Arya.ag, a leading Indian agritech company, has attracted investor attention with its innovative approach to providing storage facilities near farms and offering lending services to hundreds of thousands of farmers. Despite the challenges of falling global crop prices, Arya.ag has remained profitable and continues to thrive in a volatile commodities market.
The investor interest in Arya.ag has resulted in a successful all-equity Series D funding round led by GEF Capital Partners, raising a total of $81 million. More than 70% of the funding was allocated as primary capital, with the remainder coming from secondary share sales, according to the company.
Globally, agricultural commodity prices are on a downward trend, posing risks for businesses in the sector. Factors such as extreme weather events, rising input costs, trade disruptions, and policy shifts related to biofuels have been highlighted by the World Bank as ongoing challenges in agricultural markets. Despite these obstacles, Arya.ag has managed to mitigate risks by avoiding direct commodity speculation and implementing a resilient business model that can withstand price fluctuations.
Established in 2013 by former ICICI Bank executives Prasanna Rao, Anand Chandra, and Chattanathan Devarajan, Arya.ag focuses on empowering farmers by giving them greater control over the sale of their crops. The company’s innovative approach involves providing storage facilities in close proximity to farms, enabling farmers to access loans against stored grain for immediate financial needs, and connecting them with a diverse range of buyers in the agricultural industry, from corporations to processors and millers. This strategy helps farmers avoid the pressure to sell their produce immediately after harvest when prices are typically lower.
A key differentiator for Arya.ag is its operational scale, which sets it apart from traditional lenders and agribusiness platforms. The company handles storage and financing for approximately $3 billion worth of grain annually, representing around 3% of the national output. Additionally, Arya.ag facilitates about $1.5 billion in loans each year while maintaining a low rate of bad loans (gross non-performing assets) of less than 0.5%, even amidst price fluctuations.
Arya.ag adopts a cautious lending approach by only disbursing a portion of the value of stored grain and closely monitoring price movements to avoid potential losses. Borrowers are required to respond to margin calls by repaying part of the loan or adding more grain as collateral, ensuring the security of the lending process.
