BUSINESS CASE STUDY & PRESENTATION

INSTRUCTIONS

 A Business case study is a simulation of a real-life business or company.

 You are required to go through the case and situations, data etc. given in the case study
docket. A fictitious company, its background, facts, figures and other related information
has been provided.

 As part of this assessment, your role, and expectations from you have been detailed out
in the last section of this document.

 You are required to provide your recommendations in the response sheet which has
been provided to you. In addition, you are also required to make and present your
recommendations to the ‘Executive Committee’ (i.e. the Assessors).

 Please feel free to draw upon your knowledge of the industry and business to support
your responses. You are free to make any assumptions, however, please note these
down in the response sheets.

 The total duration of this exercise will be 3 hours. Post completion, please upload your
responses in your respective folders.

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 KHETI BADI PRIVATE LIMITED

Established in the year 1967 by two brothers, Shiv Pratap Singh and Surya Pratap Singh,
Kheti Badi Pvt. Ltd. (KBPL) today is recognized as one of the pioneers in the agriculture
industry. Set up amid humble beginnings in their village Pahad, in the Mehmedabad Tehsil
of Kheda district in Gujarat, the two brothers had started off with the cultivation of groundnuts
on their meagre farm holding of 1.2 Ha. Today, KBPL is one of the leading conglomerates in
the agriculture industry with a strong brand name, cash reserves of over INR.180 crs. and
a strong farmer base of over 15,000 farmers.

KBPL had been growing steadily till such time the next generation of aggressive owners took
over from their fathers and decided to adopt the path of inorganic acquisitions and
accelerated growth. During the decade of 2004 – 2014, the company grew by over 60% in
terms of its revenue and its farmer and dealer base grew by over 100% and 120%
respectively. These acquisitions also enabled the company to expand its reach from the
West, to Central and Southern parts of the country as well. While the Western region
continued to remain the primary business base, contributing to ~55% of business revenues,
the Central region followed with ~33% contribution and Southern region with ~12%
contribution to revenue.

Business Standard in March 2019 reported “KBPL is emerging as one of the fastest growing
conglomerates in the agriculture industry, contributing significantly to the growth of the
agricultural sector in India, and more importantly to the growth and development of the
farming community in the country. Anshuman Pratap Singh, the company’s Managing
Director, seems to have earned himself the title of the “Midas of the Agriculture Sector”,
converting every company and opportunity he lays his hands on into green gold.”

In a recent interview with Business Express Timely, Mr. Anshuman Pratap Singh made bold
statements regarding the strategic direction and growth plans of the company. “Our long-
term goal is to unlock the growth potential of Indian agriculture as a global producer &
exporter of food, feed and fibre. Investing in new age cutting edge technology and equipping
the hands that feed us to do more with less, will help enable this. Over the next few years,
KBPL will have strengthened its reach in India and overseas and will be setting the base for
strategic acquisitions to enable this end.”

From a related interview with the Tech Insider, Mr. Ayush Mittal, the Chief Technology
Officer of KBPL, seems to have hinted on the transformational efforts that the company had
started working on in order to revamp and strengthen its technology landscape. Business
Analysts speculate that for KBPL, the next 1.5 years would be key and, whether the

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outcomes of this transformation would yield dividends, would be evident only post this
period.

KBPL’s Inorganic Growth Story

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2004-2006: KBPL purchased the field crop seed business from Green Growers for INR. 100
crs. The field crop seeds business purchase specifically included - Cottonseed and their
Soybean seed business (including Nano Soya brand soybeans and their HPPD-tolerant
technologies).

Benefits of the Acquisition:

This acquisition helped in expanding KBPL’s reach and positioning in the Central region of
the country. With less than 5% of revenues from Central India and negligible presence,
KBPL with this acquisition was able to set up a strong base in Central India. Projected
revenue growth was estimated to be 40% as a result of this acquisition.

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2010-2014: During this period, in a strategic move to mark its entry into the Southern region
of the country, KBPL made two acquisitions.

Akruti Seeds: The acquisition of Akruti Seeds, though ridden with challenges, was a hostile
takeover that proved to be worth every penny for KBPL. Akruti Seeds had an unpaid loan
base and mortgaged assets amounting to INR. 200 crs. To add to it, the recent demise of
the owner and the company’s management being taken over by his rather naïve and not so
business savvy son, made things even worse.

Akruti Seeds was key, and the acquisition made sense for KBPL so that it could enter into
the Southern region of the country. Moreover, the acquisition enabled addition of paddy,
chilli, sunflower and cotton to KBPL’s existing product base.

Rao’s Research & Technology Labs: The takeover of Rao’s Research & Technology Labs
augmented KBPL’s research capabilities. The company had close to 20 patents and was
now beginning to focus on farming in dry lands and un-irrigated areas. Some of the
noteworthy patents credited to Rao’s research and innovation were in the following areas:

Planting, sowing, fertilizing techniques - 3 patents

Method for inducing improved seed germination – 4 patents

Plant reproduction using tissue culture technique – 7 patents

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Hydroponics – 3 patents (upcoming area where Rao’s Labs is investing time and money)

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KBPL’s Product Portfolio & Revenue Contribution Per Product

15%
30%

20%

10%
15% 10%

Groundnuts Paddy Chilli

Sunflower Cotton Soya bean

Mr. Sangam Mookerjee, KBPL’s Production Head has been associated with the company for
over two decades. He has played a significant role in enabling the sales of the organization
by meeting all demands effortlessly. This has mostly been possible due to the strong familial
network of growers that he has built over the years and who continue to remain loyally
associated with the company. In fact, it is believed that as long as Mr. Mookerjee is with the
company, KBPL will always have enough growers to meet any increase in demand for their
products.

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AGRI-TECHX PRIVATE LIMITED

Founded in the year 2009, Agri-TechX is a leading player in the agriculture research and
technology space and has been playing an integral role in the growth and adoption of
innovative agricultural practices that help farmers enhance their productivity and enable
them economically. Over the last many years, the company has focused on innovation led
agricultural solutions.

1. Seed Space: Agri-TechX provides tech-enabled warehousing and supply chain solutions
for farmers. It provides a mobile-based platform for farmers to book warehouse space and
know the status of their stock. Also, provides information on market trends, prices, etc. and
helps them set prices for their produce. It provides micro-warehousing services for farmers
within a range of 3-4 km. It also provides transportation and quality check services while
procuring the produce. It primarily focuses on paddy, wheat and maize crops.

2. Tazza Khaana: Recently, Agri-TechX launched its much awaited online platform for
wholesale buyers/retailers to procure their groceries, fruits, and vegetables from
producers/manufacturers directly. Tazza Khaana leverages the Seed Space business and
makes use of its logistics and farmer client base to provide services to end-customers in
towns and metro cities. Within 6 months of launch, Tazza Khaana was able to register a
customer base of over 10,00,000 users from across the country.

3. Automation System for Visual Checking Process: Agri-TechX has been working with
companies to automate visual checking in manufacturing, food and agriculture industries. Its
solution, TechX Vision is a post-harvest solution that assists in visual checking of produce
ready to be packaged and sold, using high-speed infrared technology and machine-learning
algorithms.

4. Gyaan Vigyaan Ki Baatein: A relatively small yet very profitable offering for Agri-TechX
is its Gyaan Vigyaan Ki Baatein – an app which has more than 2,50,000 farmers subscribed
to it. From providing farmers with details regarding improved agronomical practices, weather
conditions basis farmer locations (gprs enabled), reminders to check health of their soil /
farm/ crop, government announcements, to offering a voice enabled virtual assistant to help
them plan for the season and answer any questions which they may have, this application is
the one stop solution which has quickly found itself in the hands of many farmers.

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CURRENT SCENARIO

1. KBPL recently concluded its annual strategy meeting at Mumbai. Excerpts of the minutes
of the meeting are available.

KBPL’s Annual Strategy Meeting with the Executive Committee

Minutes of the Meeting – Key Highlights

Date: 24th April – 25th April

Location: Mumbai

Meeting Title Annual Strategy Meeting

 Mr. Mahesh Kulkarni’s (Chief Sales & Marketing Officer) proposal to

double the strength of the existing feet on street was presented
 Plan to expand reach and presence across villages – likely coverage
expected is 10,000 villages
Key Highlights # 1
 Investment – INR. 50 crs.
 Timeline – 4 years
 Detailed business plan to be submitted to the Ex Co and decision to
be made post evaluation
 The HR Head in response to the increase in sales force proposal has
suggested alternate employment models to further lower employee
Key Highlights # 2 costs while yet increasing feet on street
 Financial projections and the detailed plan is to be prepared and
submitted by the HR Head during the next quarterly Ex Co meeting
 Brief discussion on a new scheme launched by the Centre
 The Government has launched Unnati – a scheme to focus on
Key Highlights # 3 technology inclusion and to bring technology to the hands of our
farmers. It is investing INR. 1,75,000 crs. towards this initiative and is
encouraging companies in this sector via substantial sponsorships

2. KBPL is in talks to take over / purchase a significant portion of equity stake in Agri-TechX
company. The details are yet to be validated regarding how the deal is likely to be

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structured, however it is started that the owners are looking for an all cash deal of ~INR.
180- 200 crs.

3. Unconfirmed news from sources reveal that KBPL and Agri-TechX are in talks to develop
an unseen unheard of technology solution based on image recognition technology. Of the
little that is known on this topic, it is believed that the image recognition technology to be
developed by the company would be capable of recognising objects, faces, flora fauna and
tagging them, thereby helping farmers and related companies significantly.

4. Sources close to KBPL’s MD state that this deal with Agri-TechX will solidify KBPL as one
of the global leaders in farming technology and strengthen their position as a full line partner
for farmers across the country and the globe.

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ADDITIONAL INFORMATION

KEY AGRICULTURAL CHALLENGES IN SOUTH & CENTRAL INDIA

 Problem of small and fragmented land holdings is serious in the Southern parts of the
country where the average size of land holdings is less than even 0.5 Ha.
 Small size of land holdings has also obstructed adoption of large scale mechanisation,
resulting in wastage of human labour and low yields per capita labour force.
 Agricultural marketing still continues to be in a bad shape in rural India. In the absence of
sound marketing facilities, the farmers have to depend upon local traders and middlemen
for the disposal of their farm produce which is sold at throw-away price. In the absence
of an organised marketing structure, private traders and middlemen dominate the
marketing and trading of agricultural produce.
 Storage facilities in the rural areas are either totally absent or grossly inadequate. Under
such conditions the farmers are compelled to sell their produce immediately after the
harvest at the prevailing market prices which are bound to be low. Such distress sale
deprives the farmers of their legitimate income.
 In spite of the Government’s announcement of mega farm loan waivers to the tune of
INR. 75,000 crs in 2016, farmer suicides continued to increase with numbers going up
from 5,650 in 2017 to 8,007 in 2018 and to 15,233 in 2019.

ADDITIONAL INFORMATION - INDUSTRY REPORT

India's agriculture technology can grow to $24.1 billion in 5 years: Report

REPORT BY INDIA BRAND EQUITY FOUNDATION

India’s agriculture technology sector has the potential to grow manifold to $24.1 billion in the
next five years, according to a new report. With a turnover of $204 million, India’s agri-tech
sector is at under 1% of its market potential today.

A big chunk of the gains will likely be made by companies addressing supply chain and
financial services solutions, driven by the availability of affordable high-speed internet and
maturing of India’s digital content ecosystem, the report on India’s agri-tech potential said.
The report has also forecasted consolidation in the agri-tech space along with start-ups

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expanding horizontally to service the end-to-end needs of farmers within the next few years.
Attractive market opportunity, nascency in investment funding and minuscule penetration by
incumbent agri-tech players offer an opportunity for established players such as institutional
retailers, ecommerce players and food processing companies to create impact at scale.

The Report estimates that five key categories of agri-tech will control the lion’s share of the
sector’s turnover, with the agri-tech market for supplying farm inputs being as big as $1.7
billion by 2025, the market for precision agriculture and farm management growing to $3.4
billion in that time, while the market for quality management and traceability could be worth
$3 billion. The market for tech enabled supply chain and output market linkages will be the
largest segment, which could be worth $12 billion by 2025. The second largest segment in
the overall agri-tech market could be for financial services, with a market potential of $4.1
billion in the next five years. Funding in the sector so far is also skewed towards start-ups
serving these five sectors, with the bulk of the money being pumped into start-ups building
agri supply chains and market linkages.

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FINANCIAL STATEMENTS

KHETI BADI PRIVATE LIMITED

KBPL Annual Income Statement ------------------- in Rs. Cr. -------------------

Mar '20 Mar '19 Mar '18 Mar '17 Mar '16

Sales 930 809 819 704 744

Other Income 45 42 23 34 13

Total Income 975 852 842 739 757

Total Expenditure 702 620 622 654 584

Selling and Distribution 98.28 68.2 62.2 58.86 52.56

Processing / Manufacturing 37.2 43.54 52.32 46.72

47.73
Purchases/Raw material Exp 442.26 403 410.52 444.72 397.12

R&D Farm Expenses 22.464 18.6 13.684 9.81 8.76

Employees and benefits Exp 50.544 43.4 48.516 55.59 49.64

Establishment Expenses 35.1 31 37.32 29.43 26.28

Other Expense 5.616 18.6 6.22 3.27 2.92

EBIT 273 231 220 84 173
Interest 0 0 0 0 0
Tax 12 13 8 6 5
Net Profit 259 217 211 77 167

KBPL Margin Ratios

Mar '20 Mar '19 Mar '18 Mar '17 Mar '16

Gross Profit Margin (%) 32 31 30 25 27

Operating Margin (%) 29 29 27 20 23
Net Profit Margin (%) 28 27 26 11 22

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KBPL Annual Balance Sheet ------------------- in Rs. Cr. -------------------
Mar '20 Mar '19 Mar '18 Mar '17 Mar '16
Equities & Liabilities
Share Capital 12 12 13 13 13
Reserves & Surplus 946 994 999 1000 913
Current Liabilities 577 504 419 500 423
Other Liabilities 42 40 16 12 9
Total Liabilities 1578 1551 1448 1527 1360

Assets
Fixed Assets 267 278 226 233 220
Current Assets 1258 1196 1182 1283 1134
Other Assets 52 77 39 10 5
Total Assets 1578 1551 1448 1527 1360
Other Info
Contingent Liabilities 9 7 13 77

KBPL Cash Flow Statement ------------------- in Rs. Cr. -------------------

Mar '20 Mar '19 Mar '18 Mar '17 Mar '16

Operating Activities 0 133 150 218 246

Investing Activities 0 77 68 -209 -201
Financing Activities 0 -219 -226 2 -41
Others 0 0 0 0 0
Net Cash Flow 0 -8 -7 11 2

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FINANCIAL STATEMENTS

AGRI-TECHX PRIVATE LIMITED

Agri-TechX
------------------- in Rs. Cr. -------------------
Annual Income Statement
Mar '20 Mar '19 Mar '18 Mar '17 Mar '16

Sales 120 90 65 50 15
Other Income 6 4.73 2.39 1.68 0.5
Total Income 126 94.73 67.39 51.68 15.5
Total Expenditure 104.5 85 60 55 14
EBIT 21.5 9.73 7.39 -3.32 1.5
Interest 0 0 0 0 0
Tax 4.3 1.95 1.48 0.00 0.30
Net Profit 17.2 7.78 5.91 -3.32 1.20

Agri-TechX
Margin Ratios
Mar '20 Mar '19 Mar '18 Mar '17 Mar '16

Gross Profit Margin (%) 17% 10% 11% -6% 10%

Net Profit Margin (%) 14% 8% 9% -6% 8%

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YOUR ROLE

You have been appointed as a Business Strategy Consultant by KBPL. The above
information regarding KBPL, Agri-TechX, its financial statements and the economic situation
are available for your study and analysis.

You are required to present a report to the Executive Committee in the upcoming meeting on
the feasibility of the deal between KBPL and Agri-TechX. From your initial discussion with
the Executive Committee, it is also evident that they would like you to specifically focus your
report on:

 Go or no-go take over decision backed by strong rationale

 Would this acquisition be aligned to the company’s strategic growth objectives? How
will this be met?
 At what value would the deal make sense?
 If you recommend that the deal be made, indicate:
o How KBPL can leverage or extend use of Agri-TechX’s technology and
existing applications to enhance its business
o What could be some of the new uses or areas which could be developed
together with Agri-TechX
o A 3-5 year timeline on how KBPL will be able to fully derive the benefits of this
acquisition (revenue, margins, market share)
o How will you measure / monitor success of the plan? What metrics will you
use?
 If you recommend that the deal should not be made, indicate:
o The rationale for not recommending take over / acquisition
o How can KBPL continue to meet its strategic objectives and what kind of
transformation efforts would be required for to meet the same
o How do you recommend that KBPL utilize the INR. 180 – 200 crs. investment
to organically grow KBPL
o A 3-5 year timeline on how KBPL will be able to achieve some of its strategic
objectives (revenue, margins, market share)

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 o How will you measure / monitor success of the plan? What metrics will you
use?

Note:

1. The report template has been provided to you. While preparing your report, you are free to
make any assumptions, however, please provide justifications for the same and document
the logic which has been applied.

2. In addition, you are also required to present your recommendation and suggested plan of
action to the Executive Committee in not more than 5 slides.

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