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ReshaMandi clears the air around biz model, funding talks, defaults and debt recovery


ReshaMandi’s business and scale seemingly look quite lucrative as the company claims Rs 1,900 crore in gross revenue in FY23, almost 92X to its Rs 20.6 crore income in FY21. Its growth in the past two years also went well with investors and it raised $52 million to date.

While these numbers indicate that ReshaMandi is on track to becoming a rare success story in the agritech space, there have been talks in the market around its business model, accounting practices, and Temasek walking out from a potential funding round after engaging for months.

To clear the air on these topics and understand its business model better, Entrackr spoke to ReshaMandi’s co-founder and CTO Saurabh Agarwal. 

ReshaMandi operates three entities — ReshaFarms, Yarns and Weaves. We have heard that ReshaMandi books revenue at all three entities. Is that the reason for ReshaMandi’s hyper growth?

Saurabh: To be fair, there is no revenue inflation and each leg (entity) is an independent business for us.  We don’t do contract basis manufacturing. We take produce from farmers and give it to ginners or yarn manufacturers. Further, they gin it or make yarn out of it, after that they are free to trade anywhere including us. It is an open ecosystem. This is how the entire ops stacked up. So, I don’t think there is any inflation of numbers or anything.

Importantly, the receivable at each leg is different. It’s not like it’s stacked up and at the end the money is only coming from the retailer’s side or the brand’s side. Each leg is an independent business. Our FY23 revenue recognition has also been endorsed by our auditor Grant Thorton. We have had multiple audits by PWC and Deloitte and they didn’t find any issue with our revenue booking practices.

We have heard that ReshaMandi has been encountering severe challenges in collecting several hundred crore [to the tune of Rs 500 crore] payments from retailers in India. Could you please comment on this?

Saurabh: We have to collect some payments but it’s not to the tune of Rs 500 crore. These payments have been stacked up in the last three fiscal years and are a normal course of business. The quantum of recovery isn’t more than Rs 250-300 crore.

Has ReshaMandi defaulted on loan EMIs to Chennai-based NBFC Vivriti Capital and HDFC Bank?

Saurabh: We have closed FY23 without any defaults or anything. Right now, I am not sure about our current lending position [FY24]. 

Temasek was in talks to lead a new funding round in ReshaMandi but they pulled off after due diligence. Could you tell us what happened?

Saurabh: We were and are actively looking for investments from the right partners. Those talks are still going on. We were in late stage conversations with Temasek but then macro economics turned south.

So, Temasek said that they will revisit the deal after a quarter. That’s all it was, nothing else. They didn’t pull out. We are still engaged with them.

(A Temasek spokesperson told Entrackr, “As a matter of policy, Temasek does not comment on market speculation or rumours.”)

Sources indicate that ReshaMandi also explored M&A opportunities. Can you confirm this?

Saurabh: We haven’t yet explored any M&A opportunity and our goal is to build a long lasting business with solid fundamentals. 

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