Entrepreneurship Orientation

Business Plan

Section E | Group 15
Date of submission: 22nd December 2022

Group Members

Participant Name Participant Institute ID

Paresh Rajput 2022PGP257
Chinmay Sharma 2022PGP113
Shriya Satadeve 2022PGP366
Abhiram A B 2022PGP009
C Jay Narayan 2018IPM028
Business Idea:

A hydroponic farm business is involved in the cultivation of plants, vegetables, floral

plants and other forms of commercial plants within compact spaces with water solvent as the
base to grow plants rather than soil. They are generally built-in sheds or greenhouses. This
business helps grow to produce in a controlled optimal environment and helps control the
necessary nutrients without engrossing yourself in the actual process of farming in the soil.
There is less hazard of crop damage due to climatic failure or pests. There is a minimal
external intervention of chemicals to save crops and hence the crops are highly organic and
nutrient- rich. This type of farming is optimal for urban areas, where space is particularly
limited, and populations are high. The cost of logistics and the reduced carbon emissions
makes this practice a highly productive and eco-friendly practice in the long run. Here we
wish to convey the usefulness of this venture and how it is profitable to not only the
customers but also the producers and investors and lenders by conveying the information via
the following points:
 Business Valuation
 Road to market
 Potential customers
 Competitors
 Industry Attractiveness
 Marketing Strategy
 Financing
 Scaling Plan

Business Valuation:
As this is a new venture which is being built organically, we are following the cost-to-
duplicate approach to value our business. This approach involves taking into account all costs
and expenses associated with the start-up and the development of its product, including the
purchase of its physical assets. The cost structure break is all as follows:
In a typical 5000 sq. ft area, the following are the general requirements and setup costs to
start hydroponic farming:

One times setup cost:

Item Cost(INR)
Polyhouse Shelter 600000
NFT System
Pipes(4 inches) 700000
Pipes(2 inches) 12000
Pipe Connectors 120000
Stand Platform (holds 32 pipers each) – 40 100000
stands
Tank (20000 litres) 55000
Plastic tank (1000 litre) – 2 tanks 15000
Plastic tanks (5000 litres) 22000
Water pump (1 HP) – 4 pumps 30000
Water pump (0.5 HP) – 2 pumps 10000
Net cups 100000
Water cooler 60000
RO system 50000
pH meter 1200
TDS meter 2000

Total one-time cost ranges from 1880000 – 2100000 INR

Per cycle cost:

Item Cost (INR)

Electricity 15000/month
Seeds 20000/month
Fertilizers 20000/month
Labour 10000/month
Maintenance 5000/month
Packaging and Transportation 10000/month

Per cycle total cost ranges from 80000 – 100000 INR

Tentative Profit Statistics:
On a 5000 square feet area, the following are the outcomes in one-time yield of crops like lettuce

Item Value
Total Production 3200 kg
Waster 1000 kg
Total left 2200 kg
Value in the market 350 /kg
Value of the yield 770000 INR
Profit margin = Total earning per cycle – per cycle investment
Profit margin = 7,70,000 – 80,000 = 6,90,000 INR/cycle
The margin of profit- 6,90,000 INR/cycle
Hydroponic farming investment per square foot:
In 5000 square feet,
 Total investment (including one time and per cycle) = 20,00,000 INR
Hence
 One-time investment per square foot – 400 INR
 Per cycle investment for one square foot – 16 INR
Hydroponic farming profit per square foot:
 Total profit margin on 5000 square feet area – 6,90,000 INR
Profit margin per square foot – 138 INR/cycle

Road to Market:
Products/crops grown via Hydroponic farming can be sold through wholesale
marketing. Live shipments in standardized quantities can be delivered in special oxygenated
tanks. The average sales cycle from first contact to closing the sales will be approximately 7-
10 days for local orders and 10-15 days for orders in a further geographic region.
Furthermore, cold-contacting local retailers and employing a salesforce will increase the
demand for the product that will be covered in the marketing strategy. Custom orders can also
be accommodated on the basis of profitability.

Potential Customers:
The hydroponic method is currently receiving considerable attention. The plants that are
grown at the hydroponic farm are in high demand. There is a growing trend toward
purchasing vegetables from hydroponic farms because these operations are environmentally
friendly. To make this business a resounding success, we can cultivate partnerships with local
buyers so that we can produce high-quality items and a variety of other types of greenery. If
sufficient revenue is generated, we will be able to gradually expand the hydroponic business
by adding additional greenhouses and other types of urban indoor growing environments.
Potential customers could include garden and nursery centres, landscapers, and private
individuals.
Also, this business can provide fresh fruits and vegetables straight out of the farm with no
requirement to storing it. Hence, this can cater to the needs of the health-conscious customers
who aspire fresh fruits and vegetables daily without any delay in the delivery.
The increase in farmers' markets and other types of open-air markets has enabled more
individuals to purchase fresh produce. Consequently, we will be able to supply not only the
large supermarkets but also the previously mentioned markets.
Keeping these developments in mind, we can direct our attention toward wholesale live
vegetable shops that offer produce grown in hydroponic systems, fresh produce markets run
by local farmers, and export to states that are nearby as well as global markets.

POTENTIAL CUSTOMER
SEGMENTATION
Retail Outlets,
Exports, 40
40

Regular
Vendors, 20

Competitive Environment:
Major layers account for the great majority of the hydroponics market share,
reflecting the high level of concentration in the worldwide hydroponics input provider
industry. Among the leading competitors in the market are Koninklijke Philips N.V., Argus
Control Systems Ltd., American Hydroponics, Hydrodynamics International, Inc., and
Lumigrow, Inc.
The hydroponics market is highly fragmented, with the top five companies—Bright Farms,
Inc., FreshBox Farms, Pegasus Agritech, Village Farms International, Inc., and Thanet Earth
— holding only 7.1% of the market share. The remaining portion is distributed among a
number of businesses. They include Plenty Unlimited Inc., Circle Fresh Farms, Green Sense
Farms Holdings Inc., and others.
In addition to inventing, experimenting with, and striving to introduce better, more effective
methods for building hydroponics systems, key players are using a number of strategies, such
as mergers and acquisitions, strategic agreements, and contracts.
The potential for development in the food and beverage industry is highest in the developing
markets, which are constantly developing into opportunity hubs for several international
hydroponics marketplaces. Emerging economies provide companies with better opportunities
to meet the dietary trends of consumers looking for healthful foods while providing a wide
range of restrained preferences and needs due to a sharp growth in population, a high rate of
urbanisation, and increased disposable incomes.
Key Players:
 AeroFarms, LLC
 Scotts Miracle-Gro
 AmHydro
  Emerald Harvest
 Argus Control Systems Limited
 Hydroponic Systems International
 Emirates Hydroponics Farms
 Advanced Nutrients (Canada)
 Freight Farms, Inc.
 Vitalink (UK)
 Green Sense Farms Holdings, Inc.
 Heliospectra AB
 LumiGrow, Inc.
 Signify Holding B.V.
 Hydrofarm LLC
 Terra Tech Corp

Recent Developments:
Product launches and expansions
Year Key Player Strategy Details
Employed
May 2020 InFarm New Store In May 2020, InFarm will launch a new
location in Nijmegen, Netherlands.
Vegetables will be grown and harvested
close to the point of sale thanks to the
facility, which will be constructed in a
variety of locations including
supermarkets, dining establishments,
and distribution centres.
April 2020 Scotts Relocation In April 2020, Scotts Miracle moved
Miracle their operations from Temecula,
California to make face shields in order
to help battle the Covid-19 epidemic
since there was a lack of personal
protective equipment.
August LumiGrow Product Launch In August 2019, LumiGrow Inc.
2019 Inc. unveiled the TopLight Hybrid smart
fixture. The expanded white spectrum
is totally wireless and can be managed
by the company's SmartPAR software,
and the Hybrids will let consumers to
take
advantage of it.

Collaborations, Partnerships, and Agreements:

Date Key Player Strategy Details
April 2020 Aerofarms Expansion The largest Aerofarms centre in the
world, measuring 90,000 square feet,
has started construction, according to
Aerofarms. The facility is devoted to
the
 commercialization of locally wanted
crops as well as cutting-edge research
and development tools.
November Aerospace Investment The largest indoor farming facility in
2019 the world was built at Cane Creek
Center, a combined industrial park for
Danville and Pittsylvania County, with
USD 42 million from Aerospace.

Industry Attractiveness:
A Future Market Insights report projects that over the course of the projected period,
the global hydroponics market will expand at a CAGR of 16.2%. The hydroponics sector is
anticipated to be worth US$12.9 billion by 2022. By 2032, the hydroponics sector is
projected to reach a value of $58.1 billion.
The rise in sales from hydroponics can be attributed to:
 The hydroponics industry is mostly driven by the increased demand for exotic
vegetables used in multi-national and intercontinental cuisines, such as kale, lettuce,
broccoli, cucumber, and cilantro. This is a result of rising consumer demand for
natural and chemical-free food products. This component helps the hydroponics
industry expand.
 Hydroponics farming is expected to expand quickly in developing nations like
Thailand, South Africa, Brazil, India, and the United States. The most promising areas
for the development of the global food and beverage industry are the developing
markets, which are quickly evolving into potential hubs for various global
marketplaces.
 Emerging markets offer a significant opportunity for producers to address consumers'
dietary shifts toward nutritional products while offering a constrained range of
confined tastes and needs due to catastrophic population growth, high rates of
urbanisation, and doubled disposable incomes resulting in improvements in the basic
standard of living.
Demand for hydroponics is anticipated to increase as consumer knowledge of the health
effects of pesticides and artificial ripening agents grows, as the process eliminates the need
for these chemicals and results in vegetables with greater nutrition. It is also projected that
the inexpensive installation costs and ease of use of these systems would increase the
adoption of hydroponics in the near future.
Future developments in climate control, nutrient film techniques, and sensing technologies,
among others, are anticipated to hasten the expansion of the hydroponics sector.
As the world's population grows, so does the demand for food. This is anticipated to increase
demand for alternative farming techniques that produce greater yields in a shorter amount of
time. Regions like the Asia Pacific and Europe are seeing an increase in the use of alternative
high-yield farming methods, which is predicted to propel the expansion of the hydroponics
market where arable land and water are now becoming scarce.
Marketing Strategy:
The first step in developing a marketing strategy would be to label the product to
establish a brand identity. Labelling the hydroponic produce can help to differentiate them
from unbranded, field-grown vegetables. For example, labelling each product as hydroponic
and locally grown can help to provide an organic feel to the product, which in turn can help
to attract health-conscious customers. Initially, the firm will have to market and supply its
products to selected outlets aggressively. The major target group will include retail outlets,
wholesale outlets, and export markets for plants and vegetables. The local shops, nurseries,
garden centres, landscapers, and private customers would serve as the secondary target group.
Considering the fact that hydroponic farming is a new concept, there won’t be much of a
hassle while letting people know about it. The focus should be on the local markets in the
beginning stages, and as the business grows, export options can be considered. We will
highlight the climate-controlled hydroponics facilities' consistent year-round output, as well
as their capacity to grow in-demand, non-native vegetables. In the future, the firm can create
a website and promote the products on the Internet apart from selling directly to supermarkets
and wholesale dealers. However, the relationships formed with the managers of such facilities
are of prime importance to the business. Attending food-related conferences and other such
get-togethers can help to establish relationships with the local business owners who purchase
our products. This can help to ensure a seasonal demand for our product.

Financing:
Typically, starting a hydroponic farming business requires obtaining or leasing property,
constructing or renovating a greenhouse or other facility, and procuring the required
equipment and materials. Some potential financing options for a hydroponics startup in India
include:
Personal or family savings: Many entrepreneurs fund their businesses using their own savings
or with the help of family and friends. This can be a good option for businesses that are just
starting out and do not yet have a track record or established credit history.
Loans from banks or other financial institutions: There are a number of banks and other
financial institutions in India that offer loans to small businesses, including startups. These
loans can be used to cover a range of expenses, including the cost of building or retrofitting a
greenhouse or other structure, purchasing equipment, and other startup costs.
Investment from venture capital firms or angel investors: Some hydroponics startups in India
may be able to secure funding from venture capital firms or angel investors. These investors
typically provide capital in exchange for an ownership stake in the business and may also
offer mentorship and other resources to help the business grow.
Grants from government agencies or non-profit organizations: There are a number of
government schemes and initiatives in India that provide funding or other support for small
businesses, including startups. Some examples include the National Horticulture Mission, the
National Agricultural Development Scheme, and the Rashtriya Krishi Vikas Yojana. It is
worth researching these schemes to see if the business is eligible for funding.
As a result, some hydroponic farmers seek investment from venture capital firms and other
investors in order to cover the costs associated with launching their businesses.
There are several ways in which a hydroponic farmer can seek venture capital financing. One
alternative is to directly propose the business concept to venture capital firms. Typically, this
entails drafting a comprehensive business plan, including financial predictions and a
marketing strategy, and presenting it to prospective investors. A strong track record in
farming or similar sectors, as well as a thorough understanding of the hydroponic business
and the target market, can be advantageous.
Participating in a startup accelerator or incubator programme, which offers support and
resources to help entrepreneurs create and expand their businesses, is another alternative. A
significant portion of these programmes also provides access to venture capital companies
and other investors.
It is also feasible to seek funding from alternative sources, such as bank loans or grants from
government or nonprofit entities. It is essential to conduct thorough research and comparisons
of the available funding choices to identify which one is the greatest fit for the business.
There are a number of venture capital firms that may be interested in investing in a
hydroponic farming business. Some examples include:
1. AgFunder: This firm focuses on investing in agriculture and food technology startups,
including those working in the hydroponic space.
2. AgTech Accelerator: This accelerator program is focused on investing in and
supporting startups working on innovative solutions in the agriculture and food
sectors, including hydroponics.
3. Cultivian Sandbox: This venture capital firm invests in agtech startups, including
those working in the hydroponic farming space.
4. Acre Venture Partners: This firm focuses on investing in startups working in the
agriculture and food sectors, including those using hydroponics.
5. PowerPlant Ventures: This firm invests in plant-based and alternative protein
companies, including those working in hydroponics.
It is also worth considering other sources of funding, such as loans from banks or grants from
government agencies or non-profit organizations.
There are several Indian government schemes and initiatives that may provide funding or
other support for hydroponic farming startups, such as:
1. National Horticulture Mission: This mission, which is implemented by the Ministry of
Agriculture and Farmers' Welfare, provides funding for the development of
horticultural crops, including those grown using hydroponics.
2. National Agricultural Development Scheme: This scheme, which is implemented by
the Ministry of Agriculture and Farmers' Welfare, provides funding for the
development of agriculture and allied sectors, including hydroponics.
3. Rashtriya Krishi Vikas Yojana: This scheme, which is implemented by the Ministry
of Agriculture and Farmers' Welfare, provides funding for the development of
agriculture and allied sectors, including hydroponics.
4. Startup India: This initiative, which is implemented by the Department for Promotion
of Industry and Internal Trade, provides support and resources to help entrepreneurs
start and grow their businesses, including access to funding and mentorship.
Scaling Plan:
The future of agriculture is hydroponics. One of the most important advances in horticulture
since the invention of irrigation is hydroponics, which may be used to produce food for
human consumption or medicinal plants.
More than 80% of the world's population is anticipated to reside in urban regions by the year
2050. This will make it very difficult for us to feed everyone using current means.
Additionally, freshwater resources are at an all-time low and will continue to decline in the
next years, making less water accessible to cultivate these crops.
For each of these significant issues, a solution is provided by hydroponic farms. When
compared to traditional farming, hydroponics may save up to 99% of the water required for
production and yields 12% more per square metre. Large-scale hydroponic operations now
have a great deal of demand in the urban environment. However, how can this occur? What
procedures must be planned in order to put a big hydroponics farm together?
Step 1: Place
You need to give the location of your hydroponics business careful thought. Do you intend to
sell your produce at nearby farmers’ markets, or do you want to sell it to nearby restaurants?
Finding a location farther from the city with a lower lease cost will be simple if selling at
farmers’ markets. It might be preferable for you to find a location closer to the areas you will
be focusing on supplying if you are specifically supplying restaurants.
Step 2: Crop Selection
Before beginning any large-scale hydroponic farm, the kind of crop you will be growing must
be carefully examined. This will depend on a number of factors, including local supply and
demand, production costs, and crop profit margins. Although spinach and lettuce are among
the simplest crops to raise and have some of the best profit margins, your location may
already be oversaturated with these products depending on how many other business owners
came up with the idea before you.
Prior to beginning your hydroponic farm, you will need to do a significant amount of market
research since this is what will keep you in business. Contact the Department of Agriculture,
Environment, and Rural Affairs in your area.
It's crucial to decide if you'll concentrate your efforts on a single crop or aim for a variety
of crops to offer various markets. Both have been done and can be done successfully, but
most experts agree that it is far preferable to concentrate on one particular crop and learn
how to maximise its output.
Step 3: What System Will You Build?
The system you choose will directly rely on the area you have available and the crop you are
producing. Crops that grow shorter and faster, like lettuce and spinach, thrive in big flood
tables or aeroponic systems. These plants develop rapidly and stay short, allowing the planter
to cram a lot of individual plants—hundreds of them—into a compact space while yet getting
enough light.
Larger plants, such as tomatoes or fruits, need more space to grow both horizontally and
vertically. The deep water culture (DWC) or NFT systems will benefit these plants.
Additionally, the setup fee must be taken into account. The cost of constructing huge
hydroponic farms will be substantially different from small-size operations. Flood tables, as
opposed to small operations, which are often constructed of pre-moulded plastic, may be built
of metal and wood.
Step 4: Lighting Lighting is a crucial factor to take into account when setting up big
hydroponic farms since the power consumption margins will significantly affect the cost of
these installations. While costing almost three times as much as HID bulbs, LED lights have
a longer lifespan and use far less electricity per lumen. Think about a 600-watt LED light that
costs around (225 SAR) less each month than a 1000-watt HPS bulb while producing the
same amount of light (depending on local energy costs). The lifetime savings of an LED
(over a 25-year period) exceeds (61,430 SAR) and the annual replacement expenses of HPS
and MH lighting at (317 SAR per bulb). Given how many lights a large-scale hydroponics
company would have, this is a significant investment over the long run.
Planning should take into account whether you have the resources to choose LEDs right now
or if you will need to save development costs and pay more in the long run.

Contributions:

 Paresh Rajput – Business Idea, Business Valuation, Road to Market, Competitors,

Industry Attractiveness
 Shriya Satadeve – Potential Customers
 Abhiram A B – Marketing Strategy
 Chinmay Kumar Sharma – Scaling Plan
 C Jay Narayan - Financing