hariyali - india

HARIYALI KISAAN BAZAAR

INDEX

• The Rural Market Context• Gaps in the Rural economy • Hariyali Business Model

The Rural Market Context

The Rural Ecosystem• Rural Demographics • Rural Incomes

Agriculture• Agriculture Income• Challenge of Agricultural productivity• Agriculture Trend • Agri-Inputs Consumption

Rural Household Consumption

The Rural Ecosystem

The Rural Market

The Rural Ecosystem The Rural

Market Agriculture

andAllied Activities

Harvesting andAgriproduce

Marketing

ConsumptionTrading,

Warehousing etc.

Rural BusinessOpportunity

• Agronomy Advise• Agri-Inputs• Credit

• Post-Harvest Mgmt• Market Linkages• Output Buyer

• Commodity Trading• Warehousing• Commodity exchanges

• Consumer Goods• Household Goods• Financial Services• Healthcare• Education

There is opportunity to participate in the complete rural ecosystem, i.e. both the income and consumption side

(Rural Incomes - $450 bn & Consumption - $ 250 bn)

Rural demographics The

Rural Market • Rural India supports a population of 790 mn. as of 2005 (70% of

India’s population) living in about 600,000 villages distributed as under,

• Even with increasing urbanization and migration, 63% of India’s population is expected to live in rural areas, in 2025. (Abt. 906 mn.)

• Also, 78% of the rural population lives in 35% of the locations.A huge potential in terms of the growing market size

315

32

63

65

22

%age villages Population spread

< 1000 people

1000-5000 people

> 5000 people

(%age) SOURCE: MGI INDIA & NCAER

Rural population by Category

548 614514

403263

2058 253 411

435

5318120

10

3

0

100

200

300

400

500

600

700

800

900

1000

1985 1995 2005E 2015F 2025F

Year

Po

pu

lati

on

(m

n)

Global (>Rs.10 L.pa)

Strivers (Rs.5-10 L.pa)

Seekers (Rs 2-5 L.pa)

Aspirers (Rs0.9 -2 L.pa)

Deprived (< Rs 0.9 L.pa)

Rural Incomes The

Rural Market • Rural India generates an income of Rs. 19000 bn. ($ 450 bn) which is

approx 48% of India’s GDP.• Per capita rural income is growing at the same pace as urban income.

Rural India is witnessing robust income growth and the aspirational classes are growing

571 682 790 875 906

SOURCE: MGI INDIA & NCAER

Agriculture

The Rural Market

Agriculture Income The Rural

Market • Agriculture contributes about 37% of the rural GDP (Approx. Rs.6000 bn.

($150 bn))• “Agriculture expected to continue as primary source of income and

employment for majority of rural Indians in the foreseeable future’- Mckinsey study.

• Agriculture is expected to grow at 3.1% CAGR over the next two decades as against 2.4% CAGR in the last decade (8.8% in nominal terms)

Compound annualgrowth rate

Agriculture value added in GDP(In '000 crores, Indian rupees, 2000)

430 546752

997

1995 2005E 2015F 2025F

2.4%

3.1%

Agricultural incomes expected to be $250 bn by 2025


Challenge of Agricultural Productivity The Rural Market

Increasing agricultural productivity requires new technology and inputs

Source: Economic Survey of India 2007-08

Yield CAGR’s

•Pulses - 0.6%•Cereals - 1.7%•Wheat - 0.95%•Paddy - 1.22%

Wheat Yield Comparison (kg/Ha)•India - 2600•China – 4300•Mexico - 4700•UK - 7900•World Average - 2900

The Productivity Gap The Rural

Market

Productivity growth essential to cater to food requirement

Current level of productivity Productivity requirement to meet growing

demand

Source: Ministry of Agriculture & Cooperation, India

125

511338

43

208

8722

79

90

242

117

29110

132

0

100

200

300

400

500

600

700

1993 1998 2003

Agriculture & Allied Output ('000 crs) (Nominal)

Fruits & Vegetables (CAGR 13.1%)

Milk group (CAGR 9.8%)

Meat Group (CAGR 8.9%)

Other agri & livestock (CAGR 8.7%)

Cereals,Pulses, Oilseeds, Sugar(CAGR 6.8%)

Agriculture Trend The Rural

Market • Therefore, agricultural productivity expected to improve• Shift towards higher value added farm activities likely to continue

270 486 630

Shift towards value added agriculture and productivity gains expected to increase demand for quality agri-inputs and technology advise

SOURCE: NATIONAL ACCOUNTS 2005, MGI INDIA & NCAER

Agri Input Consumption The Rural

Market • India’s Agri input consumption is approx Rs 80,000 cr and is

currently growing at approx 3%

• Key categories like fertilizer, pesticide and seeds have market sizes of Rs 30000 crs, Rs 4100 crs and Rs 5200 crs, growing with 3 %, 3.2 % and 5.7 % CAGR

• As with yield levels, India’s Agri-nutrient consumption per acre is much lower than other countries

India Bangladesh China Netherland

108 198 289 510

Agri Input Consumption The Rural

Market • There is need to,

– Increase Food production– Shift to value added farming– Increase agricultural productivity

• Agri-input consumption, is therefore, expected to increase, backed by,– Better farm produce realizations– Technical Advisory services.– Shift towards better seed varieties– Government initiatives like National Horticulture Mission,

Irrigation projects etc.– Access to institutional credit.

As the country takes steps towards more intensive agriculture, the demand for quality inputs and farm technology expected to accelerate

Rural Household Consumption

The Rural Market

378

4127

50

439

1044324 0

359

456

873929

301

919

251

100100

211

1030

871

211

317

0

500

1000

1500

2000

2500

3000

1985 1995 2005E 2015F 2025F

Rural consumption by Category (Rs '000 crs)

Global (>Rs.10 L.pa)

Strivers (Rs.5-10 L.pa)

Seekers (Rs 2-5 L.pa)

Aspirers (Rs0.9 -2 L.pa)

Deprived (< Rs 0.9 L.pa)

Rural Household Consumption The Rural Market

• Rural India is a consumption market of approx. Rs.9700 bn ($230 bn) as of 2005 and is expected to roughly triple by 2025 (Rs26400 bn or $630 bn) (Growing at 4.9% p.a)

• Hence, by 2025, Rural India market is expected to be larger than markets of South Korea, Canada today or 4 times India’s urban market today

A very large consumption market dominated by “New to bracket” consumers

450 610 970 1670 2640


Rural Household Consumption The Rural Market

Average rural consumption per householdThousands, Indian Rupees, 2000

116

45 5067

104

158

UrbanIndia,2005E

1985 1995 2005E 2015F 2025F

Per Household spending in Rural India expected to reach current urban levels in next ten years


Gaps in the Rural Economy

Gaps – Rural Economy


• Infrastructure:

– Poor road and telecommunication connectivity

– Lack of reliable electricity and water supplies

– Limited logistics infrastructure & High distribution costs

– The silver lining, however, is,

• About 50% of the population lives in connected districts with reasonable infrastructure.

• Govt. focus on inclusive growth and investment in Infrastructure development i.e. Bharat Nirman Yojana, NREGS

• Private sector also taking steps to build warehousing, logistics & power infrastructure.


• Demographic Spread

– Population widely dispersed, disaggregated consumption

– Low per capita spending

– The silver lining, however, is that through the top 20,000 densely populated locations, over 15% of the population in rural can be catered to.

Higher costs of servicing rural markets will be a continuing challenge for marketers

Gaps in the Rural Economy• Market Characteristics:

– Lack of availability and choice

– Look-alike “Locals” dominate the market. (Local players in the unorganized sector are able to provide cheaper products)

– Few trusted, national brands (Limited exposure to the multitude of products in urban India)

– Malpractices – prices higher than MRP, faulty weights and measures, adulteration, consumer schemes not passed on

– Retailers would often misuse their position as the only source of information.

– A poor ‘buying experience’

Inefficient markets with “Basic” service levels.

Lack of reliability , trust and choice for the customers

Gaps in the Rural Economy• Agriculture:

Basic– Small land holdings (Avg. holding 1.5 Ha)– Investment in Agriculture only 2% of GDP– Degrading Soil Health– Depletion of Water Table

Agriculture Practices– Repetitive Crop Cycles– Low yield levels– Low Input consumption (NPK consumption of 116 kg /Ha against 289 kg/Ha in

China)– Lack of last mile delivery of new agri-technology & practices– Traditional expensive sources of farm credit (Farmers caught in debt

traps)– Low Farm Mechanization & Non-availability of Irrigation facilities

Farm produce Marketing– Dependence on State for disposal of Farm Produce– Underdeveloped Market Infrastructure

Large potential for Agricultural development

Summary - Rural Economy

Summary – Rural Economy• Scope & Size: The rural ecosystem with an income size of $450 bn and

consumption level of $250 bn offers a large enough opportunity for organized businesses.

• Future growth: Rural household incomes are growing at the same pace as urban and a large consuming class is expected to emerge in the rural areas.

• Market Structure: Rural markets fairly basic in nature. Lack availability, choice, quality products and service levels. High costs of reaching out to rural markets for individual marketers.

• Agriculture: While agriculture is expected to continue as the mainstay of rural population, a much more customized and commercial approach is required to improve productivity levels.

• Last mile gap in Agri-technology: Bridging the last mile gap in Agri-technology is critical to increasing Rural Incomes.

The true potential of agriculture and the rural economy can be unlocked, if a business targets to address the key gaps in a commercial and viable manner.

Hariyali Kisaan Bazaar

Harnessing the potential of rural India

Hariyali Kisaan Bazaar

“Hariyali” means “Greenery” in Hindi It signifies “Prosperity in Agriculture”

“Kisaan Bazaar” means “Farmer’s market”

Hariyali Concept

The business is designed to unlock the latent opportunity in rural markets facilitating inclusive growth

Hariyali ConceptFocused at increasing rural incomes by providing free agronomy advice and bridging “last mile gap” in technical know-how

Developing Strong relationships based on trust, reliability and fairness

Leveraging relationships through “one stop shop” retailing and direct sourcing of quality farm produce

The Strategic intent of the business is to provide the rural customer with choice, trust, dignity and thus create long-term relationships

Value proposition of efficient procurement, improved logistics, strategic pricing and multidimensional dealings with the customers

Creating platform between urban and rural

Vision and Mission

VISION To be the leading and trusted

Rural Products and Services Enterprise

MISSION We are committed to

improving the quality of life in Rural India by providing superior products and services and efficient sourcing of quality agricultural

produce

Business Portfolio

Hariyali

RetailFinancial Services

Agri-businesses

Agri-inputsFood

& Grocery

Lifestyle Household

Fuel

Insurance Banking

Others

F&VCommodity

Trading

Seeds Warehousing

Milk Cattle feed

Agri-Services

Formats

Center• A model rural hub located near

large rural agglomerations or highways

• Focused on all retail and agri businesses

• Format that encompasses Agri-services, One-stop-retail-shop, Sourcing, Banking services, Fuel station and Recreation areas

• Spread over owned 4 acre campus

• Retail space of 15-20K sqft.

Store• Located in the marketplace of

small towns• Focused mainly on retail

businesses • Convenience format

encompassing agri-services and retail of select categories

• Compact space of 4K-5K sq. ft retailing agri-inputs and FMCG

Penetrating markets through appropriate formats

Hariyali - Centers

Hariyali - Stores

Business Extensions• Property Related

– Shop in Shop– Mall Management– Extra Land Holdings

• Business Integration– Retail

• Cash & Carry Business• Merchandise Outlets in Tier 4 cities

– Financial Services – NBFC / Microfinance– Trading – Processing of Dals /Spices– Milk – Dairy Business– Integrated Food Supplier

Agri-Services

Hariyali’s business portfolio

Agri Services• Agri Services are provided as a value added offering

– Customised advice on specific opportunities/ problems– Farm Visits by Agronomists for giving Technical Advice– Field demonstrations for propagating best practices – Agronomy Seminars along with experts for last mile delivery of

best practices– Soil and water test based recommendations

• Agri Services is directed at improving farmer’s productivity and income levels.

• Dedicated qualified agronomists offer unbiased guidance thus building quick rapport with the farmers of the area.

• Wide networking with National / International Agri Institutes like CIMMYT, IRRI, University of Adelaide for Knowledge Management and dissemination of best practices

• Creates long term relationship with the farmers.

•Serves as a foundation for Hariyali’s Retail, Financial & Agribusinesses

…Hariyali….creating a scalable, viable business having a transformational impact

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