01 Sep Soros-backed Lawrencedale Agro to bring branded vegetables to cities
Fresh and juicy sells at a premium, Lawrencedale Agro discovered from its experience in selling ‘Leaf’ brand of carrots in Bengaluru. And now, thanks to enhanced processing capacity from a new facility coming up at Coimbatore, the George Soros-backed, Ooty-based company intends to bring more branded vegetables to more Indian cities.
“You keep a box of ordinary carrots, next to it you keep a box of fresh, clean and well-packaged carrots that sells at a much higher price, the premium products get sold in a jiffy,” says R Balakrishnan, Chief Financial Officer and an investor of Lawrencedale Agro Processing. Balakrishnan is also one of the founders of CRISIL.
The concept of ‘branded vegetables’ is rather new. There are branded organic foods, but you don’t find branded onions, potatoes and brinjals. Lawrencedale Agro began with the intention of interfacing between the farmer and the retailer — ‘customer minus one’ in the chain, as the company puts it — replacing the multiple brokers-middle-men in the chain. Today, most retail outlets, such as RelianceFresh, Nilgiris, Kovai Pazhamudir Nilayam, Big Bazaar, Heritage and FoodWorld, are its customers.
Three years back Lawrencedale took a punt on branded vegetables — it started with Leaf branded carrots.
In April 2013, Bengaluru-based Aspada Investment Company, funded by Soros Economic Development Fund, invested $2 million for a 40 per cent stake in Lawrencedale Agro. The company has used the money in strengthening logistics, mainly in buying a fleet of trucks for carrying vegetables from farmers in the Ooty region to retailers in cities.
A processing plant (cleaning, grading and packing and not making foods, stresses Balakrishnan) is coming up near Coimbatore at an investment of Rs. 7 crore. This plant will increase the company’s capacity to handle vegetables from about 6-10 tonnes a day now, to 100 tonnes a day.
The experiment with carrots has been successful, Balakrishnan says. Shops in Bengaluru sell 4 tonnes of Leaf-branded carrots today, and the brand has seen a 30 per cent annual increase in the last three years. The time has come, therefore, to expand products and markets.
Among the next candidates for branding are potatoes, broccoli, okra (ladies’ finger), cabbages and bush beans, says Balakrishnan. The company is also “looking at fruits”.
At the backend, the company is also broad-basing its farmer reach. Today, it connects with some 2,000 farmers in the Ooty region, says P Vijayaraghavan, CEO of the company.
What is the exit route for Aspada? IPO, of course, says Balakrishnan. “In three years, this will be a Rs.500-crore company.”