This man built an Rs 8 Cr revenue business by making lemongrass tea, saved his family from debt

In 2008, Imphal-based Ragesh Keisham’s family was crushed under a mountain of debt and had to sell-off nearly everything to treat his adopted sister. However, she eventually lost her battle to leukaemia.

With the Manipuri family living hand-to-mouth, Ragesh needed to find a way out. He tried his hands at various businesses, including data digitisation and supplying bamboo saplings to Uttarakhand, but with no success.

He needed a venture that would generate significant income. But any business that would require electricity was out of the question since it was available for only three to four hours a day in the region.

The only possible outlet Ragesh saw was agriculture. It was under these dire circumstances that he came up with an out-of-the-box idea to make tea out of lemongrass.

In 2011, he launched the CC Tea brand under the parent company SuiGeneris Agronomy, which he set up in 2010.

“I made 200 packets of the tea myself and launched CC Tea. Within five minutes, all 200 packets were sold locally. Our initial investment was around Rs 5 lakh. Today, with the popularity of our lemongrass tea, the brand has grown and recorded Rs 8 crore turnover in 2019-20,” he says in an interview with SMBStory.

Why lemongrass?

When Ragesh was considering an agricultural venture, he contacted an aromatic scientist who suggested growing lemongrass. According to the scientist, there was a thriving market for the oil extracted from the tropical plant.

A friend from Indonesia sent Ragesh 10,000 slips of lemongrass, and he began experimenting on it in a one-acre plot of land in Leimakhong — about 20 km from Imphal.

“The next year-and-a-half was spent in research, trial and error, and awaiting clearances on loan applications I made to buy equipment for oil extraction. This was a period filled with anxiety and mounting concerns over our household expenses. With no loan on the way, looking out for alternative use of the lemongrass was my only option,” he says.

Ragesh visited the state library in Imphal for further research and read that lemongrass was called ‘fever grass’ in Brazil, because of a boiled lemongrass concoction made in the South American nation to cure fever.

It planted an idea in Ragesh that he could make a beverage out of lemongrass with real health benefits. To test the idea, he took some fresh leaves, crushed it, and made the tea for himself.

“Although it was a beautiful shade of green, the tea tasted horrible. But, I found out that the bad taste and aroma were the result of not following the right drying protocol. I figured out a solution to dry the leaves properly, and fixed the bad taste,” he says.

Satisfied with the lemongrass tea, Ragesh began marketing it in schools, colleges, churches, and clubs across Imphal with a special emphasis on its potential health benefits. “Meanwhile, my wife sold all her jewellery to help me buy packaging material for the tea,” he adds.

Manufacturing process

CC Tea takes local farms on a lease, employs hundreds of underprivileged and unemployed people, and grows lemongrass. Once the leaves are harvested, they are sent to the CC Tea factory where the finest leaves are separated from the rest.

Then, there is a three-way washing process, following which the leaves are sent to the diffused drying shed. The leaves are left there for 24 to 48 hours, depending on the weather conditions.

“During this process, the moisture level settles at 40 percent. Then, the leaves are sent to the hot air blower, where they are dried at a particular temperature that doesn't kill the nutritional value,” Ragesh says.

He adds, “The leaves are dried at a lower temperature, although the process takes a little longer as the nutritional value remains intact. In most other tea products, the nutritional value is burned out.”

Once the leaves are dried properly, they are sent to the cutting department. The final cuts, measuring between one and two millimetres, are sent to the packaging team, dealing with the 100 gms and 150 gms granule packets. The powder is sent to the tea bag machine, where pouches are made by hand.

CC Tea presently works with 52 full-time employees and 1500 part-time workers.

“We use very little automation in the process because we believe in generating employment for the locals. As we scale, we intend to continue generating greater employment, but at some point, we are willing to introduce automation to a limited extent,” Ragesh says.

CC Tea’s parent company SuiGeneris owns and manages 350 acres of lemongrass fields in Imphal. It has acquired an additional 500 acres for cultivation, and at present, is expanding production to meet the growing demand for CC Tea.

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Market strategy

“After various health claims were made by our customers, we entered into a long-term research collaboration with IIT Guwahati. We found CC Tea boosts innate immune in a study done on six human cell lines. So, we decided to stick with only one product line of CC Tea in two variants, that is, granules and tea bags,” Ragesh says.

One packet of CC Tea containing 100 tea bags costs Rs 399, while the one with 40 tea bags costs Rs 200. The 100 gms packet of CC Tea granules costs Rs 200, while the 150 gms packet costs Rs 240.

At present, CC Tea’s market is concentrated in Northeast India, especially in Manipur. The products are sold online on the CC Tea website and are serviceable to over 25,000 pin codes, the founder claims. The tea is also exported to Europe through a Slovenian partner Rozle Tea, and small quantities are also exported to Japan, the US, and countries in the Middle East.

The brand is looking for specialised distributors in major and mini metros across India. It is also in talks to boost distribution in South and West India.

‘We also indirectly employ people from rural communities to sell our product. Based on a certain level of trust, they are given packets of tea bags and granules on credit,” Ragesh says, explaining:

“For instance, if they sell 1,000 packets, their commission is 20 percent, which amounts to approximately Rs 40,000 at MRP. Besides a commission, we also pay them a salary of Rs 25,000 for selling these 1,000 packets. For 500 packets, the company pays them a salary of 10,000, while the commission percentage remains the same.”

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Funding and growth challenges

In 2017, the business received an investment of nearly $550,000 from The Netherlands-based fund C4D Partners. Now, it plans to raise another round of funding to launch a second factory in Nongpok Sekmai village, which is about 30 km from Imphal.

CC Tea is playing in a growing market for tea in India. According to Expert Market Research data, in 2020, nearly 1.1 million tonnes of tea was consumed in India, and this will grow by 4.2 percent to reach 1.4 million tonnes by 2026.

Although brands like Teabox and Vadham Teas offer different kinds of herbal tea and can be considered competition, Ragesh believes there are no direct competitors for lemongrass tea.

Despite this, it has not been easy for Ragesh and his niche lemongrass tea to land the second round of funding. He believes CC Tea is denied interest from investors because it is based in the North East.

“It is seemingly evident that the impact of investing in India excludes places where deep poverty is endemic, where people are hungry, where kids die young and places where the market is not efficient. Whenever we reach out to investors, the deal is either too big, too small, too early, too late, or too risky for them,” Ragesh says.

If innovative products such as CC Tea are to be given a chance, investors should act differently and push the envelope with such businesses, according to him.

The entrepreneur also brings up how resilient CC Tea was during the COVID-19 pandemic. Despite taking a hit and shutting its factory for six months, the business did not lay off anybody, he claims. “The staff of the company proved their loyalty by earning a reduced salary for many months and kept us afloat,” he says.