Business Plan Presentation V4

Download as pptx, pdf, or txt
Download as pptx, pdf, or txt
You are on page 1of 40

eFarm

Enabling FArmers to Reach Markets


An Agri Supply Chain Platform linking farmers and consumers

BUSINESS
PLAN

www July, 2010


.efarm.in
Elevator Pitch
What does the Company do?
•procure vegetables and fruits from farmers and to supply to bulk customers in cities
•create end to end supply chain infrastructure, processes and technologies to make
perishable
produce distribution more efficient
Key pain points in agri industry : Middlemen dominated ,more than 95% Unorganised , Over
40% wastage, high uncertainty in availability/price, low technology usage (IT/Post
production) Key Benefits of eFarm :
For Farmers For Buyers For Intermedi
Wider market reach Lower/Stable prices , Better quality a r i e s Planned capacity
utilisation Stable work /
Better prices Accurate weights , Timely fees Linkages to supply
Accurate Delivery and
Weights Market Better payment markets
information terms MIS
Key differentiators?
Professional approach , Connecting the dots ,Double bottomline (social + financial goals) BOP
enterprise , shared platform with multiple alliances / entrepreneurs ,Outsource non-core
activities
Mission and Vision Statement
Vision
To be India‟s first fully
integrated agriculture
supply chain by
2015
Mission Statem
ent
“One by One

1 district at a time ,
1 city at a time
1 crore turnover by current
year
Market and Industry
Environment
The Indian Agri Supply Chain
Current State : Too Many Steps , Too Little Value
Addition
Harvesting of Terminal markets to
Vegetables •Unorganized, unregulated, unprofessional & neighborhood wholesalers

unprofitable
• Lack of demand/supply data
1 • No reliable sales, distribution, marketing
channels
• Poor logistics and storage 5
• A Middlemen’ dominated market
•No IT/ERP usage – decisions are adhoc and
Regional mandi to Wholesalers to Retailers
arbitrary 4 Terminal markets near
A local mandi large cities
auctioning 2

Local to Regional mandis


for Auction
6
Loss in
transit
Retailers to Dining Table
40% Price hike
3 End to end
> 400%
7
So many solutions , but why still a
crisis ? R&
ICT D
solution
Increase
s
yield

Contrac
t Export
farming Indian market
Agriculture

Cold
chai Moder
n Micro
n retail
finance
&
& Grants
Market and Industry
Environment
Market Scenario
Burning Crisis Or Booming
Dat Opportunity ? Organised
Faruits & Vegetables (Total market)668800 Cr Organised + retailers
are non-players
Unorganised Value when we see
Notes overall volume

Organised segment 8216 Cr < 1.2% of total


market
Total Volume of fruits & 100
vegetables produced Million
Amount processed 1 Tonne World avg ~
% s 40%
Amount exported 1 Not in top 25 in world
% exporters India is a World
Wastage in transit & 40 ~ Rs 40000 Crores lost leader in
PRODUCTION
handling % revenue but
Our production costs are one
of
the most economical in the still IMPORTING
High wastage in the our food to meet
i„chain‟
Asvceoraugneteprepr 68 But11O%uor flomgoinsttihclsy
world
DOMESTIC
rpoedrsuocntimveontothal ecxopsetnssaerseotnhfeood
Rs demand. Virtually
yny MOST EXPENSIVE ( 2.5 times non player in
Avg. per: person monthly Study , Govt of India8 , Dept. of the world avg. !!!!) global agri
i nSource
c r eIMAGES
a s eF&Rs Research
i n yi
Market and Industry
Competitor Quadrant Environment

Pockets of Strength But Collectively a


failure Price Organised Players
•Premium stores
(Organic etc)
h•F&V focussed stores
(e.g Pazhamudhir
Low volumes, Hit
Nilayam) by recession and
low profitability
•Branded Retailers Lo Hi
(Reliance , More
etc) Volume
w Volum
g Premium stores
:Sourcing and
•Push carts ,
street
High
, e,
High •Kirana stores regular supply issues
vendors
price price Terminal
Volume markets Lack of
standards,
•Regional/Terminal transparency,
Low Hig markets trader/broker
Volume, Volum
h dominated
Push carts &
Low Low
e, Kiranas Local

•Village mandi price Price •Commodity


(e.g. SAFAL)
exchanges presence to end
customer , but high
wastage
As eFarm connects all players and acts as buyer
eFar or seller in different segments, it will have a wider
footprint and better control on end to end
m profitability
Key Issues and pain
The Farmer’s Areas

Crisis
The ‘REAL’ reasons
Key Issues and pain
Areas
Marketing : The missing
link ?

Other industries have differentiated


production from marketing/sales
Agriculture – Farmer handles both
roles

Brands have value !! Indian


products though superior have
not established a brand
Customer
Serve Entire Customer Spectrum Segment

Huge domestic demand, Escalating prices & Unmet needs

Low Middl High Hotels Food & Export


Income e Income & Drink • ~1% of
Group Incom Group caterers processor volume
e • ~5% in
s • Best quality /
• > 40% in • ~25% of
volume Group volume volume • ~5% of specific
volume products
• Buy from • ~ 20% in • Buy from • Buy from only
neighborhoo volume retail chains wholesal • Product
d markets • Buy from • Quality e mandi specific
(evening) street & variety buyer
• Pay more vendors consciou • Large
for less • Price + s volume
quality Quality + fixed price
consciou range
s
Organised retailers are crowded in this space
Rest buy from wholesale mandis & streets
The solution
Is there a supply chain system which definition

will work effectively in


India
•Product Category??? : Perishable food items
•IT Systems usage : NIL
•Management team : Illiterate and average age of 55
•Age of company : Over 150 years
•Customer Segment : From slumdwellers to
•Operational efficiency crorepathis
: Six sigma !!!
The Mumbai
Dubbawallahs
•Key success factors : !!!

•Highly decentralized operations – agile, flexible , scalable


•Use of low cost transport medium – trains
•Use of human power for last mile delivery – No Fuel related
hikes
•Strong customer relationship – personal , localised
•Simple coding, routing, labelling system – operates even
without electricity !
The solution
What is eFarm ? definition

The Big Picture – Connecting The


Dots
Value added resellers
Sorting , Grading , Processing, Packing

Storage
Warehouses

Bulk buyers
Exporters

Farmers
Cooperatives
Collection centers

Kiranas
Self Help
Groups
Hawkers

Village ICT kiosks


Phone booths Logistics Fleet Small Independent
Mobile operators operators transporters Intra-city small
tempos
Value
The eFarm model Proposition

Unlock revenue potential across the value chain


Cleaning / Packing

Q u a l i ty R o u ti n g
In s p e c ti o n / G r a d i n g

Long haul
T r a n s p o r ta ti o n

Rural Produce Local vendors


C o l l e c ti o n C e n tr e s S m a l l r e ta i l e r s

Farmers

Urban area
Local D i s tr i b u ti o n c e n tr e
D i s tr i b u ti o n

C o m p o s t /M a n u r e Food Processing
fr o m w a s te u n i ts

Bulk buyers
( H o te l s / C a te r e r s /
E x p o r ts
R e ta i l e r s )

eF a r m C o m m o n Services
Planning & C a l l c e n tr e / T raining &
Research Technology
C o o r d i n a ti o n C o m m u n i c a ti o n Support
Value
Proposition
Key Products / Services

Vegetables

Fruits

Exotics / Organic Marketin


Produce g
Agri
Processed technology
Items Solutions
Trainin
Compos g
t

Non perishable Commodities


(future)
Key Partners
Technolog Food processing NGO – Outsourced
y Labour

Farmer network

Market Linkage
Programs
Key Clients
‘Hotbreads’ Mahadevan’s Chain of Fine dining restaurants Foodcourt at
in Chennai (OCPL) ExpressAvenue
Mall
(asias’s
largest)

Foodcourt at a Upcoming Indian Army .. And several local


software park Kiosk South Zone HQ vegetable vendors
Chain Canteen (Outlet) as well…
Business
Model
Pricing Scenario : Typical ‘mandi’ 42/kg
32/kg
Eg: Ooty Carrots (As of 29th
June 2009)
Situation 28/kg
24/kg
22/kg
20/kg End
custome
5/kg 12/kg r price

Farmer’s Regional Metro Terminal Neighbourhood Kirana Branded Premium


market mandi Market market stores, Retailers Grade
(In Ooty/ (Mettupala (Chennai) (Thiruvanmiyur Push (Export)
Kothagiri) yam) Chennai) carts

Source : Ooty market traders, Chennai traders, indg.in

 Over 500% Price hike on average to customer , but no value addition


 Changes hands several times: 40-50% is wasted – which adds to the costs
 Prices set at each intermediate point arbitrarily by brokers/agents without
any planned demand/supply data
 Farmer typically operates at 25% loss , End retailer less than 5% net
Business
Model
Pricing : The eFarm 30/kg
Export prices
become
Eg: Ooty Carrots (As of 29
solution
th
19.75/kg viable and
June 2009) competitive

13.5/kg End
customer
6.5/kg End s see 30%
Farmers are Wholesale custome drop in
paid 20% buyers see prices
higher than a r price
current 33%
prices to dro
ensure p
profitability
Farmer eFarm wholesale eFarm retail
(at Mylapore (at eFarm powered
Distribution centre) outlets and customer
deliveries)

 Assumptions : Transport Rs 6000 for 4T truck , Operational expense @30%


 Wastage reduced from 40% to 5% owing to prior demand data , and less intermediaries
 Customers see a 30% drop when compared to prevailing market
 End retailers get better margins , promoting more sales & entrepreneurship in F&V
 eFarm’s net margin : 10-15%
Business

Ground Operations Overview Model

Hub and Spoke with localised,inter connected nodes


Catering/Hotels
Cooperatives Hub and Spoke Model
Producer For Scalability and Organic
Corporations
Growth
Exporters
Forward Logistics
SHGs
Rural (Fresh produce) Urban
Collection Distribution
Centres Centers
Food Processors
Reverse Logistics
( Manure , Farmer supplies)
Bulk buyers
Retailers /
Small & mid sized farmers
Mom & Pop stores

•Collection centres spread across a 10 hr(max)


driving radius
•Distribution centres across key metro region
•Long haul trucks(4 tonne) connect collection
centres & distribution centres
•Local distribution use mixed transport
mediums for
Business
Technology Model

Overview
Behind the scenes
Open source
Tools &
technologies
AgriXML
As a dataXchange
format
Business

Technology Model

Components and Features ( Work In


Progress) Backoffice Systems
•Customer relationship management
•Supplier Relationship Management
•Demand/Supply Forecasting
•Order management & fulfillment
•Accounting & Financial Mngt
•Mobile/SMS gateway interface
•Voice based interface
•MIS & Data mart

Collaboration and B2B


trading platform
•Content : Daily price lists,
Schedules, Trends , Buyers guides
•Forward/Reverse bidding
•Search / Track items
•Delivery tracking
•Agri specific social networking
Time
Lines
•Completed 2 years of pilot operations and trials in Tamilnadu region, with Chennai as key
destination
•Over 1500+ farmers, grower associations, transporters, buyers , NGOs and partners identified
and enrolled
•Regular supply source established from 5 main regions in TN, Karnataka, Andhra
•Multiple market channels for F&V sales from slums to star hotels established and operational
•Over 200+ individuals, students trained in agri business fundamAeprn-0t9als through training
programs Indian delegation member Jun-09
Nellore Agri SEZ ,
First eFarm powered store at
Feb-08 May 08 Dec-08
Neelangarai
Concept Initiation Portal launched TePP Grant from Govt

Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09

Jan-08 Sep-09

Jul 08 Mar-09 May-09


Live Trials begin Launched Organic Sales Press coverage :
Hindu, TOI, NDTV
Management
Team
Founder
s
• Venkata Subramanian Founder & Managing Director: (venky@matchboxsolutions.
in )
MS (Computer Science), University at Albany, NY , B.Arch , IIT Kharagpur
(1995) , India
12 years of experience in IT industry , lead key accounts in BFSI for Wipro,
Satyam in USA. Very strong expertise in analysis & design of complex
systems , portal development , back office operations.
Responsible for overall strategy , technology and public relations

•• Srivalli , Co-Founder, CEO


(srivalli@matchboxsolutions.in) MBA , B.Com
Taxation
8 years experience in Sales, Marketing, & Operations. Has run two start-ups
and organised fund raising for NGOs as part of CSR programs.
Responsible for operations, business development, finance, administration

Consultants and advisors from leading agricultural universities, management


schools,
government and industry
Organisation

How is eFarm managed ?

COO CEO
Venkat Valli

Advisors
Finance &
Distribution
Accounting
Current Team Size
Sales &
Board Members
15
Technology
Marketing •Sourcing – 2
Investors •Delivery – 2
Sourcing Social Initiatives •Processing – 3
Alliance Partners
•Admin – 1
Logistics Recruitment
•Business Dev – 1
•Transport – 2
•Interns – 4
Consulting
Over 60% of staff
are
CORE TEAM EXTENDED TEAM differently abled
Key benefit to

Organised Collection Centres farmers

Pickups close to villages reduce transport costs to


farmers

Vehicle goes to Farmers bring the produce and it is Fresh


individual farm checked and weighed at site location itself oyster
locations/collection mushrooms
centres
Key benefit to
farmers
Payment : Better prices, on the
spot

Farmers being paid on All grades being Women farmers paid


the spot based on picked and price more to encourage self
output arrived based on help groups.
quality

Training farmers
on how to arrive at
prices based on
market data
Key benefit to
farmers

Data collection from


farmers
Production data
• Produce name, variety
• Grade
• Typical yield at harvest
• Harvest cycles
• Cost price at farm gate
Farmer information
• Name
• Address
• Contact number
• Preferred mode of payment
• Bank / Post office details
• Photo
• Attestation
Key benefit to
farmers
Price determination through cost
price analysis - worksheets
•Tools and
calculators to assist
farmers in
determining their
•Sale price
•Cost of Production
studies in key
produces
Key benefit to
farmers

Market Analysis and Decision Support


Koyambedu
What to grow ? nadu tomato
How much to grow ?
When to harvest ?
Where to sell ?
At what price ?
•Head to head
comparisons across Ottanchatram
•Markets nadu tomato
•Insight - Support level prices
and inflection points
•High / Low variations
•Identifying ‘hoarding’
and ‘cartelisation’
(data courtesy : TNAU-INDG market
information portal)
Social Impact : BOP segment Murugesan,
coconut
farmer,
with graded
coconuts

Small
tempos for
local
deliveries –
powered by
eFarm

Panjali picking up vegetables from our Mylapore centre

Only a eFar
phone call m mobile
away … a store at an
vegetable old age
vendor home
enquiring
prices
Spreading the message
Workshops, Training, Agri business entrepreneurship development
eFarm office and
Innovations in Tie ups with Agri
godown at
agriculture retailing research and
business Mylapore ,
Agri
Talk at MOP incubation centres Chennai
Vaishnava (ICRISAT)
womens’s college,
Chennai

(centre)
Talks in Setting shop -
management Our home became
schools and the godown &
institutions store.
(IFMR ,
Field trips to villages and address Conferences IBS)
Farmers gathering and trade shows
Upgraded vending
carts , standardised
weights and
measures
Market landscape

Competitive Scenario
 Food distribution companies (Sodexho )
 Cater to high end segments , costs prohibitive
 IT-Driven Procurement Platforms (Spot market exchanges (SAFAL
 SNX))

Failed due to too much technology , low adoption by farmers
Opportunities for  Contract Farming (Naamdhari , maxworth green orchards)
CO- A failure in India – farmers don’t understand legalities, production
OPETITION carries risks and saps management attention,land area fragmented

Where we may
overlap them 
Social entrepreneurs ( earthy goods , aakruthi )
in some areas, 
Similar approach , But all in early stage
but Organised Retailers ( Indian chains, MNC chains, Big store

complement formats)
them in others

Branded chains – stiff competition for small domestic segment , high
Collaborate costs, use local mandi as primary supply source, deal only top grade

to Govt. Regulated Markets/Mandis ( Vashi, Azadpur, Koyambedu)

Compete High volumes, but unorganised – middlemen dominated

Commission agents / Wholesalers / Vendors (Several local players)
Market landscape

Market Size
Quick calculation : (Taking a single Tier I metro city in India as
sample)
Typical Metro (Tier I) population : 8 million
Avg. consumption : 500 gms of fruits and vegetables per
person
Volume : 4 million kgs = 4000 tonnes
Value : 6 crores per day (at Rs 15/kg average blended price)

Even a 1% penetration by eFarm in this market


= 6 lakhs Turnover per day = 20 crores per annum per
METRO
Market landscape

Entry barriers
 People Barriers (When working with farmers/unorganised sector)
 Literacy barrier
 Cultural (language , caste etc) barriers
 Building Trust takes time
 Information Barrier
 No reliable/accurate supply or demand of industry
 Technology usage/penetration very low (except mobile
phones)
 Financial Barrier
 Years of neglect of industry , investments have dropped
 Financials of farmers – such as cost of production are
unknown , making pricing negotiations a challenge
 Operational barrier
 Crisis management on daily basis
 Myths ,emotions, hype around farmer issues and crisis status
,blurring reality
15 crores target
Financials Figures in INR
in 3 years

Figures in
‘000 INR

Assumptions
•Chennai/TN operations already stable hence
fast growth viable in home ground
•As technology+processes stabilise,
margins would improve with lower
wastage
•Gradual shift to high margin , niche
segments
•Pilots in other metros to start in mid ‘11
and reach full scale by end of ‘12

Exit Options / M&A


•Large retail chains(MNC’s) entering India
•Hotel industry majors
•Food logistics/distribution companies
•Farm equipment / Agro processing
companies
Where is funding most
critically
needed ? Establish local collection centres
•Ensure self sustenance though
local sales
•Standardize produce

Forward (Bulk produce, Processed


grading/packaging

etc.)
Reverse ( Agro compost, farm supplies
Collection
centre
Village (local) Establish distribution centres in
metro neighbourhood
Bulk distribution of goods
Establish multiple local
marketing channels
Distribution - Supply to local markets,
centre
(Neighbourhood)
shops, catering,processing
Large town
industry
(Regional)
Establish technology backbone
Manage supply chain , MIS,
items) Customer Portal
Establish marketing channels in
a large metros (e.g Chennai,
Bangalore , Hyderabad, Mumbai etc)
Outdoor mall
for processed foods & Niche
Retail channels / outlets
Large (processed foods) products
Metro
- Supply to Large retail
chains , boutique outlets
Investment Snapshot
•Company structure :MVS eFarm Pvt How will 1 crore be
utilised ?
Ltd

 Funding Requirement
 Year 1 : Rs 1 Crore (~ 225K USD)
 Year 2 : Rs 3 Crore (~ 700 K USD)

 Valuation Expected : 8 Crores


 Justifications : cash flow positive , What will 1 crore achieve ?
sales volume, positive net margins, Setup & reach steady state operations for
domain knowledge , technology niche, •2 urban distribution centres in chennai
early mover/leader metros
•5 rural collection centres across S.India
region
•Establish core technology backbone and
end user self service portal
• Bring in professional /senior staff
Risks and Gaps
Key Risks Besides Investment, we
 People / Cultural issues at also need support on :
grassroots level  Government liasioning
 Localisation of concept in for ground level support
each zone is critical  Expand partner network of
 Agri cultivation risks – related agencies such as
weather, diseases, pest affect microfinance , agritech
supply companies, logistics
companies to aid stakeholders
 Need to be in network
anticipated ,  Alliances with mobile , IT
alternatives planned
 Financial risks – low companies for building
tech backbone with rural
interest/ risk appetite reach
amongst investors in agri  Establish ties with key brand
sector
retailers , MNC chains for
 Potential cash crunch in
eFarm in the news
•TATA NEN Hottest startup 2009 nominee
•IIM Kozhikode Whiteknight 2009
Business Plan contest winner
•IIM Ahmedabad Leverage 2009
Showcase shortlisted startup
•In the press
•Entrepreneur , Sep 09
•The Hindu magazine’s Ergo tabloid
(Mar 2009)
•Times of India , May 2009
•NDTV News , June 2009
•Featured in leading e-zines –
yourstory.in, startups.in
•Featured in Tamil press-
Kumudham , Dinakaran
•Outlook Money , June 2009
•JADE , June 2009
•Academic
•Faculty for Food SCM course,
MOP Vaishnava college
•Key note speaker – TNAU
conferences
Thank
You
Venky
venky@matchboxsolutions.
in 98847 61354

Valli
srivalli@matchboxsolutions.in
11 loganathan colony
Mylapore, Chennai 600004
Ph : 044-43577236

You might also like