Hariyali Kissan Bazaar & Mahindra Subhlabh

HKB - an Innovative effort

Hariyali Kisaan Bazaar (HKB) is an innovative chain of rural agricultural supermarkets set up in India since 2002 by DCM Shriram Consolidated Ltd. (DSCL).

It was started in Rajasthan, Uttar Pradesh, Haryana, Punjab and Uttarakhand.

Empowering farmers and meeting the needs of rural households by providing access to agricultural products, services and retail.

HKB An Innovative Rural Effort

Hariyali means Greenery in hindi It signifies Prosperity in Agriculture Kisaan Bazaar means Farmers market
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

DSCLs Agri Value Chain

1969 Urea

1991 Agri Input

1993 Hybrid Seeds

1996 SKVP

1997 Sugar

2002 Hariyali

Education through Shriram Khad Program

Trusted source for all agri-inputs

Strong R&D Focus

Integrated rural development extension program

Focus on Cane Development

Unique farmer centric business

Gaps in Farming
Sluggish Farming Output resulting in a sub-optimal rural economy Input Last Mile gap in technology Low yield levels Lack of technical Advisors Poor seed replacement rate Inputs Unreliable Quality Non-availability Govt. Policy Finance Dependant on middlemen Expensive credit Poor Banking Fundamental Problem Fundamental Small land holdings Low mechanization Land degradation due to repetitive cropping Farmer Output Crops Repetitive cropping Land potential untapped Quality Focus Quality focus lacking Output Buyer Unreliable & Unfair Uncertainty in Prices MSP driven Less use of commodity exchanges

Lacks commercial orientation Dependant on Govt. Sops

DSCL Extension Services Reach

Hariyali 163 Outlets 360 Agronomists
800,000 Farmers & 40 lac Ha farm land

Servicing over 50 lac Ha with a team of over 830 qualified Agronomists The business is designed to unlock the latent opportunity in rural markets facilitating inclusive growth. Set-up ias a complete Agri-solution provider to provide the rural customer with choice, trust, dignity and thus create long-term relationships Providing approachable Agri distribution channel, which caters to multiple products and advisory service as well.

Pre-requisites HKB Business

Huge Intial Capital Investment Long gestation period
High operating costs Low margin of agri-inputs Manpower costs Low purchasing power of consumers

Pre-requisites HKB Business

Availability of technically qualified manpower - Since Agri-services is key to success of this model, availability of
qualified manpower is critical

High effort business - Requires localisation due to regional variations in taste and
consumption patterns - Low literacy and education levels of consumers - Number of government approvals

High dependency on Front-end - Inadequate infrastructure and Wide geographical spread make
supply chain and logistics benefit difficult to achieve

Need for institutional support - For providing educated and skilled manpower
For providing technical training

Critical Factors
Volume & Size of business critical to viability
During 2006-07 Population (in million) Markets Rural 680 627000 Urban 320 3768

Population per market

Population range More than 2000 Between 500 and 2000 Less than 500

1085
No. of villages 60000 230000 340000

85000
No. of retail outlets 1330000 1470000 500000

Rural markets will not offer volume per outlet. The skill will lie in creating formats with costs commensurate with expected business

Hariyali helping overcome the Constraints

Agronomy Crops Sluggish Economy Consumer Markets

Distribution Poor Distribution network

Mode of transportation are limited Market reach difficult

Lack of direct Technical inputs

Agronomy practices fairly basic

Lack of direct access to markets

Cropping restricted to basic govt. aided commodities

Fragmented & widely Distributed markets

Most business thru middlemen Rural economy insulated from rest of economy by layers of middlemen

Less purchasing power

Poor quality goods dominate the markets

HKB Services Pentagon

Agri Services Retailing Farm Inputs Retailing Consumer Goods

HKB

Financial Services

Other Services Health, Education etc

Additional support services: Output buyback Output Finance Output warehousing

HKB - an Innovative effort

Quality inputs Agronomic services Financial products Consumer goods Access to output markets Information
fertilizers, seeds, pesticides, tools, veterinary products, animal feed, irrigation items, diesel, petrol

teams of extension workers and agronomists providing advice to customers

crop insurance, credit, banking, investments, money transfers

groceries, home appliances, garments

helping farms produce buyback opportunities, commodity trading

weather forecasts, market prices, farmers databases

Benefits to the farmers

Relevant Agri technology Agri-Inputs Market Linkages Medical Facility Warehousing and Commodity Exchanges Household Goods Financial services:
Access to credit, insurance and banking services . ICICI prudential Life Insurance has announced a strategic distribution tie-up with HKB. Motorola has alliance with HKB for sales and distribution of its handsets.

HKBs alignment with objectives of Inclusive growth

1. Investment in Rural Infrastructure 2. Improving farmers productivity & profitability 3. Aggregation of Farm Produce 4. Access to information & Use of IT 5. A Sustainable model for Public-Private partnership

Hariyali Concept
Ensure availability of right product, at right time and at fair price Provide Right of Choice One Stop Solution for purchase of inputs and sale of produce Free Farm Advisory services Bridging the last mile gap in delivery of farm technology Multidimensional dealings with the customers

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

Business Portfolio
Hariyali
Retail Financial Services Agri-inputs Food & Grocery Lifestyle Fuel Household Insurance Banking

AgriBusiness
Commodity Procurement Warehousing Cattle feed Seeds Milk

Agri Extension Services

Objectives To improve farmers productivity & profitability Develop long term relationship with farmers To ensure last mile delivery

Agri Extension Services - Approach

Goal Setting:
Dedicated Team:
Set goals & customizing it into regional & seasonal themes At Regional and Field level, which considerably improve the quality of services. Focused Execution: Target specific villages & farmers. Knowledge Management: Document practices, yield data creation & sharing information

Monitoring:

Training:
Impact Assessment:

Continuous training on latest techniques

Measure impact on total farmer income and soil health

Reasons to Focus on Last-Mile Delivery

Farmers often seek immediate gains, produce more at less costs Bridge geographically differentiated management yield gaps Strengthen Public -Private partnerships / networks Developing Technical options to match endowments of farmers Empower farmers with knowledge- provide timely solutions. Strengthen the input chain - weak / dysfunctional

Training and machinery use for timely operations

Inclusive of deployment of seed to facilitate technology transfer

Last Mile Delivery Through

Agronomic Advisory
In store At field Over phone In-house training

Village level meetings Demonstration on new technologies Crop seminars/kisan melas Soil & water testing based recommendations Customized services (spray, land levelling, zero till etc)

Farm Advisory
In-store as well as on- farm advisory.

In-House Trainings
Need based training on different aspects important for the farmers

Village level meetings

Pre-season and mid season village level meetings are conducted on new developments and improved practices.

Demonstrations on New Technologies

Field Days
To observe and evaluate the results of the demonstrated technology and resolve farmers queries

Crop Seminars (Kisan Mela)

Crop seminars are organized during Rabi and Kharif seasons

Soil and Water Testing

Emphasis on soil test based fertilizer recommendations

Customized Services

Information Through Literature

Promotion Activities @ HKB

HKB Loyalty Card

Rural Indias first ever card based loyalty program.

Hariyali First is a point based program that has differential point systems for different categories.

Impact of Hariyali Kissan Bazaar

Sugarcane - Intercropping
Locations : Faridpur ( UP ) Farmer Practice : Solo cropping Recommendation : Sugarcane + Mustard / Okra/ Onion/ Garlic/ Water melon Impact : With successful intercropping, farmers were able to achieve extra income of Rs. 8500 to Rs.25000 per acre

Crop Diversification
Locations : Tadapelliguddam ( AP ) Farmer Practice : Paddy crop two times in a year Recommendation : Paddy followed by hybrid Maize Impact : Profit of Rs 20000 as compared to 10000 per acre

Fertilizer Application Technique

Locations : Faridpur ( UP ) Farmer Practice : Using DAP mixed with ZINC in potato crop Recommendation : Basal application of zinc followed by NPK and spray of liquid fertilizers Impact : Increase in income from Rs.40000 per acre to as much as Rs.52000 per acre.

The Hariyali Difference

Round the year services (24x7) Bundling of products and services Brand neutral Qualified Agronomists managing the sales process Presence at grass root level

Key Drivers to Impact

Based on building trust Long term relationships Customized Agri-solutions Complementary to other extension agencies At farmers choice
Leading to better adoption

CSISA & Hariyali

CSISA: Cereal System Initiatives for South Asia Hariyali acting as a delivery partner with CSISA to strengthen the ways and means for bridging the gaps for last mile delivery CSISA provides know how for
Technical support in crop seminars / field days New technology dissemination Demonstration of advance mechanization Knowledge of farm implements like laser leveller & zero till

CSISA & Hariyali

CSISA Delivery hubs to play an important role for achieving the overall objective of Agri Extension CSISA has two operational hubs at Hariyali Hariyali Ladwa Haryana & western UP Hariyali Farenda Eastern UP & Nepal

CSISA Activities In Hariyali Campus- Ladwa

https://sites.google.com/site/csisaportal/Home/announcements/trainingprogramathariyalikisanbazar

https://sites.google.com/site/csisaportal/Home/announcements/seminaronriceresiduemanagement

Hariyali - Centers

Hariyali - Stores

HKB Store Characteristics

Area Characteristics
Fairly good infrastructure Progressive Farmer, Processing infrastructure High farming potential Access to market information

Outlet Characteristics
High investment Advisory, Soil testing, Financing, Banking, Warehousing, Departmental Store Output buyout

Large HKB

Medium HKB

Area with basic roads Farmer, willing to change High farming potential

Medium investment Advisory, Soil testing, Financing, Wider range of Products Output buyback

Back-end

Small HKB

Poor infrastructure Farmer, willing to change High farming potential

Low investment Advisory, Financing & Basic Products Possibly, franchised

Supporting with technology solutions and product supply chain

Sustainable inclusive growth

Catchment Radius of 20-25 Km Approx. gross income Rs 280 Cr.

About 20,000 farming families

HKB store Catchment details

Agricultural land 30-40,000 HA

With each center reaching out to 20,000 farming families, the Hariyali model is proving to be an example of commercially sustainable business venture.

HKB Overcoming Constraints

Constraint : Agronomy
Primary focus on increasing Income Levels Qualified agronomists manning the outlets & providing customized technical advisory to farmers 24 X 7. Increasing agricultural incomes can, Trigger the rural economy Stem the migration to cities

What has worked ? Customized solution Collaborative approach Long term engagement with farmer

Enabling implementation of New Technology in Agriculture

Agronomists handholding farmers in the field, therefore enabling implementation of new technology

Soybean profit Rs.3000 per acre in comparison to Rs.1600 per acre

Mustard Seed cultivation profit Rs.8400 per acre in comparison to Rs.2900 per acre

Adding the critical service element - Education with a service attitude

Constraint : Crops
Creating Opportunity in New Crops

Introducing and educating farmers about new crops with buyback options
Farmer profit Rs.18000 per acre in comparison to Rs.9000 per acre with the traditional crops Creating Market Access Creating direct linkages with processors , exporters, retailers etc. High value cropping resulting in a profit of Rs.50000 per acre in comparison to Rs.9000 per acre with the traditional crops

Constraint : Consumer Markets

Providing Urban Amenities in Rural Areas Making available Aspirational but Value for Money household products triggering demand in the rural economy

Giving the Customers the right to choose

Giving the farmers respect, dignity and freedom of choice

Assured quality & quantity

Easy Availability of quality products at city-like fair prices does two things, Reforms local shopkeepers / trade channels Stems the Market Migration to cities

Constraint : Infrastructure

Providing ATM access, weather forecasts, commodity prices & commodity futures

Creating Local Employment

Improving the quality of life

Learning's
Learning's on Role of Government, Learning's on Farmers and Modern Learning's on Hariyali

Learning's Role of Government

Creating Enabling Environment
Amendment of laws causing disproportionate subsidies to different fertilizers, Encourage effective technologies like fertigation & zero tillage Create environment for credit & insurance delivery Amend Market laws to encourage farmgate procurement. Move towards open markets rather than MSPs Encourage creation of Modern Market Infrastructure Encourage Commodity Exchanges

Learning's Role of Government

Technology dissemination
Govt. should avoid carrying out Extension Services
themselves Better done through private agencies with clear measurable targets. Universities should focus on field research which can make farmers take the first step. The Research Institutes / Agri Universities should employ private agencies / modern intermediaries (like Hariyali) to achieve technology dissemination.

Learning's Role of farmers

Farmers need to look at agriculture as a commercial activity Govt. can help by encouraging open markets & not MSPs. Creating Direct linkages with processors / consumers will help. Modern Intermediaries can play a role in education. Farmers should be willing to adapt new technology. They will require support of extension agencies/ modern intermediaries for this. Farmers need to be a lot more enterprising when selling their crops Form farmer groups or use modern intermediaries like Hariyali. Use Commodity exchanges / Warehouse reciept financing. Set up small primary processing at farm itself.

Learning's Role of HKB

Focus on improvement in agricultural productivity income levels. Work towards improving quality of life including health & education. Create market linkages for farm produce Create demand for products. Increase efficiency, transparency and participate in the input & output value chain

Learnings from HKB

Yield & Productivity Improvement is essential to creating inclusive growth in Agriculture Public & Private sector can collaborate by creating Enabling Environment & Efficient Delivery", respectively. Private sector should create multiple revenue streams based on transparent & effective participation in input as well as output value chain. Only commercially sustainable business models will be able to create a long term impact on the rural economy.

Man Behind the Hariyali

http://www.dscl.com/our-leadership/group-management-board.aspx?page=8

HKB in News

HKB in News

Current Expansion Plans for HKB

Rapid scale up plans - to set up 200 centres in the next 3 years. Ie. A total of 500 HKB outlets in next 3 years. Hariyali Kisaan Bazaar headed towards eastern and southern India (Andhra Pradesh, Tamil Nadu and Karnataka, Uttar Pradesh, Uttaranchal, Rajasthan, Madhya Pradesh, Haryana and Punjab) DCM Shriram Consolidated (DSCL) has planned to separate its rural retail business Hariyali Kisaan Bazaar into a subsidiary.

References
1. http://www.dscl.com/agri-rural-business/hariyali-kisaanbazaar.aspx 2. http://www.farmingfirst.org/2009/08/hariyali-kisaan-bazaardeveloping-rural-businesses-in-india/ 3. http://abid-hussain.blogspot.in/2011/05/khushali-lati-hariyali-kisaanbazaar.html 4. http://www.fertilizer.org/ifa/HomePage/SUSTAINABILITY/Knowledg e-transfer-innovative-approaches/Hariyali-Kisaan-Bazaar.html 5. http://www.new-ag.info/en/developments/devItem.php?a=1399

Mahindra Shubhlabh

Objective: To provide total farm solution to the Indian farmers.

Agri-Business Company of Mahindra Group with equity stake of International Finance Corporation(IFC, Washington) MSSLs business mission is to integrate the agriculture value chain from Agri-inputs through to Farm outputs or Agri commodities

Mahindra Shubhlabh Services

Mahindra Shubhlabh was established in order to better serve the extensive rural base of farm equipment customers. ShubhLabh provides farmers with a single source channel to access all the products, services, and knowledge they need to run productive farms. It is present at every stage from planting to selling with seed supply, crop care, and fresh produce distribution services. Before the planting season, it provides farmers with a portfolio of seeds including cereals, oil seeds, fruits, vegetables and seed potato.

By supplying high quality seeds before the growing season, it enhances the potential for improved farm productivity in several regions of India.

Mahindra Shubhlabh Services

During the growing season, it brings farmers an array of products to help them protect their crops and reap high yields. Through their wide trade and distribution network, they supply a wide range of crop care inputs including insecticides, fungicides, herbicides, nutrients, biological, and plant growth promoters.

After harvest, they provide distribution services for fresh produce both domestically and abroad.
Today, it exports to numerous retailers in continental Europe, the UK, the Middle East, China and Southeast Asia and import foreign fruit to India. The fresh produce basket includes pomegranates, mangoes, apples, kiwis, and pears.

http://www.mahindra.com/What-We-Do/Agribusiness/Companies/Mahindra-ShubhLabh-Servic

Mahindra Shubhlabh Services

Mahindra to merge subsidiary's agri biz into itself Auto major Mahindra & Mahindra has decided to separate the agri business of its subsidiary Mahindra Shubhlabh Services and merge it into itself. The move to separate the agri business is a part of MSSL's strategy to focus more on the fresh fruits exports business.
"In view of the agri inputs business being a high gestation business, MSSL now intends to streamline its operations and wants to focus only on the fruits business and explore strategic options to grow this business domestically and globally in terms of scale and profitability," M&M said.

Two Aspects of Business

Commodity Trading

To provide one stop shop to the farmers for all his needs

Initially, both aspects of the business were supposed to be highly IT driven Both Commodity Trading and Farm solution were supposed to be highly IT driven models

Hub and Spoke Model

Model:- Hub and Spoke

HUB:-Franchise Operated Spoke:-Franchise Operated

Hub and Spoke Model

In order to increase its reach to remote places, it adopted the Hub and Spoke Model Through Hub and spoke model Mahindara subhlabh entered paddy and maize. Later, they aimed fruits, vegetables and spices farming. Krushi Vihars (farm solution programme) operated on plan-do-check-act cycle of continuous improvement

Constituent of the Mahindra Shubhlabh Model

1) Arrange all Agri-inputs such as Seeds, Pesticides and Fertilizers to the farmer. 2) Rent out Farm machinery like Tractors, Transplanters and other special machinery that helps to reduce the cost to the farmer 3) Provides commercial agricultural extension by bi-weekly visits to the Farm 4) Offer Crop-spraying , Harvesting and Post-harvesting services 5) Provide Commodity Trading in final produce of the farmers

Evolution of Mahindra Shubhlabh

First Total farm solution shop was opened at Madurai, Tamil Nadu. Mahindra Krishi Vihar (MKV) Reasons for choosing Tamil Nadu:1) Spill-over effects in case of a problem expected to be less. 2) MSSL wanted to begin its work in Paddy

Mammoth investments were made for the supermarket, tie-up with input companies and in IT infrastructure

Failure-Point
Initially, the model were to be operated with the help of Franchises. Franchisees were expected to
make huge investments pay a Non-refundable sign-up Fees were expected to reach the villages

The Initial Model considered :- Investment of approximately 1 Crore rupees (the cost of property, equipments, Land for carrying out Agri R&D, computers, tractors and Working Capital etc.) The Sign-up fee was Rs. 5 lakhs. It was non-refundable.

Failure-Point
Mahindra expected a lot of sign-up by prospective Franchises in the belief that: The Franchises would be getting definite sale through registered farmers, and also the products recommended by Mahindras for farming. They were obviously of Highquality and had relatively better margins. Money will be made through Farm consultancy fee that the farmers will pay. The Franchises were getting the distributorship of sorts of various companies in one shot without paying deposits. They would earn money through equipment Rental

Ground Realities of Indian agricultural Economy

The Non-refundable sign-up fees came as a major Stumbling block Most Dealers in Agri-input industry have to give only Security Deposits against which they either get a fixed deposit interest or get materials worth that amount immediately Many dealers , who had the capability to invest , were already One-stop shop themselves They also had Field assistants and Contract employees from companies like BASF, Bayer and other Agrochemical majors who do Field Trials demonstration too

Ground Realities of Indian agricultural Economy

The Input industry is a highly Credit driven industry (Credit period spanning 90 to 180 days). Any new Business model should provide that opportunity.

MSSL relied on Brand Equity instead of educating and developing Dealers.

Consequences
Not a single sign-up in the first phase In just 8 months, investment was brought down to 47 lakhs The IT Model was abandoned After 2 years, MSSL was at around 5 to 8 % of its projected revenue. Only 5 centers operational against projected 40. In the third year of its existence, the Commodity Trading was shut down At the end of 3rd year, 12 centers operational(4 of them JVs), 8 sign-ups in all and total turnover 6 crores

Refined Business Model

MSSL brought down Sign-up fee from 5 lakhs to 3 lakhs Project cost brought down from Rs.47 lakhs to Rs.27 lakhs Added inbuilt flexibility of it being brought down further to facilitate new sign-ups The Fund released from E-agri business was utilized for other purposes

Refined Business Model

Sign-up fees once again brought down to Rs. 1 lakh and that too, it was refundable The sub-Franchises were given only 1 Tehsil as against 1 district earlier. The IFC funding of 11 crores for MSSL MSSL trying to rework the model

Contract Farming Model of MSSL Indirect Contract Model

Contract Farming
Crops- Basmati, Non-Basmati, Maize States covered- Punjab, Tamil Nadu Franchises: Sukhjit Starch (Basmati,Maize-4000 Hectares) Bhuvi Care Pvt. Ltd. Maize(800 Ha) & Paddy(200 Ha)

The Consortium Approach

Agreement with Govt. Of Punjab to facilitate Contract farming of Maize and Basmati paddy Planned to increase farmer profitability by 35-60 % by better and cost effective input supply and better value realization from Farm produce MSSL offers Extension services to the farmers for a fee but ensures a certain level of yield If farmers get lower than the assured yield, then they need not pay the fee

MSSL in News

References
http://www.business-standard.com/india/news/mssls-grape-exportdip-by-6857/435756/ Resource Provision, Productivity and Contract Farming Parmod Kumar Contract Farming for Agricultural Development and Diversification in Punjab: Problems and Prospects- Sukhpal Singh (IIM A) New Farm Supply Chain Initiatives in Indian Agriculture - Dr. Rakesh Singh

Thank You !