[Startup Bharat] Coimbatore-based VilFresh aims to generate Rs 7 Cr revenue this year

Started with an initial investment of Rs 30 lakh to supply farm-fresh produce to urban areas, D2C agritech startup VilFresh generated a revenue of Rs 3 crore for FY22 and is targeting Rs 7 crore revenue for this year. 

Founded by husband-wife duo Selvakumar Varadharajan and Sharmila Selvakumar in July 2016, the startup is currently present only in Coimbatore, and is looking forward to replicating this model across Tier II and Tier III cities in South India this fiscal. Tirupur, Madurai, Trichy, and Salem are on the radar for this year.

The startup counts more than 1.5 million deliveries across Coimbatore since inception. It employs more than 50 youths, works with more than 100 farmers, and serves around 3,000 households in Coimbatore on a subscription model (ranging from Rs 1,500 to Rs 9,000 per month per household). 

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Owned and operated by Layman Agro Ventures Pvt Ltd, VilFresh brings fresh agricultural products from the village to urban kitchens and channelises the lion's share of the consumer's price back to the rural economy. 

The product lineup includes milk, value-added dairy products, bread and butter, and fruits and vegetables from the farm.

“We turn agriculture into a viable proposition by increasing farmers’ top line through an alternate distribution channel for agro outputs and bringing down their cost of farming with an efficient supply chain for agro inputs by empowering rural youth. Our rural youth are assured of Rs 37,500 per month. Urban consumers get the chance to enjoy chemical and preservative-free food,” says Co-founder Varadharajan.

The startup owns the first mile as well as the last mile in the 'farm-to-fork' space. It claims to increase the farmers’ savings as the cash goes from a customer's savings account to the company's current account, and then to the farmers directly. There are no middle men involved.

In the beginning

Varadharajan says the seeds of the farm-to-fork startup were sown when his child was 2.5 years old. 

“My wife was breaking her head to narrow in on the right substitute for mother's feed. She was terribly upset with the kind of agro products that were available in urban India. I chose to solve this problem by bringing village fresh agro products to urban kitchens.”

He says his idea, and plan, was simple. 

“I wanted to solve the problem of my wife, an urban consumer, in the best interest of my grandfather, who is a farmer, by empowering a rural youth, who is my cousin,” he says.

VilFresh is a 50-member team today.

Varadharajan was previously associated with HDFC, Accenture, ICFAI, and was also the Co-founder of BSBS B-School. He was a professor for a decade. 

Sharmila has worked as a business analyst at Genpact and TCS for over five years.

The problem Vilfresh solves

VilFresh is solving three chronic problems with a “three-dimensional impact”.  

“We are Enriching the farmers by Empowering the rural youths to Excite the urban consumers (3Es).”

First, the startup offers urban consumers fresh agro products that are chemical and preservative-free “at village prices”. Second, it empowers unemployed or underemployed rural youth to emerge as market connectors (middlemen) for agro inputs and outputs with an assured income of Rs 37,500 per month (going up to Rs 50,000 as volume shoots up). 

Finally, the startup is working to change things for farmers. 

“Farmers are at the mercy of the government and middlemen when it comes to agro outputs’ procurement pricing. They can't afford to buy inputs at retail price and continue to sell their outputs at a wholesale price (which is against the basic business principle),” Varadharajan says.

VilFresh aims to reverse this. For e.g, a farmer hardly earns around Rs 20 to Rs 25 per litre of milk. At Layman, we pay the farmers at an average price of Rs 32 (minimum assured price is Rs 30). We also supply all their inputs at a 20 percent discounted price compared to the market price. 

“We increase their income from fruits and vegetables, and reduce the cost of farming with our agro-inputs. First mile to zero mile (farm to our hub) is taken care of by rural youth. Zero mile to the last mile (hub to kitchen) is taken care of by college students (urban poor) who work as part-timers whose semester fee is taken care of by us,” he says.

VilFresh is ensuring a 25 percent jump on the output selling price and a 20 percent cut on the input purchase price. 

Funding and monetisation

VilFresh works on a wallet system. Customers can buy products from its Android and iOS app and can load cash to the wallet. 

Incubated at ICAR, Ministry of Agriculture and Farmers Welfare, VilFresh also supplies to star hotels like Marriott and ITC Welcome.

The startup raised a seed round of Rs 1.15 crore in 2019 from Nativelead, Upaya Social Ventures, and Sangam Social Ventures.

“In 2020, we got mentor equity funding of Rs 60 lakh from Hemalatha Annamalai, Sudip Nandy, and Ramasubaramanian,” Varadharajan says.

 The startup closed a bridge round of Rs 1.82 crore from investors in the Middle East, led by Priya Parthasarathy, an investment professional based out of Dubai, in April 2022. 

“We had achieved cash breakeven pre-pandemic. We will turn profitable again in the next quarter,” he says.

The way ahead

According to a report by Grand View Research, the Indian online grocery market size was valued at $2.9 billion in 2020 and is expected to expand at a compound annual growth rate (CAGR) of 37.1 percent from 2021 to 2028. 

The preference for online delivery of grocery products grew after the COVID-19 pandemic. With social distancing norms, many consumers turned to online shopping, which combined convenience and safety. 

“With over 65 crore Indians as the target group, VilFresh will emerge as the market leader with an undisputed value proposition,” Varadharajan says.