Herb Mentality

WHEN A DOCTOR came to Azamgarh farmer Rahul Singh in 1998, asking him to grow tulsi instead of foodgrain, the farmer was sceptical. He only listened because Dr. Narendra Singh, the person touting the benefits of tulsi, was also from Azamgarh. Otherwise, Rahul Singh would not, even in his wildest dreams, have considered growing tulsi, a plant found in the backyard of almost every Hindu home in his village. But the doctor managed to convince the farmer, who decided to give tulsi cultivation a shot.

“The first harvest fetched Rs 32,000. Today I get between Rs 1.5 lakh and Rs 1.6 lakh for each season’s crop,” says a delighted Rahul Singh.

Farmers like Rahul Singh today form the bedrock of what is perhaps India’s largest organic foods companies—Organic India. It is strangely fitting that a company that makes much of its revenue from a holy plant was started on the advice of a holy man. Israeli couple Holly and Yoav Lev started this business when Lev’s spiritual guru, Sri Poonja, encouraged him to help Indian farmers and promote organic products and ayurveda.

The couple settled in Lucknow and began a business preparing ayurvedic formulations but soon found that quality raw material—mainly herbs—was difficult to find. It was around this time that the Levs met Narendra Singh, a medical doctor interested in medicinal herbs. They decided to collaborate, and the result was their decision to commercially manufacture tulsi tea. Narendra Singh went about convincing a handful of farmers to grow the herb, while the Levs formed Organic India, the company that would make and market the product.

Apart from the Levs, chairman Christopher Dean, human resources director Linda Dean, CFO Steven Bookoff, director Laurent Chappuis, and global CEO and managing director Krishan Guptaa own stakes in the company.

The organic foods business in India is pegged at Rs 1,000 crore and is growing between 50% and 60%. According to the Agricultural and Processed Food Products Export Development Authority, 5.21 million hectares in India were under organic cultivation in 2012-13.

Guptaa claims that the Lucknow-based company has been able to dispel the notion that businesses based on organic farming can’t be scaled up. “We have built a profitable and sustainable business. In 2007, the company’s revenue was about Rs 20 crore, selling around 2 lakh units every month. Today, we are a Rs 150 crore company with sales of over a million units. The number of farmers, too, has gone up to 4,000.” He is aiming to make it a Rs 500 crore company in five years.

Besides tulsi tea and ayurvedic formulations, the company’s products include ghee, spices, pulses, and rice. Tulsi tea and ayurvedic formulations each account for 40% of sales. Guptaa says the investment so far has been around Rs 100 crore, and revenue is ploughed back into the business.

Guptaa says many who get into the organic foods business don’t realise that it is tougher than merely getting the farming right. Making the land fit for organic produce can take almost three years if chemical fertilisers were used on the land earlier.

He describes the business model as a win-win—retaining the earth’s purity and helping farmers prosper. Not just that, the company provides farmers with seeds, training to make compost, and advice on crop rotation. “Organic India pays for our produce within a week or two. If we were to sell, say, sugar cane to the government mill instead, we would have to wait for three years to get payment,” says farmer Surender Nath Singh.

It took Organic India 10 years to build the farmer base and the supply chain. Initially, it was tough to convince the farmers to switch to organic farming. But when they saw the results, they were willing to continue.

“We had to ensure that organic farming generated more income for farmers even from small holdings,” says Balram Singh, general manager, operations, who has been with the company for the past 13 years. “This was made possible by growing high-value crops like herbs.” Today, Organic India has around 250 farmer-suppliers from Azamgarh alone. It has also built a network of farmers in the states of Rajasthan, Madhya Pradesh, Andhra Pradesh, and Uttarakhand.

Competition for organic products companies is two-pronged—from players in the same category as well as from non-organic products. “We are driven by our business model and the benefits our products offer. I would like every beverage drinker to move to drinking tulsi tea,” says Guptaa. “We are not taking market share from anyone; we are creating one for ourselves.”

Last year, Organic India struck a deal with Fabindia, which will allow it to sell from the handmade products company’s 200 stores across the country. “We were working with Fabindia even before the deal,” says Guptaa. “Now we can use our strengths better.” Fabindia managing director William Bissell says both companies believe in the power of business to create wealth while preserving the environment.

Organic India is working on improving distribution, with a focus on retail chains such as Godrej’s Nature’s Basket, which stocks more than 200 organic products. “The organic foods category is growing at nearly double the industry’s pace and accounts for nearly 50% of grocery sales,” says Mohit Khattar, the chain’s managing director. Organic India has also opened six exclusive stores. “These will give us the opportunity to share better the story of our company and products with consumers.”

Organic India’s exports business started with the U.S. and Britain, and its products now sell in 40 countries. By the end of this year, it wants to be present in over 50 countries, expanding into West Africa and South America. A business that started with a herb from the backyard has grown into one that’s taking on the world