Hyderabad: Origo, an agritech supplychain and trade finance company, is working to remove intermediaries in commodities by launching an e-auction platform that will connect buyers, sellers and lenders. This blockchain-based platform will make transactions transparent, said Sunoor Kaul, Co-Founder of Origo.
“Warehousing is a focus area for us. We have been doing for the last ten years of our journey. We do it for government and private entities. We also do trade finance. We essentially finance the processors in terms of the purchases they make at the time of the harvest. We will be able to reach farmers at no expense through the e-auction software that will be up in a few months. The expenses will come down and there will be a disintermediation,” he said,” he said.
Its two arms, Origo Commodities and Origo Finance, have raised Rs 15 crore and Rs 20 crore respectively in October from capital investment firm Northern Arc Capital, and others. So far, Origo has managed 25 million tonnes of commodities and aided in reducing food grain wastage of 3 million tonne. Origo Commodities, under its warehousing, manages assets worth Rs 8,500 crore and is present in 12 states in India. Through its trade finance platform, TradeFi, Origo enables trade and trade finance for better price discovery and a national platform for agri commodities.
How does trade finance work?
Origo buys commodities like paddy on behalf of processors. It takes an upfront security from processors so that they do not default on the contract. Origo will keep the paddy for 10 to 12 months or till the time that it ages properly and they need it. The processors pay a carrying costs to cover warehousing, exchequer and administration costs. They lift the stocks at the end of contract. The processors get the paddy at the cost that it was purchased and do not suffer any market volatility.
Revenues in the previous year from trade finance were Rs 165 crore. From warehousing segment, they were about Rs 130 crore. “This year, we plan to up trade finance to about Rs 350 crore. Revenues from warehousing will also grow a little bit as we connected more buyers and sellers,” said Kaul adding that it supports starch, rice bran, poultry, flour mills and other industries.
“We can offer warehousing management to Governments and also provide them our warehouses for stocking, mainly for public distribution stock,” he said. It has about 30 lakh tonne capacity and an asset-light model due to to the seasonal nature of the commodities.
It is in talks with multiple banks and NBFCs to be part of the efforts to build an agri-eco system.