Vermarketers

Team​ ​members​ ​:

Ananya​ ​Bharati​ ​-​ ​P38126

Deepak​ ​Singh​ ​Adhikari​ ​-​ ​P38136
Ritesh​ ​Amar​ ​Singh​ ​-​ ​P38161
Ruchi​ ​Rajendra​ ​Patel​ ​-​ ​P38162
Sachin​ ​Arya​ ​-​ ​P38163
Shanika​ ​Goel​ ​-​ ​P38168

What​ ​is​ ​the​ ​problem​ ​in​ ​the​ ​situation?

Vanraj has been designed specifically to cater to small farmers and its idea too originated from
a need felt by a farmer in a similar situation. However, tractor sales in this segment account for
only 0.5% of the total sales and the growth rate is also negative i.e -0.37%. Since the
investment in the manufacturing of Vanraj is high and profits at the rate of 0.19 million per
tractor is dependant on the economies of scale , the project should be taken further only when
there is a high chance of Vanraj penetrating this sector and causing high sales for the following
years. The main problem here is to identify if Vanraj should expand its target segment to B2B
sales​ ​as​ ​well​ ​or​ ​the​ ​current​ ​customer​ ​base​ ​is​ ​viable​ ​for​ ​the​ ​project.

Our​ ​Solution​ ​for​ ​the​ ​problem​ ​:

A large number of small and marginal farmers that accounted for 82% of the total land holdings
did not own tractors. This was not due to financial reasons. It was very easy for a farmer with 3
acres of land to get a loan for a tractor. Also, this segment of farmers have not been provided
with a proper and reliable product that is suitable for small land holdings. The tractors of 10HP
available by assembling parts of the Chinese market are not reliable for the farmers since they
cost Rs. 1,00,000 and may fail anytime, leaving the farmer with a loss.Also, for these farmers,
the capacity is under-utilized i.e mostly 50% which shows that the tractors already bought by
these​ ​farmers​ ​is​ ​not​ ​the​ ​correct​ ​size​ ​for​ ​these​ ​holdings.
The cost of using a Vanraj tractor for 1 acre as given in Annexure 4 amounts to Rs. 1260/- while
for that used by a big tractor is Rs. 3040/- which is approximately 2.41 times the cost incurred.
Hence, Vanraj is very cost effective and given the expenses in operating it, it will result in faster
attainment​ ​of​ ​break-even​ ​point​ ​for​ ​them.

Also, as compared to bullocks Vanraj is viable and a preferable option since bullock will
consume Rs 20000/- per annum for 10 years along with a purchase cost of Rs. 30000/- and will
be​ ​useful​ ​for​ ​only​ ​5​ ​to​ ​7​ ​years​ ​along​ ​with​ ​the​ ​regular​ ​care​ ​that​ ​needs​ ​to​ ​be​ ​taken​ ​for​ ​them.

In just 4 states of India, there are 35076 lac small and marginal farmers. Even if 0.005% of this
market segment purchase Vanraj in the next 10 to 12 years owing to the push given by the
government in terms of farm mechanization and subsidies and increase in net sown area, there
is​ ​a​ ​huge​ ​growth​ ​perspective​ ​for​ ​the​ ​company.

As for the recovery of investment made by Vanraj, if its sales go as predicted we can see that
Vanraj is making a profit every year and is able to recover its costs in the first year itself. For a
new​ ​company​ ​still​ ​trying​ ​to​ ​capture​ ​the​ ​market,​ ​even​ ​a​ ​profit​ ​of​ ​1.33%​ ​sounds​ ​worth​ ​the​ ​try.