Biobusiness Start-up - iD Fresh Food

July 25, 2021

Biobusiness Start-up - iD Fresh Food

iD Fresh Food

An entrepreneur is an individual who starts a new venture/company or a business, undertaking most of the risks and relish most of the fruits of rewards. An entrepreneur is seen as an innovator, a source of new ideas, services, goods, procedures and business. He or she can also modify existing ideas to benefit the concerned people.

An entrepreneur always looks for possibilities and opportunities to bring something new or modify an existing object/service. They are highly innovative and are good at undertaking risks involved with the task [1][2].

Bioentrepreneurship is the application of biological entities or biological sciences to acquire profit and establish a venture. It employs all the entrepreneurial steps used to establish a functioning and successful company or venture [3]. Since the birth of the modern age, man has been using microbes (and biotechnology, unknowingly) to his benefit and has created various products like bread, beverages etc. and in this current generation, it can be a multimillion-dollar company.

Image A- Biocon, a major Indian bio business conglomerate specializing in pharmaceuticals.

A bio entrepreneur is a person who employs the skills of entrepreneurs in the field of biology and other interdisciplinary fields [4]. They can be involved in the agricultural sector, an owner of a pharmaceutical company, a tissue culture research facility, organic cosmetics company, pickle making startups etc. They have an in-depth knowledge of the product and its best production method.

Keywords: Bioentrepreneur, iD Fresh Food, P.C.Musthafa, Biobusiness, Business model.

ID Fresh Foods: -

ID Fresh Foods is a bio business based on food products situated in Bangalore, India. The company mass produces a range of fresh food items such as idly/dosa/vada batter, chapatis, paneer, curd, tender coconut, parotas, coconut gratings and filter coffee [5].

The company was founded and headed by P.C Musthafa and four of his cousins- Jafar TK, Abdul Nazer, Noushad TA and Shamsudeen TK, in 2005[6] [7].

Musthafa established the company with a capital investment of rupees 50,000. The company began by selling ten packets of 1 kg batter, to 20 stores in Bengaluru under the brand name ‘ID’ (Idly, Dosa) functioning from a 550-square-feet kitchen with a grinder, a mixer, a weighing machine, a sealing machine and a second-hand scooter for delivery purposes.

In 2016, they produced more than 50,000 kg of batter on a daily basis from their units across the country and one in Dubai [8]. The company is currently valued at around 54 million dollars. Currently, they employ more than 2000 youngsters from across India [7].

The company’s latest products include the ID Squeeze-and-Fry Vada Batter, which has been complimented across the world for its innovation and creativity, and Smart Sip Tender Coconut and Grated Coconut in a Coconut [7].

They also launched a Store Finder and Notify Me features that helped the users to purchase the desired product without having to search from store to store. Today the company’s healthy idlis, dosas and other preservative-free and fresh products feed millions of people, in India on a daily basis.

Image B- ID Fresh Foods logo

Image C- Products offered by ID Fresh Foods

P.C Musthafa: -

PC Mustafa, whose native is Wayanad, Kerala, is the CEO of ID Fresh Foods.

He was born to a father who was a daily wager and his mother never attended school. He dropped out of school in 6^th grade and completed his engineering in computer science from NIT Calicut and finished his MBA from IIM Bangalore. He said, “During my childhood, breakfast was a luxury and three meals a day was a dream.”, in an interview [7] [8].

Image D- P.C Musthafa

Musthafa and ID’s journey: -

Around 15 years ago, Musthafa’s cousins were running a household grocery shop (kirana). During this time, Musthafa was pursuing his studies at IIM Bangalore. Shamsudeen, one of Mustafa’s cousins, observed dosa batter being sold in plastic bags tied with a rubber band in nearby stores and also observed the unhygienic conditions in which batter was handled by the shops selling it. So, they thought, ‘Why don’t we do it better?’ and that’s how ID Fresh was born [7].

He and his four cousins then started running operations from a 550-square-feet kitchen with a grinder, a mixer, a weighing machine, a sealing machine and a second-hand scooter for delivery [7]. They started delivering batter to nearby local stores and small kiranas. “Out of 100 packets delivered, 90 were returned and this continued for three agonizing months”, as stated by Musthafa. They decided to give themselves six months to turn things around [7].

Initially while working on the batter complex, a small blast occurred in one of the shops that bought the batter. The shop hadn’t been using any refrigeration and kept the pouches in the open. The shopkeeper called Musthafa and told him about the blast that occurred in his shop due to his batter and luckily no one was injured. When Musthafa took the blasted pouch home, he and his team pondered on why the pouch burst. That’s when he understood the problem of fermentation. He figured out that, due to the pouch being out in the open, the batter had over fermented and led to the burst due to over buildup of carbon dioxide. After this, he started advising every shopkeeper to keep the batter in the refrigerator throughout and also began working on making the pouch durable in extreme cases.

In the meanwhile, they started supplying the returned packets to business-to-business stores at a reduced price, thereby helping them stay afloat until the retail sales picked up. They continued to push their product with retailers as well as consumers. By the ninth month, they were selling 100 packets on a daily basis [7] [9].

By 2009, they had established themselves as a recognizable brand and were supplying 3,000 kilograms of batter to stores in Bengaluru, clocking an annual revenue of Rupees 1 crore [7]. They scaled up very fast and made considerable efforts to hire young talent from remote villages and small towns throughout Karnataka and trained them in manufacturing and sales.

During this expansion, they tried expanding to Chennai, which was one of the biggest challenges Musthafa and his cousins faced [7].

They put nearly all their profits in opening a unit in Chennai, only to face severe competition [7]. They found that the only way they could stay in business in Chennai was if they decide to make a compromise on the quality. But as it went against their motto which is- adopting a 100% -natural, homemade style of preparation, without the use of any chemicals, preservatives, synthetic stabilizers, artificial colours or flavours. Hence they made a tough but prudent decision to shut down the Chennai branch. The 10 lakh Rupees loss was a bad hit but they feared the hit on the team’s morale more.

At a time when the company was facing its worst financial crisis, the team continued to work enthusiastically at one point, even without any salary for three months. Their faith and dedication had driven them to greater heights. From 2012-2014, within months of exiting Chennai, they expanded to Mumbai, Pune, Hyderabad and Dubai [7]. They also introduced new ready-to-cook product categories, including “Malabar parota” and “Whole wheat chapathi”.

In 2014 they received funding of 35 crores from Helion Venture Partners due to their immense popularity among the people [10]. Slowly ID Fresh Food started becoming a family name and gained popularity. In 2017, they received another funding of nearly 25 million dollars from Premji Investment [10].

They also launched the world’s first vending machine for their product and this became a huge hit. This was called the “Trust Shops”. They installed vending machines at apartments, IT parks and corporate offices. There is no salesman or any camera [11]. A person can pick up products like idli-dosa batter, chapatis and parathas, and can place the money at a box placed there. If they were short on money, they can pay whatever they can and pay the rest later. They installed 17-20 such machines throughout Bangalore. They were inspired by the positive stories his team hears every day from customers who trust his product. The team didn’t patent this idea and wanted other companies to follow this trust movement [11].

He then initiated a collaboration with a German company to co-develop a machine that could make 4,500 kg of batter an hour, more than 100 times the output that was given by traditional machines. In 2018, they launched their filter coffee decoction packets, which became an immediate hit in South India and the USA [7].

Image E- Musthafa and his team at a production unit

Business model and functioning: -

They utilize an SAP-based backend platform so that they can maximize a zero inventory model, such that 90 % of the products are sold on the same day [12]. They use a mobile app, that keeps track of the sales patterns in each store and area. He said that they don’t make workers work on an employment basis. They don’t offer fixed pay. Every employee is treated and is expected to work like a micro-entrepreneur. Each area’s sales team is given one vehicle and the team has to maintain their own profit and loss account [12].

According to Musthafa, as stated in an interview with The Hindu, he says that Whitefield, Jayanagar, Indiranagar and Koramangala are the places, in Bangalore, where they do their best business [12].

Latest developments/products by ID Fresh Foods: -

Recently the team has patented their unique squeeze-and-fry vada batter packaging design and they're new Smart Sip Tender Coconut and Grated Coconut in a Coconut idea which redefines the an entire packaging system as it’s one of the eco-friendliest ways of packaging achieved till now [7]. Currently, the company is producing more than 65000 kg batter on a daily basis using cutting edge batter production technology.

Image F- Musthafa at his team’s latest product launch – Grated Coconut in a Coconut.

Awards received by Musthafa and ID Fresh Foods: -

For this successful biobusiness of his, P.C Musthafa has been awarded many prestigious awards like the India Today Make in India award, JCI National Award, Vocational Excellence Award, Entrepreneur India Award, among others [13]. He was invited to Harvard Business School and MIT Sloan Business School to share and educate students on his success story and the challenges an emerging entrepreneur faces [13]. He is part of the Indian Philanthropy Initiative and also works with DIAV for the welfare Army Martyrs’ next of kin. He is also a member of the Prime Minister’s “Champions of Change” team with a perception to build a better India by the year 2022. He has given many ideas for traffic system automation, some of which is a part of the “New India Synopsis” [13].

Conclusion: -

The success story of P.C Mustafa, who is referred to as “The Breakfast King”, is a “take-home message” for all entrepreneurs and upcoming start-ups to learn. Now, his vision for his company is to become a fully organic company that makes organic food affordable and accessible for all. He made us understand that dreaming is a big task, but chasing the same dream is magnificent [7] [14]. For a healthier and greener future, they have decided to invest in smart packaging, by implementing cutting-edge technologies.

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