Active Crop

Business Plan

OWNERS
Ashwin P(p38133)

Bindu Mishra(p38134)

Brihad Maurya p38135)

Deependra Nigam(p38137)

Vijay kumar K (p38175)

B.13 M.G Road

Cantonment

Varanasi ,UTTAR PRADESH 221010

Mobile Number 7775049156

E‐Mail:p38134@irma.ac.in
Contents
I. Executive Summary .............................................................................................................................. 4
II. General Company Description.............................................................................................................. 5
III. Products and Services ....................................................................................................................... 7
IV. PRODUCT DESCRIPTION ................................................................................................................... 8
V. Sales Forecast ................................................................................................................................. 10
VI. Start-up expenses and capitalization ................................................................................................... 11
VII. Profit and loss projection..................................................................................................................... 12
VIII. Projected Balance Sheet ..................................................................................................................... 13
IX. Cash Flow Statement ............................................................................................................................ 14
I. Executive Summary

Active corp is into contract farming in western Uttar Pradesh we have selected

This area as we see a lot of fallow land here according to state government data

There are vast majority of uncultivated farmland availiable in near varanasi are.

We are shoosing varanasi as our central location as this city is mostly connected with all kind s of
communication channels like road connectivity via NH7 and flight connectivity .

We have take n loan from axis bank in tune of Rs 20 Lakh and additional 25 lakh capital was put
in my our founders who were given partenership in the firm and we are majorly producing mustard
and toor daal as part of our crop pattern we realize that these crops are high yeilding in Uttar Pradesh
and the area that we have taken on lease is fertile we have also been in talks with Cargil food
company to take our products and sell them in further up the value chain.

We see from our projections that we are a profitable venture please find the details in the income
statement and the projections
II. General Company Description

Active group is into Contract Farming leveraging farm-firm linkages by effectively utilizing the
fallow cultivable land which may turn into uncultivable if underutilized for a longer duration .

Mission Statement: Active group mission is “Ensuring sustainable rural livelihood through
innovation in farming practices”

Company Goals and Objectives: The major goal of our company is to enable farmers to achieve
their financial independence through scientific and modern farming practices and effective use of
fallow land and to provide the farmers with more than their required income and effectively ensure
the supply to FMCG companies.

Business Philosophy: our business is driven by good people, making good food, from good
ingredients - and the result is food that makes people feel good.

To whom will you market your products? The agricultural produce shall be sold to the FUTURE
GROUP , ITC, CARGILL, PEPSICO, PATANJALI, GENERAL MILL who will do further
processing and sell them to market .We would further try to tie up with companies and the people
who will try to purchase the finished goods.

According to current statistic provided by the union government less than 25 percent of Indian
farming is deploying scientific measures so we have quite a scope there. Also, India has the largest
fallow land cover in the world. Hence, this situation can prove to be conducive in developing the
business and the farming sector on which our business depends upon. Through contract farming,
the fallow land cover can be converted into cultivable land by bringing it under contract for use by
farmers who are landless. It could improve the livelihood of the farmers and at the same time prove
to benefit our company by generating more agricultural produce

The major strength of the company lies in connecting with both forward and backward linkages in
the most profitable and just manner. The procurement of agricultural produce at an adequate price
that will benefit farmers and build trust in the minds of the farmers. At the same time, it would also
ensure that the produce will be available to cater to the demand of the firm and helps to build trust
from the firm’s (to which the raw material is supplied to) minds. The core competency that we
possess in this business model is the trust that we would create by our practices.

We bring in the expertise of the rural market and we are mangers so we know how to manage our
finances well along with the produce.

Our company will be owned in a partnership by the five people who would bring in there private
capital 5 Lakh each.
III. Products and Services

Our major crops are mustard and pigeon pea which are in huge demand in India largely due
to vegetarian diet of Indian. Aggregate imports of pigeon pea in 2015-16 were 59 lakh tons
in India if we can locally help in producing it this will help us in reducing our importing bill
and in turn help our farmers and they will be able to lead a happy life.

In case of mustard crop the situation is much worse we have 64,0000 crore import bill, if we
can use the fallow land and help India in reducing its import bill by adding our contribution.
We want to increase it as much as possible and probably try to reach a level where we are
self-sufficient in our crop produce especially in the products mustard and pulses.

We also have a plan to introduce training centres for our farmers so that the farmers they are
able to produce the crops in a better way.

The pricing of our produce will be a less below minimum support price (MSP) which will
help them in procuring the orders from the firms. Also we are trying to create efficient supply
chain so as to help our farmers in producing a better farm output at a relatively little
investment.

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IV. PRODUCT DESCRIPTION

Contract farming, by design, offers plenty of scope to yield maximum profit by

remaining true to the core value of agrarian sector – sufficient price to the produce produced
by famers. It is highly possible to generate revenue for the firm by satisfying the parties on
both side of the chain – the famers from whom we procure and the firms to whom we supply
raw materials. The product in contract farming scenario is tangible like in any other business
sector. It involves the supply of inputs to the farmers to get more productivity and also
supplying raw material to the firms, as per the demand, in good quality with desired
specifications demanded.

It is right in claiming that contract farming is one of the very few business models which
has both backward and forward linkages playing an equally crucial part. The business starts
not just when capital is invested but when the trust is gained. In order to gain the trust of the
farmers, the products in the backward linkage include supply of

 Fertilizers
 Pesticides
 crop insurance
 irrigation systems
 good quality seeds
 consultancy services
 Lands to landless farmers to carry out agriculture on contract basis, etc.

Among all the products, the latter one plays a crucial role in maintaining the sustainability
of the firm and the farming sector. Landless and marginalized farmers struggle to get a
livelihood due to poor economic returns from other occupation and lack of skill to engage in
other occupations as farming is the crux of their life cycle. In order to facilitate their
development along with the development of the firm, contract farming business model can
serve the purpose. The benefits of this particular segment is that it serves as a mean to achieve
the anticipated growth of the business in procuring adequate farm produce to supply to the
firms as demand increases. Also, in the backward linkage, it helps to mitigate the agrarian crisis
as it serves as an employment opportunity to the farmers who desperately need one among the
many.

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 In the context of forward linkage, the products include the supply of required raw materials
(agricultural produce) produced by the farmers under the contract. The major challenge lies in
anticipating the demand and creating a trusted bond between the two parties. In order to receive
continual orders from the firm, the agricultural produce supplied should be of good quality and
available at a price in the interest of the firm. At the same time, the price paid by the firm should
be enough to achieve profit and distribute to the farmers in a fair manner. Hence, profit
maximization can be achieved by selling higher volumes of the produce to various food
processing firms. By selling huge volumes, revenue generated can be increased and hence it
would ease the operations of distributing the profits to various dependents of the system.

Hence, to put things in a nut shell, the products involved in the model basically comprises
of the agri-input commodities and agri services to farmers who are the producers of the raw
materials which are to be supplied to the firms.

ACTIVE CROP PRIVATE LIMITED

BACKWARD LINKAGE
FORWARD LINKAGE
 Fertilizers
 Pesticides  Mustard seeds

 crop insurance  Pigeon Pea

 irrigation systems
 good quality seeds
 consultancy services
 Lands to landless farmers to
carry out agriculture on contract
basis

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V. Sales Forecast

We have done forecasting for bath the Rabi and Kharif crops which will be produced during
the year below is the data

Mustard (Rabi)
Year 2017 2018 2019
Area 25 25 50
Yield (qt) 457.5 457.5 915
Gross Income (Rs.) 1532625 1639909 3509405
Cost of cultivation 713375 729000 1445750

Forecasting we see that in the 1st and 2nd year we have the same land and we are getting the
similar output while in the third year we have increased our output due to the increase in the
land under cultivation.

Pigeon pea (Kharif)

Year 2017 2018 2019
Area 25 25 50
Yield (qt) 487.5 487.5 975
Gross Income (Rs.) 2461875 2634206 5637201
Cost of cultivation 737900 857900 1661800

Hence the total

Year 2017 2018 2019

Total cost of cultivation 1451275 1586900 3107550
Gross income 3994500 4274115 9146606
Net Income 2543225 2687215 6039056

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VI. Start-up expenses and capitalization

Below are the expenses and capital inputs for the Active Crop

2017 2018 2019

Total Land leasing 625000 1375000 2420000
Logistics 32000 64000 96000
Warehouse 6000 26400 43560
Total salary of
employees 516000 567600 855600
Cost of cultivation 1451275 1586900 3107550
Office building rent 120000 132000 145200
Office supplies 8000 8800 9680
Maintanance 5000 5500 6050
15% Loan intrest 171000 171000 171000
Total expense 2934275 3937200 6854640

Net sales 3994500 7989000 12782400

Tax paid 318067 1215524 1778328
Net Income 742158 4051800 5927760

We see that our net income is rising and it is going good as per third year data we plan to open
training centres for our farmers in order to help them come along with us.

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VII. Profit and loss projection

The annual projection of profit and loss is given below for 3 years

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 VIII. Projected Balance Sheet

Below is the projected balance sheet

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IX. Cash Flow Statement
Below is the cash flow statement for year 2017 ,2018 and 2019 respectively

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