IFMR Trust Microfinance Project Report

INSTITUTE OF AGRIBUSINESS MANAGEMENT
NAVSARI AGRICULTURAL UNIVERSITY
NAVSARI – 396 450

A
Project Report
On
Microfinance
IFMR Trust
Kadi
(Mahesana)

SUBMITTED BY
HITESH K. KARKAR
(04-0409-2008)
hitesh_iabm@yahoo.com
2nd Semester
IABM

IFMR TRUST IABM Page 1

Declaration

I hereby declare that the project I am submitting for the completion of
Industrial Attachment Programme is an original piece of work carried
out by me under the guidance supervision of Dr. Ruchira Shukla. The
information has been collected from genuine and authentic sources.
The work has been submitted in partial fulfilment of the requirement of
MBA course in Agribusiness Management.

Place:

INSTITUTE OF AGRIBUSINESS MANAGEMENT, NAVSARI
Date:

Name of Student

Signature

IFMR Trust Microfinance 2

IFMR Trust
CERTIFICATE



ACKNOWLEDGEMENT

After passing 15 days at Kadi (Dist: Mahesana), in conducting this project
many key persons had performed an important role in my personal
exercise.

I convey heartily thanks and deep sense of gratitude towards the
followings:

Θ Dr R. R. Shah, Dean, Institute of Agribusiness Management, Navsari
Agricultural University.

Θ Mr. Bhaveshbhai Nayak, Project Manager, Dharampur. IFMR Trust.
Θ My esteemed guide Dr Ruchira Shukla, Asst. Professor, Institute of
Agribusiness Management, Navsari Agricultural University.
Θ Dr Alpesh Leua, Asst. Professor, Institute of Agribusiness
Management, Navsari Agricultural University.
Θ Mr. Rahul Thakkar, Asst. Professor, Institute of Agribusiness
Management, Navsari Agricultural University.
Θ My Dearest Friends for their wholehearted support.
Θ All those persons who were directly or indirectly engaged with this
project, I am heartily thankful to them.

- Hitesh K. Karkar


Contents
Sr. No. ParticularS Pa g e
No.
1. Industry Profile 1
• Microfinance
• Different models in India
2. IFMR Trust profile 3
3. Organizational/corporate structure 4
4. Senior Management Team 6
5. Companies HR policies (People Group) 8
6. IFMR Trust ventures 10
7. Agreement with National Spot Exchange Ltd. (NSEL) 14

8. A Model of financial services 16
• KGFS Finance
9. IFMR TRUST Activity at Kadi 18
• Indian Scenario
• Factors Influencing Castor seed & Oil Market
• Castor seed buyers
10. Cost Sheet for Millers Lifting Delivery from Exchange 23
Designated Warehouse
11. Storage Receipt and procedure of financing-farmer Education 25
• Enrolment & KYC of Farmer
• KYC documents
• Sampling process
• Castor seed Quality
• Testing method
• Packing details
• Commodity depositing Process
• Storage charges
• Weighing process
• Warehouse receipt issue
• Product features
• Events of default
12. Process of 31
• Education
• Enrollment process
• Commodity deposit at NSEL warehouse
• Quality testing process
• Storage
13. SWOT Analysis 35

Project


“Farmer/Client Feedback for “Khedut Kendra Dharampur”

14. Introduction Khedut KendraDharampur 38

15. Products and services offered at present 38

16. Objectives of survey and Research Methodology 39

17. Action Plan 39

18. IFMR survey Outcomes – 41
• Analysis of data
1. Maharajpura
2. Shivpura
3. Korda
4. Visatpura

5. Kalyanpura
19. Findings and Recommendations 45

Bibliography 48

Appendices & Annexure 49


1. Industry Profile

Microfinance

Microfinance refers to the provision of financial services to low-income
clients, including consumers and the self-employed. The term also refers
to the practice of sustainably delivering those services. Microcredit (or
loans to poor microenterprises) should not be confused with
microfinance, which addresses a full range of banking needs for poor
people.

Rural households need relatively large sums of money for life cycle
needs (such as marriages, festivals and old age), emergencies (such as
illness, the death of a bread-winner and floods) and investment

opportunities (as much in assets and household goods, for example, as
in investments in micro-businesses)i. They therefore need access to a
basket of financial services. When looking at rural financial markets, we
discover not only the lack of access to credit, but also other financial
services (Investments, Insurance, etc) not being available.

Microfinance models in India

Operational features of different microfinance models in
India
Operational SHG Grameen Individual
Features Banking/Sector
cooperarative
Client type Groups (15-20 Group(usually 5 Individual clients
members) members)
Service focus Savings and credit Credit-regular credit
cycle
Role of MFI staff Guide and facility Organize organise
(group may develop
autonomy)
Mechanism Monthly meetings Weekly meetings Varible-often
daily
Saving products Rs. 20-100/month Rs.5-25/week varible
Insurance In early stages Link to national
companies
Credit products Rs. 5-10,000 also, Rs.2-5,000 Rs.15-35, 000
internal loans from
group funds
Effective interest 14-36% 29-41% 18-24%
rate
Development Often through Usually none Enterprise
service associated NGOs support


Actual use of MFI Loan- All Model

Comparison of Alternative Financial Services Providers
Parameter Microfinance Informal Formal
SHG Grameen Moneylender family
MFI Group MFI

Loan Medium Variable Low- Variable- Low- High
amount Medium High Variable
Access Variable Medium Medium Medium Medium Low
Speed Medium High Fixed High High Low
Flexibility Medium High Low High High Low


2. IFMR Trust

Profile

The Institute for Financial Management and Research (IFMR), Chennai,
is one of India’s most prestigious business schools and academic
institutions. Established in 1970, it is recognized as an Institution of
National Importance by the Ministry of Finance. Since its inception,
IFMR’s mission has been focused on contributing to growth and
development efforts in India with an emphasis on finance and research.
IFMR also has several key partnerships with some of the leading
academic institutions worldwide and offers a stimulating and world class
environment to faculty and students alike.

IFMR Trust is a private trust; it is not a public charitable trust. However,

unlike a privately-owned or shareholder-owned company, the trust’s net
profit will not go to any individual(s) or body corporate. All profits will be
reinvested in Trust activities and companies. As a private trust, IFMR
Trust does not have investors. Initial resources for the Trust were
provided by ICICI Bank via long-term borrowings.

Mission

“To ensure that every individual and every enterprise has complete
access to financial services.”

This mission can be achieved only through systemic changes in the
Indian financial system. Their vision of the financial system comprises
three components:

1. Frontline provision of high-quality and adequate financial
services

India is a vast and diverse country, with a large rural population. It is
unrealistic to expect a few national institutions to have the reach to
provide financial services to every individual and every enterprise. The
cost-to-serve would be extremely high, and there would be huge
information gaps. So it is necessary to have a number of permanent,
local and autonomous entities that will serve as the last mile for
financial intermediation.

2. Orderly transfer of risk

However, local entities would typically be thinly capitalized and
concentrated regionally. If their level of activity and outreach is
determined only by the extent of direct capital on their books, the
entities are doomed to slow rates of growth. If the local footprint of


these entities with the ability of well-capitalised financial institutions is
combined to manage risk then the scale of operation can be
reengineered.

Orderly transfer of risk between local entities and larger financial
institutions and markets would address information asymmetry as well
as the moral hazards inherent in this multi-tier design.

3. Holding of risk by well-capitalized diversified entities

If local providers of financial services hold all the risks locally, clients will
be greatly exposed to local and regional shocks, such as natural
disasters and crop failure. They will not get the security and liquidity of
savings and insurance that can be offered by large, diversified entities.
A stable and inclusive financial system should therefore have
mechanisms that facilitate the warehousing of risk by well-capitalized

and diversified entities that have the ability to manage risk efficiently.

Working with several partners, they seek to advocate changes in the
Indian financial system that would enable development of the above
three components.


3. Organizational/Corporate structure

IFMR
Trust

IFMR IFMR

IFMR IFMR Trust
Holdings Advisory
Capital Advocacy
Services
Unit (ITAU)

IFMR Trust
Network
Enterprises Fund
(NEF)

Kshetriya Gramin
Financial Services Network
(KGFS) Enterprises


4. The Senior Management Team

Name Designation

President
Bindu Ananth worked with ICICI Bank in its micro
finance practice between 2001 and 2005 and was
Head of the New Product Development Group within
the bank's rural finance business in 2007.

She founded the Centre for Micro Finance, IFMR, and
has published in the Small Enterprise Development
Bindu Journal, the Economic and Political Weekly, the OECD
Ananth working paper series and the IFMR working paper
series.

Senior Vice President, People

Dave Wallack worked for over 10 years as an
Executive Coach and Organisational Design Advisor
for various private sector and political clients in the
US.

He specialises in building and motivating
Dave organisations to operate effectively in rapidly
Wallack changing environments.

Senior Vice President- IFMR Trust and CEO-
IFMR Holdings Private Limited.

Anil Kumar started his career in a rural branch of
Canara Bank. Later he joined ICICI Bank, where he
was Head of the Micro Finance Institutional
Development Team, which created over 100 MFIs
across the country in 25 states.
Anil Kumar
He was involved in structuring several innovative
models of finance to reach out to clients at the
bottom of the economic pyramid, and has conducted
several training programmes aimed at identifying
entrepreneurs for the micro finance sector.


Senior Vice President, IFMR Trust and Managing
Partner, The Network Enterprises Fund

Puneet Gupta worked with the Social Initiatives Group
(SIG) of ICICI Bank as Coordinator of its education
and micro finance programmes.

At ICICI Bank, he led teams that worked to improve
Puneet the quality of mainstream systems of delivery for
Gupta education and access to financial services for low-
income households.
Senior Vice President- IFMR Trust and CEO-
IFMR Capital.

Sucharita Mukherjee led the origination and

structuring effort in credit derivatives and structured
finance for corporates at Morgan Stanley in London.
Her work includes developing innovative asset-backed
financing structures in such areas as intellectual
Sucharita property and healthcare receivables.
Mukherjee
She was also part of the credit derivatives team at
Deutsche Bank in London, structuring credit-
derivatives-linked repackaged investments for
financial institutions.

• IFMR Trust is governed by a Governing Council. Its key role is ensuring
that:
• IFMR Trust and its partners stay consistent with the mission of the
Trust.
• All resources (internal and external) are deployed towards the
achievement of the mission, in the shortest possible time.


5. People Group
Human resources that they call the ‘People Group’ have following
components.

Recruiting

They have in-house recruiting team that is familiar with their mission
and the intricacies of their work. The team has launched a global search
that reaches from India to major development-focused cities around the
world.

Performance management

Although all the companies owned by IFMR Trust operate as
independent entities, they choose to focus on compensation, leave, and

performance management centrally. In this way, they can encourage
cross-training and lateral movement of employees within the IFMR Trust
companies, as well as IFMR's research centers. This performance
management system tracks key competencies and goals that cascade
down from the IFMR Trust mission.

Processes

They have been working on mapping and refining the processes of each
IFMR Trust company with the objective of coming up with clearly
defined processes and matrices that can be viewed by all employees at
any given time. They believe that this level of process transparency will
increase the pace of process improvement and will ensure that all
employees have a clear sense of how they and their teammates relate
to the overall mission of IFMR Trust.

Training and development

The training needs of IFMR Trust companies are vast. They have
launched a separate training company to create quality training material
that is relevant to the rural Indian context and can be easily translated
into local languages.

The training needs seek to serve include skill and knowledge
development. However, the greatest challenge is in changing the beliefs
of prospective employees so that they are able to see what is possible
for them to achieve. Balancing the acquisition of skills and knowledge
with transformation of the way people see themselves is the focus of
their training effort.


Assessment

One of the major challenges facing IFMR Trust companies is employee
selection. Over the next decade, IFMR Trust companies expect to hire
thousands of employees. Given the scale of their hiring effort they are
eager to make early investments in the development of consistent
assessment tools that help them to avoid interviewer bias. They have
already seen an interest in this project by large Indian employers with
whom they expect to work to further refine their assessment tools.

Qualities of IFMR Trust Team Members

Social entrepreneurship

They seek people who want to solve social problems using

entrepreneurial means. Specifically, social entrepreneurs with a market
orientation. People who agree with them that access to finance and
markets is part of the answer to meeting India’s challenges. People with
the entrepreneurial confidence to believe that they can change the
world.

Systems thinking

They are oriented towards looking at entire systems and taking action to
fix the whole system rather than just solve a local issue. They want
people who share this way of looking at situations. Working at the
system level requires enough flexibility to recognize and question
unchallenged assumptions embedded in systems that aren’t working.

Self-confidence

If someone is terrified of the risks involved in a venture like it, he/she is
the wrong person for the job. they are at the cutting-edge of finance. It
is both dangerous and exciting out here. Their people are confident
enough of their ability to change the world and are not worried about an
exit strategy. When they succeed, the rewards will have been worth the
risk.


6. IFMR Trust Ventures
1. IFMR Holdings, developing working prototypes of localised, high-
quality entities to provide financial services in remote parts of rural
India. These entities are called Kshetriya Gramin Financial Services
(KGFS) companies. IFMR Trust Holdings is creating a network of KGFS
to meet the huge, unmet demand for financial services in rural, under-
served parts of India. In IFMR Holdings operations, involving the roll-out
of Kshetriya Gramin Financial Services; they have a formal hierarchy,
with regional structures. In this environment they value hard work,
salesmanship, passion for the lives of our customers, customer focus,
integrity and consistency. KGFSs will leverage recent advances in
technology and financial markets to roll out a network of financial
services access points in remote rural India.

Each KGFS is expected to have the following characteristics:

• It will have 'thin branches' at the village panchayat level, supported by a
strong back-office. There will be a high degree of automation at the
branch level.

• Each branch will have state-of-the-art technology that captures the
credit history of rural households.

• Branches will offer multiple, client-centric financial services including
savings, remittance, insurance, small-ticket loans and investments.

• Using good data capture and analysis, high-performing KGFSs, in
conjunction with the IFMR Capital, would be able to sharply reduce cost
of funds through securitization.

• Sharply focused on delivery of financial services KGFSs will serve as
information databases and facilitators for other service providers. KGFSs
will also provide a local footprint to our Network Enterprises.

2. IFMR Advisory Services, is an Asset Management Company that is
launching its first equity fund a private equity fund, the Network
Enterprises Fund, to eliminate systemic risk and make small rural
enterprises ‘financeable’ by local banks/financial institutions. The NEF
will invest in supply chain companies in 10-15 sectors called Network
Enterprises (NEs), they in turn will invest in key supply chain gaps,
including logistics, technology and certification backend and working
capital. They have sector-specific teams organized under leaders to
identify potential Network Enterprises (NE) and mentor them. The NEF
is a 10-year closed-ended fund. The Fund plans to hold investments for
five to seven years. The Fund will exit over the last five years. In this
environment, they value innovation, entrepreneurial action, creativity,
passion for our mission, and financial acumen.


Fund Promoter

IFMR Trust is the promoter of IFMR Trust's Network Enterprises Fund.
IFMR Trust's mission is ensuring universal access to financial services
across India.

Investment Management Team

Investments are managed by a team of four members. The team brings
over 50 years of collective experience in financial services, derivatives,
venture capital and investments. The team will be expanded to nine
members.

Investment Strategy

a) IFMR consider investment in a Network Enterprise in the NEF's focus

sector when it meets the following criteria:
b) It has a strategy of investing in rural supply chain acceleration and
meets the definition of Network Enterprises.
c) It identifies and invests in enterprises in the rural supply chain gaps of
the focus sector.
d) It is led by an entrepreneur in residence with proven commitment and
integrity.
e) It is engineered for scale and current returns.
f) The NEF will invest in 10 to 15 enterprises. Average investment size
would be the equivalent of USD 5-10 million.

• Investment Target

Pending the creation of the Network Enterprises Fund, IFMR Trust has
so far invested INR 300 million (USD 7.5 million) in various enterprises.
We plan to raise and invest INR 6 billion (USD 150 million).

• Prospects

IFMR Trust's Network Enterprises Fund is focused on harnessing
commercial capital to address key gaps in rural supply chains.
Investments made in various enterprises have so far delivered a yield to
maturity of 20%.

• Exit Strategy

The NEF expects to get returns in the form of regular dividend and
interest payout by the investee companies. It may also make additional
returns in the form of terminal value.

3. IFMR Capital, (earlier IFMR Trust Guarantee Company) is being
structured as a registered Non-Banking Financial Institution (NBFI)


based in Chennai. The company will be regulated by the RBI under
Section 45-IA. It is a financial intermediary that will ensure orderly
transfer of risk between the originators and aggregators of risk. In IFMR
Capital they apply cutting-edge thinking in financial markets and
securitisation, focusing on growth of originators that are relevant to low-
income households (both rural and urban). In this environment they
value deep structured finance competence and agility in applying that to
the markets we care about.

IFMR Capital's objective is providing liquidity and developing access to
debt-capital markets for critical sectors such as:

• Rural financial service providers.
• Urban financial service providers that focus on low-income households.
• Municipalities.
• Rural infrastructure.

• Small and medium enterprises in the rural sector.
• Agriculture, low-cost housing, and other sectors relevant to low-income
households in both urban and rural areas.

IFMR Capital will meet its objective through multiple strategies:

• Identifying good-quality underlying portfolios and achieving
diversification via pooling of risks across various sectors and
geographical locations.
• Structuring debt to achieve efficient pricing; for instance, priority sector
eligible assets for Indian bank investors, investment grade securities
with a formal credit rating for fund investors.
• Using financial tools such as repackaging, securitisation and credit
enhancement to tailor products that match the risk profiles of investors,
thus facilitating access to domestic and international markets.

Further, IFMR Capital plans to develop markets for new asset classes by:

• Setting market standards for microfinance loan-backed securities,
municipal financing instruments and project finance bonds.
• Developing a sound theoretical pricing framework.
• Designing rating methodologies for new asset classes and structures
with rating agencies.
• Providing liquidity by making two-way markets in municipal bonds,
structured finance securities.

4. IFMR Trust Advocacy Unit (ITAU)

IFMR Trust’s principal strategy for ensuring complete access to financial
services is advocacy. IFMR Trust Advocacy Unit (ITAU) identifies
priorities for research and action to be undertaken by various IFMR
Trust ventures and partners. The outcomes of these initiatives are used
for effective advocacy.


To strengthen financial system components that we believe are essential
to ensure financial inclusion in India, ITAU supports action-research and
pilot projects on access to finance. ITAU disseminates important
learning, research and operational strategies to IFMR Trust ventures.

ITAU also seeks to influence thinking and action among stakeholders,
policymakers and practitioners. It is currently focused on research and
action in the following priority areas:

• Understanding the needs and behaviours of low-income individuals,
households and small enterprises that have traditionally been
underserved by the formal financial market.
• Designing and testing appropriate channels for a range of financial
services and products such as insurance, savings, loans, investments
and remittances.
• Evaluating the impact of financial access on individuals/households and

economies.
• Strengthening the Originate-to-Distribute (OTD) model.
• Enabling financial market infrastructure for risk transfer.
• Knowledge-building initiatives.
• Shaping policy for better regulation and management of risk
aggregators.


7. Agreement with National Spot Exchange Ltd.
(NSEL)
NSEL is a national, institutionalized, electronic spot exchange, promoted
by Financial Technologies (I) Ltd. (FTIL) and National Agricultural Co-
operative Marketing Federation of India Limited (NAFED). It provides a
state-of the-art market place with facilities for risk-free and hassle-free
procurement and disposal of farm produce. It provides customized
solutions to various problems related to It provides customized solutions
to various problems faced by the farmers, traders, processors,
exporters, importers, arbitrageurs, investors and the general masses
relating to agricultural marketing, storage, warehouse receipt financing,
etc.

IFMR Trust has signed a partnership agreement with National Spot

Exchange Limited (NSEL) on September 30, 2008. The alliance will
create a seamless process for providing finance to farmers and traders
against commodity warehouse receipts for the commodities deposited in
NSEL approved warehouses. The pilot for this financing model will be
launched shortly at Unjha (Gujarat).

Under the partnership, IFMR Trust will provide loans to farmers against
agricultural commodities deposited in NSEL-approved warehouses, by
way of warehouse receipts issued for these deposits. Such post-harvest
financing will give farmers the option to wait out the usually low prices
offered immediately after harvest, and sell at a later time, when prices
tend to rise. It will also allow farmers to take advantage of changing
market prices rather than being burdened by them. The loans backed by
warehouse receipts will be pooled and repackaged into securities. IFMR
Trust will structure, arrange and sell these commodity loan-backed
securities in the capital market.

This partnership empowers the farmer by providing a liquid market for
agricultural commodities accompanied by access to finance. Through
this partnership with NSEL, it will unlock tremendous value for both
farmers and investors through this partnership with NSEL. They expect
this model to be replicated throughout the country in the coming years.

IFMR Trust will act as Professional Clearing Member (PCM) of the
exchange. The disbursement and repayment of loans made by IFMR
Trust will be made through NSEL's PCM system.

Enterprise Partners
IFMR Trust works with non-government organizations (NGOs) and
companies that share their objectives.
Two examples illustrate how a partnership with an NGO or company can
work:


An NGO works with women who produce handicrafts. By partnering with
one of their Network Enterprise (NEs) on a commercial basis, the NGO is
able to provide the women market access at scale and at fair prices. By
partnering with our Kshetriya Gramin Financial Services (KGFS), the
NGO is also able to ensure inflow of working capital and expansion
capital.
If any organization is looking to have a rural footprint, either in terms of
procuring from rural markets or selling into rural markets, IFMR’s
Network Enterprises can provide access to competitive production bases
as well as shared infrastructure for distribution. Depending on the
sector, and specific needs, other kinds of partnerships can also be
developed.



8. A new model of financial services
Conceptualised by IFMR Trust, a new model of offering a range of
financial services in remote, rural locations of India has completed one
year of operation.

The model is being rolled out by IFMR Holdings, an IFMR Trust venture,
through region-specific, not-for-profit entities called Kshetriya Gramin
Financial Services (KGFS) companies, registered under Section 25 of the
Indian Companies Act.

The first KGFS company, Pudhuaaru KGFS (PKGFS), started operations
in Thanjavur district of Tamil Nadu in June 2008. Two other KGFS
entities have been launched more recently: Sahastradhara KGFS of
Uttarakhand with proposed operations in the districts of Tehri Garhwal,

Pauhri, Haridwar and Dehra Dun, and Dhanei KGFS in Orissa's Ganjam
district.

These KGFS companies offer a range of financial services and products
through branches located in villages.

Beyond micro finance

KGFS's mandate, as enunciated in IFMR Holdings' mission, is to
"maximise the financial wellbeing of every individual and every
enterprise in remote rural India by providing complete financial
services".

The KGFS model thus goes far beyond the scope of micro finance
institutions (MFIs), which have made inroads in remote locations in
many regions of India. "The growth of micro finance in India has been
unambiguously important for millions of poor households,".

"MFIs enable low-income households to take a loan when there is not
enough money to meet some critical needs. This allows households to
manage cash mismatches in ways that are superior to taking usurious
loans from moneylenders, selling assets like gold or buffaloes, or pulling
kids out of school."

"Just like their middle-income counterparts, low-income households
need to have the ability to move their resources across time and space,
in such a manner that their needs for finance are met smoothly over a
lifetime." To be able to do this, low-income households require "the full
suite of financial services, including savings, credit, risk mitigation and
insurance and remittances".


KGFS's finance suite

KGFS companies are being developed to provide this full suite of
services in remote, rural locations. After much deliberation, 14 products
and services have been identified, to be offered through KGFS branches
to all households living within their area of operation.

These fall under four categories:

1. Loan products: Joint Liability Group (JLG) loans, loans against
mortgaged jewellery (called 'jewel loans' in the Indian banking
industry), retailer loans, and loans for rural industries like brick kilns,
coir units, and rice and dal mills.

2. Insurance products: Personal accident insurance, cattle insurance,
weather insurance, and life insurance.

3. Investment products: Savings instruments that provide safety,
liquidity and reasonable returns, fixed deposits of public sector finance
companies, and a gold accumulation plan that helps customers
accumulate their savings in the form of jewellery, and pension plan
annuities.

4. Services: Sale of certified gold coins, and remittance services to enable
efficient delivery of money sent by migrant members of village
households.

Use of technology

Use of technology helps keep branch operations to the minimum.
Computers in branches are linked, via towers installed over the
branches, to the head office, and all data is subsequently transferred to
servers maintained by FINO, IFMR Holdings' technology partner, which
does the backend processing. Investment in this technology was the
costliest part of setting up KGFS, and also probably the most critical
when one thinks of replicating this model in other remote rural areas.


9. IFMR Trust Activity at Kadi

Castor seed & Oil

Castor (Ricinus communis L.) is cultivated around the world for the
commercial importance of its oil. Castor grows under tropical conditions.
Castor oil obtained from castor seed is inedible oil but is of great
industrial importance. It is used in the manufacture of surfactants,
specialty soaps, surface coatings, cosmetics, personal care products,
pharmaceuticals, perfumes, plasticisers, grease, lubricants and specialty
rubber. Castor meal has uses in agriculture as organic manure.

Indian Scenario

India is the world leader in castor production and dominates the
international castor oil trade. In India, Castor is planted between June
to October and harvested between October to April. Gujarat accounts
for 86% of India’s castor seed production followed by Andhra Pradesh
and Rajasthan. Castor is cultivated in Gujarat in Mehsana, Banaskantha
and Saurashtra/ Kutch region. In Andhra Pradesh, Nalgonda and
Mahboobnagar districts accounts for 70 % of the total castor produced
in the state. The rest is accounted for by Prakasam, Guntur and Ranga
Reddy Districts. The major castor seed markets in Gujarat are Rajkot,
Ahmedabad, Gondal, Gadwal, Bhabar, and in Andhra Pradesh are
Jedcherla and Yemignoor. The annual domestic consumption of castor
oil in India is only about 80,000-1,00,000 tons. Of this, the soap
industry consumes about 25,000 tons, the paint and allied industries.
35,000 tons and the lubricant and derivatives industry 20,000 tons.
India exports castor seed, oil and also meal. However the oil export has
the largest share as it is a value added product from castor seed. From
India castor oil is exported in two forms – First Special Grade and Castor
Oil Commercial. The Indian variety of castor has oil content of 48% and
42% can be extracted, while the cake retains the rest.

Factors Influencing Castor seed & Oil Market
• Variations in castor seed domestic acreage based on yield and price
realization.

• Crop development based on monsoon progress in growing regions
(especially Gujarat & Andhra Pradesh).

• Comparative farm level return on input costs for various crops.

• Comparative price with other vegetable oils in the domestic market.


• Chinese and Brazilian crop size and subsequent demand of Indian castor
oil in world market.

• Carryover stocks.

• Development of new applications and substitutes of castor oil.

Castor Seed Buyers

Buyer Deals in
Jayant Oil Mills Exporting and manufacturing of castor oil,
castor oil derivatives, undecylenic acid,
ricinoleic acid and zinc undecylenate. Also
offering ricinoleic acid kosher grade, n-
heptanol, methyl ricinoleate and methyl 12
hydroxy stearate acid.

Kisan Agro Product Leading manufacturers and exporters of
Ind. edible oil that includes commercial castor
oil, refined castor oil and refined castor oil
pale pressed grade. Also offers Castor Oil
Pharmaceutical and castor seed extraction
meals.
Bharat Foods Co Engaged in manufacturing, importing and
Operative Limited exporting of castor oil, cooking oil,
groundnut oil, cottonseed oil and palm oil.
Also offering mustard oil, peanut oil, rice
oil, soybean refined oil, sunflower oil and
vegetable oil.
Exporting of edible oils like castor oil,
castor oil dehydrated, castor oil
hydrogenated, castor oil refined,
Ultra Chemical Works dehydrated castor oil fatty acid, groundnut
oil and also deals in bulk drugs and
aluminium hydroxide magnesium
carbonate co dried gel.
A Z Agro Ventures Wholesale manufacturer and exporter of
edible oil that includes sesame oil,
groundnut oil, castor oil, linseed oil. Also
deals in raw cotton andcotton yarns, oil
seeds, peas, lentils, pulses, grains, cereals,
bird feed, animal feeder.
Chemical and Suppliers and exporter of edible oils like
Fragrance Corporation, almond oil, apricot kernel oil, argan oil,
Mumbai avocado oil, castor oil, evening primrose
oil, grape seed oil, hazelnut oil, jojoba oil,
macadamia nut oil, olive oil, peach kernel
oil, walnut oil, wheatgerm oil.


Arvalli Castor Manufacturers of hydrogenated castor oil.
Derivatives Private
Limited

Shreeji Trading Wholesale manufacturer and exporter of
Company, Maharashtra castor oil, derivatives oil and lubricants.

Muskaan Tradex Suppliers of castor oil.
Private Limited
Amee Castor & Manufacturers and exporters of castor oil.
Derivatives Limited
N. K. Industries Manufacturer and exporter of castor oil,
Limited edible oil and oil products.

Natraj Industries Manufactuers of castor oil and exporters of
groundnut seeds(peanut),castor seeds &

refined castor oil (f.s.g.)
K. S. Exim Limited Deals all kinds of castor oil and oil
products.
J. J. Industries Manufacturers and exporters of refined
castor oil.
Shankar Lal Ram Engaged in manufacturing of castor oil,
Bharosey Lal expeller mustard oil and mentha oil.
Commodities

Swarnajyothi Manufacturers and exporters of castor oil
Agro&Exports(P) Ltd. usp, hydrogenated castor oil etc.

Somani Oil Industries Manufacturer and exporter of all types of
castor oil, sesame oil, refined oil, edible oil
and non edible oils.
Mandeep Oil Industries Manufacturers and exporters of castor oil,
linseed oil, karanjia oil and refined
soyabean oil.
Hardi Sales Exporters of castor oil (of various grades)
and its derivatives, castor cakes.
K. G. N. Industries Deals in manufacturing of edible oils,
Limited castor seed, castor oil and castor oil
derivaties.
Rajena Agro Products Manufacturers and exporters of castor oil
Private Limited of all grades and other oilseeds.

Laxmi Minerals Manufacturers of all kinds of castor oil.
Aalisha Trade Link Suppliers of refined soya oil, raw linseed
oil, castor oil, karanja oil and edible oils.
Kanel Oil & Export Manufacturers and exporters of castor oil,
Industries Limited edible oil and oil products.


Shri Ram Oil And Manufacturers of castor oil and arzimon oil
Chemical Ind etc.

Ishaan Oils Private Manufacturers and exporters of castor oil
Limited and its derivatives, castor oil commercial
grade, castor oil first special grade and
hydrogenated castor oil.
Laxmi Oil Industries Manufacturing and exporting of cold
pressed castor oil, first special grade castor
oil, pale pressed castor oil, commercial
castor oil and british special grade castor
oil.
Panthroli Industries Manufacturing and wholesale supply of
castor oil.
Siddeshwara Oils And Manufacturers of Castor Oil and its

Allied Products Private derivatives.
Limited
Royal Castor (India) Manufacturers of hydrogenated castor oil.
Ltd.
Maniram Agro Products Engaged in manufacturing of castor oil and
Private Limited cold pressed castor oil.

Synthokem Industries Manufacturers & exporters of castor oil,
castor oil refined, de-hydrated castor oil &
castor oil hydrogenated Etc.
S. K. Enterprise, Dealing Into All Kinds Of Base Oil, White
Masjid Bunder, Oil, Castor Oil, Tailor Made Distilled
Mumbai Petroleum Products.
Vasista Foods & Fats Manufacturers and exporters of castor oil
Private Limited and its derivatives, hydrogenated castor oil
etc.
Keloth Oleochem Manufacturers of castor oil, pale pressed
Private Limited grade castor oil (ppg), cold pressed castor
oil, urethane grade castor oil,
hydrogenated castor oil, pharma grade
castor oil etc.
Modi Oil Mills Manufacturers and exporters of
commercial castor oil, fsg castor oil, pale
pressed castor oil etc.
Paras Chemical Manufacturer and trader of castor oil,
Industries turpentine oil and eucalyptus oil.

Alps Processors Producers and suppliers of ground nut oil
and castor oil.
Gokul Overseas Manufacturer and wholesale exporter of
Limited castor oil, refined palm oil, refined mustard


oil and vegetable oil.
Pawan Agro Industries Leading manufacturers and fabricators of
castor oil.
Crystal Caschem India Engaged in manufacturing refined castor
Limited, Ankaleshwar oil and hydrogenated castor oil.
S. C. Chemicals Sellers of castor oil.



10. Cost Sheet for Millers Lifting Delivery from
Exchange Designated Warehouse
From From
NSEL MANDI
Sl. Expenses Lot Rate Amount Total Expenses Rate Total
Size Amt Amt
I (Rs) (Rs) (Rs) (Rs)
Bag
(75
Kg)
1 Base Price i.e. 75 20 490.00 1837.50 Base Price (75 Kg 490 1837.5
Castor Seed Gross Weight)
Loose Price at
NEST
Terminal for 1
Lot of 75 Kgs
- Net Weight
2 APMC Cess - 11.03 Commission 22.97
0.6% on Base @1.25% -Kutcha

Price Adad
APMC Cess - 11.03
0.6% on Base
Price
Hammali - For Per 5.50
Sieving & Bag
Bagging (75
Kg)
Stitching Per 0.20
Bag
(75
Kg)
Commission 18.38
@1% - Trader
1895.57
3 NSEL 9.19 Interest cost for 3.41
Transaction paying VAT &
Charges- @Rs getting return -
500/- per One considered upto
Lakh of 3 Months - [VAT
Turnover @ 4% on
1895.57 is Rs
75.82. Interest
cost for 3 months
for Rs. 75.82 @
18% p.a. is
Rs.3.41/-]
Total Cost 1857.71 1898.98
for 1 Lot i.e. Loading at Mandi Per 75 2.00
75 Kgs Kg Bag

Transportation Per 75 4.00
from Mandi to Kg Bag
Mill
Unloading at Mill Per 75 1.50
Kg Bag

Total Cost for 1 Lot i.e. 1906.48
75 Kgs
Difference in Cost Per Bag of 75 Kg's 48.77

Difference in Terms of Rate per 20 Kg's 13.00


11. Storage Receipt Financing- Farmer
Education
The IFMR Trust Structure

Services Offered By Branch

• Enrolment and KYC of farmers.
• Providing loan against storage receipt (70% of market value of crop
@ 10% p.a.).
• Electronic spot trading facility in castor seeds with specific warehouse
location.
• Information about Market price at branch, Grading, quality
certification, Processes at warehouse, Process of issue of storage
receipt at warehouse and standardization of commodity.

Benefits to Farmers

• Increase in holding capacity due to availability of storage receipt
finance and hence chances of realizing better price.

• Increase in bargaining power due to availability of an alternative
market.

• Cost reduction in handling and other activities.

• Access to a national level transparent market where direct selling to
end users would be more beneficial.


Enrolment & KYC of Farmers

• Business Executive explains about KYC process and documents
required.

• Business Executive captures personal and geographic data about
farmers at the branch.

• After the farmer visits the branch Business Executive will do the
physical verification and fill the CIS form.

• Farmer comes to branch for enrolment with all KYC documents.

• Business Executive captures details in CIS form and takes
photograph.

• Finally customer ID is generated.

KYC Documents

• Identity proof(any one): passport, PAN card, voter ID, driving
license, Ex-service man card, employee identity card, letter issued by
village sarpanch/head of village of panchayat/mukhiya/village
administrative officer, caste certificate.

• Address proof(any one): telephone bill by BSNL, letter issued by
village sarpanch/head of village of panchayat/mukhiya/village
administrative officer/block development officer, electricity bill, ration
card with photograph, letter from current employer, certificate from
postal office confirming the address of customer, premium receipt
from LIC, voter ID, driving license.

Sampling Process

• No of bags less or upto 2:- 100% testing will be done i.e. Full bags
will be sieved for foreign matter.

• No of bags more than two upto 40 bags.

• A group of bags sold by a single seller upto 40 bags will constitute
one single lot. If number of bags sold by a single seller is more than
40 it will be treated as a separate lot for the purchase of quality
testing.

• Two bags to be selected for sieving through a 4 mm x 4 mm mild
steel sieve.

• The first bag will be selected at random basis.

• The second bag will be selected in the process of online sampling
from each bag.


• Apart from this, the exchange reserves the right to conduct testing of
test weight by taking a composite sample through online sampling.

Castor Seed Quality

Deliverable grade

• Gujarat Castor seed small

Oil content

• Acceptable Range – 44% to 48%. Checked by Test Weight Basis

Moisture content

• Acceptable Range - 4 to 5%. Checked by Test Weight Basis

Physical Impurity

• Dust (Raj) – Sampled bags will be sieved for finding dust. Allowable
upto 350 gms per bag with no deductions. In case dust is between
350 gm to 700 gms per bag, the deduction in weight will be the
weight of dust over and above 350 gms of dust from all the bags. In
case dust is found above 700 gms per bag, then actual weight of
dust will be deducted from all the bags.

• Stone - Actual weight of stones to be deducted from weight of the
bag Upto 300 Gms – 1:1, From 301 Gms to 500 Gms – 1:2, Over
500 Gms – 1:3

• Husk (Fotri) – Sampled bags to be screened for Husk. Actual weight
of husk found after sieving to be weighed and deducted from all the
bags.

• Damaged Seed –If found visually in large percentage in the Bags.
Acceptable upto –2% but with a deduction in price. Over 2% -
Rejected

• Desi/Paras Eranda – Should not be mixed with castor seed. If found,
Lot can be out rightly rejected.

Testing Method

• Test Weight: Done by filling composite sample made from an entire
lot in an aluminium tin having a capacity of 4.2 litres subject to the
specified acceptable range –

• Acceptable weight – 2230 Grams.

• Between 2230 gms to 2000 gms – deduction of Rs.5/- per 20 kg.


• Below 2000 gms - Deduction of Rs.10 /- per 20 kg.

Packaging Details

• The bags used for delivery should be new or second hand jute bags
in good condition without patches and not having been previously
used for cement bagging.

• One bag should contain 75Kg net weight of castor seed with
tolerance limit of 5 kgs. Standard weight of bags used for packing
castor seed should be one kg.

• Price is paid on net weight basis. If the farmer delivers anywhere
between 70 Kg’s to 80 Kg’s then it will be treated as a good delivery
and price will be paid on actual weight received at the warehouse.
The farmer will take away the bags, as the payment is done on net

weight basis for naked grains without packaging material. Hence, the
buyer is required to pay for the packaging material as specified
below.

Commodity Depositing Process

• Farmer has to bring a copy of his 7/12 Form or Pani Patra or such
other document / certificate establishing his land record while
delivering castor seed at the exchange designated warehouse to be
submitted to the selling member. A copy of such document should be
attached with each deliverable lot of castor seed.

• Farmers willing to sell / deposit Castor Seed in the Exchange
accredited warehouse will be required to bring castor seed to the
exchange warehouse where weighment will be first checked and
quality certification shall be done. Farmers can sell their commodity
on receipt of Warehouse Receipt and Quality Certificate on the same
day at the NSEL terminal available at the warehouse provided by any
NSEL Member or in their village level branch of IFMR Trust (Khedut
Kendra). Weighment and Unloading of Castor Seed will be done on
first cum first serve basis. Stocks received from the farmer at the
exchange designated warehouse upto 01:00 PM can be sold on the
same day. The farmer after execution of sale shall have to fill up the
relevant portion of invoice for the onward delivery to the buyer.

• The farmer may bring and deposit goods at the Exchange accredited
warehouse along with duly filled CID form through the NSEL Member.
The members must use separate forms for each delivery at NSEL.
The Warehouse will accept the delivery from Monday to Friday
between 08.00 am and 01.00 pm. The member should deposit the
goods within the specified time, in order to have hassle free delivery
of Castor Seed against their transactions.


• Farmers not desirous of selling the castor seed on the day when he
brings the goods to the warehouse can store the goods in the
warehouse after having quality checked for sale subsequently. In
such case, storage charges shall be applicable and goods have to be
compulsorily packaged in jute bags. In case the farmer willing to
store has not brought his castor seed in good conditioned jute bags,
such bags can be supplied by the warehouse at extra cost as defined
under packaging below. Since the farmer brings naked grains, which
is to be graded and packaged, the buyer has to pay the labor charges
as specified below. The buyer is also required to pay the cost of bags
as mentioned in Storage Charges Section below.

• There is no distinction between old and new crop and hence stocks
will be accepted based on the contract specifications as specified by
the Exchange.

• Before deposit, goods have to be compulsorily weighed at the
designated weigh bridge / weigh scale and will be monitored and
certified by the warehouse supervisor. It is to be ensured that the
Castor Seed delivered at the warehouse should comply strictly with
the acceptable tolerance limits as prescribed by the Exchange in the
contract specification.

• On receipt of Castor Seed at the warehouse and during unloading the
same, random sampling for quality analysis of physical properties, oil
content and moisture testing will be done by the quality certifying
agent based at the exchange warehouse. If required, the bags will be
opened and will be spread on the floor for verification/analysis.

Storage Charges

• Rs. 0.15 per bag per day (1 day billing cycle exclusive of tax, if any)
to be paid by farmer.

• These charges are inclusive of insurance and fumigation charges.

• These charges are payable by the buyer only. There are no charges
to farmers for selling Castor Seed on the exchange platform.

Weighing Process

• Lot size of One to Five Bags to be weighed individually through
electronic weigh scale.

• More than five bags to be weighed at weigh bridge.

• Castor seed arriving in loose form in trailors will be weighed at
weighbridge and treated as a single delivery unit.


Warehouse Receipt Issue

• Warehouse receipt (on delivery unit basis i.e. 75 KG) along with a
quality certificate will be issued by designated warehouse for all
Castor Seed kept in the designated warehouse.

• First of all commodity inward document (CID) will be issued by
depositor upto D+0, 1:00 pm.

• Quality certificate would be issued by Quality Certification Agency
upto D+0, 5:00 pm.

• Finally warehouse reciept would be issued by warehouse upto D+0,
5:00 pm.

Product Features

• Loan against storage receipt

• 70% of market value of crop

• The tenure of each loan shall be less than or equal to the validity of
the warehouse receipt subject to a maximum period of 12 months.

• Interest Rate - 10% per annum

• Limit per borrower- Farmer : Ceiling 10 lakhs

• Margin call at 85%

• 3 days to bring the margin money

Events of Default

• If the borrower does not bring the required top up margin within
stipulated time of margin call.

• If the stop loss is triggered.

• If repayment has not been made as per the repayment schedule
fixed and goods not lifted by the borrower

• If there is any deterioration beyond acceptable levels quality or
impairment of the goods stored.


12. Process

 Education

Steps Who When Where
The Branch Executive will meet Branch Prelaunch Village
opinion leaders in the village Executive of Branch
(Sarpanch, members of panchayat,
Head master,) and few people in
the village to brief them about
IFMR Trust and announce that we
shall be shortly opening our branch
in the village.
Branch executive will talk about Branch Prelaunch Village
warehouse receipt finance product Executive of Branch

through NSEL for which IFMR Trust
enrollment is necessary
Branch executive will carry the Branch Continuous Village
product feature booklet which will Executive
be in Gujarati and describe all the
product features in detail
After discussing the product Branch Prelaunch Village
feature, to get the warehouse Executive of Branch
receipt loan the branch executive
will inform that the enrollment is
on and will end on the following
date - will not end….
At the outset the branch executive Branch Prelaunch Village
will inform that enrollment does Executive of Branch
not gurantee them loan, eligibility
is based on our product features.

 Enrollment Process


Branch executive will inform Branch During Village
the farmers about the KYC executive education
documents required for taking program
the loan and photograph
Branch executive will collect the Branch On initial Branch
geographic and personal executive visit
information of the interested
farmer - This will happen at the
branch.


Branch executive will give an
enrollment time &date to the
interested farmer at ATMNE
branch - This will be walk in
Before - (After in our case) the
farmer visits the branch the
branch executive will complete
the physical verification on the
client and fill the information in
the CIS form(The CIS form will
need to be modified to have the
option of tagging the
warehouse receipt with the
profile of the farmer in the CIS
form) - This will come after
photo

Farmer comes to ATMNE branch ATMNE
for enrollment with all the branch
required KYC documents
Branch executive captures
details in the CIS form and
takes photograph and a
customer ID is generated at the
backend
This ID will form the Client ID
for trading purposes on NSEL
ATMNE gives a unique ATMNE
customer ID branch

 Commodity deposit at NSEL warehouse

Farmer intimates the ATMNE Farmer 1 Day in ATMNE
branch about deposit of advance branch
commodities at the NSEL
warehouse
End of day, ATMNE informs BE 1 Day in ATMNE
warehouse about deposit of advance branch
commodity
Farmer brings his stock to NSEL Farmer Kadi-
warehouse Warehouse
Farmer will fill the deposit Farmer Day the Kadi -
application form at the /ATMNE farmer Warehouse
warehouse brings the
commodity


The warehouse manager will Warehouse Day the Kadi-
draw the sample Manager farmer Warehouse
brings the
commodity
Sample will be drawn from Warehouse Day the Kadi-
different sides and depths till Manager farmer Warehouse
the required amount of sample brings the
around 1Kg is avaliable commodity
The sample will be mixed till a Warehouse Day the Kadi-
homogenous mixture is Manager farmer Warehouse
obtained after which it will be brings the
analzed commodity

 Quality testing process

Steps When

Moisture Content-Basis 4.5% After sample
The moisture should be allowed up to 5% maximum amount is
during July to October. available
Oil Condition-Basis 47%
Between 47 to 45 with discount 2:1
Below 45: Rejected
Physical Impurity-Basis 3%
Acceptable up to 6% with a discount of 1:1
Above 6%: Rejected
All other kinds of seed, dead seeds, damaged seeds
(Immature, shriveled and broken if any), grains free
shell (Husk) of Castor Seeds. Shell (Husks) covered
on castor seed and separated there from shall be
considered as “dirt”
Allowance for dead seeds and damaged seeds: All
dead seeds and damaged seed shall be reckoned as
dirt.
( 10 mm Mild steel Sieve No.4/18 will be used for
refraction to determine physical impurity)
Black Seed-Maximum 1%
If the drawn sample is withing the parameter of
NSEL, the warehouse manager will start weighment
of the commodity.


 Storage


After quality testing is done the Warehouse After Warehouse
commodity will be brought to manager quality
weigh bridge testing
Weighment will be done either Warehouse Warehouse
on the weigh bridge installed at manager
the NSEL warehouse or
platform scale
The packing material weight will Warehouse Warehouse
also be considered while manager
calculating the Net weight of
the commodity. The bag weight

would be deducted from the
gross weight.
The floor of the warehouse will Warehouse Before Warehouse
be covered by dunnage in the manager stacking
form of plastic sheets or
wooden mats
Stacking of the commodity will Warehouse Warehouse
start infront of the warehouse manager
manager and farmer
The comodity will be stacked Warehouse Warehouse
having a dimension of manager
30*20*16, with 2 feet space
from the wall on all the sides
After stacking is finished ,stack Warehouse Warehouse
card will be put with clear manager
stacking floor plan
The warehouse manager will Warehouse Warehouse
issue the warehouse receipt to manager
the farmer


13. SWOT

Strengths
• A team of experts with collective experience in rural financial services,
venture capital and supply chain management.
• A deep understanding of mainstream markets and project finance
techniques.
• Partnerships with large companies and NGOs facilitated in large part by
the ICICI group of companies working through the ICICI Foundation, a
mentor to IFMR Trust.
• Better and transparent price realisation to the farmers as compared to
Mandi.
• Online Participation of buyers from all across country without physical
movement to point of purchase

Weaknesses

• Dependent upon volume/demand on the exchange.
• Requires significant amount of education to be given to farmers.
• Farmers are not so aware about IFMR Trust activity and their products.
• Perticulary in kadi taluka IFMR Trust provide loan only on castor
Commodity.
• IFMR Trust provide loan only on NSEL warehouse recipt not on the other
warehouse receipt.
• No fixed parameters of judging quality.

Opportunities
• Futures and options offering to farmers.
• Arbitrage opportunities for ATMNE.
• Network of branches working with farmers can allow for other services
to be sold or given to farmers (e.g. fertilizers, etc).
• Can expand its product portfolio.

Threats
• Commodity risk management.
• Existing traders could react in hostile manner.
• Age old long relationship between farmers and traders at Mandi
• Dependence of small farmers on traders for agricultural loan.
• Competitors like RRBs, other financial institutions.
•


Farmer/Client Feedback
For
“Khedut Kendra Dharampur”

Submitted To:-

Mr. Bhaveshbhai Nayak
Project Manager
Dharampur

IFMR Trust

SUBMITTED BY:

HITESH K. KARKAR
(04-0409-2008)
2nd Semester

INSTITUTE OF AGRIBUSINESS MANAGEMENT

NAVSARI AGRICULTURAL UNIVERSITY,

NAVSARI


Acknowledgment
I express my sincere thanks to Mr. Rajendrakumar for lending me an
opportunity to undertake special project and have such a valuable
experience.

A Sincere thanks to our Director Dr.R.R Shah. My project guide Dr. Ruchira
Shukla & Internship Co-ordinator Dr. Alpesh Leua also Prof. Rahul Thakkar,
for their benevolent support and giving me such a great opportunity to feel
the rhythm of business world and also guidance in completion of this report.

I also would like to thank Mr.Bhaveshbhai Nayak Project Manager,

Dharampur. Mr.Sandipbhai Branch Executive, Dharampur also Mrs. Gitaben
Branch Manager, Dharampur who helped me in learning and completing
this report.

Special thanks to Mr. Mitesh Chikhaliya for his everlasting support and
guidance in conducting this project. Heartily thanks to Mr. Srikant Thakre,
my companion during this entire project.

Last but not the least; I would like to acknowledge the warmth and
hospitality of the natives of my respondents (Farmers/Traders) for their
whole hearted support.


14. Introduction
Agricultural Terminal Markets Network Enterprise Private Limited was
legally registered in September 2008. ATMNE has been incubated by
IFMR Trust’s Network Enterprises Fund. They have launched a private
equity fund, the Network Enterprises Fund, which incubates and invests
in companies exclusively focused on sectors where rural households
have a competitive advantage as producers or consumers.

The founding-members of ATMNE began working with IFMR Trust in
spring of 2008, exploring various gaps in agricultural supply chains that
required the intervention of new operators or investors. It was decided
that partnering with the National Spot Exchange Limited presented an
opportunity to bring high-value services to an enormous amount of
farmers, within a reasonably short amount of time.

15. Products & services offered at present
As the first step towards its goal, ATMNE opened its first branch on
February 16, 2009 at Dharampur village in the Kadi taluka of Gujarat.
Through its partnership the National Spot Exchange Limited (NSEL),
ATMNE believes it can achieve its goal of bringing about greater market
transparency and price discovery and providing alternate financing
options to small farmers, a facility only available to large farmers and
traders. ATMNE is an Institutional Trading and Clearing (ITCM) on the
NSEL and is installing trading and backoffice infrastructure to enable it
to be present across India, wherever NSEL operations exist.

ATMNE is currently working with one commodity (castor seed) and
offering the following services to farmers at present:

a) Providing price information to farmers.

b) Buying castor directly from farmers, at prices an average of above
the local mandi price.

c) Providing access to storage & grading. This is undertaken through
NSEL’s warehouse and their staff conducts the grading.

d) Financing against stored commodities – farmers who store their
commodity in the NSEL warehouse can go to the ATMNE branch
office to receive a loan up to 10 lakhs (i.e. 70% of the commodity
value) at an annual interest rate of 10%. To avail this product
farmers register with the branch and are issued smart cards with
their photo on them, to allow for unambiguous identification.


16. Objectives of Survey
Khedut Kendra Dharampur was established on 16th February, 2009 so in
order to know the effectiveness and to know the opinions of
farmers/client of the region regarding Khedut Kendra Dharampur survey
was conducted.

It will be useful for the company to change or modify its strategy as
needed for better operational efficiency in the area of microfinance.

Research Methodology

Source of data collection

• Primary: - Data collected from survey of the five villages.

• Secondary: - Data collected from internet & Internal reports of
trust.

Data collection method

1) Personal interview with open ended questionnaire.
2) Observation of farmers of villages surveyed.

Instrument of data collection: - Questionnaire

Sampling Techniques: - Convenience sampling & Purposive sampling.

Sampling Unit: - Farmers/Clients of the Khedut Kendra Dharampur.

Sampling Size: - 70 farmers/Clients of five villages.

17. Action Plan

This project basically involves survey of five villages of the Mahesana
District. The villages surveyed are namely,
1. Maharajpur
2. Korda
3. Visatpura
4. Kalyanpura
5. Shivpura

Out of these five villages in Maharajpura and Korda they have members
in these two villages and they are looking forward for the entry in
Visatpura, Kalyanpura, Shivpura. For successful completion of this
project an action plan was prepared,


Date Activity
08-07-09 Questionnaire Preparation for Feedback of Farmers
Regarding IFMR Trust (Khedut Kendra Dharampur).
09-07-09 Visit to Dharampur Branch (Dharampur Khedut Kendra).
10-07-09 Identification of Villages and Primary Survey of Selected
Villages.
11-07-09 Survey of Maharajpura Village.
13-07-09 Survey of Sivpura Village.
14-07-09 Survey of Korda and Visatpur village.
15-07-09 Survey of Kalyanpura Village.
16-07-09 Project Submission and evaluation.
&
17-07-09



18. IFMR Survey Outcomes

Analysis of Data

Maharajpura Village
• Total 12 farmers surveyed selected randomly from the different
parts of the village.
• Majority of farmers have very small land holding (not more than
10 Vigha) i.e. majority of them are marginal farmers.
• Educational level is average.
• Farmers have irrigated land. Mainly two sources of irrigation are
there, canal and bore-well.
• Farmers depend mainly on monsoon crop cotton, castor, jiru, etc.

• Main source of income is the agriculture.
• Farmers prefer to sell their commodity in the Kadi APMC due to
nearness (20 km).
• Farmers have to bring the commodity in the market in their own
vehicle.
• There is no any facility in the village to know the market price for
particular commodity on specific day. Farmers directly bring the
commodity to Kadi market and after coming to market they come
to know about price. So if they don’t get satisfactory price then
also they have to sell their commodity.
• Farmers are exploited by private traders so they are interested to
deal with IFMR.

Shivpura Village

• Medium land holding farmers i.e. 40-100 vigha.

• Literacy level is good. Majority of farmers have passed Metric
(SSC) exam.

• Farmers have well irrigated land. Mainly two sources of irrigation
are there, canal and bore-well. 60-80 % land is irrigated by canal.

• Cropping pattern:

1. Winter crop: - Jiru, Tomato and castor


2. Monsoon crop: - Cotton, Juwar

• There is no any private trader in the village, so farmers prefer to
sell Jiru in the Unjha APMC, it is main center for jira in Gujarat, 90
kms away from the village and for other commodity they visit Kadi
Market, 20kms away from the village.
vehicle.
• Newspaper is the only source to know the market price of
particular commodity as prices are decided base on last day trade
price in Kadi APMC. But actual price is decided by the traders.
• Farmers are exploited by private traders so they are interested to
deal with IFMR.

• Tomato production is good in winter so there is good opportunity,
if seasonal centre is established for tomato procurement.
• Many of farmers thinks that the price of commodity should be
decide based on export policy.

Korda Village
• Majority of farmers have very small land holding (not more than
25 Vigha) i.e. majority of them are marginal farmers.
• Education level is average.
are there, canal and bore-well. Around 50% land is irrigated by
canal. Sometime irrigated by village lack.


1. Winter crop:- Jiru, Wheat, Variyali

2. Summer Crop: - Juwar

3. Monsoon crop: - Cotton, Dangar and Castor.

• Due to absence of collection centre in the village farmers sell Jiru
in the Unjha APMC and for other commodity they visit Kadi
Market, 20kms away from the village.
vehicle. No transportation facility is provided by the traders.


particular commodity. Sometime farmers also make phone calls to
traders to know the price of the commodity.
• Almost all the farmers are member of Khedut Kendra Dharampur
but they have no idea about activities of Dharampur centre.

Visatpura Village
• Farmers have average land holding i.e. not more than 50 vigha.
• Literacy level is good.
are there, canal and bore-well.


1. Winter crop:- Jiru, Wheat, Variyali



• Main source of income is the agriculture also some farmers do the
business of money lending.
• Farmers prefer to sell their commodity (jiru) in the Unjha APMC,
for Tomato they visit Jamalpore market (Ahmedabad) and for
other commodity they visit Kadi Market which is 20 kms away
from the village.
particular commodity.

Kalyanpura village
• Total 15 farmers surveyed, selected randomly from the different
• Faremers have average land holding i.e. not more than 50 vigha.
• Literacy level is good.
are there, canal and bore-well.


1. Winter crop:- Jiru and Wheat




• Main source of income is the agriculture also some farmers do the
business of money lending.
• Farmer use to sell their commodity in Unjha and Kadi Market.
• Newspaper and Phone calls at IFMR centre at Kadi they come to
know the market price of particular commodity.
Private traders provide credit to farmers for purchasing of inputs
so farmers sell their commodity to them only



19. Findings And Recommendations

Findings
• Farmers gets good price in IFMR as compare to Kadi yard due to
absence of intermediaries.

• Farmers feel safety of payment from local traders because traders are
well known to the farmers and past trading experience.

• Farmer needs not to travel long distance for delivery of his commodity
because local traders collect it from their doorsteps.

• Farmers are not aware of activities of “Khedut Kendra Dharampur” also
farmers, who are little aware about centre said that the procedure &
documentation is cumbersome.
Ex: - if farmer wants to take loan for warehouse receipt than he has to
submit 7/12 copy, but in village they face many problems in getting
copy of 7/12 from “Talati”.

• For delivery of commodity farmers have to go to Kadi centre and for
payment collection they have to visit Dharampur. It is quite difficult for
them.

• Farmers view “Khedut Kendra Dharampur” as a Private Bank, so they
hesitate to deal with it due to past bed experience with some another
private trust.

• Farmers complaint that they have to pay interest for loan taken on their
commodity and also loan given is only70% of market value of crop
which is not favored by majority of the farmers.

• Deduction (QC) is more in NSEL as compare to Yard also there is no
standard parameter for QC, the way QC is done farmers do not agree
with it. Still the farmers prefer to give their commodity to IFMR because
there are some advantages as compare to yard/mandi or APMC.

• Procedure of QC is not transparent according to farmers.

• In case of Kalyanpura village private traders provides the credit facility
so if IFMR Trust provides same facility then it will attract more farmers.


• In majority of village the literacy level is not up to the mark so there is
need to arrange promotional and it should be design in such a way that
people can understand it easily.

Recommendations
• Farmers are not completely aware about activities of “Khedut Kendra
Dharampur”, so there is need to arrange awareness campaign on large
scale to understand rural mentality because rural culture is quite
different from that of Urban.

• Ensure the safety of payment to famers. Its major issue in rural area
because from the survey the one common point noted is that farmers

are not ready to take risk in dealing with new entrants, so in order to
penetrate deep in this region, organization needs to develop healthy
relationship with them.

• Documentation procedure for warehouse receipt loan should be made
transparent and it should be farmer friendly. Make them feel that “we
are here for you”.

• If possible establish Godown within Dharampur, so that farmers need
not to go for Kadi by this way it may also eliminate competition from
private traders and people will realize that Orgnization is not “fly by
night operator”, but it is here to stay.

• Only single commodity is accepted, i.e. Castor seed, as there is a
verygood scope to expand portfolio by dealing in other commodities
specially Jira and cotton because the Unja is a main centre for Jira and
still absence of any private spot exchange in the region for jira gives the
assurance of success.

• If farmer want to take loan for his commodity then if possible than it
should be sanction based on pre-survey of field i.e. crop grown,
expected production, etc and accordingly charge the interest rate.

• Arrange “Commodity Collection Camp” on any specific day of every
week. This will give many benefits like…

1. Commodity may be collected in bulk within short period of time.


2. Market position will be strengthened by holding large amount of
commodities in the warehouse.



BIBLIOGRAPHY

Θ www.ifmrtrust.co.in

Θ www.google.com

Θ www.wikipedia.org

Θ IFMR Trust Technical Note “Access to Micro-Savings for Remote
Rural India”.

Θ IFMR Trust Annual report 2007-08.

Θ “Access” Quarterly Newsletter of IFMR Trust and its Partners.

Θ Impact Assessment of Microfinance in India (Interim findings from a
national study of MFIs in India).


Appendices & Annexure

Questionnaire for Farmer/ Client Feedback

Khedut Kendra Dharampur

Name of Respondent :

Address : Village: Taluka:

District:

Pin code- Mo.

Age :

Education : Illiterate:

Below 10th :

Above 10th :

Specific :

Land holding :

Irrigated:

Un-irrigated:

Cropping pattern : Summer :

Kharif :

Rabi :

No. of dependent :

Source of income : Farming:

Business:

Service:


No. of markets available :
& service provide by
Name :
them
Distance:

Auction time:

Payment condition:

Why you go specific market as well as trader?

What are the transportation facilities available?

What are the other facilities available?

What are the sources for known the market price at village level?

Would you know about Khedut Kendra Dharampur and how it work?


What are major problems at Khedut Kendra Dharampur?

Are you happy with Khedut Kendra Dharampur work? Why?

Note: - These questions are Subject to Change as per Situation.


IFMR Trust Microfinance Project Report

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