Dynamics of Incubating an

3
M FPO
MCE 8-9, January 16, 2023
Dr C. Shambu Prasad
FPO Impact Award
 DSC’s Strategy for Promoting Sustainable Agri. Livelihood

Value Sustainable
Productivity addition and
Enhancement agriculture
marketing livelihoods
Cost reduction
Risk
management

Water & Land

mgt.
Fed FPO

Low &
WUA+WDC Cluster
uncertain Women
Association
Incomes from Federation
agriculture
WUGs Kisan Cubs SHGs

Vertical for water and land Vertical for agriculture Vertical for saving -credit
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 KFPC Financials 2014- 2020
Stage 1 Stage 2
Particulars 2016-17 2017-18 2018-19
2013-14 2014-15 2015-16
Total Revenue 2,909,874 4,630,623 10,632,654 56,576,286 161,941,681 19,446,946

Total Expenses 2,529,272 4,462,728 9,789,420 56,357,090 161,705,459 19,362,486

Profit Before Tax 380,602 167,895 843,234 219,274 236,222 84,480

Profit After Tax 380,602 167,895 843,234 42,484 156,000 71,384

Share Capital 538,000 780,000 1,017,500 2,563,000 3,767,000 4,408,500

Reserves and Surplus (353,484) (185,589) (139,603) (12,625) 318,220 389,604

Long-term Borrowings - - 303,000 - 1,511,094 1,830,737

Revolving Fund 1000,000 1000,000 1000,000 1000,000 1000,000 1,000,000

Fixed Assets including 34,470 28,480 74,466 152655 202,264 1,223,559

investments
Current Liabilities 974,369 1,257,245 2,100,317 1289420 12,971,527 1,762,913

Current Assets 1,959,789 2,637,262 3,773,668 6384902 19,034,415 8,171,078

Marketing Contribution to sales
500

450

400

350

300

250

200

150

100

50

0
Visnagar Himmatnagar Modasa Meghraj Dhari Total-1

2016-17 2017-18 2018-19 Total

Governance and Management
Figure 4: Share-holder vs. non-shareholder beneficiaries
16000
14000
12000
10000
8000
6000
4000
2000
0
1 2 3 4 5 6

No. of Shareholder farmers No. of Non-shareholder farmers served

SHAREHOLDING

4409

1729
868 855 545 412

V I S N A G A RH I M M A T N A G A R M O D A S A MEGHRAJ DHARI TOTAL

Financial Sustainability of FPC: Margin analysis of portfolio
Details 2016-17 2017-18 2018-19
1 Agri-Inputs from distributors (average margin)
1.01 Seeds 3.25 3.50 2.89
1.02 Pesticides 12.5 12.35 12.93
1.03 Bio-Products 27.30 23.54 22.56
1.04 Farm Equipment 12.08 9.64 7.58
2 Agri-inputs produced by own farmers or KPCL (average margin)
2.01 Wheat Seeds 7.48 8.50 10.16
2.02 Groundnut Seeds 5.20 6.00 7.56
2.03 Fodder Seeds 15.00 15.00 16.36
2.04 Bio-Fertilizer 12.00 12.00 11.78
2.05 Bio-Pesticide 8.05 8.75 9.09
2.06 Cattle Feed 15.22 12.67 16.67
3 Aggregation & Marketing of agricultural produce 7.00 7.25 7.46
4 MSP with government (groundnut) 1.00 1.00 1.00
5 Retail Outlet – Ahmedabad/ Himmatnagar (KPCL/Gujpro) 0.50 0.50 0.72
6 Potato – contract farming (2019-20) 2.75
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Market initiatives during two stages of incubation

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 Case discussion questions
1. Is it a good idea to promote multi-community, multi commodity, multi- location FPOs? What lessons can be drawn for incubating
other FPOs in similar context, elsewhere in the country/ world? (G10)
2. “If DSC had not wasted so much time in the ‘preparatory phase’, Krushidhan would have been a multi-crore company by now!” – Do you
agree or disagree with this observation? Please substantiate your arguments with evidence drawn from the case and elsewhere. (G9)

3. How can the capacity of the leadership be built during incubation period to deal with local external forces that feel threatened by
the success of the company? (G8)

4. What kind of post-incubation support would be needed (if any) and how can or should it be provided? What kind of eco-system
of support institutions (other than DSC) is needed to help KPCL grow and become financially sustainable?(G7)

5. What efforts were made by Krushidhan leadership to strike a balance between commercial and social goals of the company? How
successful do you think it has been in this? (G6)

6. How do you rate the financial performance of Krushidhan? Do you think it will continue to grow at an exponential rate as
expected? (G5)

7. Comment on the process followed at Krushidhan to draw up future plans. What is your assessment of the future plans drawn up
by management? How should a company like Krushidhan plan for future growth? (G4)

8. How should the financial reporting system, of an FPO, be redesigned such that the social benefits passed on to its members and
other local beneficiaries are captured and reported? (G3 and G1)

9. Do you agree with the revenue model adopted by KPCL? If commercial viability of the FPO depends on activities undertaken by a
mix of larger and marginal farmers, will it adversely affect its social agenda? If yes, how can the interests of marginal farmers be
protected? (G2)