eFarm Financial Plan v1.0


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efarm financial plan presentation. Audience : Investors, partners, entrepreneurs

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eFarm Financial Plan v1.0

  1. 1. eFarm : A Farmer To Consumer Agri Supply Chain Network Part 3 : Investor Presentation : Financials and Growth Plans May 2009 Presented by Venky & Valli , Founders , eFarm
  2. 2. Cleaning / Packing Business Potential Social Impact Quality Routing An untapped , niche Inspection/ Grading Organizing the large market with very few Long haul unorganized agri sector of organized, entities Transportation India – bottom of pyramid Revenue generation More income to farmers , through better truck operators and small optimization, value Rural Produce Local vendors vendors owing to profit addition across the chain Collection Centres Small retailers sharing across the network Reduced wastage in transit = more revenue Farmers Support to traditional , eco Urban area friendly farm practices , Has potential to jumpstart Local Distribution Distribution centre organic farming through other agri-dependent better marketing ventures Convert waste to compost A professional ly Compost/Manure Food Processing , providing low cost managed supply chain is from waste units manure back to farmers. vital for tapping international markets Bulk buyers Revival of agriculture (Hotels / Caterers / Retailers) Exports dependent livelihoods , Potential to scale across empowering villagers eFarm Common Services India as core problem is wide spread Planning & Coordination Research Call centre / Communication Technology Training & Support Under privileged/Disabled and urban poor get ‘Pull factor’ from rural employment opportunities India for other services and products
  3. 3.  Often large organizations fail in rapid text te xt expansion phase – too fast , too soon text te xt te xt  eFarm would expand in a sustained text te xt controlled manner as shown text  Create 1 fully functional, fully te xt sustainable unit (eg could be a collection text text te xt te centre , or a distribution centre or even a xt text te xt store) text  Replicate the successful model into two text te xt  Ensure continued viability of this expanded unit te text xt te xt Continue to ‘divide and expand’ text te xt  In case of any issues, we only need to text  text te xt take one step back to prior state and text te xt te xt rebuild text te xt  At a given time, number of units would be a measure of 2n where n is time taken 1 -> 2 -> 4 -> 8 -> 16 to replicate 1 step …
  4. 4.  Farmer liasion : Government agencies , Agri institutions , NGOs  Incubation : ICRISAT / TNAU  NGOs : RASA , Nandini Voice of Deprived, Exnora , Nivedita  Agri parks/Exports : IFFCO Kisan SEZ  Software :Microsoft (Bizspark startup program member)  Mobile gateway : SMSIntegra  Micro finance for eFarm entrepreneurs : Equitas, Indian bank  Funding : Leading Social VCs, PSBs
  5. 5.  Financial Indicators  Revenue generation from Day 1 , Profit from Year 3  Sustained scalable model , with organic growth across locations  Leadership position across market channels  Social indicators  Increase in income to farmers, truck operators, small vendors  Reduction in farmer suicides  Increase in land under cultivation  New Job creation in rural & urban areas  Reduction in Migration to city from rural areas
  6. 6. Please see attached Excel spreadsheet for balance sheet, sales projections , funding summary , financial ratios etc., Sales , Profit Projections 3500 3000 2500 2000 1500 Sales 1000 Net profit before tax 500 0 -500 Year 1 Year 2 Year 3 ** At end of 3 years Figures in Rupees Lakhs
  7. 7. eFarm Please see spreadsheet for details Year End Summary Extended Projections till 6 years Year One Year Two Year Three Year Four Year Five Year Six Total Income 34,670,240 144,619,610 341,211,415 474,684,655 654,096,624 898,045,331 Total Cost of Sales 26,520,365 94,373,762 191,751,691 259,230,666 284,621,978 312,525,834 Gross Margin 8,149,875 50,245,848 149,459,724 215,453,988 369,474,646 585,519,498 Total Salary and Wages 9,213,000 18,426,000 36,852,000 63,417,200 69,758,920 76,734,812 Total Fixed Business Expenses 29,654,050 44,481,075 55,601,344 78,235,758 86,059,334 94,665,267 Total Other Expenses 1,259,594 1,254,136 - - - - Net Income (Before Tax) (31,976,769) (13,915,363) 57,006,380 73,801,031 213,656,392 414,119,419
  8. 8. ROI / IRR : A Sample scenario  Initial investment : 500,000 $ (approx 2.25 Cr)  Term : 6 years , Equity : 3%  Valuation : 108 Million USD  NPV : 2,180,000 $ IRR : 67%  Final payout : 3,240,000 $  Reference : http://www.bplans.com/business_calculators/investoroffering.cfm  http://younoodle.com/predictor
  9. 9.  Sale of Agri Produce  Wholesale / Bulk buyers transactions  Retail (eFarm ‘powered’ shops run by entrepreneurs)  Premium products – Organic , Export quality items  Third party logistics and distribution  Processed food products  Waste conversion – Compost / Value add products  Consulting (Supply chain , System integration)  Registrations in B2B portal  Ads ( Push carts , Vending stations , Website) Note : A small set of fully owned demo outlets of eFarm are primarily for marketing, training and operational studies. These would comprise of low cost outlets , push carts, street side vending stalls,tricycles etc., These would be fully staffed by efarm directly.
  10. 10.  The truck , being the main mode of deliveries , represents the fundamental unit of volume , utilization & growth indicator  Based on trials and metropolitan traffic regulations , a 4 tonne truck has been identified as a standard, viable, long haul unit which can freely come within city at all times.  All figures are tied to “How many truckloads of produce” is being transacted
  11. 11.  Primary revenue is through produce sale, and commissions on truck loads transacted.  The produce is sold across different marketing channels – bulk/whole sale , retail , premium segments  A truckload is assumed to be operating at 75% utilization at peak.  An average blend rate of Rs 15/kg is taken as sale price and Rs 10/kg as purchase price of goods.  Wastage in transit & handling is assumed at 5% . This is lower than current industry avg. of 40% as we would be deploying better practices & demand prediction.  As all price points are expected to stabilise over time to a predictable flat model , operating margins are achievable  Net Profit margins would be at 20%
  12. 12. Portal Registrations, eFarm portal allows users to interact and trade . Registration would be Ad revenues fee based. Transactions executed using eFarm logistics are charged. Advertisements placed in our website , shops , trucks are also on fee basis. Assumption : Fees range from Rs 300 – Rs 3000 based on nature os registrant. Transaction fees would be 2% of value of goods. Franchisee fees All eFarm operations are primarily run by trained entrepreneurs as franchised operations . This outsourced model offers better flexibility, competition and scalability. The franchisee fees would cover initial training , support & setup fees. Assumption : 1 % of annual turnover Consulting Advisory/technology implementation projects to agri industries , institutions, high end customers, entrepreneurs etc., Consulting charges would be on per-diem/time & materials basis. Manure/Compost/ Revenue from waste can be created by converting it to manure or using Products from agri byproducts to extract other value items (such as mango oil from kernel) waste
  13. 13. Sourcing Set up standardized collection centers in rural areas, pre-processing centers, quality control , training of personnel and Outreach sessions Distribution Set up standardized distribution centers within urban area, Training and developing logistics and transportation network, setting up marketing channels across metro areas , sorting/grading/packing/labelling and special storage facilities , build franchisee /entrepreneur network Sales and Set up model outlets & vending stations, media campaigns, training Marketing videos/material, market research Technology Software, hardware, hosting, portal development, backend ERP system development, MIS R&D Demand/Supply data and price line study , In-transit storage mechanisms, waste reduction and composting, food processing etc HR Employee salaries & benefits , External consultants Miscellaneo Company registration, trade marks & licenses , IPR , Travel etc., us
  14. 14. 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
  15. 15. Current/ Completed pilot phase studies, market studies for demand/supply prediction, Identified top 20 Completed vegetables/fruits and buying patterns, Set up pilot distribution centre in Mylapore, Chennai , (Mar 09) Setup model pushcarts/mobile vans, Setup separate unit for handling Organic produce sourcing & distribution, Setup website , Identified pilot group of suppliers, transporters & customers , Running operations and revenues Short term Seek funding/investors, Setup first model collection centre, Build street sales force, Setup low- (By Jul 09) cost POS vending stations, Build core functionality of B2B portal, Setup call centre operations , Setup mobile/SMS interfaces, Develop Training material Mid term Expand franchised shops network, Marketing campaigns/promotions, Setup food processing (By Dec 09) pilot, Initiate pilots in Tier II cities, Expand sourcing to include neighboring states, Enhance portal for third party integration, Pilot usage of third party warehouses/cold storage Expand to 1 more metro area in S.India (TBD) , Export grade sourcing, Expand portal for data (By Dec 10) analysis & trends, Integrate third party storage (wet/dry), Supply to branded retail chains, Reverse logistics of farm supplies, manure, compost to villages Long term Setup pilots in other major metros in India, Cross-border / Inter state supply chains, (By Dec 11)
  16. 16.  Year 1 : Rs 3.1 crores (~ 690K USD)  Year 2 : Rs 1.3 crores ( ~ 290 K USD)  Year 3 : None ( Will be generating profit)  Utilisation of funds :
  17. 17. • Focused in India and Rural centric/ Social sectors • Domain knowledge in (one or more of) agriculture, supply chain, retailing , food processing , technology , exports • Bring in Industry and government networking • Ability to sustain and stay invested to mid/long term (at least 3 to 6 years) • Exit in phased , mutually agreeable manner . Open to exit through buy back arrangements , entry of larger investors , corporate investments etc.,
  18. 18. Venky venky@matchboxsolutions.in Valli srivalli@matchboxsolutions.in