Full Transcript

Dhruv Sharma: Happy Monday listeners, you're watching the 91st episode of the Offline Network and today Utsav and I are chatting with Shashi Kumar, who's the founder of a wonderful and interesting agribusiness called Akshay Kulp Organic. Shashi, welcome to the show.

Utsav Somani: Shashi, so let's take it back to the founding story. I think it's one of the more unique ones that we've had on this show. 27 engineers at Wipro in 2010 after working, I mean you personally worked at Wipro for 13 years before this, you guys decided to pool money and start a farming business. So what was the conversation around that?

Shashi Kumar (Akshayakalpa Organic): So the point was, I think 27 crazy people you can assume, way back in 2010 even startup was a very alien and also agriculture itself was a startup in an agriculture space is alien. We have been discussing, okay, how to go back to villages, work with farmers and groom them to be entrepreneurs and set up right examples. For example, if you take me as an example, born in a farming family, why did I become an engineer? Okay, my father is still a farmer. Basically, my father never wanted me to be a farmer. So he made me an engineer. So what we thought was going back to villages and getting young people into farming, one way is demonstrating that farming is amazingly remunerative. Young people can get into farming like how my father saw a good engineer in Bangalore. We wanted to see in every village to have a very good farmer so that people can, okay, look up to them. So that's the oral genesis of Akshay Kalpa.

Utsav Somani: And what about the use of technology, 27 Wipro engineers coming together?

Shashi Kumar (Akshayakalpa Organic): So today, Akshay Kalpa farms are some of the most technologically advanced farms anywhere else you see in India or throughout the world. Two acres, three acres, five acre farms. We have integrated technology, the best possible technology where we can objectively collect data and make decisions for farmers. So that's what we have done. Farmer incurred zero cost for this. Generally, you try to sell the technology to farmers. What Akshay Kalpa has done is they've invested on behalf of farmers and we are measuring the data and trying to give inputs to farmers. That's what, okay, we are trying to do.

Dhruv Sharma: And Shashi, can you give us a sense of what products the end consumers receive today after many years in operation?

Shashi Kumar (Akshayakalpa Organic): The fundamental is, so we also understood markets very late, okay. We fundamentally believe that value for an agricultural commodity gets created in the farm by the farmer and it's only, okay, viable if there is a paying customer for it. So over a period of last 16 years, what we realized was we need to sort out this food systems, okay, in a streamlined manner. So we are not down to any value added part. We are selling basic milk, okay. Ghee, curd, paneer, cheese, okay. A little bit of vegetables, a little bit of ghee, okay. A little bit of honey, okay. A little bit of mushrooms. This is exactly what we do. They are fundamentals, not much of a value addition, okay. They are taken as is and given to consumers. That's what we do right now. They're all organic.

Dhruv Sharma: And can you give us a sense of, you know, when you started, how many farmers were you working with today? You know, how has that number grown and how much acreage are we really looking at?

Shashi Kumar (Akshayakalpa Organic): We started, of course, with the first farm in 2010. Over a period of time now, last 16 years, now we work with 2,800 farmers, okay. And at an average, each farmer earns at a 128,000 rupees a month. Last financial year, at an average, we paid 128,000 rupees to each farmer. Average landholding is three acres. So that is the scale at which we operate Akshaya Kalpa, okay, right now. Akshaya Kalpa is a 700 crore turnover company, okay. Right now, we do around 60 crores a month sales in three cities, Bangalore, Chennai and Hyderabad, expanded to Mumbai and Pune recently. Coming back to the farmer side of it, this has been an, what we call an amazing realization for us. Just to give a simple example, the amount of, okay, productivity which is happening in these 2,800 farms enabling 700 crores of business. If you want to do a very similar thing in conventional setup, okay, you would need 100,000 farmers. So that's exactly what it is. We cultivate and manage 7,800 acres of land, okay, fully organic, owned by 2,800 farmers. So that is a change what we have brought in, okay, farming scenario in India. And it has become a role model for anybody to emulate in the country. Agriculture actually can be remunerative to farmers, and also businesses can be built around that.

Utsav Somani: And I think what's interesting is that your business is asset-less. And working with all these farmers, I think the interesting piece would be to learn more about the three-year incubation period that you have with them, where you provide financing, you give them all the supply of machinery and all the tech stuff that you need, automated milking processes, and many other things. So talk to us a little bit about what goes on, on that farm during those three years to make it real.

Shashi Kumar (Akshayakalpa Organic): Initial three years is a little bit of a tough journey, okay. Now you're a conventional farmer, you have got three acres of land, then you get associated with that. We work in three clusters. We don't work throughout India, in Tiptur cluster, Chengalpetu cluster, Rangarhadi, Mahbubnagar clusters. These three clusters we operate. One cluster we are operating now in Maharashtra, okay, around Haldianagar in and around, okay. So when a farmer in the first three years is a very, okay, tough journey. He has been conventionally doing farming, he has got two or three cows, okay, three acres, four acres of land. Now, how do we engage him while I am not giving market access? I am not trying to sell anything to him. What we are trying to do is, we are trying to deliver services. So what are these services? For example, can you ensure that three cows he has, they become more productive? Can you start feeding these cows better way? Can you raise wonderful calves? For this one, there is no additional money required. He already has resources. Can you organize it better, get science into that feeding? That is one part of it. Can cut off external inputs coming into his soil? We teach them how to make a manure at scale, okay. You have little bit of cow dung along with cow dung, agricultural waste and tree trimmings, little bit pulverization. You should be able to make world class manure. The worst part in Indian agriculture ecosystem is, while the chemical manures, let us take 17-17-17 NPK ratios, you deliver precisely, you know, 17% is nitrogen, phosphorus, trash, okay. All of it you are able to deliver at a precision, it is tested. No farmyard manure in the country gets tested, you know. That is where the problem is. We brought science into making manure, farmyard manure, how do you make? So that is the second part of it. Third one is, when somehow most of these farmers, okay, actually they borrow 18% to 36% interest rates, okay, to do agriculture. So can we get the bank linkages properly organized, okay, with a support? That is one thing. Technology, data measurement in the farm, what is happening? Yield, what is happening? Why they are not consuming? All the data we are able to put in front of farmers and tell them, this is where you are losing money, this is where you are making money, let us make that ship. So this is what we do, services delivery. Agronomy as a service, we deliver. Veterinary services, we deliver. Paraveterinary services, soil management services, mechanical services, all of them are delivered to farmers at his doorstep without any cost to him. So that is exactly…

Utsav Somani: The ecosystem…

Shashi Kumar (Akshayakalpa Organic): Yes. Basically, it is like assume you are running a software company, you do not bother about where the power comes from or a diesel generator, there is a service provider coming and providing to you. This is exactly what we do. In a farmer, you should do farming profitably. All the concomitant services needs to be delivered at your doorstep. That is what we have done. We have just borrowed Western University models where they go and give services to farmers. This is exactly what we have done.

Utsav Somani: This is super impressive. Yes, definitely not coming for your company. Thank you.

Dhruv Sharma: And speaking of these services, we would love to go level deeper, Shashi. Talk to us about similar services and the use of technology in say processing or in the cold or in logistics, which is so important in bringing the produce to the end consumer.

Shashi Kumar (Akshayakalpa Organic): See, one fundamental, if you take milk as an example, immediately after milking, before you start chilling, it is 7 to 8 to 10 hours it is time in India, conventional systems. Is it possible you can integrate cold chain in the farm itself with a farmer? We have done it. Okay. 2800 chilling systems we have integrated in each individual farm. That actually preserves the quality of milk at the peakest possible. Immediately after milking, milk is chilled to 4 degrees, you know. So, that is where the journey starts. Before that chilling, okay, in itself happens, is it possible to validate milk does not have antibiotics? Is it possible to validate milk does not have afrotoxins? We make sure farmer tests it and declares and before it goes to chilling in his own farm. These chillers are 50 litres, 100 litres, 200 litres, 500 litres. This is the first way back in 2010, started thinking about small chillers at the farm level. Actually, in the West, no, it is mandated. Every dairy farm actually has a chilling system integrated. Immediately after milking, milk goes to chilling. That is how they are able to do better quality milk. So, this is one technology part where, okay, we have been extremely focused. Second technological aspect, especially farm level innovation is, is it possible, any farm you, okay, commission that cow dung, you can actually convert into methane gas. Okay, 2800 units we have deployed. Every farm is, the moment you commission, methane gas production has become mandatory. So, with that one, cooking, okay, and hot water generation, actually it is almost free of cost. These units are extremely low cost, you know, 12,000 to 18,000 to 25,000, you can commission these units. This is the kind of technology we have bought in. Housing of the animals, we have changed more the way we conceive housing of the animals, that we have changed. Other aspect is, how do you manage so many animals? You know, Akshaya Kanpa is right now managing 30,000 cows, you know, spread across 2800 farms. We have bought herd management system in there. Now, we can precisely tell what is really happening in that cow's life.

Utsav Somani: Is it powered by Stellabs, the company that you mentioned?

Shashi Kumar (Akshayakalpa Organic): Yes, that's exactly what it is. It's, it's other company we founded, the herd management system comes from Stellabs. Okay, now we are able to track and tag each animal and see, understand what's happening. What is the feed intake? What, why is the milking issues? Why she is not conceiving? What is the cost problem? Everything of that history, we are able to log now and make decisions for farmers. These are some of the technological innovations at a farm level. Coming back to, okay, on the consumer side of the business, okay, we were the first, okay, to go to customers and say, hey, you know, can you pay me in advance? We started doing this one in 2016, you know, okay, we put our app there, okay, make sure consumers subscribe to milk and pay in advance. That's how we could pay our farmers in advance, you know. Same day we do settlements to farmers, first time in the country. If you, with the milk, it tests and certifies and goes into the cloud, payment is automatically triggered. So we, farmer need not really worry about somebody validating this quality. So, so these are some of the technological aspects we have brought in on the settlements, okay, on the consumer journeys, on the farmer journeys. This is the core to this Akshay Kulpa, what we are doing.

Dhruv Sharma: And Shashi, think about, so you've clearly spent, you know, maybe 20 years of your life and, you know, your entire team proving that this model can work and at scale. But if we now, and but India is still a very, very big country. Now, if you have to take this playbook and actually really scale your success across many different geographies, what would be, you know, what are your thoughts with respect to that?

Shashi Kumar (Akshayakalpa Organic): We are trying that, okay. For example, first we tried to replicate this one in Tiptur, okay, in Tumkur district in Karnataka. Then we took this one to Changalpet in Tamil Nadu in 2019. Okay. We are replicating there. Then we took this entire model to Rangarhadi, Mebunagar district, okay, in Telangana. We are replicating there. What we are trying to prove this model is, we are trying to move from one agro-climatic condition to next agro-climatic condition, trying to prove the model. India has 16 agro-climatic conditions. So, okay, such divers we are. What we have been policy wise doing in, it is a disaster. We are thinking what works in Punjab will work in Tamil Nadu. Definitely not possible. So, we need to customize our agronomy, okay, our interventions, our animal integration, okay, the people interactions, everything we need to customize by agro- climatic condition, by agro-climatic condition. That is exactly why, what we are trying to do. And anybody who is willing to, okay, know what we are doing and they want to replicate, we are very, very happy to share whatever we are doing. We already started doing this experiment in Bijapur, okay. We have started transferring all the know-how we have got to farmers in Bijapur. So, there is a pilot we are running, zero cost, okay. There is implementation agency. We put our resources, transfer technology.

Utsav Somani: But also, I think what might be very interesting to learn is the logistical side of, I mean, the challenges that you face when you do these cluster deliveries because everyone is expecting their milk early in the morning. So, you must have mastered the supply chain to the, I mean, the point where everyone gets their brown box or bottle of milk in the morning. So, how does that all work when all the deliveries are basically in a short time frame, most of them?

Shashi Kumar (Akshayakalpa Organic): What happens is by midnight, 12 o'clock, all our milk goes into what we call as a spokes. For example, Bangalore, we have got 50 cold chains integrated throughout Bangalore. When a customer places an order, based on where he is, entire milk actually gets routed to whichever cold store he should go. These colds are 200, 300 square feet cold stores walk in. So, milk is by 12 o'clock in the midnight, gets stocked there. Morning 4 o'clock delivery boys will come and pick it up. Likewise, in Chennai, we have got 40 cold stores like this throughout Chennai. Like Hyderabad, you have got close to 60 cold stores, okay, right now. So, this is exactly how the model works, okay, on the distribution side. We need to establish a lot of distribution infrastructure. And also, each city has what we call as a crosstalk. For example, in Bangalore, we operate one of the India's best crosstalk, 60,000 square feet, fully under, okay, climate control system. Every milk comes in there, okay, in big trucks. From there, it goes to these spokes, which I was discussing, 50 spokes in Bangalore, it gets distributed. Very similar system, but it has taken time for us to master this. And everything is managed by technology, starting from distribution, okay, which should go to which cold store, okay, which delivery boy comes and picks up. Nothing is no manually, no intervention. It's just automated, it's automated.

Dhruv Sharma: Shashi, I'm curious how, you know, business like yours is adapting to changing consumer preferences and needs. So, people asking for lactose-free milk or high-protein milk or similar products.

Shashi Kumar (Akshayakalpa Organic): See, recently we launched our high-protein milk. You should try, okay. It's an amazing response from, okay, consumers, okay. Lactose-free milk, we have launched.

Utsav Somani: Can you talk to me a little bit about the technology or what goes on, the science behind making this high-protein milk? In Delhi, with Ruv and I have based, we have Provilac doing that for us.

Shashi Kumar (Akshayakalpa Organic): See, the technology is simple, okay. What does, okay, milk has? Milk has lactose, okay, milk has fat and milk has protein, okay. So, just to deliver, you need to deliver just protein to you. So, we need to remove the lactose and fat part of it, okay. It's a microfiltration, it's a filter basically. You put milk from one side, the protein separates, fat separates, okay, and, okay, your lactose separates, that's it. So, take the protein part of and deliver it to consumers, that's it. That's as simple as that. It's a technology, it's called microfiltration.

Utsav Somani: And what about the A2 trend? I read the government put out a statement that A2 in ghee is not allowed. Like, what is this A2 trend? Like, I mean, A2 milk and is, how is it different?

Shashi Kumar (Akshayakalpa Organic): See, technically, there's no science to say that A2 milk is better than milk with A1 protein. There's no science, there's no peer-reviewed data, nothing. So, there are certain breeds of cows, okay, which can produce milk with A2 protein, okay. Some of those breeds are our native breeds, okay, breeds specific to our subcontinent. There are other breeds also which produce A2, a lot of breeds in Africa. Even, for example, first A2 trend was started by a company in New Zealand called A2 Corporation. They produced A2 milk through Holston HF cows, Holston Friesen cows, okay, Jersey cows. That's exactly how the A2 milk was produced. So, there are no science to say it is, okay, beneficial to human being, okay. It's just a milk and is as good as A1 milk or A2 milk. Lot of marketing companies picked up this trend, okay, saying A2 milk is good for you, okay. It's, okay, in fact, there's no science to say that, okay. For example, when A2 Corporation tried to do this gimmick in New Zealand, government really slapped a lot of fines on them, okay, saying this is not a right branding, there's no medical benefits associated with just consuming A2. Coming back to your question on government, what they are saying is A2 is a protein, okay. Ghee is a fat. Why are you branding a ghee as A2 ghee? It is a labeling law, in my opinion, is coming into picture. You are misguiding consumers. The moment you put a ghee as A2 ghee, ghee has no protein in it. Why are you labeling it as A2? That's a violation of consumer, okay, trust violation, in my opinion. Government is right, okay, what they are saying.

Utsav Somani: And in your industry, talking about consumer trust violations, have you seen other such examples which you would like to highlight for people to take notice?

Shashi Kumar (Akshayakalpa Organic): No, very simple, okay. Lot of people, for example, I will just give a simple example. If you do a high-protein milk, okay, it is acidic. pH is around 3, okay, 3 to 4, okay, body can take it. Now, you want to add, let me say, mango flavor to it, okay, without adding a mango pulp to it. Mango pulp is again acidic, okay. The moment add acidic to your milk, milk will break. So, lot of people, what they do is, okay, they just add neutralizers, okay, and they just do not declare. So, that is, I believe, is a trust violation. So, there are lot of examples like this. And you just want to get the product done, you do not want to tell consumers the whole truth. That is the whole problem.

Dhruv Sharma: Shashi, I think my closing question for you would be, you know, back to your original vision. Now, cities have grown large, they are incredibly congested, they have lots of people who have come in searching for livelihood, etc. So, when we talk about the theme of reverse migration, with your experience, what would you like people to know, both people who actually have a countryside home to be able to go back to, and people who just have this notion in their head of going and living in a farm one day in their lives?

Shashi Kumar (Akshayakalpa Organic): See, if you do not have a farming background, it is a little bit tough call. Most of the migration has happened with people with farming land, they found it is unviable, and they have migrated to cities. I think for them, the Akshakalpa is a great example that reverse migration actually pays. At an average, if you are, if you are able to earn around 1 lakh to 2 lakhs a month, okay, two to three acres of land, I think it is a very remunerative profession. Okay, that is one part. And if you do not have agriculture background, okay, and you still want to go there, okay, it requires a lot of hands-on, what you call, what is agriculture? It is muscle memory, you know. Okay, the moment you see a plant, you know how to react. The moment you see a soil, you know how to react. That is muscle memory. You need to build that muscle memory, you need to get yourself trained. Unfortunately, there are no farming schools in India. There are agricultural universities which still sell crops, but they do not teach farming. So, go to a farmer and learn how to do farming before you take that journey. So, that is what I can say.

Utsav Somani: One quick human version of this. I think you did your master's at Illinois. You spent 13 years at Wipro debugging telecom protocol stacks. And, I mean, now you live in Tiptur. You wear blue clothes, like blue clothes like you are wearing now. And you have what the press calls a Bhishma beard and you grow your own food. So, two entirely different lives. One, 13 years at Wipro, telecom protocol stacks, now doing farming or simplifying it. What part of this latter life is something that is unexpected and a very positive change for you personally?

Shashi Kumar (Akshayakalpa Organic): I think for me, I did not realize initially when we started experimenting on farming, I did not realize the complexity involved. Though I came from a farming background, I think it was my father's problem. Okay, we were just going and giving him a helping hand. But when it went deeper and deeper and deeper and deeper, okay, what was lacking, at least realization, at least in my end was, we have moved away from science. We have bought it down to thumb rules. It is actually killing our agriculture ecosystem. We need to get the science organized at a farming level. One way of doing that one was experiment on ourselves. So, that is exactly how we all started growing our food. We started experimenting. Can you grow your own food? It is extremely difficult to grow your own food. And we have learned how to grow. So, we have eliminated anything. We have become paranoid on external food now. We do not take any external food. We grow our own food. If we do not grow our food, we are not eating our food. We have reached that stage. So, for me, the realization is science actually can solve these problems. We need to dump it down the way the farmer can understand. So, that is what we are trying to do in our company.

Utsav Somani: Wishing you the very best on this solid journey. Thank you. Thank you for coming on our show.

Shashi Kumar (Akshayakalpa Organic): Thank you very much. Thank you. I appreciate me being on this show. Thank you.

Utsav Somani: All right, Dhruv. A couple of talking points. So, there is, I mean, PM Modi is on a world tour right now. So, he signed or helped Tata Electronics signed an MOU with the ASMR, which is the Dutch company that effectively owns the global chip lithography market. The asset in discussion is a commercial 300 mm semiconductor fab, which is almost near completion, by the way. It is an $11 billion project in Dholera, Gujarat. The target capacity is 50,000 wafers per month, and they are targeting late 2026 for production. And this company has no global competitor, actually, to be honest. And it is a solid, solid MOU that is signed. Hopefully, it materializes. But for the science behind it, why don't you explain it to me like I'm five? Yes.

Dhruv Sharma: So, this is a very, very consequential company, Utsav. And, you know, you could you might call it the crown jewel of the Netherlands, their entire industry, their, you know, their export basket, essentially. And you're absolutely right. They do have a monopoly on this technology called EUV, where you use extreme ultraviolet light to do what's called photolithography. The previous generation, by the way, they did still have competition, like Canon could do it, a few others could do it as well. And in their own words, I think what the way they describe this is, at the end of the day, these very advanced chips are like miniature skyscrapers, which is to say that they have hundreds of layers and billions of transistors. And if anyone's wondering how those transistors make their way, you know, to the to the wafers and the chips, it's through this photolithography process. And so they have these incredibly large, complex, very, very expensive machines, almost 200 million dollars a machine that, you know, essentially bombard a droplet of tin with plasma with a laser, I'm sorry, turning it into plasma that's almost more than 40 times hotter than the sun. And then they use the EUV or extreme ultraviolet light that gets generated from that kind of boom, what's called a, you know, photo mask onto the chip. And that's how that's how the blueprint gets embedded onto the chip and therefore the wafer. And then they do this over and over and over again. And so but, you know, what this tells us is that our National Semiconductor Mission is now actually starting to think of even the leading edge nodes and not just the trailing edge nodes, because that's when you need these EUV machines. Those are the ones that we're importing. So very, very interesting stuff.

Utsav Somani: I actually did a college trip, as a fun fact, to Netherlands, to this place called Eindhoven. We visited the plant where Philips actually invented the CD-ROM in 1979. That's very good. That was in Netherlands. Yeah, I think it's just an hour drive from Rotterdam. We went in 2012. I think that was a fascinating learning trip. But anyway, I think it's an action-packed news. We're taking a break on Wednesday. Dhruv and I will be back on Friday. But some of the updates that we can look forward to are NVIDIA's first quarter earnings, of course, going to be blockbuster. Google's annual live developer conference, they've flown down a bunch of influencers from India. I think so there is going to be wide coverage around this. Meta platforms is supposed to lay off this week, which is an unfortunate news. And then, of course, the SpaceX Starship is launching on Tuesday. And SpaceX has finalized their ticker as well, SPCX, expected to list on June 12th. So this launch will be exciting to see. Fingers crossed for everything going off well. And we'll see you on Friday. Cheers.