May 2009

Presented by

Venky & Valli , Founders , eFarm

eFarm : A Farmer To Consumer Agri Supply Chain Network

Part 3 : Investor Presentation : Financials and Growth Plans

Farmers

Rural Produce

Collection Centres

Quality

Inspection/ Grading

Cleaning / Packing

Routing

Long haul

Transportation

Urban area

Distribution centre

Small retailersLocal vendors

Food Processing

units

Exports

Bulk buyers

(Hotels / Caterers /

Retailers)

Compost/Manure

from waste

eFarm Common Services

Planning &

CoordinationResearch

Call centre /

CommunicationTechnology

Training &

Support

Local

Distribution

Business Potential

An untapped , niche market with very few organized, entities

Revenue generation through better optimization, value addition across the chain

Reduced wastage in transit = more revenue

Has potential to jumpstart other agri-dependent ventures

A professional ly managed supply chain is vital for tapping international markets

Potential to scale across India as core problem is wide spread

‘Pull factor’ from rural India for other services and products

Social Impact

Organizing the large unorganized agri sector of India – bottom of pyramid

More income to farmers , truck operators and small vendors owing to profit sharing across the network

Support to traditional , eco friendly farm practices , organic farming through better marketing

Convert waste to compost , providing low cost manure back to farmers.

Revival of agriculture dependent livelihoods , empowering villagers

Under privileged/Disabled and urban poor get employment opportunities

Often large organizations fail in rapid expansion phase – too fast , too soon

eFarm would expand in a sustained controlled manner as shown

Create 1 fully functional, fully sustainable unit (eg could be a collection centre , or a distribution centre or even a store)

Replicate the successful model into two Ensure continued viability of this

expanded unit Continue to ‘divide and expand’ In case of any issues, we only need to

take one step back to prior state and rebuild

At a given time, number of units would be a measure of 2n where n is time taken to replicate 1 step

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1 -> 2 -> 4 -> 8 -> 16

…

Farmer liasion : Government agencies , Agri institutions , NGOs

Incubation : ICRISAT / TNAU NGOs : RASA , Nandini Voice of Deprived, Exnora ,

Nivedita Agri parks/Exports : IFFCO Kisan SEZ Software :Microsoft (Bizspark startup program

member) Mobile gateway : SMSIntegra Micro finance for eFarm entrepreneurs : Equitas,

Indian bank Funding : Leading Social VCs, PSBs

Financial Indicators Revenue generation from Day 1 , Profit from Year 3

Sustained scalable model , with organic growth across locations

Leadership position across market channels

Social indicators Increase in income to farmers, truck operators, small

vendors

Reduction in farmer suicides

Increase in land under cultivation

New Job creation in rural & urban areas

Reduction in Migration to city from rural areas

Please see attached Excel spreadsheet for balance sheet, sales

projections , funding summary , financial ratios etc.,

Year 1Year 2

Year 3

-500

0

500

1000

1500

2000

2500

3000

3500

Sales

Net profit before tax

Figures in Rupees Lakhs

Sales , Profit Projections

** At end of 3 years

eFarm

Year End Summary

Year One Year Two Year Three Year Four Year Five Year Six

Total Income 34,670,240 144,619,610 341,211,415 474,684,655 654,096,624 898,045,331

Total Cost of Sales 26,520,365 94,373,762 191,751,691 259,230,666 284,621,978 312,525,834

Gross Margin 8,149,875 50,245,848 149,459,724 215,453,988 369,474,646 585,519,498

Total Salary and Wages 9,213,000 18,426,000 36,852,000 63,417,200 69,758,920 76,734,812

Total Fixed Business Expenses 29,654,050 44,481,075 55,601,344 78,235,758 86,059,334 94,665,267

Total Other Expenses 1,259,594 1,254,136 - - - -

Net Income(Before Tax) (31,976,769) (13,915,363) 57,006,380 73,801,031 213,656,392 414,119,419

Extended Projections till 6 years

Please see spreadsheet for details

ROI / IRR : A Sample scenario Initial investment : 500,000 $ (approx 2.25 Cr) Term : 6 years , Equity : 3%

Valuation : 108 Million USD NPV : 2,180,000 $ IRR : 67% Final payout : 3,240,000 $

Reference : http://www.bplans.com/business_calculators/investoroffering.cfm

http://younoodle.com/predictor

Sale of Agri Produce Wholesale / Bulk buyers transactions

Retail (eFarm ‘powered’ shops run by entrepreneurs)

Premium products – Organic , Export quality items Third party logistics and distribution Processed food products Waste conversion – Compost / Value add products Consulting (Supply chain , System integration) Registrations in B2B portal Ads ( Push carts , Vending stations , Website)

Note : A small set of fully owned demo outlets of eFarm are primarily for marketing, training and

operational studies. These would comprise of low cost outlets , push carts, street side vending

stalls,tricycles etc., These would be fully staffed by efarm directly.

The truck , being the main mode of deliveries , represents the fundamental unit of volume , utilization & growth indicator

Based on trials and metropolitan traffic regulations , a 4 tonne truck has been identified as a standard, viable, long haul unit which can freely come within city at all times.

All figures are tied to “How many truckloads of produce” is being transacted

Primary revenue is through produce sale, and commissions on truck loads transacted.

The produce is sold across different marketing channels –bulk/whole sale , retail , premium segments

A truckload is assumed to be operating at 75% utilization at peak.

An average blend rate of Rs 15/kg is taken as sale price and Rs 10/kg as purchase price of goods.

Wastage in transit & handling is assumed at 5% . This is lower than current industry avg. of 40% as we would be deploying better practices & demand prediction.

As all price points are expected to stabilise over time to a predictable flat model , operating margins are achievable

Net Profit margins would be at 20%

Portal Registrations, Ad revenues

eFarm portal allows users to interact and trade . Registration would be fee based. Transactions executed using eFarm logistics are charged. Advertisements placed in our website , shops , trucks are also on fee basis. Assumption : Fees range from Rs 300 – Rs 3000 based on nature os registrant. Transaction fees would be 2% of value of goods.

Franchisee fees All eFarm operations are primarily run by trained entrepreneurs as franchised operations . This outsourced model offers better flexibility, competition and scalability. The franchisee fees would cover initial training , support & setup fees. Assumption : 1 % of annual turnover

Consulting Advisory/technology implementation projects to agri industries , institutions, high end customers, entrepreneurs etc., Consulting charges would be on per-diem/time & materials basis.

Manure/Compost/ Products from agriwaste

Revenue from waste can be created by converting it to manure or using byproducts to extract other value items (such as mango oil from kernel)

Sourcing Set up standardized collection centers in rural areas, pre-processing

centers, quality control , training of personnel and Outreach sessions

Distribution Set up standardized distribution centers within urban area, Training and

developing logistics and transportation network, setting up marketing

channels across metro areas , sorting/grading/packing/labelling and

special storage facilities , build franchisee /entrepreneur network

Sales and

Marketing

Set up model outlets & vending stations, media campaigns, training

videos/material, market research

Technology Software, hardware, hosting, portal development, backend ERP system

development, MIS

R & D Demand/Supply data and price line study , In-transit storage

mechanisms, waste reduction and composting, food processing etc

HR Employee salaries & benefits , External consultants

Miscellaneo

us

Company registration, trade marks & licenses , IPR , Travel etc.,

Jan-08 Sep-09

Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09

May 08

Portal launched

Jul 08

Live Trials begin

Feb-08

Concept Initiation

Apr-09

Nellore Agri SEZ ,

Indian delegation member

Mar-09

Launched Organic Sales

May-09

Press coverage :

Hindu, TOI, NDTV

Dec-08

TePP Grant from Govt

Jun-09

First eFarm powered store at

Neelangarai

Current/ Completed(Mar 09)

Completed pilot phase studies, market studies for demand/supply prediction, Identified top 20 vegetables/fruits and buying patterns, Set up pilot distribution centre in Mylapore, Chennai , Setup model pushcarts/mobile vans, Setup separate unit for handling Organic produce sourcing & distribution, Setup website , Identified pilot group of suppliers, transporters & customers , Running operations and revenues

Short term(By Jul 09)

Seek funding/investors, Setup first model collection centre, Build street sales force, Setup low-cost POS vending stations, Build core functionality of B2B portal, Setup call centre operations , Setup mobile/SMS interfaces, Develop Training material

Mid term(By Dec 09)

Expand franchised shops network, Marketing campaigns/promotions, Setup food processing pilot, Initiate pilots in Tier II cities, Expand sourcing to include neighboring states, Enhance portal for third party integration, Pilot usage of third party warehouses/cold storage

(By Dec 10)Expand to 1 more metro area in S.India (TBD) , Export grade sourcing, Expand portal for data analysis & trends, Integrate third party storage (wet/dry), Supply to branded retail chains, Reverse logistics of farm supplies, manure, compost to villages

Long term(By Dec 11)

Setup pilots in other major metros in India, Cross-border / Inter state supply chains,

Year 1 : Rs 3.1 crores (~ 690K USD) Year 2 : Rs 1.3 crores ( ~ 290 K USD) Year 3 : None ( Will be generating profit) Utilisation of funds :

• Focused in India and Rural centric/ Social sectors

• Domain knowledge in (one or more of) agriculture, supply chain, retailing

, food processing , technology , exports

• Bring in Industry and government networking

• Ability to sustain and stay invested to mid/long term (at least 3 to 6

years)

• Exit in phased , mutually agreeable manner . Open to exit through buy

back arrangements , entry of larger investors , corporate investments etc.,

Venkyvenky@matchboxsolutions.in

Vallisrivalli@matchboxsolutions.in