Opening note

We are all aware of the clichd, overused phrase - the agriculture sector is the
backbone of the Indian economy. The purpose of this note is not to build a wellcrafted story on why the Expat group must venture into Agriculture looking at the
myriad of big ocean, agrarian opportunities either in India or abroad and neither is
it a heartwarming, feel good concept of being a savior to the world by saving the
vulnerable farmers from exploitation and so on.
What this note seeks is rather to ascertain if there exists a synergy for our current
business model and agriculture, not synergy in the sense of it being just another
glorified word thrown in by every Chef seeking to sell his cooking pot but synergy
in the sense of:
a) Utilizing idle land in the time period between acquisition and before
handover to our customers. This ensures a recurring income to our Group.
Post-handover we can enter into a revenue sharing model say on a 70%
Expat, 30% to our Customers.
b) Creates a competitive advantage for our sales team in selling the concept of
land as an asset class either by selling the idea of buying a plot of land and
bringing home, crops grown on your piece of land (some of our customers
already having evinced an interest in planting specific crops in their plots) or
purely the profit motive -generating a recurring income even as the
investment appreciates.
c) Benefits the Expat brand by building strong relationship at grassroots level
with villages, on a broader scale with Corporates and the Government by
showcasing the company as one which is not merely interested in land
aggregation but also in partnering with farmers.
d) Alignment with the groups long term business strategy of starting a new
vertical in agriculture will develop specialized skillsets in house which will
help us in new, relatively unfamiliar markets.
e) Scope for Expat Hotel and Tourism division to offer Agri based tourism for
their customers.

Having ascertained that there exists certain areas that do intersect with our
business, however grey they might be, here are some of the key facts and
figures of the agriculture sector in India along with a snapshot of Indian
companies investing in agricultural land overseas which might leave us either
proud or prejudiced in taking a similar leap of faith.
Key facts and figures for the Agriculture sector in India
Largest employer in the Indian economy engaging around 600 million
people however acute labour shortage have driven up labour costs.
India is the worlds largest producer of milk because of having the
distinction of being the country with the largest cattle population in the
world (yield however compares unfavorably with global benchmarks); India
is also the worlds largest producer of coconuts, cashew nuts, turmeric, black
pepper, ginger, okra, bananas, papayas, mangoes and lemons.
India is the second largest producer of wheat, rice, groundnut, sugarcane,
tea, potatoes, onions, cauliflowers, brinjal, and cabbages.
India is the third largest producer of tobacco in the world after China and the
USA.
The last 60 years has seen the food grain production grow 5 times to 250 mt.
however needless to say, Indias population is growing faster than its ability
to produce rice and wheat
Only 2% produce is stored in temperature controlled environments resulting
in 10%-13% GDP being wasted per annum.
Minimum support price is distorting production behavior and building
inefficiencies.
Elongated supply chain with many layers of middlemen resulting in artificial
price escalation and lack of transparency to the farmer about market prices.
Mangoes , walnuts, grapes, bananas, pomegranates account for larger
portion of fruits exported from the country while onions, okra, bitter gourd,
green chilies, mushrooms and potatoes contribute largely to the vegetable
export basket.
The major destinations for Indian fruits and vegetables are Bangladesh,
UAE, Malaysia, Sri Lanka, UK, Nepal, Saudi Arabia, Pakistan and
Indonesia

Snapshot of Indian Companies investing in Agricultural land overseas

Company

Country

Karuturi Agro Products

Plc

Ethiopia

Ruchi Soya Industries

Ethiopia

KS oils

Indonesia

Verdanta Harvests

Ethiopia

Chadha Agro Plc

Ethiopia

Sterling Group

Argentina

Olam International

Argentina, Gabon,
Uruguay

Varun Intenational

Madagascar

Solvent Extractors
Association of India

Latin
America(Uruguay,
Paraguay)

Uttam Sucrotech

Ethiopia

Mc Leod Russel India

Uganda

Details
Acquired 100,000 ha in the Jikao and
Itang districts of the Gambela Region
for growing palm, cereal and pulses
with conditional option to acquire
another 200,000 ha.
Acquired 25-years lease for soyabean
and processing unit on 152,649 ha in
Gambela and Benishangul Gumaz
States
Acquired 130,965 ha at Kalimantan
for palm plantation; this is the third
tranche of land acquired by the
company after it previously acquired
210,039 ha in two deals in 2008 and
2009
Acquired a 50-years lease for 5,000
ha in the Gambela region for a tea
and spice plantation
Acquired up to 100,000 ha in Guji
Zone in Oromia Regional State for a
sugar development project
Purchased a 2,000-hectare olive farm
and another 17,000 ha for growing
peanuts
Acquired 17,000 ha in Argentina to
grow peanuts, 30,000 ha in Gabon
for palm oil and 16,000 ha in
Uruguay for dairy farming. Olam is a
Non-Resident Indian firm based in
Singapore
Subsidiary of Varun Agriculture
(SARL) - leased or purchased
232,000 ha to grow rice, corn and
pulses
A consortium of 18 vegetable oil
companies was set up to acquire
lands in Latin America to grow
soyabean and sunflower.
Won a $100-million contract to
expand the Wonji-Shoa sugar factory
Purchased tea plantations worth $25
million, including Ugandas Rwenzori
Tea Investments; McLeod Russel India
is owned by BM Khaitan

There are a couple of companies worth mentioning below who either have
captured headlines by painting the town red with very ambitious, slightly murky
moves or have a slight degree of similarity with our business.
Summary of select companies
Karturi Global
Incorporated in 1994, Karuturi Global is currently the largest producer of cut roses
in the world, with are area of over 292 hectares under Greenhouse cultivation and
an annual production capacity of around 555 million stems.
An integrated production model encompassing in-house plantation, cultivation and
distribution capabilities coupled with a series of green initiatives make them one of
the lowest cost producer of cut roses in the world. Almost the entire produce is
exported to high-value markets such as Holland, Germany, United Kingdom, Italy,
Singapore, Hong Kong, Taiwan, Bahrain, Muscat, Dubai, Australia, Japan, New
Zealand, Brunei and North America, with a small portion sold in India.
Having established a very strong presence in floriculture, the Group has diversified
their portfolio into the production of cereals from food plantations in Africa.
Karuturi Globals other fast-growing business realms are food processing,
floriculture retail and Telecom.
Ruchi Group
The Ruchi Group of Industries is the largest food and steel conglomerate of Central
India with business interests in diverse fields like FMCG, Oils, Steel, Cement,
Power, Information Technology, Real Estate, Dairy Products, Agro Commodities,
Logistics and Warehousing.
Headquartered in Indore the group is credited with building awareness leading to
the Soyabean Revolution in Madhya Pradesh. Currently they are the largest
importer and exporter of Soya products in Asia and also have the largest share in
the secondary flat steel market of India with a turnover of $ 6 billion.

Conclusion
The players in the Indian agriculture sector are similar to big fish
in a small pond, we need to play scrabble with Agriculture long
enough to learn the rudiments of the game before using our
learning as a springboard to venture into foreign markets where
we have a bigger slice in the pie.
On studying the big names in the agriculture business it becomes
clear that successful companies were ones who focused on
building an integrated supply chain mechanism around a single
crop, be it KS oils Soya seeds or Karturi s cut flower stems or
gherkins. This crop would then be the bread winner for the
vertical.
Diversifying into other crops is a shift the Group should make
either into a very niche crop in India which can be manufactured
in India at a lower cost and exported to take advantage of market
inefficiencies or we can diversify into rice, wheat or maize and so
on in the International market which will find buyers in the
International market itself.
Agriculture will have to be closely aligned to our Facilities
Management vertical initially before being hived out as a separate
business. This is because its success will depend largely on the
effectiveness of the security and general maintenance provided
by facilities management to safeguard our crops from theft,
damage etc.
We need to partner with local villages and communities by
speaking the common language of agriculture in order for Expat
to be viewed as being socially responsible. However land being a
very sensitive issue the partnerships will have to be one based on

trust rather than mere business relationships to avoid

encroachments by locals.
What the group requires however to sustain this model in India is
Joint Ventures with large Corporates on a contract farming model
or even HNI investors seeking alpha as we currently do not
possess the know-how or are able to bear initial costs for a
vertical which is not our Core Business.