Business plan presentation v4 generic july2010


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efarm business plan : concept, operations, current status, financials, funding requirements.
updated ad of : July 2010
author : venkat (founder , MD)

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Business plan presentation v4 generic july2010

  1. 1. eFarm Enabling FArmers to Reach Markets An Agri Supply Chain Platform linking farmers and consumers BUSINESS PLAN July, 2010
  2. 2. 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 Inter mediaries Wider market reach Lower/Stable prices , Better quality Planned capacity utilisation Accurate weights , Timely Delivery Stable work / fees Better prices Linkages to supply and Accurate Weights Better payment terms markets Market information 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
  3. 3. Mission and Vision Statement Vision To be India‟s first fully integrated agriculture supply chain by 2015 Mission Statement “One by One” 1 district at a time , 1 city at a time 1 crore turnover by current year To integrate technology, industry best practices and social entrepreneurship in our agri- supply chain business to benefit both farmers and customers
  4. 4. 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 • A Middlemen’ dominated market 5 •No IT/ERP usage – decisions are adhoc and arbitrary Regional mandi to Wholesalers to Retailers 4 Terminal markets near A local mandi large cities auctioning 2 Local to Regional mandis for Auction 6 Loss in transit 40% Price hike Retailers to Dining Table 3 End to end > 400% 7
  5. 5. So many solutions , but why still a crisis ? R&D ICT solutions Increase yield Contract farming Export Indian market Agriculture Cold chain Modern Micro retail & finance & logistics Grants
  6. 6. Market and Industry Environment Market Scenario Burning Crisis Or Booming Opportunity ? Data Value Notes Organised retailers Fruits & Vegetables (Total market) 668800 Cr Organised + Unorganised are non-players when we see overall volume Organised segment 8216 Cr < 1.2% of total market Total Volume of fruits & vegetables 100 Million produced Tonnes Amount processed 1% World avg ~ 40% Amount exported 1% Not in top 25 in world exporters India is a World Wastage in transit & handling 40% ~ Rs 40000 Crores lost revenue leader in PRODUCTION but Our production costs are one of still IMPORTING our the most economical in the world food to meet High wastage in the „chain‟ DOMESTIC demand. Average per person monthly is counter productive to any 68 Rs But11% oflogistics expenses on food Our monthly costs are the Virtually non player increases inin F&V (Urban) expenditure yield MOST EXPENSIVE ( 2.5 times the in global agri world avg. !!!!) industry Avg. per person monthly 8 kgs Source : IMAGES F&R Research Study , Govt of India , Dept. of Agriculture
  7. 7. Market and Industry Environment Competitor Quadrant Pockets of Strength But Collectively a failure Price Organised Players •F&V focussed stores •Premium stores Low volumes, Hit by (e.g Pazhamudhir (Organic etc) recession and low Nilayam) profitability •Branded Retailers Low High (Reliance , More etc) Volume , Volume, Premium stores :Sourcing and regular •Push carts , street High price High price •Kirana stores supply issues vendors Terminal markets Volume Lack of standards, transparency, •Regional/Terminal markets trader/broker Low High dominated Volume, Volume, Push carts & Kiranas Low price Low Price Local presence to end •Commodity exchanges customer , but high •Village mandi wastage (e.g. SAFAL) As eFarm connects all players and acts as buyer or eFarm seller in different segments, it will have a wider footprint and better control on end to end profitability
  8. 8. Key Issues and pain Areas The Farmer’s Crisis The ‘REAL’ reasons
  9. 9. 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
  10. 10. Customer Segment Serve Entire Customer Spectrum Huge domestic demand, Escalating prices & Unmet needs Low Income Middle High Income Hotels & Food & Export Group Income Group caterers Drink • ~1% of • > 40% in Group • ~5% in volume • ~25% of processors volume volume • ~ 20% in • Buy from retail volume • ~5% of • Best quality / • Buy from volume chains • Buy from volume specific neighborhood • Quality & wholesale products only • Buy from • Product markets street vendors variety mandi specific buyer (evening) • Price + conscious • Large volume • Pay more for Quality + fixed price less quality conscious range Organised retailers are crowded in this space Rest buy from wholesale mandis & streets
  11. 11. The solution definition Is there a supply chain system which 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 crorepathis •Operational efficiency : 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 ! •Delivery excellance – fixed time , professionalism
  12. 12. The solution definition What is eFarm ? 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 transporters Mobile operators operators Intra-city small tempos
  13. 13. Value Proposition The eFarm model Unlock revenue potential across the value chain Cleaning / Packing Quality Routing Inspection/ Grading Long haul Transportation Rural Produce Local vendors Collection Centres Small retailers Farmers Urban area Local Distribution centre Distribution Compost/Manure Food Processing from waste units Bulk buyers (Hotels / Caterers / Exports Retailers) eFarm Common Services Planning & Call centre / Training & Research Technology Coordination Communication Support
  14. 14. Value Proposition Key Products / Services Vegetables Fruits Exotics / Organic Produce Marketing Agri technology Processed Items Solutions Training Compost Non perishable Commodities (future)
  15. 15. Key Partners Technology Food processing NGO – Outsourced Labour Farmer network Market Linkage Programs
  16. 16. Key Clients ‘Hotbreads’ Mahadevan’s Chain of Fine dining restaurants in Foodcourt at 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…
  17. 17. Business Model Pricing Scenario : Typical ‘mandi’ Situation 32/kg 42/kg Eg: Ooty Carrots (As of 29th 28/kg June 2009) 24/kg 22/kg 20/kg End customer 5/kg 12/kg 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 500 % Price hike Source : Ooty market traders, Chennai traders,  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 margin
  18. 18. Business Model Pricing : The eFarm solution 30/kg Export prices become Eg: Ooty Carrots (As of 29th 19.75/kg viable and June 2009) competitive 13.5/kg End End customer 6.5/kg s see 30% Farmers are Wholesale customer drop in paid 20% buyers see higher than a 33% price prices current drop prices to ensure profitability Farmer eFarm wholesale eFarm retail (at Mylapore (at eFarm powered outlets Distribution centre) and customer deliveries) Reduced from 500% to 200%  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%
  19. 19. Business Model Ground Operations Overview Hub and Spoke with localised,inter connected nodes Cooperatives Hub and Spoke Model For Catering/Hotels Producer Scalability and Organic Growth Corporations Exporters Forward Logistics Rural (Fresh produce) Urban SHGs 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 last mile connections
  20. 20. Business Model Technology Overview Behind the scenes Open source Tools & technologies AgriXML As a dataXchange format
  21. 21. Business Model Technology 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
  22. 22. 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 fundamentals through training programs Apr-09 Nellore Agri SEZ , Indian delegation member Jun-09 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
  23. 23. Management Team Founders • Venkata Subramanian Founder & Managing Director: ( ) 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 ( 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 Combination of different background ,skills and experience to provide creative perspectives to solving key problems in the supply chain area
  24. 24. Organisation How is eFarm managed ? COO CEO Venkat Valli Finance & Advisors Distribution Accounting Current Team Size Sales & Board Members 15 Technology Marketing •Sourcing – 2 •Delivery – 2 Investors Sourcing Social Initiatives •Processing – 3 •Admin – 1 Logistics Recruitment Alliance Partners •Business Dev – 1 •Transport – 2 •Interns – 4 Consulting Over 60% of staff are CORE TEAM EXTENDED TEAM differently abled
  25. 25. Key benefit to farmers Organised Collection Centres Pickups close to villages reduce transport costs to farmers Vehicle goes to individual Farmers bring the produce and it is checked Fresh oyster farm locations/collection and weighed at site location itself mushrooms centres
  26. 26. 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
  27. 27. 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
  28. 28. 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
  29. 29. 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 •Markets Ottanchatram •Insight - Support level prices and nadu tomato inflection points •High / Low variations •Identifying ‘hoarding’ and ‘cartelisation’ (data courtesy : TNAU-INDG market information portal)
  30. 30. 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 eFarm phone call mobile store away … a at an old vegetable age home vendor enquiring prices
  31. 31. Spreading the message Workshops, Training, Agri business entrepreneurship development Innovations in Tie ups with Agri agriculture retailing research and Agri eFarm office and business incubation godown at Talk at MOP centres Mylapore , Chennai Vaishnava womens’s (ICRISAT) college, Chennai Talks in management (centre) schools and Setting shop - Our institutions home became the (IFMR , IBS) godown & store. Field trips to villages and address Conferences and Farmers gathering trade shows Upgraded vending carts , standardised weights and measures
  32. 32. 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  Contract Farming (Naamdhari , maxworth green orchards) Opportunities for  A failure in India – farmers don’t understand legalities, production CO-OPETITION carries risks and saps management attention,land area fragmented Where we may  Social entrepreneurs ( earthy goods , aakruthi ) overlap them in  Similar approach , But all in early stage some areas,  Organised Retailers ( Indian chains, MNC chains, Big store formats) but complement them  Branded chains – stiff competition for small domestic segment , high in others costs, use local mandi as primary supply source, deal only top grade  Govt. Regulated Markets/Mandis ( Vashi, Azadpur, Koyambedu) Collaborate to  High volumes, but unorganised – middlemen dominated Compete  Commission agents / Wholesalers / Vendors (Several local players)  Primary dominant segment, but not professionally organised, only localised to area
  33. 33. 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
  34. 34. 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
  35. 35. Financials Figures in INR 15 crores target 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 •Technology providers in agri space •Food parks / Agri SEZ •PPP initiatives with Government (local /central)
  36. 36. Where is funding most critically needed ? Establish local collection centres •Ensure self sustenance though local Forward (Bulk produce, Processed items) sales •Standardize produce grading/packaging Reverse ( Agro compost, farm supplies etc.) Collection centre Establish distribution centres in Village (local) metro neighbourhood Bulk distribution of goods Establish multiple local marketing channels - Supply to local markets, shops, Distribution centre catering,processing industry (Neighbourhood) Large town (Regional) Establish technology backbone Manage supply chain , MIS, 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
  37. 37. Investment Snapshot •Company structure :MVS eFarm Pvt Ltd How will 1 crore be utilised ?  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 , sales volume, positive net margins, domain What will 1 crore achieve ? knowledge , technology niche, early Setup & reach steady state operations for mover/leader • 2 urban distribution centres in chennai metros • 5 rural collection centres across S.India region • Establish core technology backbone and end user self service portal • Bring in professional /senior staff
  38. 38. Risks and Gaps Key Risks Besides Investment, we also  People / Cultural issues at need support on : grassroots level  Government liasioning for  Localisation of concept in each ground level support zone is critical  Expand partner network of  Agri cultivation risks – related agencies such as weather, diseases, pest affect microfinance , agritech supply companies, logistics companies  Need to be anticipated , to aid stakeholders in network alternatives planned  Alliances with mobile , IT  Financial risks – low interest/ companies for building tech risk appetite amongst investors backbone with rural reach in agri sector  Establish ties with key brand  Potential cash crunch in retailers , MNC chains for long expansion , need clear success term supply contracts to change existing mind sets
  39. 39. 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 –, •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
  40. 40. Thank You Venky 98847 61354 Valli 11 loganathan colony Mylapore, Chennai 600004 Ph : 044-43577236