Yes Bank

Transformation Series

A comprehensive solution on the case: - Popularizing farm mechanization in India

Problems: A scalable model for M4I that addresses the problem discussed below:-

• Adaptation of Mechanization by Farmers – To increase the awareness of the mechanization between

the farmers about how a small farmer can increase its productivity and efficiency by conducting some
digital campaigns by NGO’ and Self-help groups to educate the farmers about various equipment and
latest technology.
• The low rate of mechanization - As the small farmers do not expect much from the world, they just
want in-hand cash after selling their harvest. They have a mindset that mechanization is for big farmers
only, without knowing the positive effects of it. Due to which 80% are small farmers with the same
mentality.
• Under utilization of assets – It can be noticed that high demand of equipment is required in the
harvest season but eventually drops in other months. But Tractors can be used throughout the year for
various different activities besides farming.
• Difficulty in Standardization of Equipment – The terrain of India is different throughout the nation.
So it’s difficult to standardize the equipment of CHC (Custom hiring Centers). So M4I must focus their
targets to a specific area for a while. So that they can establish their presence in the market.
• Capacity to pay – As the small farmers could not able to earn much from their land, it is hard for them
to lease the equipment, as they would not be able to pay for it. To change this, a group of small farmers
must be formed whom lands are grouped together and then they can take the lease.
• Lack of technical knowledge – As the women are more into house hold work, they usually lack behind
in the technical knowledge of machinery, which also affects the interest for mechanization. To fight
this, we need to promote SHGs who will conduct seminars and make them aware of how the
mechanization can improve their productivity.

Recommended business and operating model for M4I for next 3-5 Years

Here we are choosing the CHC model where we will go for “owned” option into the business rather than the
franchising.
The area that we are focusing upon is South 24 Parganas, West Bengal because the scenario of that district is
that, the farmers are not even using the basic machinery in their farming technique. The urban touch of
machinery in not there in that district.
Initially, we will start by educating the farmer of that area as to what are the benefits of the mechanization.
This would be done by doing tie-ups with the NGO’s and local organization who will conduct the seminars.
Seminars would be inclusive of Audio-Video support in which will present that how adopting the
mechanization along with digitalization can change the life of the farmer by increasing the productivity.

We will bring the farmers and their family for these conventions by conducting drama and play shows (to rise
the interest in them for attending these seminars). We will also interact with them throughout the events,
which will help us in knowing the Taste, income, equipment they are using and to be required. This will help
us to build good relationships with farmers and their families so that we can connect with them and utilize the
relationship.
The range in which the CHC’s would set-up would be on the basis of No. of land owners, Area, distribution of
income and infrastructure.

The equipment which are to be needed would be on the basis of the data that we would collect from the
farmers during the interaction. As to what are the equipment they require.

After setting up the CHC centres, it would be required to employ some peoples from that district to gain the
trust. Because he is having a better overview of the farming scenario of that district plus farmers will able to
develop trust in the M4I because it is providing employment to the youth of that district.

And lastly, a survey would be conducted as to where are the loopholes in the system, where they can improve
and also keep an eye on the lessors.

Financial Projections with clear outlines and justified assumptions with Impact projections

Firstly we will take 40% subsidies from the government for the amount to be invested.

Through Startup India, Women entrepreneurs can get a loan of amount 10L to 100L. This would be the source
from where we will raise the fund.

All the assumptions and financial calculation are made on the basis of data collected from Google and
Government Portals.

We are assuming a joint land scheme, where our basis is that a group of 3 farmers will lend the equipment
together so that their cost can be saved, which could result in the increase of their annual income.

As the farmer would not lend the equipment for a whole year, our lending period would be for at least 3
months for that group of farmers.

We are assuming that the cost of tractor should be recovered in 10 years including other equipment.

Name of the equipment Cost

Tractor 600000
Other equipment 300000
Total 900000
(-)Subsidy @40% 360000
Final Cost 540000
Per year recovery (540000/10) 54000
3-month yearly recovery 13500

13500 is the amount which we need to recover in every 3 months of the year.
Also we are assuming that farmer in that area would grow different crops in different seasons.
Farmer Average annual Income (before)
Farmer A 72000
Farmer B 72000
Farmer C 72000
Total 216000
Income for 3 months(3 54000
farmers)(6000*3*3)

Compiled income of 3 farmers for 3 months.

So as to compare it with the recovery cost.

According to data from Google, a primary data, the increase in the income and productivity which is
happening after mechanization is 20%.
So according to that, the Farmers new income would be Rs.64800.