The agritech start-up sector is still waiting for its first unicorn, but it probably won't be long before the sector's first IPO arrives. Arya.ag, which came into existence a decade ago, could be the first agritech start-up company to hit the stock market for fund raising Looking at the way the company's turnover and profits are increasing, it will not take long for it to achieve Rs 100 crore profit and launch an IPO, as its focus is on strengthening the revenue and profit generating business rather than increasing the merchandise value. The company has focused on storage infrastructure to help farmers find markets, sell their produce at the right time and at the right price. It is managing 10 percent of the country's storage capacity for non-perishable agricultural products. Rural World spoke at length with Prasanna Rao, Co-Founder & CEO of the company, about the 11-years journey of Arya.ag, important milestones and its future plans.

What does Arya.ag do? 

Prasanna said that there are two major problems of farmers in India. Most of the farmers are forced to sell their produce at low prices at the time of harvest because they do not have storage capacity and need money immediately. Commodity prices are typically lowest immediately after harvest as most of the produce hits the market at that time, but prices increase during the off-season.

  The second problem is, to whom to sell the crop. Often farmers sell their produce to nearby traders, commission agents, input dealers or moneylenders because they want to avoid the hassle of going to the market and in many areas there are no markets. In both situations, farmers have to sell their produce at low prices.

  According to Prasanna, to solve the first problem, Arya.ag brought warehouses across the country on its platform. Arya.ag gives loans up to 70 percent of the price of the product to farmers for storing their produce in nearby warehouses. With this, farmers are saved from the pressure of selling their produce immediately after harvesting and also get money for their needs. Many a time farmers can earn up to 40 percent profit by selling crops in the off season. In this way, farmers were given a solution as to when to sell their produce. Besides, by better utilizing the capacity of warehouses, warehouse owners were also given the opportunity to earn more in expanding their business. Typically up to 40 per cent of warehouse capacity remains unused, but we have harnessed its full potential by connecting warehouse owners with our platform and managing them directly.

  To solve the second problem, Arya.ag brought together farmers and buyers storing their produce in warehouses on one platform. The buyer needs assurance of quality of goods and supply as and when there is demand. Rao says that the record of how much goods are kept in which warehouse is online, so it becomes easier to connect buyers with farmers. Seller farmers enter the details of their produce on our platform. Similarly, buyers also express their demands. Farmers want immediate payment after selling their produce whereas buyers are in a position to make payment only after selling the produce to the end users or in the value chain. Arya.ag also provides credit to the buyer along with the quality of the goods. In this way, Arya.ag works to connect farmers and buyers by solving two major problems of farmers. This gives farmers better options to sell their produce and buyers also get assurance of supply and quality throughout the year. Prasanna claims that through Arya.ag, farmers' income has increased by 20 to 30 percent. Farmers can get up to 40 percent better prices by selling crops in the off season.

How big is the business

Prasanna explains that Arya.ag is India's largest grain commerce platform. Apart from more than eleven thousand warehouses and 8 lakh farmers, 1200 FPOs, financial institutions, food processors and commodity traders are associated with it. Of these, about three thousand warehouses are managed by Arya.ag itself. For this, Arya.ag takes the warehouse on lease. The total storage capacity of these storages is more than three crore tonnes. Rao says that today about three percent of the grain produced in the entire country comes in the warehouses associated with Arya.ag. In quantity it is about 90 lakh tonnes annually. Their value is about Rs 23 thousand crores. Along with storage, loans and buyer linkage, Arya.ag also provides crop consultancy services to farmers and FPOs.

  The special thing about Arya.ag is that this 11 year old platform has been profitable since the first year. Prasanna says that in the year 2023-24, about Rs 4.5 thousand crore worth of produce was traded through Arya.ag. Arya.ag has given loans of more than Rs 12 thousand crores on the produce of more than Rs 22 thousand crores, in which NPA is almost zero. During this period, the company's revenue increased from Rs 297 crore last year to Rs 360 crore. In the year 2023-24, Arya.ag earned a profit of Rs 17 crore, which is 37 percent more than the previous year.

How did it start?

The three co-founders of Arya.ag, Prasanna Rao, Anand Chandra and Chattanandan Devarajan, come from a background in banking and rural finance. Prasanna says that while working for warehousing and collateral management services, he observed that most warehouses remain vacant by 15 to 20 percent because they do not have access to finance for working capital. On the other hand, farmers do not have the facility to store the produce for a few weeks or months and sell it later at a better price. Arya.ag tried to solve both these problems. He got initial success more in Bihar because there is a lack of mandis there. After this, the services of Arya.ag were expanded to other states of the country. With the increase in the network of warehouses, they are able to provide produce storage facilities to farmers at an average distance of 11 kilometers, an effort is being made to reduce this further.

  Arya.ag has raised funding in several rounds from Omnivore, Lightrock India, Quona Capital, Asia Impact etc. Initially, it raised seed funding of Rs 20 crore from Lightrock in 2016. In 2019, Omnivore invested in Arya.ag and in 2020, it raised $21 million from Quona Capital. In 2022, funding of $60 million was received from Asia Capital and other investors. It is thinking of raising funds in the current financial year also. Debt financing has also been raised from the US International Development Finance Corporation (DFC).

Eye on IPO and future

Currently, Arya.ag is targeting an annual net profit of Rs 100 crore. Prasanna says that there is an intention to launch an IPO in the future. There will be a need to mobilize investment to reach more farmers and increase the country's grain market share. On the trend of decline in funding of agri startups, Prasanna says that till now the emphasis of various companies has been more on increasing valuation whereas Arya.ag's focus is more on profits and sustainable business. He hopes that in the coming days also, Agri start-ups will focus more on sustainable business rather than valuation. This is a positive change. Now the trend of investors is also increasing towards such companies, whose business foundation is strong and which are earning profits.

Companies associated  with Arya.ag

  Arya Collateral Warehousing Services Private Limited (Warehouse and storage related services)

  Aryadhan Financial Solutions Private Limited (NBFC providing loans against agricultural produce)

  Aryatech Platform Private Limited (Agri-Fin-Tech Platform)