Get full access to one story every week, and to summaries of all other stories. Just create a free account

Say, you’re a biscuit manufacturer. Your main ingredient, wheat, is available at its best price and quality in April, right after harvest. But you’re not a large manufacturer, and can’t afford to pay for it upfront. You need a loan.

But what if, rather than a bank, investors gave you the loan instead? 

Unlike a bank loan, this would mean that investors owned the produce until you actually wanted it, and the transaction would not show up as debt on your balance sheet. You’d also have the flexibility of buying the produce from the investors at any time within the predetermined time frame. In contrast, bank loans require fixed payments at regular intervals.

This is what 10-year-old agritech startup Origo Commodities is trying to do. It’s pitching an alternative to bank loans for traders and buyers of produce to finance their purchase. This alternative, the first of its kind in India for agricultural produce, is securitisation.

In October 2020, along with its financial services partner Vivriti Capital, it securitised Rs 4.7 crore ($640,000) of maize. Origo sourced the maize in Gulab Bagh, Bihar, and raised money from investors, who paid for the product. In return, the investors were promised 12% interest per annum at the end of one year.

Right now, only agri-finance institutions have invested, says Sunoor Kaul, co-founder of Origo. However, the company’s long-term aim is to enable individual investors to park their money in farm produce for a fixed return, he adds.

Nearly half of Origo’s Rs 295 crore revenue for the year ended March 2020 came from procuring and warehousing more than 20 commodities for clients. From grains such as rice and wheat to vegetables such as lentils and soybean. The company has more than 500 warehouses across 12 states, storing produce worth $1.4 billion.

Securitisation is an additional revenue stream for the company, apart from warehousing and trade finance (giving loans to manufacturers, traders and buyers). Origo and Vivriti get between 1-1.5% of the total value of produce to be procured by the buyers as fees.

However, even though agriculture and allied sectors is a $276 billion $276 billion IBEF Agriculture in India: Information About Indian Agriculture & Its Importance Read more  industry, there are limitations. If short-term agri loans are to be an attractive investment for investors, the rate of return would have to be high. But increasing the rate of return would make it less lucrative for buyers to seek investors in the first place. 

Origo’s transaction also needs to achieve the highest rating awarded by credit rating agency ICRA (formerly Investment Information and Credit Rating Agency of India) in order to get better investors.

AUTHOR

Shreedhar Manek

Based in Bangalore, Shreedhar is a Staff Writer for The Ken. He writes on technology, education, human resources and urban mobility. He has a BTech in Computer Science and an MS in Urban Sociology from IIIT Hyderabad.

View Full Profile

Subscribe to read this story

The Ken is the only business subscription you need. Questions?

 

Premium

  • 5 original and reported longform business stories every week
  • Access to ONLY India edition
  • Close to 250 exclusive stories every year
  • Full access to over 6 years of paywalled stories
  • Pick up to 5 premium subscriber newsletters
  • 4 original and reported longform business stories each week
  • Access to ONLY Southeast Asia edition
  • Close to 200 exclusive stories every year
  • Full access to all paywalled stories since March 2020
  • Pick up to 5 premium subscriber newsletters

Rs. 2,750 /year

$ 120 /year

India Edition
Subscribe Subscribe
Most Asked For

Borderless

  • 8 original and reported longform business stories each week
  • Access to both India and Southeast Asia editions
  • Close to 400 exclusive stories every year
  • Full access to over 6 years of paywalled stories across India and Southeast Asia
  • Unlimited access to all premium subscriber newsletters
  • Visual Stories

Rs. 4,200 /year

Subscribe
 

Echelon

  • 8 original and reported longform business stories each week
  • Access to both India and Southeast Asia editions
  • Close to 400 exclusive stories every year
  • Full access to over 6 years of paywalled stories across India and Southeast Asia
  • Unlimited access to all premium subscriber newsletters
  • Visual Stories
  • Bonus annual gift subscription
  • Priority access to all new products and features

Rs. 8,474 /year

Subscribe
Or

Questions?

What kind of subscription plans do you offer?

We have three types of subscriptions
- Premium which gives you access to either the India or the Southeast Asia edition.
- Borderless which gives you complete access to The Ken across both editions
- Echelon which gives you complete access to The Ken across both editions along with a bonus gift subscription

What do I get if I subscribe?

The Premium edition gives you access to stories in that edition along with any five subscriber-only newsletters of your choice.

The Borderless and Echelon subscription gives you complete access to The Ken across editions and unlimited access to as many newsletters as you like.

What topics do you usually write about?

We publish sharp, original and reported stories on technology, business and healthcare. Our stories are forward-looking, analytical and directional — supported by data, visualisations and infographics. We use language and narrative that is accessible to even lay readers. And we optimise for quality over quantity, every single time.

Our specialised subscriber-only newsletters are written by our expert, award-winning journalists and cover a range of topics across finance, retail, clean energy, cryptocurrency, ed-tech and many more.

How many newsletters do you have?

We are constantly adding specialised subscriber-only newsletters all the time. All of these are written by our team of award-winning journalists on a specialised topic.

You can see the list of newsletters that we publish over here.

Does a Premium subscription to your Indian edition get me access to the Southeast Asia edition? Or vice-versa?

Afraid not. Each edition is separate with its own subscription plan. The India edition publishes stories focused on India. The Southeast Asia edition is focused on Southeast Asia. We may occasionally cross-publish stories from one edition to the other.

We recommend the Borderless or the Echelon Plan which will give you access to stories across both editions.

Do you have a mobile app?

Yes! We have a top-rated mobile app on both iOS and Android which allows you to read on-the-go and has some amazing features like the ability to bookmark stories, save on your device, dark mode, and much more. It’s really the best way to read The Ken.

Is there a free trial?

You can sign up for a free account to experience The Ken and understand our products better. We’ll send you some free stories and newsletters occasionally, and you can access our archive of previously published free stories. You can stay on the free account as long as you’d like.

The vast majority of our stories, articles and newsletters can be accessed only by a paid subscription.

Do you offer any discounts?

Sorry, no. Our journalism is funded completely by our subscribers. We believe that quality journalism comes at a price, and readers trust and pay us so that we can remain independent.

Do you offer refunds?

No. We allow you to sample our journalism for free before signing up, and after you do, we stand by its quality. But we do not offer refunds.

I am facing some trouble purchasing a subscription. What can I do?

Just write to us at [email protected] with details. We’ll help you out.

I have a few more questions. How can I reach out to you?

Sure. Just email us at [email protected] or follow us on Twitter.