hariyali - india
TRANSCRIPT
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
SOURCE: MGI INDIA & NCAER
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
SOURCE: MGI INDIA & NCAER
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
SOURCE: MGI INDIA & NCAER
Gaps in the Rural Economy
Gaps – Rural Economy
Gaps in the 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.
Gaps in the Rural Economy
• 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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