Battered by a rough childhood and moulded by values of a village life, PC Musthafa was driven to build a venture where money was made in the right way, for the right cause. The proof is in the batter
PC Musthafa, co-founder and CEO, iD Fresh Food, at one of the ginger farms where his father and he worked in Chennalode village, Wayanad, Kerala
Image: Arun Chandrabose for Forbes India
Bengaluru, 2010. The business was getting battered on two fronts. First was the inability to expand the frontiers of the idli-dosa venture beyond Bengaluru. PC Musthafa knew that the failure to do so had nothing to do with the product. In fact, it was the superior quality of the batter that made iD Fresh Food—the venture started by Musthafa and his cousins from a 50 square feet kitchen in 2005—a name to reckon with in the software capital of India.
Back in 2005, the brothers were convinced that batter was the best business option for them. There was a pressing need and huge demand for superior quality of batter. The supply, though, was unreliable and unorganised. The kirana background of the four cousins, who ran a pocket-sized grocery store in Indiranagar in Bengaluru, and the enterprising mindset of the maverick IT professional—Musthafa had a few job stints in Europe, the Middle East and India, including Citibank in Dubai and Intel in Bengaluru—prodded them to take a stab at the problem. They made a humble beginning with a grinder, mixer, sealing machine, weighing scale and a second-hand Scooty, and ended the first year with a modest collection of ₹8 lakh. Over the next three years, the revenue jumped to ₹50 lakh. The business was moving at a brisk pace.
Then came the big Chennai experiment in 2009. iD was selling around 3,500 kg of batter in Bengaluru, and the aspiration was to go to the Mecca of idli-dosa: Chennai. Musthafa moved swiftly, invested all the savings of the company—₹20 lakh—opened a plant in Chennai and launched batter at ₹40 per kilo. The move flopped. Rivals were selling batter at half the rate, some even lower than ₹20 per kg. “Forget profit, their MRP was not even the cost of my raw material,” rues Musthafa, who didn’t want to play the price game. After over a year or so, iD exited a profusely bleeding Chennai market.
The bombing of the Chennai experiment had another devastating collateral damage. iD started losing ground on the home turf, Musthafa didn’t have any capital to expand, and the option of taking a bank loan was never an option to begin with. Musthafa explains. “We don’t pay interest, we don’t take interest. It’s against our ethical values,” he says. EMIs, he adds, are one more reason to shun any kind of loan, and kill creativity in individuals and businesses.
So, iD stayed confined to Bengaluru, there was no bank money to tide over the crisis, and raising capital was well-nigh impossible. This was a serious problem on the second front. “Idli-dosa was not a fancy business,” rues the first-generation entrepreneur who did his MBA from IIM-Bangalore. “If I had started a pizza business after my MBA, many would have invested,” he says. The business indeed had a problem in terms of sizing by the venture capitalists (VC). “They were not sure of the size,” says Musthafa. With VCs staying away and the founder failing to get money to grow the business, iD was in the midst of a brewing crisis. The batter play was becoming too thick.