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Start up of the Week: A company that dared to change the agriculture sector with e-commerce

logo300Agriculture and farm production is close to 500 million MT a year in India. The market share of even the largest of player is under five per cent. That is the kind of fragmentation that exists and thus the opportunity.

Raman Singh Saluja, had his first stint with agriculture in late 1990’s by exporting potatoes and lentils to south Asia. It was the close contact with the farming community that he learnt of the additional costs and inefficiencies in the entire supply chain, including lack of Infrastructure. Capabilities to work across varied food and farm products is very challenging and needs multiple skill sets. It gives an idea on the scope.

To know the details about the agriculture sector, IndianMediaBook gets in the conversation with Raman Saluja, who is sharing his experience in this sector.

Raman-Singh-Saluja300

How did you get the idea to get into the firm like Gramco Infratech?

With a friend I formed grammandi.com, wherein we not only Web enabled farmers with all market and technical information but also set up procurement the centres at multiple locations. The response was good but banking and connectivity issues forced us to scale back and wind up. The APMC laws made working even more inefficient.  Despite that I strongly believed in the sector and the need for building an enterprise located close to farmers and growing areas. In 2008 I got back to building a business model around my learning and formed Gramco in 2009.

 How big is the market opportunity? Please share your business model.

We will see a transformation in the years ahead, with focus on productivity and efficiency. The post harvest infrastructure has been getting the required attention and will continue to play a very important role in assisting farmers to preserve and obtain better prices, during off season. The government has been talking of FDI or no FDI in back end etc, we as a company and a home grown one at that, are investing and building the infrastructure. We hear talk on the importance of supply chain and market linkages but so far I am yet to come across a proper policy document which empowers an entrepreneur or Investor to plan a proper intervention.  We have piece meal policies.

Being an end to end company, we help and partner with the farmer for most activities, offering services like; soil management and nutrient application, involvement of farmers in seed production, providing access and making available our cleaning / grading facilities to farmers, which can assist them in having higher returns, procurement, warehousing, WR finance against commodity stored and finally procurement from the farmers.  Gramco, supplies to processors in the oilseed and wheat milling sectors at present.

Please take us through your funding journey. How difficult it is to raise fund in India for start ups?

We set up the first two facilities with our own funds and did a first round of funding last year in August. The projects are funded as a mix of both equity and debt.

The current capex is helping us expand the geographic reach and also brings more crops in our focus. We are looking at increasing our geographic foot print over next 3-5 years. Challenges are immense right from identification of a location to securing suitable land, finding right people who share and are willing to inculcate the right value system. The process of land conversion etc is a very tedious process. Every new crop brings its own challenges. Multiple licensing and departments are involved in the entire process, which can be simplified.

Raising funds from any source is a challenge.  There is money out there but you can’t take it at any cost. Raising funds is subject to multiple factors – sector, niche, value proposition, scalability etc.

What are the barriers you have faced during start ups? What is the scope for start ups in rural India?

Rural India is a tough market. We hear about the bottom of the pyramid, what it does not mention is that the weight of the pyramid is at the bottom too. Human resource is the biggest challenge. A lot of local factors come into play during get execution. Power situation is far from acceptable, Internet connectivity and quality is still not very supportive.  A lot of approvals are within the domain of the panchayatand that brings its own set of issues.

A rural start up has to be intrinsically rural i.e the product or service should be have value there, if you are to build a sustainable business around rural India.

How difficult it is in dealing with the rural markets? How it’s different from urban markets?

Mind-set, acceptability of the new way is much less in rural areas. Education and awareness are two major differentiators.

What kind of competition you are facing and how you are dealing with it?

We are bringing all services on one platform – they exist in parts. There are old ties within the community and that is the major one. Rural India also thrives on credit. As a new entrant we are vary on that count. However, you cannot hard sell your self to the rural folks. Performance and commitment is the key.

What are your marketing strategies and how you are advertising?

We have our team visit villages and interact with farmers, educate them and explain the benefits and how they can benefit from the services. It is about building a relationship with the farmer, where he feels and considers the Gramco facility as his own. This takes time.  Our services and relationship with the farmer is most important. We believe we gain only if the farmers gains.

What changes would you like to do in the industry?

Complete revamp. We cannot do away with the system overnight till there is an alternative and viable model. The government policies do not indicate they want to assist in creating a level place no field to an alternative of APMC. The taxes for example charged by mandibular are for building facilities and Infrastructure for farmers – we are doing that, with our funds. So Why Should We Not Be Given Exemption From Paying Such Taxes, At Least Equal To The Capex.  Take wholesale and retail of seeds and inputs – a separate licence is required for each district.  A lot of things can be simplified.

What is the major achievement of the Gramco Infratech so far?

Acceptability by farmers in areas where we are is most important and our team has done well on that count.

How was 2014 been for Gramco Infratech? What are your plans for coming 2015?

2014 is shaping well, we have but a team capable of building each verticaland we are expanding our reach to over 140-150 villages by Q1  of 2015. We are confident of the years ahead as 2015 too has our focus on Capex we growing the operations.