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HARIYALI KISAAN BAZAAR


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INDEX

The Rural Market Context

Gaps in the Rural economy

Hariyali Business Model


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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


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The Rural Ecosystem

The Rural Market


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The Rural Ecosystem The Rural Market

Agriculture

andAllied Activities

Harvesting and

AgriproduceMarketing

ConsumptionTrading,

Warehousing etc.

Rural Business

Opportunity

Agronomy Advise Agri-Inputs

Credit Post-Harvest Mgmt

Market Linkages

Output Buyer

Commodity Trading

Warehousing

Commodity exchanges

Consumer Goods Household Goods

Financial Services

Healthcare

Education

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)


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Rural demographics The Rural Market

Rural India supports a population of 790 mn. as of 2005 (70% of Indias

population) living in about 600,000 villages distributed as under,

Even with increasing urbanization and migration, 63% of Indias populationis 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

3

15

32

63

65

22

%a ge v il la ge s P opula t ion spr ead

< 1000 people1000-5000 people

> 5000 people

(%age) SOURCE: MGI INDIA & NCAER


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Rural population by Category

548614

514

403 263

20

58 253 411

435

53

18120

10

3

0

100

200

300

400

500

600

700

800

900

1000

1985 1995 2005E 2015F 2025F

Year

Population(mn)

Global (>Rs.10 L.pa)

Strivers (Rs.5-10 L.pa)

Seekers (Rs 2-5 L.pa)

Aspirers (Rs0.9 -2 L.pa)

Deprived (< Rs 0.9 L.pa)

Rural Incomes The Rural Market Rural India generates an income of Rs. 19000 bn. ($ 450 bn) which is

approx 48% of Indias GDP.

Per capita rural income is growing at the same pace as urban income.

Rural India is witnessing robust income growth and theaspirational classes are growing

571 682 790 875 906

SOURCE: MGI INDIA & NCAER


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Agriculture

The Rural Market


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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- Mckinseystudy.

Agriculture is expected to grow at 3.1% CAGR over the next two decades asagainst 2.4% CAGR in the last decade (8.8% in nominal terms)

Compound annual

growth rate

Agriculture value added in GDP(In '000 crores, Indian rupees, 2000)

430546

752

997

1995 2005E 2015F 2025F

2.4%

3.1%

Agricultural incomes expected to be $250 bn by 2025



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Challenge of Agricultural Productivity The Rural Market

Increasing agricultural productivity requires new technology and inputs

Source: Economic Survey of India 2007-08

0

500

1000

1500

2000

2500

3000

1991 2001 2002 2003 2004 2005 2006 2007

Kg

/ha

Wheat

Rice

Cereals

Oil

Seeds

Yield CAGRs

Pulses - 0.6%Cereals - 1.7%Wheat - 0.95%Paddy - 1.22%

Wheat Yield Comparison (kg/Ha)

India - 2600China 4300Mexico - 4700UK - 7900World Average - 2900


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The Productivity Gap The Rural Market

Productivity growth essential to cater to food requirement

Current level of productivity Productivityrequirement tomeet growing demand

Source: Ministry of Agriculture & Cooperation, India


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125

511338

43

208

87

2279

90

242

117

29110

132

0

100

200

300

400500

600

700

1993 1998 2003

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

Fruits & Vegetables (CAGR 13.1%)

Milk group (CAGR 9.8%)

Meat Group (CAGR 8.9%)

Other agri & livestock (CAGR 8.7%)

Cereals,Pulses, Oilseeds, Sugar

(CAGR 6.8%)

Agriculture Trend The Rural Market

Therefore, agricultural productivity expected to improve

Shift towards higher value added farm activities likely to continue

270 486 630

Shift towards value added agriculture and productivity gains expected to

increase demand for quality agri-inputs and technology advise

SOURCE: NATIONAL ACCOUNTS 2005, MGI

INDIA & NCAER


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Agri Input Consumption The Rural Market

Indias Agri input consumption is approx Rs 80,000 cr and is currentlygrowing at approx 3%

Key categories like fertilizer, pesticide and seeds have market sizes of Rs30000 crs, Rs 4100 crs and Rs 5200 crs, growing with 3 %, 3.2 % and 5.7 %CAGR

As with yield levels, Indias Agri-nutrient consumption per acre is muchlower than other countries

India Bangladesh China Netherland

108 198 289 510


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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, Irrigationprojects etc.

Access to institutional credit.

As the country takes steps towards more intensive agriculture, thedemand for quality inputs and farm technology expected to accelerate


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Rural Household Consumption

The Rural Market


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378

4127

50

439

1044324 0

359

456

8739 29

301

919

251

100100

211

1030

871

211

317

0

500

1000

1500

2000

2500

3000

1985 1995 2005E 2015F 2025F

Rural consumption by Category (Rs '000 crs)

Global (>Rs.10 L.pa)

Strivers (Rs.5-10 L.pa)

Seekers (Rs 2-5 L.pa)

Aspirers (Rs0.9 -2 L.pa)

Deprived (< Rs 0.9 L.pa)

Rural Household Consumption The Rural Market

Rural India is a consumption market of approx. Rs.9700 bn ($230 bn) as of2005 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 ofSouth Korea, Canada today or 4 times Indias urban market today

A very large consumption market dominated by New to bracket consumers

450 610 970 1670 2640



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Rural Household Consumption The Rural Market

Average rural consumption per household

Thousands, Indian Rupees, 2000

116

45 50

67

104

158

Urban

India,

2005E

1985 1995 2005E 2015F 2025F

Per Household spending in Rural India expected to reach currenturban levels in next ten years



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Gaps in the Rural Economy

Gaps Rural Economy


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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.


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Demographic Spread

Population widely dispersed, disaggregated consumption

Low per capita spending

The silver lining, however, is that through the top 20,000 denselypopulated locations, over 15% of the population in rural can becatered to.

Higher costs of servicing rural markets will be a continuingchallenge for marketers


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Gaps in the Rural Economy Market Characteristics:

Lack of availability and choice

Look-alike Locals dominate the market. (Local players in theunorganized sector are able to provide cheaper products)

Few trusted, national brands (Limited exposure to the multitude ofproducts 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 ofinformation.

A poor buying experience

Inefficient markets with Basic service levels.

Lack of reliability , trust and choice for the customers

h l


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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


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Summary - Rural Economy


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Summary Rural Economy

Scope & Size: The rural ecosystem with an income size of $450 bn andconsumption level of $250 bn offers a large enough opportunity for organized

businesses.

Future growth: Rural household incomes are growing at the same pace asurban 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 ruralmarkets for individual marketers.

Agriculture: While agriculture is expected to continue as the mainstay ofrural population, a much more customized and commercial approach isrequired 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 abusiness targets to address the key gaps in a commercial and viable manner.


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Hariyali Kisaan Bazaar

Harnessing the potential of rural India


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Hariyali Kisaan Bazaar

Hariyali means Greeneryin Hindi

It signifies Prosperity in Agriculture

Kisaan Bazaar means Farmers market

Hariyali Concept

The business is designed to unlock the latent opportunity in ruralmarkets facilitating inclusive growth


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Hariyali ConceptFocused at increasing rural incomes by providingfree agronomy advice and bridging last mile gap

in technical know-how

Developing Strong relationships based on trust,reliability and fairness

Leveraging relationships through one stopshop retailing and direct sourcing of qualityfarm produce

The Strategic intent of the business is to provide the rural customer with

choice, trust, dignity and thus create long-term relationships

Value proposition of efficient procurement,improved logistics, strategic pricing andmultidimensional dealings with the customers

Creating platform between urban and rural


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Vision and Mission

VISION

To be the leading and trustedRural Products and Services Enterprise

MISSION

We are committed to

improving the quality of life in Rural Indiaby providing superior products and services

and efficient sourcing of quality agricultural produce


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Business Portfolio

Hariyali

RetailFinancial

Services

Agri-

businesses

Agri-inputsFood

& Grocery

Lifestyle Household

Fuel

Insurance Banking

Others

F&VCommodity

Trading

Seeds Warehousing

Milk Cattle feed

Agri-Services


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Formats

Center A model rural hub located near

large rural agglomerations orhighways

Focused on all retail and agribusinesses

Format that encompasses Agri-services, One-stop-retail-shop,Sourcing, Banking services, Fuelstation 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 encompassingagri-services and retail of selectcategories

Compact space of 4K-5K sq. ftretailing agri-inputs and FMCG

Penetrating markets through appropriate formats


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Hariyali - Centers


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Hariyali - Stores


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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

Hariyalis business portfolio


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Agri-Services

Hariyali s business portfolio


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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 farmers productivity and incomelevels.

Dedicated qualified agronomists offer unbiased guidance thus building quickrapport with the farmers of the area.

Wide networking with National / International Agri Institutes like CIMMYT,IRRI, University of Adelaide for Knowledge Management and disseminationof best practices

Creates long term relationship with the farmers.

Serves as a foundation for Hariyalis Retail, Financial & Agribusinesses


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Hariyali.creating a scalable, viable

business having a transformational impact

www.dscl.com

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