Listing Rice

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For planners and policymakers, the stagnant agriculture might be the new moribund area of economics but the fact is that the second company from the state which is being listed at the National Stock Exchange, after the J&K Bank, is state’s major rice exporter. From a small rice miller to an almost Rs 500 crore turnover company, Sarveshwar Foods Pvt Ltd has been Rohit Gupta’s roller coaster journey, reports Masood Hussain

Rohit Gupta CEO Sarveshwar

Rohit Gupta is a real rice puller. When he took over the small family business, he knew the worth of the efforts that his earlier generations have put into its making. Luck, he says, was a great divine contribution, that his efforts succeeded taking the company to a level that Sarveshwar Foods has emerged as the second publicly listed company at the National Stock Exchange (NSE) this summer.

“It is not about generating more funds but it is sort of creating history,” Rohit said, a day after his investor’s meetings were over in Jammu and Srinagar. “This is the fact that the IPO will improve our market capitalization and valuation but the larger fact is that we intend to grow with the people, who have helped us grow in the state.” At a personal level, his satisfaction comes from the fact that his company will be the first private enterprise from Jammu and Kashmir that will be listed at NSE and will be the only second one, after J&K bank, from the state.

“We plan to take the funds that the IPO will raise (expects it to net almost Rs 60 crore at the face value of Rs 10 for 6467200 shares) to our organic department and partly utilize as working capital for our Basmati operations,” Rohit said. “We also wish to get into certain niche areas that we are sure having better yields and dividends.” After three days, the IPO was over-subscribed.

The IPO tensions have forgotten the ardent badminton players in Rohit Gupta.

In his college and later during University days, Rohit said he would play more badminton than attend to his curricular assignments. He actually won many awards at state and the national level. But he could not opt for sports as a career for the lack of adequate infrastructure and encouragement. But the most important factor was that he was required at home. He was supposed to manage the business his father and grandfather had managed for a long time.

Rohit’s company has, like many other business houses of the state, had a modest start. His grandfather Ishar Dass Gupta was a small supplier of provisions and other eatables to few units of the army in Jammu, primarily to its Topkhana garrison. He had inherited this business from his father who bagged this opportunity from the Maharaja in 1890, Rohit said.

Rohit Gupta along with his father in his office.

Things were normal until 1947 changed almost everything. In Jammu and Kashmir, part of the Maharaja’s army rebelled in parts of erstwhile Poonch and the state was divided unevenly in wake of the war between India and Pakistan. By then, Maharaja had become history. Even Jammu’s demography had witnessed massive upheavals.

All of a sudden, the well-to-do Ishar Dass was rendered jobless. For him hunting a new job was slightly easy. His bigger problem was that he had suffered huge losses because of the 1947 happenings. Even importance of the spaces changed. He had to make a career change.

After a protracted delay, Dass finally started a small rice husking mill in 1954. It operated from Kanak Mandi and they named it Janta Rice Mill. With this, his struggle started afresh. It took some time for the family to stabilize, manage its partition losses and plan its future.

Those were the days when markets tend to believe that they are self-sufficient. Then, rice was banned from export because productions were limited. It had though, a good local market.

Working tirelessly, the family was able to create a fortunate out of the modest re-start. By 1968, they set up a major rice mill near Below Gumat. It had half a tone capacity which was quite big by the then market standards. The family had a vast clientele within the state, especially in Jammu and it helped them create a brand loyalty towards their products even though they had no established brand.

The next expansion took place in 1996 when the family invested Rs 10 crore in setting up a rice sheller in Bari Brahmana with 1.5 tons an hour capacity. That was the time when the government had embraced liberalism and was permitting movement of rice from J&K, otherwise a food grain deficit state. By then Rohit had graduated from the University of Jammu with a law degree in hand. He had no time to join the bar because his father had his plans ready for execution. Rohit joined the business.

Installed units in a multistorey factory of Sarveshwar Foods.

In the subsequent years, Rohit supervised two major expansions in his company. The first was in 2008 when the family decided to set up a six-ton per hour unit at Seora in Jammu’s Kunjwani periphery near Baba Farid Nagar. Imported partly from Europe, US, and Japan, this mill required an investment of Rs 10 crore. Initially, it was half the capacity, Rohit says, but to make it economically viable its capacity was doubled later.

Next was the most modern 10 ton an hour plant that the group set up in Bari Brahmna at an investment of Rs 35 crore in 2011. A grading line was added to it later. The land for this plant was acquired by Rohit after the Moral Overseas ceased to exist and a sprawling industrial facility became instantly available for re-use. Rohit took part of this premises and the remaining was acquired by a pharmaceutical company.

Today Sarveshwars has all the milling and processing facilities that are required for a good food processing brand. It is one of the few companies in North India which have has presence across the entire rice value chain: procurement storage milling, sorting, packaging, branding, and distribution.

Right now, the company has two facilities with a cumulative installed capacity of 84240 metric tones a year. Its facilities are spread over 16.27 acres of land at the two places. The two major milling plants are equipped with the state of the art pre-cleaners, de-stoners, precision-sizers, graders, paddy separators, and de-huskers. It even uses magnets to prevent foreign materials from getting into the final market. Apart from polishing and rice-whitening facilities, Sarveshwars have a steam rice plant and a sella rice plant, a specially treated rice variety that is considered at par with Basmati.

But Rohit does not consider the class expansion of his group as his contribution. His real game-changing event took place in 2009. Oblivious of the systems in vogue, the group had accepted an export order of 63 tons of Basmati rice. Once it reached the port, it was stopped because it did not comply with the stringent export quality norms, then in vogue. The consignment was huge and it was there for a long time forcing Rohit to approach the state government and make them act.

The stacks of rice bags stored in the factory for supplying to the market.

“My struggle to get the consignment exported exposed the faulty export norms that were in vogue,” Rohit says with a sense of pride. “As the state government pressed the government of India, things changed for good and for the benefit of all.”

The Director-General Foreign Trade (DGFT) that falls under the control of Ministry of Commerce had created a standardization of the export quality rice which was in contradiction with that of the Ministry of Agriculture, the real stakeholder in the entire process. The categorization was based more on the length of the rice grain than on its aroma and flavour. “The best export quality of Basmati was supposed to be having a grain length of 7.2 mm for grade A; 7 mm for grade B and below 7 mm for grade C,” Rohit says. “This classification was an outright denial to the Basmati that J&K and Dehradun were growing. It was qualitatively better than the best being exported.” The two belts have the Basmati variety that is not more than 6.61 mm long.

Rohit remembers the contributions that the then Agriculture Minister Ghulam Hassan Mir and Agriculture Production Commissioner (APC) Iqbal Khanday made. The reversal of the quality classification led the aroma and flavour getting preference over the length. Agriculture Ministry suggestions were eventually accepted by the DGFT. Post-reclassification, the game changed entirely.

Under the earlier norms, there were no takers for the Jammu Basmati. It would sell at much lesser cost than that of Punjab and other places. For the first time in history, Jammu rice farmers got integrated with the larger market in plains as they started getting a good price. The net benefit per kilogram has been as high as Rs 35. “That was the biggest achievement of my career,” Rohit says.

Jammu has been growing Basmati for centuries. It had varieties that had evolved locally and were mostly being consumed. People who know the Basmati say there are around 37 different varieties that are historically being sown and consumed. Fragrant though, it had a small size. However, a major change took place after the 1971 war when some improved variety started being sown in Jammu’s Ranbir Singh Pora, and other belts. It had a little bit more size and the fragrance was improved. Many growers think some seeds in bulk had actually changed hands during the turmoil. It was this very factor that led to pitched battles between the Indian and Pakistani rice growers over the GI and patent issues. At one point of time, one of Kashmir’s Industry Commissioners, G K Pillai wrote a detailed note to the central government asking them to help the state in subsiding the Basmati costs to growers so that Pakistani exporters are dented in the international market.

The view of the production unit of Sarveshwar Foods.

Basmati is being produced on around 37500 hectors of land in Kathua and Samba districts. At the production yield of 2.5 tons per hector, the overall Basmati harvest in a season is around 88000 tons. The best yielding varieties are Ranbir Basmati, Basmati-370, and Sanwal Basmati. These are export brands. Off late, the central government has invested substantially in helping growers get the best seed varieties. Given the fact that most of the Basmati rice fields are closer to the international border, any escalation impacts the produce. During Operation Parakram, when India moved to the borders in wake of the Parliament attack, the farmers suffered extensively as their felids were converted into the minefields.

Historically, however, the Basmati growers and Rohit celebrate the SRO 268 issued on August 31, 2009. It lifted the ban on Basmati exports for the first time in history. This government order paved the way for Sarveshwar to create its niche in the export market. Officials said the first offshore consignment was 63 tons in 2010-11 that improved to 135 tons, a year later. The exporters managed sustaining the temp and Rohit was the leading one.

Right now Sarveshwar is J&K’s major exporter to Europe, US and Middle East. Apart from operating its offices in Delhi, Mumbai, he has small offshore liaison offices in London and the Middle East. The export has helped him add to the facilities to ensure he does not lack anything in the rice value chain. Right now, 132 procurement agents work for him in the states of Punjab, Haryana, and Himachal Pradesh and UP. He has 64 major distributors across India who has access to 1843 retailers. He supplies to WalMart and Future Group too. Now manufacturing 59 branded and 63 unbranded products, he is supplying to eight countries including USA, and in Europe and the Middle East.

“Our exports have crossed Rs 50 crore ark,” Rohit said. “We are planning big for the Middle East markets now.” He already has got the certification from US Food and Drug Administration.

As the major rice processor in the region, Rohit’s business has restored the confidence of the farmers in Jammu and even in Kashmir. Though the installed capacity of the two units is 84240 metric tons a year, the actual utilisation of the capacity has been varying: 68635 (81.48 percent of the capacity) in 2015, 78299 (92.95%) in 2016, and 53354 (63.34%) in 2017. For the first half of 2018, it has been 23303 metric tons, so far. The rice production has remained 45050 metric tons, 50916 metric tons, 34780 metric tons and 15146 metric tons in these years, respectively.

Both the mills manage Basmati and non-Basmati, locally called Sharbati rice varieties. Its operations in the twin mills and the sales are managed by nearly 150 salaried staffers in addition to more than 250 wage workers. Of the estimated 80,000 ton Basmati produced in Jammu, Rohit claims he is the biggest bulk buyer. This is in addition to his contract farming on 22000 acres of paddy land across India.

One major battle won, Rohit has set his new targets – the organic food. Piggybacking the organic farming initiative of the government, he has already set up Sarveshwar Organic Foods Ltd (SOFL) which is thriving already.

In R S Pora, the Basmati hub of Jammu with 37500 hectares under this crop, Organic farming is already a huge hit. Over the years, Rohit’s intervention has helped convert 9000 acres of paddy fields, earlier sown conventionally, being declared organic; thanks to Sarveshwar initiative that gets third-party certification from a Netherlands firm. Farmers say though the yield reduces to some extent for initial three years, the company provides them training, organic inputs, nutrient and disease management, and facilitation of certification and eventually procures the crop at a better price. Initially, there was some sort of resistance to change. But once the farmers understood the yield is almost double, they took the organic path for cultivation.

Rohit says he is keen to take the Organic Movement to Kashmir. He already is in the process of growing organic saffron in Pampore and has taken certain stretches in Budgam for organic cultivation of Pusa Basmati. This brand of Basmati takes around 150 days in Jammu to mature but Rohit says in Kashmir, its gestation period must go down so that it can be harvested as early as August.

Sarveshwar’s Kashmir connections are new but are getting strong. He has already tied up with the farmers in south Kashmir who grow fragrant Mushkbaduj rice, a variety endemic to Kashmir. With the help of SKUAST, he is packaging and marketing the product at Rs 170 a kilogram. “Out of 250 tons produce of Mushkbaduj, we procured 160 tons last year,” Rohit says. “We are doing more.” He has already processed and packaged another fragrant rice variety – Kamad that is retailed at Rs 150, a kilogram. He is involved in walnuts in Pulwama, kidney beans in Bhaderwah, in addition to Kenova and Red Rice in Himachal.

Rohit says certain areas in Kashmir are better for growing some niche agricultural products. “In Tangdar, for instance, we can grow red rice and we have international clients for that,” Rohit said. “There is also a government scheme that will be of great help.” He said there are various places across the states which are better suited to grow Koshihikari rice that is very popular across Japan. “We have recently started growing certain species in Rajasthan and Eastern UP,” Rohit said. “If Sikkim can be an organic agriculture state, why cannot Jammu and Kashmir aspire to be one?”

Recently, he has extended his Organic project to three districts in Himachal Pradesh. “I want to make it a movement,” Rohit says. “Initially there is feeble resistance but people understand the land sustainability is key to better realization, improved yield that change fetches them.” After organics, his new targets include value additions so that nutrition value of the grains improves befitting the requirements of people’s basic nutrient needs.

Last year, he has started his own organic products store under the brand name Nimbarak. The food products put on sale include dry fruits and nuts, pulses, lentil, porridge, spices, garam masala and “superfoods” like chia seeds, flax seeds, quinoa seeds. Nimbarak was received very well by the market and we have extended these stores to Chandigarh, Ludhiana various places in Himachal and we are supplying the items to various stores in Mumbai too.

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