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 Market

The Rural Ecosystem

The Rural Ecosystem The Rural Market

Agriculture Harvesting and

and Agriproduce
Allied Activities • Agronomy Advise
Marketing
• Agri-Inputs
• Credit
• Post-Harvest Mgmt
• Market Linkages
• Output Buyer
Rural Business
• Consumer Goods Opportunity
• Household Goods
• Financial Services
• Healthcare
• Education • Commodity Trading
• Warehousing
• Commodity exchanges Trading,
Consumption
Warehousing etc.

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,

22

65

<1000 pe ople

63 1000-5000 pe ople
>5000 pe ople

32

15
3
(%age)
%a g e v i l l a g e s P o pula t io n s pre a d SOURCE: MGI INDIA & NCAER

• 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
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 population by Category

1000
571 682 790 875 906

900

800 20 53
181
700 10 Global (>Rs.10 L.pa)
58 253
Population (mn)

600 3 411 Strivers (Rs.5-10 L.pa)

20 Seekers (Rs 2-5 L.pa)
500
435 Aspirers (Rs0.9 -2 L.pa)
400
Deprived (< Rs 0.9 L.pa)
300
548 614
514
200 403
100 263
0
1985 1995 2005E 2015F 2025F
Year
SOURCE: MGI INDIA & NCAER

Rural India is witnessing robust income growth and the

aspirational classes are growing
 The Rural Market

Agriculture
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)

Agriculture value added in GDP

(In '000 crores, Indian rupees, 2000)
Compound annual
3.1% growth rate
997
2.4%
752
546
430

1995 2005E 2015F 2025F SOURCE: MGI INDIA & NCAER

Agricultural incomes expected to be $250 bn by 2025

Challenge of Agricultural Productivity The Rural Market

Source: Economic Survey of India 2007-08

Yield CAGR’s Wheat Yield Comparison (kg/Ha)
•India - 2600
•Pulses - 0.6% •China – 4300
•Cereals - 1.7% •Mexico - 4700
•Wheat - 0.95% •UK - 7900
•Paddy - 1.22% •World Average - 2900

Increasing agricultural productivity requires new technology and inputs

The Productivity Gap The Rural Market

Current level of productivity Productivity

requirement to
meet growing demand

Source: Ministry of Agriculture & Cooperation, India

Productivity growth essential to cater to food requirement

Agriculture Trend The Rural Market
• Therefore, agricultural productivity expected to improve
• Shift towards higher value added farm activities likely to continue

Agriculture & Allied Output ('000 crs) (Nominal)

270 486 630
700 Fruits & Vegetables (CAGR 13.1%)
600 132
Milk group (CAGR 9.8%)
500 90 110
400 79 29
22 Meat Group (CAGR 8.9%)
117
300 43 87
38 13
200 51 Other agri & livestock (CAGR 8.7%)
208 242
100 125
Cereals,Pulses, Oilseeds, Sugar
0 (CAGR 6.8%)
1993 1998 2003

SOURCE: NATIONAL ACCOUNTS 2005,

MGI INDIA & NCAER

Shift towards value added agriculture and productivity gains expected to

increase demand for quality agri-inputs and technology advise
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
 The Rural Market

Rural Household Consumption

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

Rural consumption by Category (Rs '000 crs)

450 610 970 1670 2640

3000
317
2500
211

2000
871 Global (>Rs.10 L.pa)
100
100 Strivers (Rs.5-10 L.pa)
1500 251 Seekers (Rs 2-5 L.pa)
Aspirers (Rs0.9 -2 L.pa)
29
1000 39 87 Deprived (< Rs 0.9 L.pa)
919 1030
5 24 0 43 456
0 104
500 27 41

378 439 359 301 211

0
1985 1995 2005E 2015F 2025F
SOURCE: MGI INDIA & NCAER

A very large consumption market dominated by “New to bracket” consumers

Rural Household Consumption The Rural Market

Average rural consumption per household

Thousands, Indian Rupees, 2000

158

116
104

67
45 50

Urban 1985 1995 2005E 2015F 2025F

India,
2005E

SOURCE: MGI INDIA & NCAER

Per Household spending in Rural India expected to reach current

urban levels in next ten years
 Gaps – Rural Economy

Gaps in the 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 Concept

Hariyali Kisaan Bazaar

“Hariyali” means “Greenery” in Hindi

It signifies “Prosperity in Agriculture”
“Kisaan Bazaar” means “Farmer’s market”

The business is designed to unlock the latent opportunity in rural

markets facilitating inclusive growth
 Hariyali Concept
Focused 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
Value proposition of efficient procurement,
improved logistics, strategic pricing and
multidimensional dealings with the customers
Creating platform between urban and rural

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

Financial Agri-
Retail
Services businesses

Food Commodity
Agri-inputs Insurance Banking F&V
& Grocery Trading

Lifestyle Household Others Seeds Warehousing

Fuel 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
 Hariyali’s business portfolio

Agri-Services
 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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