External Environment Challenges

Challenges Solutions

• Asking the farmers to diversify their crop portfolio to meet the changing climate

• Competition in domestic & international markets can be intense due to presence of big players

• Withdrawal of government subsidy can limit JISL’s growth

• Bad Quality Competition• Lack of trust amongst the small scale

farmers• Backward integration of JISL’s

multinational companies in the food processing business can lead to lost opportunities

• Trainings to educate the farmers regarding the damages by climate change-’Jain Education Program’

• Lobbying and maintaining relationships with the government

• Competition in domestic & international markets can be intense due to presence of big players

• Increase loyalty through a loyalty program for existing clients and host regional trade shows to show the impact of better MIS

• 70% of the world’s freshwater is used for agriculture

• Many big food producing countries have reached, or are close to reaching, their renewable water resource limits

• The main causes of wasteful and unsustainable water use are:– leaky irrigation systems– wasteful field application methods– cultivation of thirsty crops not suited to the environment

• Excessive irrigation can also increase soil salinity and wash pollutants and sediment into rivers

DID YOU KNOW? - Facts

GLOBAL FOOD SYSTEM – Key Affecting Drivers

Global population increases

Climate Change

Competition for key resources such as Global water and energy demand

Competition for key resources such as Land for food production

Changes in the size & nature of per capita demand

FOOD WASTE MANAGEMENT

1. Reduce wastage in processing

2. Reduce household wastage

How to counter the effects

(1) Switch to vegetarian habits

(2) Increse dependency on marine food

FOOD HABITS

1. Avoid old irrigation practices such as flood irrigation

2. Use water efficient practices – Micro irrigation system

IRRIGATION

1. High quality seeds2. Gnenetically modified for higher

yields3. Require less water4. High disease resistant

SEEDS

Government – Greater spending on Agriculture (Avg. 10% of GDP)

IRRIGATION – Micro Irrigation System & Advancement

Video on MISMIS - https://www.youtube.com/watch?v=irTPXgUe5kU

IRRIGATION – Other Agricultural Advancements

• Biotechnology : genetically modified crops, which make them more resistant to droughts, increase the productivity or make them grow faster

• Equipment: tractors with GPS assistance which are able to measure the harvest and map the productivity of the different areas of the farm so the production can be optimized by distributing fertilizer in a correct way

• Bacteria and fungi tests : incorporated into the seed they can improve their resistance and productivity

• Hydroponic irrigation: plants grow in an inert medium, which provides the pH, nutrients, etc. The drain water can be reused

JISL - Overview

1963 JISL was founded – selling fuel and agricultural inputs

1964 – 1970s JISL expanded abroad, added tractor and automobile dealerships, fertilizer, pesticide and seed sales

1983 Bhau discovered micro-irrigation

Late 1980s the company was manufacturing and selling a variety of MISs

1990s opened plastic sheet manufacturing plant, moved into food processing, started investing heavily in R&D

2000s expanded more in India by opening new production plants and sales offices, and internationally by acquiring established companies

2010 became largest MIS company in India and 2nd largest worldwide

2011 established a non-banking financial company (SAFL)

JISL– The Business

NBFC

• SAFL finances the subsidized part of the total amount

• It also gives loan to farmers at a lower rate than money enders for the non-subsidized part

• SAFL is established to counter the burden created on JISL due to long subsidy realization period of 6-12 months

• It helps JISL to free up its tied cash for other purposes

Energy, Bio-Tech & Research

• Solar based products – pumps

• Hybrid Seeds, pest restraint & fast maturing varieties of crops

• Other precision farming techniques

MIS• Contributes 50% Revenue

• Research, Developing & installing MIS for small scale farmers

• Product life 3-7 years

Food Processing

• JISL buys agro produce at floor price

• Then sells this to big companies under brand “Farm Fresh”

• Contributes 16.9% revenue

JISL – SWOT Analysis

• Strong brand and leadership positions in its businesses in India

• Business model provides complete solution for agriculture to the small farmers

• Strong track record of dealing with the government and bringing positive policy changes related to growth of MIS market

• Continued emphasis on innovation and R&D• Exclusive channel to push its products with

extensive reach to rural markets

S

• MIS has a huge potential and remains prone to expansion

• Growing need for food will require an efficient water usage system and enhanced productivity

• Ability to build and sell commercially viable renewable energy applications to overcome energy scarcity

• Food processing market is estimated to grow at a pace of 20-30% in India

O• Small competitors selling inferior quality MIS can

negatively impact its utility as a booster of farm productivity

• Competition in domestic & international markets can be intense due to presence of big players

• Withdrawal of government subsidy can limit JISL’s growth

• Backward integration of JUSL’s multinational companies in the food processing business can lead to lost opportunities

T

• Growth of the MIS segment is heavily reliant on government subsidies, which are credited only 180 to 365 days after approval

• Highly leveraged business model with constantly increasing cost of maintaining a cash to cash cycle of 150 to 170 days

• Risk of default rate and challenge of collecting loan from farmers

• Failed to create a pool of middle level managers who can work independently

• HR and recruitment processes also don’t do enough to continually produce competent middle level managers

W

RECOMMENDATIONS

• Expansion by using a hub and spoke model

• Increase loyalty through a loyalty program and the complete ecosystem

• R&D to apply MIS to wheat and rice cultivation

• Promote solar for big farmers and community Bio-gas plant for smaller farmers

• Have in-house production facilities to improve cost-control

• Spend research to produce pipes fast at low cost or build new plant To fulfill the demand of pipes

• Diversify portfolio of SAFl to mitigate default risk of farmers and use existing distribution network of JISL to gain the trust of farmers

• Develop technology for better traceability and quality control to increase product portfolio

• Attract middle level of managers by providing incentive for international exposure and training