How a small spice store in Moga landed Nestle Maggi as its first client and now rakes in Rs 400 Cr turnover
In 1982, when Nestle was planning to set up its Maggi production unit in India, it was on the lookout for Indian spice traders to give a desi twist to the Swiss-made two-minute noodles.
The multinational conglomerate planned to set up the manufacturing plant in Moga, a small town in Punjab, and was looking for local vendors for ease of operations. It was during this time that Nestle came across a small store selling spices in the local market that matched its expectations.
Father-son duo Kishan Lal Budhiraja and Viney Budhiraja had started a spices store in the mid-70s. They used to source spices locally and from parts of Rajasthan and Gujarat .
The call from Nestle came as a once-in-a-lifetime opportunity and there has been no looking back.
The duo named their brand Paras Spices, after the name of Viney’s son, in the early 90s and after 30 years, the company now in rakes Rs 400 crore in annual turnover.
In an interaction with SMBStory, third-generation entrepreneur Paras Budhiraja takes us to the time when the brand started from a small 50 sq ft store and reveals how it grew to become one of the leading spices manufacturers of the country.
“In the 1970s when my grandfather and father decided to set up a spices store, they had very little money. Setting up a shop, purchasing stock, selling on credit, and other day-to-day expenses required money. It was a tough phase, and they had to pawn jewellery and borrow money from friends to start the business,” Paras says.
For over a decade, Kishanlal and Viney ran the small retail business until they got the chance to collaborate with Nestle.
When Nestlé initiated trials and R&D of masalas for Maggi, Viney used to carry two kilograms of spices on his bicycle to deliver to the manufacturing unit.
Paras says Nestle helped the business in its initial phase by handholding them to pass quality checks.
In 1983, when Nestle opened up its plant in Moga, Paras Spices was one of the primary suppliers of Indian spices for Maggi.
Diversifying the portfolio
The business now has a 15-acre manufacturing plant, processes about 15,000 tonnes of spices every year, employs 1,700 people, and caters to clients like ITC, PepsiCo, Domino's, Delmonte, McCain, Haldiram, Veeba, and others.
Paras says Paras Spices caters to 60-70 percent of the B2B FMCG market in India and exports spices to around 16-17 countries.
“Today’s customers are looking at spices not just as fillers, but as taste and flavour enhancers. We identified gaps in the market and saw that there were not many premium quality spices and seasonings brands,” Paras says. He adds that India has the best quality of spices in the world, but they has not reached people.
The brand took this opportunity and started diversifying into a range of herbs, seasonings, and spices.
The company entered retail in 2018 and sells its premium spices and seasonings through its brand Orika. These are available across North India, on ecommerce portals like Amazon and Flipkart, and in modern retail stores like Modern Bazaar, Rajmandir Hypermart, and more.
The company also came up with Paras Nutrition, a brand in the animal nutrition space that offers toxin compliant animal feed.
Paras Spices sources some of its raw materials directly from the farmers and has till now imparted training to three lakh farmers. The company does a lot of backward integration for spices such as cumin, fenugreek, chilli, and fennel, and is aiming to extend its direct farm procurement.
Challenges and the competition
Indian spices are the most sought after globally, given their exquisite aroma, texture, taste and medicinal value. India has one of the largest domestic market for spices in the world.
According to Paras, the country produces about 75 of the 109 varieties listed by the International Organisation for Standardisation (ISO). The export value for Indian spices stood at $3.65 billion in FY20, witnessing a growth of 10 per cent year on year.
Paras Spices’ products undergo a stringent GMP-compliant processing technique that ensures high quality is maintained consistently
Talking about the challenges, Paras says evolving consumer awareness, socio- political changes, and changing agro-climatic conditions make it challenging to maintain business sustainability.
In times of COVID-19, the supply chain became a huge problem and the company had to go for alternate vendor development. It focused on keeping its staff safe, “creating safe food, and protecting our business”.
The way ahead
In the next three to four years, the company is planning to double its sourcing and processing capabilities with “deeper penetration in existing territories and better presence outside strongholds”.
Housing a complete spice processing facility, the company has been proactive in adopting the latest technologies.
While the capacity and product portfolio expansion are ongoing activities, the road to expansion focuses on two important pillars: enhanced R&D and sustainable sourcing processes.
With enhanced R&D, the company can offer more innovative and novel products that add value in kitchens. Through sustainable sourcing of raw materials, Paras Spices ensures digitally farm traceable, ethical, unadulterated, and transparent sourcing of spices throughout the value chain while complying with international quality standards.
“We are planning to expand the presence of Orika in 60-70 new cities in the near future, reaching Maharashtra, Karnataka, and Telangana,” Paras says.