How did Paras Spices start?
We have been a supplier of spices, seasonings and condiments to leading brands in the food industry for more than 30 years now. Our foray into the spice business from a small grocery store set up by my grandfather (late) Krishan Lal, in 1982 in Moga, happened quite by chance when Nestle India approached us for a spice mix for their instant noodles brand, Maggi. We started by supplying small quantities, and eventually established a fullfl edged spice business over the years.
In 1991, my grandfather laid the foundation in Moga for one of the most advanced spice processing plants in the country. Nestle India’s first factory was also set up here. Ten years later, the plant was upgraded and equipped with the latest state-of-the-art machinery. Today, directly or indirectly, our products are being consumed by every Indian customer, either through his/her favourite noodles or potato chips brands. Today, our clients include leading names such as PepsiCo
, Delmonte, Parle, McCain Foods, International Flavours & Fragrances, Kerry Group
, Mane India, and Marico.
How has the company grown in the last few years?
My father Viney Budhiraja, Managing Director of the company, is leading the company, and I am the third generation to be actively involved in the business. For the last four to fi ve years, our company has been growing at over 25 percent year-on-year. We have not only grown in volumes but have expanded our portfolio as well by entering into new verticals such as herbs, seasonings, and chicory, and we have also introduced our private labels in some categories.
We anticipate growth to accelerate once the global recession in the food industry subsides. Besides, the company plans to invest Rs 200 million in facility expansion, following which, it will reach new heights.
What is the current status of the packaged spice market in India?
According to industry analysts, the spice market in India is currently estimated to be around USD 6 bn, of which only 15 percent is packaged. Supply to the foodservice and B2B segment constitutes almost 70 percent of the total spice consumption. There is no single brand in the country that uniformly leads the market, as there are several leading regional players in markets across the country.
The biggest opportunity, and challenge, lies in shifting consumer preference from the unorganised sector to the packaged, organised segment. A large number of people still prefer buying loose spices, and many prefer fresh spices grounded at a small grocery store or at home. This trend is more prevalent in tier II and III cities, although organised sector is making inroads into these cities as well.
How has the evolution of modern trade helped grow the spice segment?
Modern trade has actually made customer the king! Its evolution has helped in expanding the basket of choices. Earlier, customers had few choices, and since products were not displayed for self-service, they bought whatever was sold to them by the shopkeeper. Few choices meant hardly any competition, so quality checks were ignored, and customers had to bear rampant adulteration of unpackaged spices. The advent of modern retail has led to packaging of spices with labels indicating their manufacturing and expiry dates, and there is hygiene and cleanliness.
No doubt, the situation is changing, but it’s only the beginning. Today, the customer has a lot of brand choices, both national and private label brands, and they are willing to pay for quality and spices that are unadulterated. The state governments have also come down sharply on retailers selling loose, open spices, which are cheaper, and adulterated in most cases. With the improvement in supply chain facilities and increase in competition, the quality of products has also improved signifi cantly.
Which product categories and industries contribute the most to your sales?
We have divided our business into two segments: the first is spices and condiments, which generate 90 percent of our revenue. The second segment is tailor-made spice-mixes or seasonings, which contribute 10 percent of the revenue. Our maximum sales comes from the snacks market – 35 percent of the revenue; the culinary industry generates 50 percent; our supplies to fl avouring companies, 10 percent; and the remaining 5 percent by other categories that are now using spices and herbs to spice up their products.
What is your processing capacity?
Paras Spices has a complete in-house spices and food solution facility that produces high quality spices from gate-in to gate-out. We have two production units in India: one at Moga, Punjab, and the other at Pantnagar in Uttarakhand. The fully mechanised 1.50 lakh sqft Moga plant has an annual capacity of producing approximately 15,000 MT. The 20,000 sqft Pantnagar plant has a capacity of 2,000 MT. We have the latest technologies at both the plants. We are currently in the process of investing Rs 200 million towards further modernisation of the Moga plant, and in the diversifi cation and expansion of our business. This investment in the plant will almost double its capacity.
What are the processes involved in developing a new product?
We have a fully equipped lab and a team of specialists in Delhi and at our plant in Moga, which support the R&D requirements. We have a team that looks into the development of spices, and another takes care of the research and development of new products such as spice-mixes, seasonings, etc. Our workforce is trained by us to maintain quality and consistency of the products at every step. In case of specific customer projects, our specialists work closely with the customer. All our processes are designed to optimise development and launch of new, improved products rapidly into the market. Our R&D division also collaborates with external scientists and institutions, when required.
Where do you procure the raw materials from?
We procure different spices from different regions depending upon the variety of crop grown in a specific region, its specification, season and availability. For instance, we source chillies from the Guntur region of Andhra Pradesh; turmeric comes from Salem in Tamil Nadu; and coriander from Rajasthan. Sometimes, within the same area, variants of the same spice can be found, which we source. We even import some herbs and spices from different countries.
India is the world’s largest grower, producer, consumer, and exporter of spices. Even then, sourcing is one of the most challenging tasks in the industry. The challenge lies not in the quantity of ingredient to be sourced, but in finding the right quality. The post-harvest facilities and the storage conditions are so poor in the country that the quality of the products often deteriorates. Quality is further compromised by bad soil, environmental imbalances, poor quality of the water, and excessive use of pesticides.
We have warehouses at several sourcing destinations for storage, and we also undertake contract farming of certain products, which gives us control of the quality right at the farm level. Our procurement team is always exploring new areas for sourcing, and they also engage with traders and farmer communities for spices that adhere to our stringent specifi cations.
Please specify your company’s quality assurance initiatives and standards.
We believe that quality is the responsibility of one and all, and must not be compromised under any circumstances. By focussing on quality management from farm-to-fork, we ensure that our finished products are safe for consumption. We are ISO 22000 certified by Intertek. Our clients have given us a score of 98 percent in terms of quality, and were awarded ‘best vendor’ over the years by several clients, including Pepsico in 2012. We are also SEDEX certified which requires utmost compliance with Human Rights and Factory’s Act. Compliance with all these acts and standards has earned us the FSSAI certification as well.
How is the brand positioned in the domestic and foreign markets?
Being an ingredient and customised solutionproviding company, right segmentation and promotion is very important for us. As of now, our products are being used in 70 percent of the top 20 food MNCs in India. We have created brand awareness through exhibitions, trade events and advertisements in food magazines, but the best promotion has been through word-of-mouth by our clients.
We have been exporting the USA, UK, South Africa, Malaysia, Egypt, UAE and to our neighbouring countries. Currently, exports constitute only 15 percent of our sales, but with expansions in our plants, etc, we hope to atleast double exports over the next two years. Going ahead, in the next 12 months we will enter untapped markets such as Japan, Russia and some Latin American countries.
What are your future plans?
Our first objective is to retain and increase the market share in our existing client base. We will focus a lot more on herbs and seasonings where we see a lot of opportunity as people’s tastes are also changing and they are exploring exotic and international dishes as well. We are also enhancing our distribution channels for the foodservice sector, especially overseas. For this sector, we will be launching some specialised ingredients in Delhi and NCR initially by the year end, and are in talks with some five- and seven-star hotels.