will be an IT-driven electronic platform connecting all services and solutions offered by Origo.
On revenues/turnover front, the company has outperformed so far. Every year, since its inception, the company is registering over 100 per cent growth in revenue and it has touched Rs 300 crore in the last fiscal. In the current fiscal (FY16-17) is expected to cross Rs 600 crore mark.“ We expect to be a Rs 2,200 crore company by 2020 and Origo Farms will contribute reasonably with Rs 350 crore,” says Kaul.