Sohan Lal Commodity: Revolutionizing agri-warehousing with technology

By 2050, the world population will touch 9 Billion and availability of quality food will be one of the major concerning factors. With the looming food-crisis and steeply increasing inflation, it only aggravates to hear the news that millions of tons of food-grains are left to rot because of lack of proper storage process and procedures. Sandeep Sabharwal led Sohan Lal Commodity Management Pvt. Ltd. (SLCM) is trying to address this issue with the help of technology and well documented scientific processes and procedures. The company provides a host of services in post harvest agri logistics ecosystem offering best-in-class storage and protection services for the entire range of agri-commodities using technology.Background

About sixteen years ago, Sandeep Sabharwal, an MBA grad from FMS, Delhi, joined his family business started by his grandfather in 1960 and took over the management of an agri-processing plant in Delhi and scaled the business 15-16X times in a span of eight years. Soon he realized that the market potential for branded agri products in India was not as promising as he though and also the upheaval task which lies ahead in replicating the current processing plant model and creating a scalable business. Sandeep shares - “We were already into processing and warehousing for our internal consumption. So, I was clearly able to see that the storage and warehousing as a huge underserved market, with no scientific process & procedures, and predominantly looked upon as a heavy industry. There was a big gap between what the market wanted and what was being served. Being a processor myself, I could see this huge gap and how we had the capability to fill this gap as we were able to understand the aspiration of the processing plant as well as that of the warehousing company”. So, he decided to shut down the agri-processing business which was in full bloom and generating huge amount of cash and ventured into warehousing. A very bold step indeed.Journey

SLCM started off with one warehouse in one single location nine years ago and today has over 90+ warehouses across 16 states and are constantly growing in an infrastructure light model. Sandeep shares – “Our main aim is to de-link infrastructure dependency between processing and agri-warehousing. We realize the importance of technology, processes and procedures and how critical they will be in building a scalable business and hence we have invested more in systems, technology and process rather than on brick and mortar assets”

Started as a four member team – Sandeep, along with two warehouse managers and one office help, SLCM today handles about INR 500 Crs of agri products per day. They have grown into a 200 people strong organization with about another 200 people off-rolls operating across India, predominantly in North and Central India. “We have built-in lot of processes, check-points and corporate governance into our work and systems so that it functions effectively and efficiently and is not person dependent” – said Sandeep. SLCM is growing at 40% q-o-q in terms of head count and plans to be 400 by March 2012

Challenges

Being a niche player in the huge agri-sector and also segment definers in their own way, Sandeep shares with us the challenges SLCM had to face in their journey.

Domain-knowledge: Given the diversity of the Indian agri landscape, it’s very difficult to adopt processes and procedures which have worked in western countries as it is in India. We have about 750 million farmers and the average farm holding in India is in acres as compared to hectares in western countries. And each farmer comes out with differ kind of products. We do not have standard grading practices and procedures to rank and price the goods based on quality and standards. So, over the years what we have built at SLCM is a well documented and proven storage and warehousing model which can be applied in any climate, for any crop across India and we can proudly say that this can be replicated across the world as well. No matter if it’s a small shed, a tent house or a big warehouse - we have the technology capability to operate it. We operate in the wettest part of the country to the most dry lands, we operate in 16 states and most of them have their own rules and regulations, standards and procedures which we have to adhere to.

Branding: As we are a small company and have built a niche sector for ourselves in the agri-space, it was quite challenging in the early days to go and pitch to the big customer telling them that we can do much better than any of the big brands that they are currently associated with, that too at a lower cost and better throughput. And also in terms of hiring talent – everyone saw agri as a not so glamorous sector compared to IT or telecom - where you go to office properly dressed and come back without getting your hands dirty. Some of them used to think Sohan Lal as some small company run by some Lalaji. But, with time we have grown and established a very respectable brand name for ourselves.

Awareness: Over the years with the advent of television, internet and mobile the amount of information readily available for the famers and end users to gain knowledge about the price variations, exposure to foreign markets and tips and procedures on best practices has definitely increased, but I doubt that the knowledge on how to utilize this information in their decision making and to comprehend the situation is still lacking. The Govt. is taking lot of steps to help in this cause, but still it’s a long way to go.

Technology

At SLCM Sandeep tells us that technology plays a very crucial role in their day to day operations.

“We were one of the first companies in India to install bar coded ware-housing systems as far as six years back. So, each of our customers can track their products entire lifecycle through our system by just scanning the barcode at their end – right from which warehouse was it stored in to which truck was used for its transportation.

We were also the first in the country to implement a centralized MIS system. We were one of the first companies in India to introduce SAP in this sector and we did it record six months. Recently, SAP also recognized our project as the first of its kind implementation in the world.

Now we are introducing mobility in our company and want to decrease the delay in information flow from T+1 day to T+ few seconds. Similar to what the credit cards companies do when you use or swipe your card, we have built a system where if a customer’s truck enters any of our warehouse in India, the moment it exits the premise the customer gets a sms saying your truck has been unloaded. We have invested heavily in technology and have built a fiber of technology into the system and have focused on having process oriented system in place” – said Sandeep.

Finance and Investment

Sandeep started SLCM nine years back with just about INR 1-1.5Lakh. The initial investment was made on systems and technology and not much on infrastructure. They started with their first warehouse on lease and till date they have been replicating that model and all of their current warehouses across India on lease.

Sandeep shares – “We consciously did not leverage ourselves with any kind of debt or equity funding in the early stages of the company till the time we became a sizeable organization and venture investment capable. In 2010, Nexus came in and like our organization, they believed that we had a scalable model and invested INR 10Crs in us and later a combined investment of INR 35.5Crs along with Mayfield.

What the investors brought to the company besides capital is the best practices in HR, Finance, Operations and Corporate Governance that they had learned from their investment in smaller companies like us from across the world. These are very conducive practices which take companies to next orbit. They have given us a great prospective to showcase to the world that agri business can scale up and is a great investment sector. So, now let’s talk about getting right people with right talent into agri industry.”

A strong commitment plus an inimitable way of doing things, sets Sandeep apart as an entrepreneur. With him at the helm, we at YourStory believe that agri warehousing in India will continue to make upward strides. For more information on Sohan Lal Commodity, please visit their website - http://www.sohanlal.in/

- Chandan Raj