Musthafa P C was born into a poor farming family in Chennalode village in north Kerala. He did badly in class 6, which provided the jolt he perhaps needed. He applied himself to an extent that he got into NIT, Calicut, and then a job with first Motorola and then Citibank. He then did an executive management programme at IIM-Bangalore, which is where the thought of starting a venture of his own struck. Sitting at a kirana store that his cousins ran in Bengaluru, he had noticed the poor quality of idli and dosa batter and its irregular supply. That was the genesis of his now Rs 100-crore ID Fresh Food. He started with batter in 2008, but is now into parota, chapati, paneer, and curd and sells across multiple cities in India and the Persian Gulf. Last week, ID secured a third round of institutional funding – of Rs 170 crore from Premji Invest – that valued the company at $100 million.
What were the challenges in the initial days?
I and my four cousins started this. At the time of incorporation, we were one of those rare branded batter players. Even for retailers and consumers, this was a new concept. We were not sure how it would work out. We learned a lot during the first year of operations, like the impact of seasons on the quality of batter and the product consistency. Today our biggest challenge is to convince customers that anything that comes in a packet is not 100% pure, and can be unhealthy.
How do you see the competition from private equity-backed players like MTR and lately, Adyar Ananda Bhavan (A2B)?
Our USP is that this is how your grandmother makes it at home. So we don’t compete with players selling batter powder.
When did you realise this would become a big business?
I did all the market research when I was at IIM-Bangalore. We never thought this would become such a large business, though we were confident about the category. Around 2009-10 is when we realised that we are growing fast and brought in industry professionals into the company.
You began the journey with cousins. How difficult was it to transform it into a professionally run company and get venture capital for expansion?
One good thing about us was that we knew each other well from our childhood days. We kept family and business separate. There was no dispute and we all shared the same family value system. We debate. We were getting inbound interest from VCs from 2009-10. In 2012, we developed expansion plans and for that we needed funding. We were a zero debt company and continue to be. We are high on ethics. As a matter of philosophy, we don’t pay interest and we don’t take interest-based loans. This (VC funds) was an interest free option.
Was there a moment when you thought of shutting down?
In 2009, when we started our second plant in Chennai, we got a little too confident about the brand. We had not done enough market research. We ended up burning a lot of money. There were much cheaper options and a lot of competition from unbranded players in the city. We lost all the money we invested and our savings, and we shut the Chennai factory and business. Thankfully, we took the decision fast enough, so it did not impact our overall business health. We re-entered Chennai in 2013. This time we were better prepared. We launched parota first and through that we built our brand. Today Chennai is a Rs 25 crore business.
People from north Kerala have been successful in Bengaluru, with many running bakeries and super markets. What makes them tick?
We did not have a business background, apart from a small shop my cousins ran. We all came from poor backgrounds. Three meals a day was a luxury. In that situation, you learn a few things. Personally, I wanted to give employment to rural kids. Today our company supports 1,400 families. Around 35% of the people we employ are from our village.
What has entrepreneurship taught you?