ENTREPRENEURSHIP DEVELOPMENT INSTITUTE OF INDIA, AHMEDABAD

Organized Agri Input Retailing in India

NAGARJUN KUSHWAHA

Submitted to Shri Debdatta Pal Course instructor, Agribusiness Marketing Submission date: 11th Sept of the year 2011

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INTRODUCTION What is Organized Agri Input Retailing? ORGANIZED AGRI INPUT RETAILING is a format of selling agri inputs through branded shops. These shops are either owned or franchised by corporate houses and are multiple in numbers. They sale a range of product like seeds, fertilizers, pesticides, agriculture machinery and services like soil testing, credit facility, agriculture information etc. These facilities are set up nearby district towns which have agriculture as pre dominant activity. When it started and where? Organized Agri Input Retailing is largely a phenomenon which started in last decade. In contrast to organized urban retail which has by and large spread in whole of India, the former has remained limited to some pockets. Organized Agri-Input Retailing is largely limited to North and West India phenomena. This is basically because of it being agriculturally very progressive zone.
Who are they?

At present there are around 7 big corporate houses that have entered into this business. This becomes very essential to say that all these have already had existing chemical industries or related agri allied industry. Tata Kisan Sansar is subsidiary of Tata Chemicals, Godrej Aadhar is jointly owned by Godrej group and Future group. Similarly Hariyali Kisan Bazar is owned by DSCL and Mahindra SubhLabh by Mahindra. ITC Sagar chaupal concept mall was launched after success of ITC e chaupal. All these companies are well known names and there total revenue runs in thousands of crores. Besides these there have been more initiatives both from government and private bodies. Gujarat Agro model is successfully running in 18 districts of Gujarat. It sells mainly Gujarat Agro Chemical Ltd product which is owned by

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the state government. On similar lines Sikkim government opened first store in May this year. There are few strong regional players like Champion Agro Ltd a Rajkot based company. It has presence all over Gujarat and they have long product line in agri input sector.
Are all of them similar?

A number of experiments like Tata Kisan Sansar, Godrej Aadhar, DSCL Hariyali Kisan Bazar, ITC Sagar chaupal have suddenly emerged in rural market space. These experiments have one common thread i.e. they are attempting to integrate by removing inefficiencies existent in the rural agricultural supply chain. The key objective of these experiments is to provide One Stop Solutions to Indian farmers so that farm income increases. Though all these companies have commonality in their objectives but there are differences in way of their functioning and their focused product. Like Mahindra SubhLabh is mainly promoting Grapes farmers in their production as well as in its international marketing.
Why there is need of Organized Agri Retailing?

1. There has not been enough penetration of agri inputs to all farms of India. 2. There is inefficacy in the existing supply chain. Extremely long supply chain causes inefficiencies and squeezes the margins of producer Information asymmetry causes frequent shortage; there are riots for fertilizers in peak season. Poor/fake agri input are rampant in rural bazaars 3. Big companies involved in production of these products wanted a reliable and profitable supply chain to take their products till last village. 4. Rural economy is also growing at a good pace and rural people are looking for quality product.

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5. Every company wants to make their presence felt. This might be helpful for future backward/forward integration of agri commodities besides creating a good image of company.

A COMPARATIVE STUDY OF EXISTING PLAYERS

Sr. No. Rural Retail

Presence (no. of stores) North South East West 1Haryali Kissan Bazzar 2002DCM Shriram Ltd PB,RJ,HR,UK,UP AP MP,MH 2Tata Kissan Sansar 2004Tata chemicals UP,UK,PB,HR BR,JH,WB MH 3Champion agro 2005Champion Agro GJ 4e-Chaupal Saagar 2003ITC UP MP,MH 5Mahindra Subhlabh 2000Mahindra PB,RJ,HR,UK,UP AP,TN,KR CH,OR,BR MP 7Godrej Agrovet 2003Godrej AP,TN,KR OR,MZ GOA,GJ 8Gujarat Agro 1970Gujarat Agro corp. GJ 9SIMFED Sikkim 2011Sikkim Govt. SK 10kisan Seva Kendra 2007IOC No info.

Estd. YearParent company

Seeds Yes Yes Yes Yes Yes Yes Yes Yes

Products (no. of product) Fertil izers Pesticides Tools Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes

Services Soil Test Agri Info Financial Yes yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes

Can these companies be grouped?

Based on the ownership these companies can be grouped into two groups namely privately owned and government owned. Private owned companies are owned by big corporate houses like Tata, ITC, Godrej and Mahindra. Whereas SIMFED, Gujarat Agro and Kisan Seva Kendra are government supported initiatives. Based on the geographical reach again they can be divided as regional and national player. Some private players like Champion Agro and government run

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like Gujarat Agro and SIMFED are totally a state based activity. Whereas large corporate houses have understood the potential of this market and ventured at national level. Hariyali Kisan Bazar and Tata Kisan Sansar are trying to be national player. There distributors are spread majorly in agriculturally strong states of north and west of India. Kisan Seva Kendra started by IOC at rural based petrol pump has all India spread. They have already started at over 1500 petrol pumps. On similar line DSCL has tied up with BPCL. Based on the product and services provided by these companies they can be divided into many categories like only agri input supplier (eg. HKB, TKS, Gujarat agro, Champion Agro, SIMFED) and input and other FMCG suppliers (eg. ITC Sagar Chaupal, Kisan Seva Kendra). These companies can also be divided into own product pushers (eg. Tata Kisan Sansar, Champion Agro, Gujarat Agro etc.) and all products sellers (eg. ITC Sagar Chaupal, Godrej Agrovet). Its difficult to differentiate companies on these lines as all the companies keep product of one product or other of different companies to make their shop complete. These companies can be further grouped into all agri input company and specific agri input company. Mahindra SubhLabh is mainly concentrating its activities towards grapes cultivation in western part of India. Its support activities are majorly related to it. Its contract farming activities of Potatoes and seed development activity is also very specific in nature. Similarly Godrej Agrovet is mainly concentrating towards palm cultivation in coastal area of India. Most of the other companies are working towards being all agri input company. Every day they are adding new products into their portfolio to increase their reach and bring more and more farmers under their fold.

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Where they are headed? Except Triveni Khushali Bazar (TKB) promoted by Noida based Tiveni Engineering and Industries group all other companies in this sector are growing very rapidly. According to some news report TKB has shut the shop keeping in view its other businesses and looking for buyers. IOC has aggressive plan to start the Kisan Seva Kendra at over 2000 IOC rural based petrol pumps. ITC Sagar which started with one rural hypermarket in MP is now in three states with 24 such hypermarkets. Hariyali Kisan Bazar and Tata Kisan Sansar have already crossed 1000 store spread over north and east India. Champion Agro which has 34 stores in Gujarat has an aggressive plan to spread its network in other states and by end of year 2012 they plan to have 200 stores.

References
1. http://www.championagro.com 2. www.dscl.com/Business_Agree_HarKisBzr.aspx 3. www.tatakisansansar.com/ 4. www.tatachemicals.com 5. www.mahindra.com/What-We-Do/.../Mahindra-ShubhLabh-Service 6. www.iocl.com/Aboutus/PetrolDieselStations.aspx 7. www.simfed.in 8. www.gujagro.org 9. www.godrejagrovet.com 10. www.itcportal.com/sustainability/lets-put.../choupal-saagar.aspx 11.Triveni Shuts Shop Business Standard 15-09-2009

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