Corporate File

Waycool’s soil-to-sale strategy bears fruit

TR Vivek | Updated on April 15, 2021

Big greet basket: Waycool buys at farmgate and sells in cities   -  BIJOY GHOSH

Karthik Jayaraman, founder and CEO, Waycool Foods   -  BIJOY GHOSH

The six-year-old agri and food supply start-up clocks revenues of nearly $100 million

Waycool Foods’ earthy corporate office, a repurposed apartment in a leafy bylane in Chennai’s T Nagar, reflects its self-description. At a time when it is fashionable for any start-up with an app to append the suffix ‘tech’ (think foodtech, edtech) to itself, Waycool, which buys produce at farmgate and sells in cities, with technology involved in between, prefers to call itself a soil-to-sale business.

Set up in 2015, Waycool is one of the fastest growing agriculture and food supply chains in India with revenues of nearly $100 million (₹740 crore). It procures more than 350 tonnes of fresh produce, staples such as cereals and pulses, spices and milk from close to 50,000 farmers every day and sells to kirana stores, modern trade, hotels and restaurants in six states, primarily in South India. What sets it apart from similar chains, according to its CEO and founder, Karthik Jayaraman, is the commitment to create a positive social impact and help farmers increase their income.

Auto to agriculture

The venture was a result of Jayaraman’s discontentment with the automotive sector. He’d worked with the commercial vehicles giant Ashok Leyland for 20 years, driving its sales and marketing and organisational transformation. “In 2013-14, I felt the auto industry was in terminal decline. Vehicles are turning into appliances. That’s not a fun business,” says the 46-year-old burly and soft-spoken Jayaraman.

He wondered if he could channel his experience of managing the complex supply chains of the automotive industry into another sector. “We chose food because it is large and recession-proof. For a sector where demand is inelastic, there seemed to be huge price fluctuations,” he says.

Vinod Dasari, former CEO and MD of Ashok Leyland and Jayaraman’s long-time boss, became a mentor and investor in the venture. His son Sanjay Dasari, now studying at Harvard Business School, was a co-founder. Waycool’s current investors include Light Rock, Lightbox Ventures and FMO, a Dutch entrepreneurship development bank.

One reason why private capital shies away from Indian agriculture is the fragmentation down the chain. Food is procured from nearly 200 million farmers; the US has just about 2 million farmers. There are six million settlements in India and people buy from a whopping 12 million retail outlets. The supply chain itself is so long that food changes hands at least six times before it lands on the table. It not only increases damage and wastage of produce but also delays the farmer’s payment.

“An efficient supply chain is one where the flow of material, money and information is smooth. Several factors have come together to make an alternative supply chain model possible,” explains Jayaraman. With all-weather rural roads, it’s now possible for a truck to reach the farmgate. Communication and data have been democratised and there is digitisation of money.

Wealth and social impact

The margins in an agri-food chain can be deceptive. Buying tomatoes at ₹8 a kg and selling for ₹16 may seem to fetch an attractive 50 per cent gross margin. But a lot of the costs are constant and hard to compress. The standard trucking cost of ₹3-3.50 from Nashik to Chennai for a kilo of onions cannot be crunched any further. “If you want to build sustainable margins and be focused on community impact, you have to go beyond. That’s why we bring in partnerships at the seed and soil level,” says Jayaraman. Waycool, for example, ties up with a seed company that has a high-yielding hybrid tomato variety. Its agronomists work with farmers during the crop cycle to help lower costs through simple measures like inter-cropping and judicious use of pesticides.

Other steps include staggering cultivation to obtain a certain yield every day. “The controlled and predictable supply also helps us liquidate the produce more easily and at a better price,” Jayaraman explains.

According to Gangadharan, a 31-year-old farmer living near Tindivanam in Tamil Nadu, selling to Waycool at the farmgate instead of sending his gourds and chillies to the Koyambedu wholesale market, fetches him up to ₹2 more a kilo. His monthly income from vegetables has gone up to ₹35,000 from ₹25,000 before. “I get paid digitally on my phone as soon as the vegetables reach Waycool’s warehouse. With agents I had to shell out 10 per cent in commissions and wait more than a week for payment,” he says.

In the next two years, Waycool plans to expand its reach to 75,000 farmers across the country. To increase rural incomes it is gradually shifting the work of grading, sorting and even packaging of dry goods to the farmgate and villages from its warehouses. And if all goes to plan, it wants to help rural entrepreneurs get into food processing for its in-house brands. “Transferring value-addition processes to the villages would be a bigger economic force multiplier than keeping them reliant only on farm production,” says Jayaraman.

Published on April 11, 2021

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