Namdhari’s eyes up to $30 mn for expansion

New Delhi: Premium grocery retail chain Namdhari’s Agro Fresh Pvt. Ltd is looking to raise between $20 million and $30 million as it looks to scale beyond South India.

Meanwhile, increasing competition from quick-commerce firms and online grocery delivery platforms is also prompting retailers like Bengaluru-based Namdhari’s to boost investments in their brand and scale operations.

“Initially, $20 million to $30 million is the amount that will help us look beyond the south, at least in the first phase. We’ve also just entered Hyderabad to understand what a regional play would look like. We are hoping to pick up maybe some strategic partnerships, whether it’s through any of the strategic players already in the industry or some financial partners, so we can take our business beyond the south. We are engaging in conversations to look at either of those options—whether it’s a strategic partner or a financial partner,” said Gurmukh Roopra, chief executive of Namdhari’s.

The retailer was engaged in talks with Walmart-backed Flipkart for a possible acquisition. However, the talks did not materialize.

The Namdhari’s Group started out as a grower of fruits and fresh produce in the 1970s. Today, it operates as a contract producer of seeds used by over 500,000 farmers, with a large agribusiness. In the early 2000s, the group ventured into the retail business, selling fresh produce from its farm in stores. The first Namdhari’s Fresh store was launched in 2001, while Simpli Namdhari’s was launched in 2019. The stores sell a range of fresh produce, dairy products, staples and other fast-moving consumer goods.

“Retail is capital intensive, especially the front-end part, so it makes sense to join hands with somebody to at least build out the front end. The back-end part isn’t really a challenge because we already have a presence in seed sales and access to a land bank between the south and the western part of the country,” Roopra said.

Namdhari’s currently has a small regional play with 27 stores—most of which are in Bengaluru. It recently entered Hyderabad with a single Simpli Namdhari’s store. The retailer will focus on expanding the large-format Simpli stores. “We feel slightly larger stores give a better experience and help us stock wider assortments,” Roopra said. The company will add 8 to 10 stores in the next 12 months with more Simpli formats in the pipeline.

The share of modern retail in overall retail of daily goods and staples in India is still small compared to the dominance of kirana stores.

Meanwhile, new online formats such as quick commerce have emerged, too, posing significant challenges to incumbents. The pandemic also altered consumer habits, leading to greater adoption of online retail.

Roopra said this has led to a greater “overlap” between offline and online shoppers. “Omnichannel presence for an organization like ours is probably a business requirement and not really an option,” he said. The proliferation of online platforms, backed by private equity funds, has caused “collateral damage” for existing retailers in the market, he said.

“For us, it’s about being more resilient and sharp in terms of our focus, but for sure, it has eroded a lot of opportunistic businesses that we have with our customers. As a result, we’ve focused more on being a bit more of an experience store,” he added.