Incorporated in March 2004, Sresta Natural Bioproducts (Sresta) is a leading organic produce company of India. Among the organic food companies, Sresta is among the better funded, having raised several rounds of equity funding from 2 different VC funds – VentureEast and Peepul Capital. Together, the two funds own over 70% of equity of the company, and appear to have pumped in close to Rs 400m. Powered by VC funding, Sresta has reported strong growth. In the 5 year period from 2010-15, it has grown from a revenue of Rs 101m to Rs 1135m, a CAGR of over 60%.

1. SRESTA NATURAL BIOPRODUCTS PVT LTD
Company Report: India-Organic Food-Unlisted
18 APRIL 2016
www.indiabusinessreports.com
COMPANY BACKGROUND
Beginning
Incorporated in March 2004, Sresta Natural
Bioproducts (Sresta) is a leading organic produce
company of India.
Among the organic food companies, Sresta is among
the better funded, having raised several rounds of
equity funding from 2 different VC funds –
VentureEast and Peepul Capital. Together, the two
funds own over 70% of equity of the company, and
appear to have pumped in close to Rs 400m.
Powered by VC funding, Sresta has reported strong
growth. In the 5 year period from 2010-15, it has
grown from a revenue of Rs 101m to Rs 1135m, a
CAGR of over 60%.
The company has worked to create both backward
and forward linkages. It sources products from over
25,000 farmers working an area of 1,50,000 acres. It
sells its products from 10,000 plus retail stores now,
under the brand 24 Mantra. It is rapidly expanding
both as it grows.
The company employs over 250 people currently.
Key Company Info
Corp Identity Number U01122TG2004PTC042837
PAN Number AABCH9484P
Auditor Gandhi & Gandhi
Board of Directors
Name Designation Date since
Seelam Rajshekar Reddy Managing director 09/03/2004
Balasubramanian
Narayanan
Whole-time
director & CEO 05/08/2010
Sarath Naru* Nominee Director 12/03/2010
Mohana Krishna Reddy Director 30/08/2013
Deepak Mittal# Nominee Director 08/03/2016
*Nominee – VentrureEast; #Nominee - Peepul
Address
203, PAVANI ANNEXE,ROAD NO.2,
BANJARA HILLS, HYDERABAD - 500034,
ANDHRA PRADESH
Financial Summary
Year ending June 30 FY13 FY14 FY15
Net Sales (Rs mn) 460.8 796.3 1,134.8
PAT (Rs mn) 1.9 2.1 4.9
Net worth (Rs mn) 346.1 452.9 713.3
Debt (Rs mn) 1.4 2.0 35.7
Sales Growth (%) 70.7 72.8 42.5
PAT Growth (%) 3115.0 6.8 137.5
ROE (%) 0.6 0.5 0.8
ROCE (%) -0.7 -4.7 3.9
D/E (x) 0.0 0.0 0.0
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Promoters
The key promoter is Seelam Rajshekar Reddy. In 1992,
Raj Seelam was working in an agricultural products
company, when he observed the alarming use and
spread of chemical usage on farms, and the deep
impact it had on rural indebtedness. Investment in
pesticides and synthetic fertilisers meant farmers had
to borrow money, which in turn was affecting the very
sustainability of the farmer’s life and standard of
living.
This sowed the seeds for Sresta. With a group of
inspired colleagues, he set out on a lifelong journey of
passion and commitment.
The two VC funds backing Sresta owned close to 70%
of common equity as on Mar’15.
Apart from the above, there were un-converted CCPS
share as following:
As of Mar’15
After Mar’15, VentureEast Life Fund III LLC put in
another tiny tranche of 91,028 CCPSs.
Accounting for their conversion, the fulling diluted
shareholding of Sresta could look like this currently:
The 2 funds will end up owned 76.1% at full
conversion, up from 70.7% as on 31.3.2015.
BUSINESS HIGHLIGHTS
Procurement
Sresta has a unique farming model: One which
ensures alignment with processes and allows for
round the year supervision.
The farming is currently organised into 30 or so
projects. Spread in a radius of 15- 20 kms, the farms
acreage could range from 200 to few thousand acres.
Typically for every 100 – 150 farmers it has a
Supervisor.
Sresta procures the crop from the farm. Procurement
Centres are set up at the sites and farmers are
contacted directly without any middlemen. In fact the
payments are all done through banks and online
transfers to ensure authenticity and transparency.
Sresta’s teams check out the farmer’s knowledge,
attitude and more importantly, whether he has an
adequate understanding of sustainable living.
Then comes the choice of the right soil – finding that
particular soil well suited for a particular crop. Sresta’s
people check the soil quality, cropping pattern,
prevalent crop rotation and the nutrient levels in the
soil. This determines the matching of the soil to the
crop. While doing this, it ensures the region has a
suitable weather and temperature.
Right land, right soil, right farmer and the right crop.
That done, the next steps, are the right seeds. This is
followed by the right farming and cultivation practices.
Natural solutions to control pests, locally nurtured
wisdom and an organic connect with the land, crop
and nature are all Sresta’s dynamics and efforts at
details. Storage is done through environment control
and effective storage techniques are a result of
homegrown wisdom, usage of local resources and
proven learnings accumulated over a period of time.
Processing and storage
Sresta’s central storage and processing facility is
located in Hyderabad with regional storage centers
across various States. India’s first ECO2 treatment

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facility (Non Chemical fumigation system) has been
installed by Sresta.
Grain Cleaning
Sresta has a state of art facility with pre-cleaners,
aspirators, fine cleaners, gravity separators, destoners,
suction blowers, sortex machines, dryers to clean ,
grade and pack grains of high purity. This set-up
enables the farm grade material to be cleaned to a
super clean material.
Fumigation
Sresta’s team after years of research has developed
the technology of using the safe carbon dioxide
modified atmosphere to treat the grains and to
prevent infestation. No chemicals are used for
fumigating the grains and spices. This makes the sresta
products even more safe and pure.
Flour Milling
Sresta’s whole wheat flour is ground in the traditional
Chakki mill to give the taste and texture that is most
preferred in the Indian homes. This traditional
technology ensures that the natural balance of bran,
germ and endosperm is kept intact in the flour.
Sresta’s Whole wheat flour has maximum fiber
content than any other whole wheat flour of other
brands.
Sresta understands the need for handling allergens
separately to avoid contamination and to deliver safe
food its customers. All the non-glutinous grains like
Sorghum, finger millet, chickpeas, maize, rice are
handled in different line where they do not come in
contact with gluten containing grain.
Aseptic processing
Sresta processes organic fruits into aseptically packed
pulps, purees, juices and concentrates at audited and
certified units with world class equipments and
facilities. Facility is certified for Aseptic pulp lines have
the capacity to process and pack 10 MT/ hour. Facility
is certified for Kosher, ISO:22000 and FSSAI.
Processing facility has a well equipped lab and trained
technicians to continuously monitor, evaluate and
process the product. All tropical fruits like Alphonso
Mango Pulp, Totapuri Mango Pulp, Kesar Mango Pulp,
White guava pulp, Pink Guava Pulp, Pineapple pulp
and Juice, Red and Yellow Papaya Pulp, Banana puree
are processed and packed.
Aseptic fruit concentrate line has a capacity of
6MT/hour. Clarified Mango juice concentrates, Mango
Pulp Concentrates, Pineapple juice concentrates are
also processed and aseptically packed.
Individually Quick Frozen
Sresta processes IQF at a one of the kind facility
certified for BRC-Global Standard Food Safety. Sresta
processes organic IQF mango dices, slices, Papaya
dices, cubes, pomegranate kernels, banana slices and
vegetables. Development team ensures that
specifications as per the customer requirement are
handled with ease. Processing facility is situated close
to our project areas to maintain the ‘Just Picked”
freshness of the fruits and vegetables.
Brands
Sresta markets under the 24 Mantra brand. Under this
brand, it sells as many as 200 products:
5 types of Rice
2 varieties of Poha
22 varieties of Spices
20 varieties of Dals/Pulses
14 varieties of Atta/Flours
4 varieties of Cold Pressed Oils
2 varieties of Sugar
2 varieties of Jaggery
4 varieties of Juices
5 varieties of Breakfast Flakes
5 varieties of Masala Powders
5 varieties of Masala Powders
3 varieties of Health Products
3 varieties of Jams
4 varieties of Ready to Cook Pastes
5 varieties of Teas
2 varieties of Papads
4 varieties of Cookies, 3 varieties of Chikkis

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Key Product – Soya Bean
In what is a bit of an oddity, the key product of Sresta
is Soya Beans. In FY15, the revenue from Soya Beans
was Rs 29 crore, up from Rs 22 crore in FY14. Volume
of sales was 6574 tons, at an average price of Rs
44/kg.
Retail Presence
24 Mantra organic food brand is available across India
and abroad.
The company sells over 200 products through 10,000
retail stores in 150 cities in India. It claims presence in
hypermarkets (modern retail), neighborhood super
markets and stores (general stores), dedicated organic
stores, its own franchisees stores and a new concept
of self -dispensing bulk stores where consumers can
buy loose and by the scoop are the different formats
in which we are building the retail distribution
channels.
24 Mantra organic is available in all leading retail
chains ABRL, Auchan, Metro, Food Bazaar, Hyper City,
Wal-Mart Best Price, Spencer’s, Godrej Nature’s
Basket, Tesco Star Bazaar and many more.
The company also direct to consumer through its
website www.24mantra.com
Exports
Exports is around 50% of Sresta’s sales mix. Share of
exports has come down from 68% in FY09. It exports
several products like Ready-to-eat rice, Curries,
Chutneys, Pickles, Curry pastes, Masalas and Spices
etc.
Sresta has direct presence in the USA, with atleast
three major wholesale outlets in the country –
Washington DC, Chicago and San Francisco in CA. It
has presence in Houston too and plans to slowly
expand to other cities
Subsidiaries
FYVE Elements LLC
FYVE Elements LLC is a wholly owned subsidiary of the
Company which was incorporated on November 30,
2012 under the laws of the State of
Maryland, USA. Their main business is Whole-sale
retail distribution of food products and related items,
covering whole of USA. During the year under review,
the Company has invested an amount of Rs. 13.9
Million.
Sresta Global FZE
Sresta Global FZE is a wholly owned subsidiary of the
Company which was incorporated on 3 rd October
2012 under the laws of the State of RAK, UAE. Their
main business is trading of food products and related
items. During the year under review, there is no
further investment made by the Company.
MANUFACTURING FACILITIES
Sresta has its manufacturing facility and storage
facilities in Hyderabad as described in the earlier
section. However, its gross block is much smaller
compared to say Morarka Organic Foods, which has an
asset base 10x bigger than Sresta.
FINANCIAL PERFORMANCE
Sresta has done extremely well on the revenue front,
posting a CAGR of 62% over FY10-15.

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Around 50% of its revenue comes from the local
market, which shows that its efforts of building an
organic food brand could be paying off.
However, profitability is still poor. While it is not
making losses any more, net profit is almost negligible.
There appears to be marginal improvement in EBITDA
margin.
The company is well capitalized though, since PE funds
have been supporting it with regular fund infusions.
The company has negligible debt.
However, the company will continue to need external
funding support give negative operational cash flow.
The working capital cycle is quite large at around 125
days. Lets assume in FY16, the company added Rs 60
crore of sales. This would require Rs 20 crore of
working capital. Cash generation from P&L being
negligible, this needs to come from external funding
(either bank lines or equity or a mix).
Please Note: This appears in FY15 financial filing.
During the year a cyber fraud was committed on the
company by hacking the e-mail ID of an employee and
funds aggregating to USD 6,15,070 (equivalent to INR
3,74,75,213) payable by an overseas customer
(unrelated) to the company for direct supplies
(exports) made and supplies routed through the
wholly owned subsidiary, Siesta Global FZE, Dubai
were diverted to the bank accounts of unknown
entities. On reaching an out of court settlement the
company could realize a part of the funds so diverted
and the balance (INR 1,12,79,432) was agreed to be
foregone and was written off as a bad debt. Ref Note
No. 7 of Additional Notes on Accounts to the financial
statements.
FUTURE GROWTH PLANS
As part of the plans the company announced entry
into two new categories -- Ready to Drink and Ready
to Cook products, in Feb’16.
Five variants of the Ready to Drink -- Orange, Mango,
Berry, Apple and Lemon Green Tea flavours -- and four
variants of Ready to Cook breakfast options -- Millet
Dosa Mix, Ragi Idli Mix, Gojji Avalakki and Kanda Poha
-- have been launched
Over the next four years, the company, Mr. Seelam
said, wanted to increase the acreage under organic
farming, carried out on a group farming basis, to 5
lakh acres from the existing 1.5 lakh acres.
The expansion plans would see the headcount going
up from 250 at present to 800.
FUNDING
Sresta has raised several rounds of funding from the
two PE funds, aggregating over Rs 60 crore. The PE
funds have been invested for several years now, and
could be looking for an exit soon. As per their
Shareholders Agreement, the company needs to give
them an exit by Dec’15, or be prepared for drag along
etc.
We show below (see tables below) some the
investment rounds done, and the price per share
implied in them.
As per the last round of dilution, in Jun’15, the price
per share was Rs 125. Multiplying this by fully diluted
shares (1.76 crore), we get a valuation of Rs 220 crore.
This implies a valuation of around 2x trailing sales.

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FINANCIAL DETAILS
P&L
(Rs mn) FY11 FY12 FY13 FY14 FY15
Net Sales 180.0 270.0 460.8 796.3 1134.8
EBITDA 2.1 1.8 19.1 24.5 82.1
Margin (%) 1.2 0.7 4.1 3.1 7.2
Interest 0.0 0.0 3.8 7.8 15.7
Other Income 0.0 0.0 8.8 29.5 0.0
PBDT 2.1 1.8 24.1 46.1 66.5
Depreciation 1.6 0.0 21.3 43.3 58.6
Extraordinary Item
PBT 0.6 1.8 2.8 2.8 7.8
PAT 0.2 0.1 1.9 2.1 4.9
PAT Margin (%) 0.1 0.0 0.4 0.3 0.4
Balance Sheet
(Rs mn) FY11 FY12 FY13 FY14 FY15
Liabilities
Equity Capital 76.7 108.3 133.2 147.1 175.3
Reserves 36.0 155.5 212.8 305.2 538.0
Shareholder Funds 115.9 263.8 346.1 452.9 713.3
Other long term liabilities 27.8 0.8 1.4 2.0 35.7
Total Liabilities 144.0 264.5 347.5 455.0 749.0
Assets
Fixed Assets (net) 12.0 24.9 38.9 39.0 89.4
Oher Long Term Assets 5.9 45.0 86.8 126.6 182.2
Total Long Term Assets 48.0 98.3 153.2 192.3 295.5
Inventories 42.4 92.8 131.6 186.9 389.5
Debtors 51.0 65.6 101.8 211.5 316.3
Cash 0.3 3.7 5.5 2.8 1.1
Other CA 0.1 33.8 32.8 73.3 89.1
Total Current Assets, L&A 100.2 220.2 282.5 494.4 817.6
CL & Provisions 11.9 53.9 88.2 231.8 364.2
Net Current Assets 88.3 166.3 194.3 262.6 453.5
Total Assets
144.0 264.5 347.5 455.0 748.9

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Ratios
FY10 FY11 FY12 FY13 FY14 FY15
Growth (%)
Sales -5.2 78.2 50.0 70.7 72.8 42.5
PBDIT -26.1 -108.5 -15.4 955.8 28.2 235.3
PBT -18.3 -102.3 229.1 54.1 1.2 177.4
PAT -16.1 -101.3 -72.7 3115.0 6.8 137.5
Margins (%)
PBDIT -25.0 1.2 0.7 4.1 3.1 7.2
PAT -16.8 0.1 0.0 0.4 0.3 0.4
Balance Sheet Ratios
ROE (%) -14.7 0.2 0.0 0.6 0.5 0.8
ROCE (%) -18.8 0.4 0.9 -0.7 -4.7 3.9
D/E (x) 0.4 0.2 0.0 0.0 0.0 0.0
Inventory t/o (days) 92.3 64.5 91.4 88.9 73.0 92.7
Debtors t/o (days) 50.3 75.4 78.8 66.3 71.8 84.9
WC Cycle (days) 119.3 126.3 153.4 133.1 122.1 137.4
Dilution History
Date Fund Shares Total (Rs L) Price/Share
30-Dec-10 VentureEast Trustee Co 7,82,855 200 25.5
27-Jan-11 VentureEast Life Fund III LLC 917 0 31.4
20-Sep-11 Peepul Capital III LLC 31,30,505 1,508 48.2
28-May-14 Peepul Capital III LLC 5,28,682 500 94.6
28-May-14 VentureEast Life Fund III LLC 3,04,924 288 94.6
28-May-14 VentureEast Trustee Co 2,23,758 212 94.6
CCPS
27-Jan-11 VentureEast Life Fund III LLC 15,90,000 288 31.3
21-Jun-13 Peepul Capital III LLC 8,33,333 500 60.0
21-Jun-13 VentureEast Life Fund III LLC 4,80,635 288 60.0
25-Jul-14 Peepul Capital III LLC 15,62,500 1,250 80.0
25-Jul-14 Peepul Capital III LLC 9,01,192 721 80.0
25-Jul-14 VentureEast Trustee Co 6,61,308 529 80.0
26-Jun-15 VentureEast Life Fund III LLC 91,028 114 125.0

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