26 Sep 2016 20:37 IST

With a SunnyBee in his basket

Sanjay Dasari hopes to build a low-on-wastage logistics and supply chain in the fruits and vegetables business

At 6’3”, and a build to match, 22-year-old Sanjay Dasari packs a lot of muscle. These days, Sanjay is packing — well, figuratively — a whole lot of fruits and vegetables for his one-year-old venture, SunnyBee, a chain of six stores across Chennai that sell fresh produce.

One would wonder what a young man, who graduated from Babson College, near Boston, with a bachelor’s degree in business administration and a specialisation in entrepreneurship, is doing in a fruit and vegetable store.

Isn’t the whole world and their uncle plunging into an ‘app’ or tech world? Talking to Sanjay at his cheerful SunnyBee store in Chennai’s upmarket Kalakshetra colony, he disabuses you of any such notion that he’s dabbling in a traditional and age-old business for a lark.

SunnyBee, he avers, is only the front end of the business he’s established. “We researched the industry and saw scope for differentiation in the supply chain as it’s a pure price-play at the front end. We have established a perishable products supply-chain as we saw fruits and vegetables are wasted during the existing transportation methods. In addition, it passes through a large number of aggregators who all perform limited tasks in the supply chain, but add cost and complexity. We saw that there was scope for improvement.”

On that premise, Sanjay and a team comprising a former McKinsey executive co-founded WayCool Foods & Products Pvt. Ltd in July last year, and set about establishing ties with farmers’ associations while also revving up a fleet of trucks.

Outlets

While WayCool has six SunnyBee stores, and many more to come, Sanjay says it will be only one outlet for the fruits and vegetables he sources. “As far as our supply-chain and trucks are concerned, I am agnostic and we will sell through our own branded chain, our competitors’ chains, through wholesale… so long as I can sell more through my supply-chain and have control of it,” he explains. The firm has 10 trucks — all Ashok Leyland’s Dosts.

WayCool sells to about 25 e-commerce and supermarket corporate clients, and about five competing chains. The customised trucks go around to large office complexes and gated communities — they visit over 30 in a week — to sell fresh produce on the spot.

The firm has set up three warehouse hubs around the city, with one at Mahindra World City as well, where it sells through its trucks as well as a SunnyBee store — the best-performing — in MWC’s main shopping hub. Produce is graded, washed, sorted and packed at these warehouses.

Sanjay hesitates to brand his store organic as that takes on too many connotations. But, he avers, SunnyBee is identified with direct-from-source products, some of them organically grown as well.

“So, perhaps, in the future, a restaurant can have a placard which says “sourced from SunnyBee” and you will know that the restaurant is using safe-to-eat unadulterated vegetables,” he adds. WayCool supplies directly to CK’s Bakery, Relish Juices and Amadora ice creams, among others. Sanjay expects more restaurants to start sourcing from his outfit soon.

Locally sourced

The firm has tied up with 85 different farmer organisations and aggregators all over south India, ranging from the Nilgiris, Kodaikanal, Coimbatore, Dindigul, the Hosur belt as well as coastal Andhra and Maharashtra, from whom it directly sources.

Upcountry sourcing is also done, such as getting in pineapples from Shillong, potatoes from Agra and red pears from northern India. Sanjay likes to recount the story of transporting litchis from Bihar. The litchis were transported speedily by truck and air and 2.5 tonnes of the fruit was shipped to Chennai in 16 hours and sold at competitive prices.

“We are trying to build a pan- India supply-chain, but it’s a geographical focused industry for specific fruits and vegetables, so connections we have in the south won’t work in western or northern India. So we have to start from scratch,” he elaborates.

As WayCool is yet to get an import licence, it sources exotic produce from the wholesale market in the Chennai hub of Koyambedu. Green apples, peaches, pears, rambutans, dragon fruit and the like are all sourced from importers. “Once we establish significant scale through all of our channels, only then can we go farther back till we get to the source itself,” he says.

Bringing down wastage

WayCool sells 10 tonnes a day, 85 per cent of it through SunnyBee stores, where at least 2,000 customers troop in daily.

Sanjay believes there’s massive under-utilisation of the existing cold storage capacity as there is no network between the farmer and the retailer. “We have to control sourcing and the retail chain. Only then can we be successful.

“We also started out with high wastage — 30-40 per cent, which is the industry norm. We could send a truck to a location, with 300 kg of stock and may be sell 10 kgs. Now, after demand forecasting and better transporting and handling, we got that down to between 7 and 10 per cent wastage, though our internal target is 5 per cent,” the young entrepreneur explains.

Funding

WayCool’s investors are nine high net worth individuals who are angel investors in the company. “We finished two rounds of funding from them. It’s not a very high cash burn industry. People who understand that it’s a complex industry and know that we have to go deep and establish IPR in the supply chain are the ones who have invested,” says Sanjay. Now WayCool is at a stage where it has been talking to VCs for Series A funding.

Vinod Dasari, Ashok Leyland Managing Director, Sanjay’s father, and an investor, says lack of proper logistics causes nearly a third of the produce in India to go to waste. “Clearly there is a business opportunity if someone can solve this problem. This business by Sanjay was especially interesting because it not only was solving a problem but was doing it in a manner that helps the farmer as well. I expect a minimum of a 10x return in five years.”

Ishwar Subramaniam, another investor, said the idea presented was compelling enough for him to invest. “The promoting team were young, hungry and smart. From then on, it was theirs to lose,” he says.

CK Ranganathan, MD of CavinKare, who’s invested in the second round as well, says he liked the team behind the venture and the fact that they were quick to take to ideas and also change course fast. “They will have to continuously keep increasing the margins while challenging the operational costs,” he says. Ranganathan says he will stay invested in the venture as he’s looking for long-term value creation.

“This industry has not seen a lot of movement as far as VC funding goes, so we need someone who understands the business,” he says. Sanjay expects the project to break even by the middle of next year, when the company scales up from selling 10 tonnes a day to 50 tonnes a day with the current operating and cost structure. And if he does that, “it will be way too cool”.

Why SunnyBee?

With a plethora of ‘branded’ fruit and vegetable chains sprouting up all over Chennai, most of them with ‘Pazhamudhir’ (ripe fruit) emblazoned on their name boards, how does SunnyBee stand out? Sanjay explains that SunnyBee was chosen as an amalgamation of two very important aspects of agriculture - the Sun and the Bee.

“We always wanted to differentiate ourselves as much as possible from the overused word ‘Pazhamudhir’. The sun is very important for obvious reasons, but the Bee, our mascot, is often underappreciated for its role in the world. Without it, between 50-80 per cent of flora wouldn't be possible, as the pollination process happens while the bees collect nectar.”

He hopes his plump mascot on his sign boards will get more customers to troop in to SunnyBee, intrigued by the name. 

How SunnyBee tackled wastage

Dasari’s nascent firm managed to trim its wastage of fruits and vegetables from 30-40 per cent to under 10 per cent, and he intends to bring it down to 5 per cent. A series of measures his firm undertook: 

~~ A much deeper understanding into store-wise buying patterns and procurement planning in line with it aided in forecasting demand. For example, its suburban Nanganallur store has a very different pattern than the Kalakshetra store. Similarly, Tuesday purchases are very different from Saturday purchases. “By understanding the intricacies of what is different and why, we can plan ahead, aim at the particular pattern, and reduce wastage by only stocking what the customer needs,” explains Sanjay

~~ Better processing and handling is also very important. WayCool makes it a point to avoid as much handling or "touches" as possible. It did this by: low cost mechanisation of the warehouse, like roller conveyors, pallet trucks, scissor lifts; produce is handled carefully and hygienically, and not thrown around and moved only in crates.

~~ Simplification of the supply chain wherever possible. It picks up stock directly from the harvest points and delivers directly to its stores through milk runs. This avoids the warehouse, any unnecessary extra touches, and makes sure the product is much fresher. 

~~ Centralised planning of stock combined with multiple deliveries per day ensures that they can keep a buffer/safety stock at the warehouse in case any one particular store needs extra on any given day. This helps avoid wastage and the buffer stock that can be activated on request.