BUSINESS PLAN: ASHANTH AGRO TECH LIMITED

 

Executive summary

In this business plan, discussion is done on the Ashanth Agro Tech Limited.

       The idea of the business is to adaptation over the innovation technology in the rural area of the India in order to develop the Farming practice. Using innovative and people technology can help the farmer to increase the efficiency of Farming and produce more crops

       The market of the company is the rural segment of India. The mid-range farmers are the main target over here because they are not able to afford high range technology because of high price.

       The business model is product to service business model, where the company will manufacture the cost effective technological product in order to support the agricultural sector of India. In terms of sale inbound sale model will be used.

       The target market is the Indias rural small agriculture states and their farmers. It targets the farmers of Haryana, Punjab, and West Bengal. The company has planned to use outbound marketing sales strategy for attracting customers.

       The plan has evaluated some risks which are possible with product deployments and future business. It is possible that the farmers are not well accustomed or ready to accept this product. It is also possible that there is climatic change and introduction of new products may receive negative feedback.

       Agricultural production is important for the business organization as it frames the business model. The implication of the innovative technologies can drive the market operation and raise the production sales.

       Competition is high with the existing companies manufacturing technology-based agricultural tools. However, the Company plans to develop products which would be satisfying all the demands and requirements of targeted customers in terms of budget, availability and service.

 

Table of Contents

Section 3: Introduction and company description. 5

Aim & Goals. 5

Aim of the Company. 5

Objective of Company. 5

Short Term Objective. 5

Medium Objective. 5

Long Term Objective. 5

Section 4: Product and service. 9

Section 5: marketing plan. 11

5.1: What is the market?. 11

5.2: The marketing plan. 13

5.3: Sales plan. 15

5.4: Engineering and R&D.. 16

Section 6: Operational and resources plan. 17

Section 7: Management and organisation. 19

Section 8: Personal financial statement 22

Section 9: Start-up expenses and capitalisation. 22

Section 10: Financial plan. 24

Section 11: Limitation and risk analysis. 26

Section 12: Conclusions. 28

References. 29

Appendix. 32

Appendix 1: Income statement 32

Appendix 2: Balance sheet 42

Appendix 3: Sales forecast 45

Appendix 4: Cash flow statement 46

 

 

        

Section 3: Introduction and company description

Aim & Goals 

Aim of the Company 

Aim of the company is to develop an agri product company which can operate in a sustainable way in the competitive business environment of India. 

Objective of Company 

Short Term Objective 

Short term goal is very specific, which is to create innovative products. This method can motivate management of companies to spread their products in the market. Innovative management skill labor can help to achieve this objective within a specific time of product development. New and innovative products can help to get a reasonable, realistic approach in the market.

Medium Objective 

Medium objective of the company will be to identify potential customers and the market. It can be measurable by company becassue management evaluates their market efficiently. In addition, this objective achievable and relevant beascue market of India is much wider and proper identification can help to start from a potential market. It is a timely objective because companies need to evaluate the market quickly because without evaluation companies may not launch their product.

Long Term Objective

Long Term objective is to develop an adequate customer base for increased sales. Customers are important and proper marketing can help them to achieve this. Large number of customers can help a company to grow and develop in a long timeframe. 

Ashanth Agro Tech Limited intends to focus on adopting innovative technologies for manufacturing agricultural tools which could benefit the farming sectors of India. The company plans to develop and deploy modern technological mechanisms which would enable the targeted agriculture sectors to improve their performance and efficacy.

Marketing report

Vision

The vision of the company is to be the first choice whenever a farmer thinks about buying innovative machinery for the agriculture

Mission

The mission of the company is to solve the problem of the farmer in the agricultural sector with the help of innovative technology (Kour and Arora, 2020). In order to accomplish the purpose, the company will provide the machinery and increase awareness about the roles and importance of innovation in the agriculture sector.

Business Opportunity

India is an agriculture-based country, which faces daily problems in the agriculture sector. This sector is going through significant changes over the last some decades. Hence, these changes can be turned into an opportunity. Implementing innovative technology in the agriculture sector is exciting as this can allow the primary industry of India to reach new heights (Khanzode et al. 2021).

Markets

Before starting a business it is important to select the market, where the business process can be performed. In this Ashanth Agro Tech Limited, they are going manufacture agricultural tools. Therefore, the company would target the Indian rural agricultural market which has been lacking farming infrastructure and technological advancements to make beneficial business. The segmentation would be based on consumers buying and technology adoption behaviour in terms of service, convenience and price (Sharma, 2016)

Technology

The company is a technological-based company. Hence, they will also use innovative technology for making those tools. On the other hand, the investment will be done in the R&D of technology

Products

Products are a variety of ranges. As suggested by Suvedi, Ghimire, and Kaplowitz (2017), those are The Motocultor, seeders and planters, Shovel, Wheelbarrow, The Harvester, Sprinkler, and other tools and machinery. However, Ashanth plans to manufacture sensors such as nitrogen sensors. As mentioned by Sharma (2016), nitrogen is considered to be one the primary ingredient in good crop fertilizers. Using these sensors, the farmers can measure plant health allowing them to use fertilisers effectively. With the changing infrared lights the crop health can be estimated..

Goals and objectives

In order to fulfil the mission and vision, setting proper goals and objectives is necessary to be followed. It has been found that before starting the business setting proper goals could help them to follow the rules of the business. The goals of the company are

●      The business targets to accomplish its mission by targeting the Indian states like West Bengal, Haryana and Punjab within 6 years. As the farmers here is still having a sense of insecurity and fear with green revolution, their effects on farmlands and increased competitions these new tools and technology would provide them a new path for flourishing their business well.

●      Ashanth Agro Tech Limited can include the modern technological (biotechnology, genetic engineering) approach to enhance the market share. Based on this, the objectives are made with a clear perception to drive the business sales and accomplish the target (Estrada et al., 2017). The implication of the technology in the agricultural field can bring the green revolution and capitalise the agricultural value.

●      Develop marketing strategies for targeting the farmers of West Bengal, Punjab and Haryana and their local governments through media promotion, physical site visits and campaigns

●      The differentiation strategies are incorporated with the business model to demonstrate the structure of the model and help the farmers ratio develop the positive approaches. The implication of the strategy in the field highlights the useful feature and understands the market requirement to value the agricultural products. Based on this analysis of differentiation strategy the innovation and pricing strategy are introduced to scale the market productivity. The strategies are indulged with the business approaches to enhance the market capabilities as well as bring the competitive advantage.

●      The primary objective is to identify the requirements of the farmers and concentrate on the innovative technologies that can be used to deliver the desired outcomes. The business approaches are interconnected with the modern and innovative technologies to reach the business objectives (de Boer and van Ittersum, 2018).

●      Based on the analysis, the research and development (R&D) can improve the business process and increase the creation of agricultural products. R&D is used to encompass agricultural activities and design innovation. The design of agricultural products qualifies the low cost outputs and bolsters the income of the farmers.

Strategy

The implication of the marketing strategies in the agricultural context can raise the business revenue and imply the capitalisation value of 37780. At the end of 2023 the financial statement summarizes the amount of INR 327362.46 by raising the profit margin (Shaimardanovich and Rustamovich, 2018). The cash flow measures the changing position in the market conditions and draws the balance sheets to maintain the profit and loss statements.

The farm involves the partnership with the investors and corporate with the organization to raise the business proprietorship. The agricultural industry implements the supplying machinery and the techniques to furnish the production rate.

Business model

The company needs to choose a specific business model as per the goal and objectives of the company. For the Ashanth Agro Tech Limited Product to Service business model is going to be used (Roy et al. 2017). The company would combine technology and agricultural tools to develop a single technology-based farming service applications or products which the farmers could deploy in their farmlands.

Management

In terms of management, when a company starts to develop a new business plan to execute, the overall management of the company needs to be identified and analyzed including the legal form of ownership (based on the suggestion of Bhutta et al. 2019). Ashanth Agro Tech Limited is going to be registered as a Private Limited Company (LTD) in India. Hence, the owner and other shareholders can take exclusive control over the company as the management structure.

Section 4: Product and service

The company has identified various ranges of products, which they are going to be sold in the market. All the products are related to agricultural machinery. Not only the product, but also the service change will also be free of cost, which means the training of using those machines and the staff of the company will do implementation. As stated by Shingate and Sarode (2018), The Motocultor, seeders and planters, Wheelbarrow, The Harvester, and Sprinkler are the five key products for the company.

The Motocultor: this is a two-wheeled tractor, can be used single-handedly. Rather than a big tractor is easy to use and cost-effective for the plowing. The tiller is single-axis agricultural machinery that harvests the products with reduced soil disturbance. Adaptation of modern technologies can gain sustainability and be deployed in the farms to scatter the more marketing benefits.

Seeders and planters: A small tool will be made for the planting of the seeds, which can be performed with a battery. Seeders and planters can speed up the process but require a large amount of labour.

Wheelbarrow: This can also operate with a battery and it will be easy for the farmer to move some product from one place to another (Mahadev, 2021). The tools are required for the agricultural holdings but unsafe to use in the overload condition.

The Harvester: The Company will make a combined harvester, which can be used for different purposes. Reaping, threshing, and winnowing can be done easily with that. However, rather than the available harvester, this will be small to use and cost-effective. As suggested by Mukeshimana et al. (2021), this can even operate with solar power. The machine is used to speed up the process and require less manpower.

Sprinkler: the sprinkler can also operate with the use of solar energy. Hence, it can automatically sprinkle the pesticide or other thighs easily. A sprinkler is used to irrigate crops and control the dust of airborne. Besides that in the high temperature the efficiency of the application is poor. On the other hand, it can create the loss of water during the process of evaporation so that the innovative machinery can bring the effective resolution to eradicate the issues.

Other than, these product analyses of the market, competitors and customers also need to be done.

Product categories refer to the type of product that was created by a firm or industry. Type can be identified or evaluated by use, year of use, demography and so on. Some examples of product categories are capital goods, luxury goods, commodities, consumer goods, digital goods and so on. Capital goods refer which can increase capital or asset of buyer. Convenience goods create connivence for buyers and digital products run or controlled by digital factors. These three categories will be applicable for products. 

Name of products	Product Category
The Motocultor	Capital Goods
Seeders and planters	Convenience goods
Wheelbarrow	Convenience goods
The Harvester	Capital Goods
Sprinkler	Digital goods

Cluster of product refers to a group of products which share the same type of nature (AL-Sharuee et al. 2021). Cluster can be done by price range, nature of products, performance group, usability and so on. Cluster can be created based on price range. 

Premium products: The Harvester,

Medium Range Products: The Motocultor, Sprinkler

Low range products: Seeders and planters, Wheelbarrow

Customer

The customers are mainly the targeted state farmers and the state and local governments whom the services or the products would be offered. Customer service is essential as it would allow business sustainability with their loyalty. Therefore, products will be designed by addressing customers interests, behaviour and requirements during farming.

Innovation of the agricultural machinery can bring efficient production as well as minimize the time required by the farmers (Van der Ploeg and Long, 2019). Modern farm machinery can raise productivity and empower the farmers to bring the positive revolution.

The implications of the process include the systematic analysis of the process and drawing the domains to uphold the business scales. The tools are important for the effective service operation and can drive the changes to scatter the best outcomes.

The famers are the essential key that interconnects the agricultural products with the innovative machinery. The integration of the innovative techniques can bring the effective revolution in the centre and help the business optimize the business resolution.

The business approaches can be easily implemented within the organization to redesign the production process.

The agricultural tools shallow the trenches and handle the debris. Besides that it can cause physical injuries to the farmers and place the farmers at risk (Van der Ploeg and Long, 2019).

Section 5: marketing plan

5.1: What is the market?

Customer analysis and needs

Demographic: farmers more than 18 years old, both male and female

Geographic: Rural area of India

Behavioral: the customer segment must belong from the rural area, who are not aware of the innovative technology in the agriculture domain.

Figure 1: Farmers in India

From figure 1 it can be analysed that 67.105 farmers own less than 1 hectare land. Therefore, it can be assessed that this segment should not be targeted first. As mentioned by Bhardwaj and Dhiman (2019), he farmers in this segment are assumed that they are not very much accustomed to technology and may not use technology due to budget constraints. It has been found that most of the farmers belong as marginal farmers. As stated by Shingate and Sarode (2018), their need is to reduce the cost and labor of farming. On the other hand, they cannot afford high-tech machinery for farming. Hence, marginal farmers will be prioritised because competition would be less here.

Worldwide market

The market size of agricultural machinery is huge globally and is expected to reach $166,491.6 million in 2027 (vikaspedia. in, 2021). As per the new trends in agriculture, the farmers are also being digitized and trying to use a cost-effective and easy way of farming.

Competitive advantage

Agrovision farm equipment, the national agro-industry, and Padgilwar Corporation are the competitors of the company. As suggested by Ghadiyali, Lad, and Dhodiya (2018), these all have the strength that they are an existing company in the Indian market. Price of Ashanth Agro Tech Limited will be decided after valuation of market because market price can help to get competitive advantage in market. Next method will be the features of the product. Product that was planned by Ashanth Agro Tech Limited is new and much more advanced than existing agro equipment. Motocultor is a medium-ranged product and it can work like a tractor. Small and medium farmers can be attracted by this product easily and this product is not highly sold or promoted by other companies. On other hand, seeders and wheelbarrows are low price segment products and they can provide convenience to farmers. Small and medium sized farmers can handle their farming activities single handed. In addition, these products are energy effective and it can be a USP for form famers and agri product markets. Sprinkler is an automated system to spread pesticide and it is a solar energy product. It refers that buyers need to invest one time to enjoy outcomes for several years without spending money on energy purposes. Energy savings and modernized technology products can change the market scenario and it can easily create differentiation in the market. Competitor analysis indicated that Agrovision farm equipment, the national agro-industry, and Padgilwar Corporation has sverla agri products in market yet they do not offer energy saving productivity. In addition, prices for the products are high and clustering of products helps to identify that the product price range of Ashanth agro tech limited is better than them.

Value creation

Values can be created by understanding the need of the customer. Providing the demanded product and free service will be able to enhance the value for the company. On the other hand, the number of farmers in rural areas is higher. Hence, this will be beneficial.

5.2: The marketing plan

Marketing strategies

The marketing strategy needs to be effective enough to increase the awareness of the company. In the targeted segment, three marketing strategies will be used for getting the targeted customer. As suggested by Shingate and Sarode (2018), promotional advertising through televisionwill be done. Other than that, local campaigns will be organized where the companys marketing representatives will visit the rural areas and promote products using local language.

The straight-line depreciation salvage the assets value and effectively used in the year for the agricultural expenses.

The approach allocates the non-current cost for each accounting period. Based on this it indulges with the investment and intellectual properties to raise the profit margins.

The survey can understand the customers' and based on this, the investors of the sponsors can recognize the necessity of the innovation. Besides that, the survey would help the farmers know more about the production and their perceptions are equally valued by the investors.

India is an economically emerging country and the digitalisation of the country is increasing (Qayyum et al. 2021). Digitalisation has grown after 2018 and use of internet and digital products has increased in the market. It makes a positive impact on increasing social media. At present maximum people have access to the internet and social media. It can give opportunity to Ashanth agro tech limited to promote their product effectively. Management of a company can use data from social media about users who have interest in agri products, are involved in agricultural activities, are involved in the business of agri development product business and people who work on agricultural development activities. Companies can promote their product and approach them for their product. In addition, the social media management team can follow up sverla social media pages and groups which are involved in agro related activities. In this way they can get contact with users who have interest in the product. Companies can make videos about products, rewbiew, use and so on. Those can showcase on their social media page and it can be sent to people who have interest. Companies can hire some employees to solve queries of customers asking questions about the product and service of the company. This easy promotion can be effective and companies can easily attract customers.

Measurement

Measurement of the success of the business and marketing will be done through data collection and analysis of revenue and sales reports. The annual reports would be monitored checking the sales, income, profit-loss and revenues earned from business annually. As opined by Ray et al. (2019), Social media accounts would be created in companys name where customers having social accounts can share their product feedback. Moreover, surveys would be conducted for collecting product feedbacks.

Price

The product pricing would be designed addressing the targeted customers budget and incomes. The business would attempt to design price by ensuring the inclusion of the product development costs and customers cost ability to purchase such product. The five proposed products price varies on the basis of size, service quality and technical configurations. Thus, the range would be kept between 2000 INR to 10000 INR based on product type, their size and other factors.

Primary tactics

In the first 1 and 2 years focus will be given to increase brand promotion rather than profits. In order to catch the market, discounts and offers will be given to the customer on their frequent purchase. Membership service will be included. The company will reward the customer who will refer the company.

Primary event

Two events are planned for the first year. One is the "technological awareness in farming", which will be done in each state, which is more involved in agriculture such as West Bengal, Haryana, Jharkhand, Punjab, and Uttar Pradesh. Another event is "advance farmer", where a reward will be given to the first 100 customers of the company.

5.3: Sales plan

Sales strategy and standard channel

Sales will be done through a distributor. In each state, there will be one subunit of the company. As suggested by Shingate and Sarode (2018), the distributor can collect the machinery from the companys regional units and sell it to the farmer. The regional units would act as the representative unit in particular state. For example, the customers in Punjab areas like Amritsar, Ludhiana, and Patiala can purchase their product from their local area distributors who will get product from subunit office in Jalandhar.

Penetration tactics

Penetration is a very important part. As the company is new, they have to give effort for the penetration. Hence, the first five-month will be focused on penetration. Augmented promotion, product improvement and price adjustment will be used for market penetration.

Sales model

Outbound sales modelswill be used, which focus on the need, challenge, goal, and interest of the farmers (Khanzode et al. 2021). Hence, the product will be developed based on targeted customer. Outbound sales results from the prospecting efforts to the potential customers who have not expressed any interest yet in service product by company.

Hiring and training

Agricultural engineers, sales managers, finance managers, and HR will be hired. Each of them will be assigned a specific role in the office. In order to develop their work efficiency, an experienced team will provide training each week.

Measurement and reporting

HR will be responsible for the measurement of progress and reporting in the head unit and subunits. Profit.co Software will be used for the measurement of performance.

Sales forecast has been produced for the year 2022, 2023 and 2024. All the four quarters have been considered in this aspect. [Refer to appendix 3]

5.4: Engineering and R&D

R&D is an important part of engineering because it provides powerful knowledge and insights about improvement of existing products. Efficiency of product can be increased by this method and cost can be reduced. In addition, companies develop new products and services to get competitive advantage and survive in the competitive business market of the company.

Core technology

Some core technology will be used for the growth of the company. It has been found that in order to manage the business in the digital era, digitalization is required in each space, hence, in order to manage the documentation and other work computer and different software will be used. Sensor technology, GPS technology, online data, farming software and automation technologies are to be used for product development.

Development status

The primary milestone of the development is to increase brand awareness. Hence, this will target the customer segment better of the company. On the other hand, increasing the number of customers will increase the sales per year by contributing to revenue generation. The development will also be done in the logistics and management system of the company (Khanzode et al. 2021).

Strategy for future product

The company has taken some innovative strategies for future product development. The product range is five as of now. However, the company has planned to add five more products within 2025. On the other hand, all the predictions will be solar panel-based so that they can be cost-effective to use for the customer.

IP and patent

Patents provide the honor of creativity to the maker. However, as per the Indian law (sections 3 and 5 of the Indian Patents Act, 1970), any unique machines or methods related to agriculture and horticulture are non-patentable (krishi.icar.gov.in, 2021). However, as per the Copyright Act, 1957 it can be saved from copying by other companies.

Section 6: Operational and resources plan

Operation and manufacture

The manufacturing strategy of the company is unique and different from the other, the raw material will be outsourced from the USA, Korea as those are constructive. The machinery will be made in India. The location is based on Amritsar Punjab. There will be agreement-based contract signed between the Company and the resource supplier companies from Korea, USA. The contract will be including clause like the legal conditions and mode of business, communications and profit partnership. It will be signed for 2 years and would be renewed with both partners concern. As opined by Kumar et al. (2020), this location is chosen for the manufacture and office because this is the epicenter of agriculture in India. Hence, this could easily deliver the product to the nearby states as well as to the others. The core business of the company is manufacturing.

Unique capabilities and process

The unique capabilities and uniqueprocesses are the types of the product (Raj et al. 2018). The product is uniquely designed for the Indian farmers of targeted states. The company specially designed the product for the Indian farmer. As Indian is still a developing country, it is hard for farmers to buy high-range products. On the other hand, in order to reduce the maintenance cost, solar power and batteries are included in the machinery. Hence, these are the unique capabilities

Focus on customer

In the business idea, the Customer Support Strategy will be provided to the farmers so that there is equanimity in the access of technology and modern devices. Support will be provided in terms of analysing the farmers business and output from their land. Additionally, the ways in which the use of modern devices or the technology could be fruitful for them will be done too (Kumar, 2021). The primary objectives of the business idea are related to:

●      Efficient delivery

The business services and products will be delivered in ways that are customer-centric. Thus, a focus on the benefit of farmers will be prioritised here. Distribution channel of a company can be prepared by hiring efficient and experienced employees from other companies because their experience can help to develop the supply chain efficiently. Management can hire new employess who have knowledge and skill about supply chain. In addition, employees with logistical experience in rural areas need to be hired because products need to be delivered in rural areas.

●      Response time from the business team

In case any Indian farmer makes contact with the business after its advertising and promotional activities, then they will be contacted within one working day. A preliminary reach out will be done within 6 hours.

The National Skill Development Corporation (NSDC) governs primary policies for agricultural innovation by Agro Tech Limited. In case of future services, the farmers can expect to be eligible for half-yearly assessments of their farmlands productivity status. This will allow them to suit their needs and request any changes in the working as well (Gurumurthy and Bharthur, 2019). It has been already discussed that the Agro product market is highly competitive. Technological rapid development influences market competition. Companies need to work on R&D consistently because it can help them to be prepared for any situation and new developed products can help to get competitive in the market.

Lean management principles can be used for the operation of this business. It can help manufacturing organizations to increase efficiency in their operation. Lean management has 5 steps that can be used by a company such as identification of value, map value stream, creation of flow, establish pull and seek perfection. Lean management can create value for products to increase customer satisfaction. Management of a company needs to evaluate steps and methods for creating value. Then engineers need to analyse whole steps and methods for identifying waste. After that, waste can be eliminated from steps. Pull is a method to develop flow of product in a timely manner. Perfection step management takes some steps for further improvement.

Management of a company can follow business to business and customer both methods. Agri products can be taken by different organizations for development of agriculture products due to this reason a business to business model is required for the company. On the other hand, a large number of customers can purchase products directly and companies can target them for sales of products.

Section 7: Management and organisation

The idea to innovate Indias agriculture by using innovative technologies is also directed at reducing time required for farming activities like sowing seeds and shipping tasks. Likewise, in irrigating the plants, used water can be managed by the devices too.

The Managing Director of the idea and the company will be the developer of the idea who will be based in India for looking after all the major activities and projects. Five sub-managers will report to the MD regarding marketing strategies, resourcing of materials, and operational tasks. Moving down the hierarchy, there will be two line managers for each sub-manager who will report to them about the status of projects, their activities, and changes in plans, and requirements of the project, farmer needs, agriculture sectors demands and the like.

The role of Managing Director will be inclusive of the following:

●      handling the processes related to human resource management

●      The requirement of reaching clients, talking to them, explaining to them the importance of using technology and modern devices will be undertaken by the MD too.

●      This is because it will provide an advantage to the idea and ensure that the people and farmer communities show oneness with the idea (Arafat et al. 2020).

●      Communication with the employees like the sub-managers and the line managers will be undertaken at regular intervals so that the MD is updated regarding the activities

The sub-managers will specifically perform:

●      Tasks related to self-development programs for the line managers

●      Ensure their professional development

●      Up skill them regularly

●      Conduct assessments of their job activities and difficulties

●      Ensure to include their viewpoints in decision-making

●      Supporting them with changes

Organisational expectation from the line managers include:

●      Maintaining productivity within the business

●      Enhance profitability by coming up with new ideas and projects

●      Interact with local farmers and people to gather customer-centric information

●      Keep themselves informed about sectoral demands and changes as well

Figure 3: Organisational chart for the business idea

The above organisational chart for the idea represents the hierarchy levels that will be involved in it. This will allow a clear flow of instructions from one level to another and promote the clear understanding of job roles and requirements too. As explained by Ghosh (2020), organisational information flow is crucial for prevention of the loss of ideas and newness. Managing director will take strategic decisions for the company and coordination with board of directors (Ahmadi Simab and Shams Koloukhi, 2018). The CEO of the company will work under the managing director. The CEO will be responsible for control activity of operations & development manager and finance & Marketing manager. In addition, he will be responsible for taking decisions and strategy for the company. In addition, look after every aspect of the company in an effective way. Operation and development manager will look after the operation of a company such as supply chain, logistic , manufacturing and so on. On the other hand, the finance and marketing manager will look after finance and marketing activities. Finance manager will control and manage financial activities. Marketing managers look after marketing, promotion and feedback operations of the company. On the other hand, development managers look after production activity along with R&D.

Section 8: Personal financial statement

The personal financial statement is the amount that the Managing Director of the company and the business idea will be taking from the first year of business. Following table provides a breakdown of the personal financial statement:

Figure 4: Personal financial statement

It has been assumed that the transport cost is 300 as the normal rate is 250. These expenses in the above table will be required to live by the Managing Director of Agro Tech Limited. This will allow the business to set itself and expand in the future too. The loan will be used in a way so that all instalments are paid on time and the business is able to earn profits as well. Harini and Savithri (2021) explained that the policies for start-up business in India are favouring the young minds so that they can bring innovative ideas to the market and change the landscape of the sector. This assists in elevating the benefits to the farmers of the nation.

Section 9: Start-up expenses and capitalisation

The start-up expenses of the company are needed to establish the idea in a profitable and proactive way so that its customers are able to buy suitable services/products.

Table 2: Start up expense

The breakdown of the start-up expenses presented in the table shows the areas in which expenses will be required for setting up working of the business idea. This will be informative for the Managing Director to ensure the flow of revenue in setting this entire idea. Likewise, it will be needed for showing the idea in the terms of a profitable and presentable perspective so that market evaluation of the sector is done accordingly. The total cost is assumed as 37780. machine cost is assumed 25000 as normal rate is 22000. Supplier cost is essential for start up. Pilot scheme can be conducted by using randomised control trial (RCT).

Section 10: Financial plan

Profit and loss statements for 3 years

The profit and loss statement is shown here for three years. Along with that, the company can earn a net income of INR 298712.81 at the end of third year. This can be beneficial for the business and allow it to expand and search for new ways to reach efficient delivery for business products. A company cannot sustain without profit and financial date of the company indicates that the company will be profitable in 2021, 2022 and 2023. Data suggest that business will be sustainable though bad signal is that profit will decrease every year. It can create trouble for companies in the near future.

Balance sheet for 3 years

The balance sheets shown here communicate the assets and liabilities of the company. This is crucial for laying out the knowledge about assets and fixed costs as well.

Cash flow for 3 years

The cash flow statements for 3 years show the amount that could be earned as revenue by the company. Here, the amount of INR 475702.15 could be the year-ending balance at the end of the third year in 2023. At the beginning year companies can face negative cash flow yet they can move towards positive cash flow. It is a good sign because without liquid cash businesses cannot be able to run their operation. Additional investments can be seen from here and any decision regarding liquidation could be taken too [Refer to appendix 1]

Break-Even Analysis

Break-even for Agro Tech is calculated as below:

Year 1:

Total Cost= INR (5,977.30)

Year 2:

Total Cost= INR 3,431.42

Year 3:

Total Cost= INR 2,478.25

It an be observed that break even for FY 2021 is INR 5977.30, FY 2022 is INR 3431.42 and FY 2023 is INR 2478.25. The break even for year 1 shows that at INR 5977.30 there will be no profit and no loss. It determines the range for covering the fixed and variable cost of production. In the next financial years the break even are calculated which marks the no profit and no loss margin. In the next financial year the break even is evaluated to be 3431.42. In the third financial year, the break even is 2478.25 which is much less as compared to year 2. It can be stated that at 2478.25, there can be chance of profitability which can be further used by investors. The break even is calculated by subtracting cost of sales from sales and further the total expense is divided by the value. [Refer to appendix 2]

The primary assumption here is that the company will make profit in its first three years. This will be an important step to ensure that the business idea is able to gain ground and is able to be fruitful for the farmers.

The primary categories for the use of the funds will include farmer consultation, equipment for the machinery. These are needed to ensure that the business idea is able to reap benefits for the farmers and excel in service delivery as well.

The primary risks here could arise in terms of uncertainty in costs of the raw materials needed for the machinery.

In order to reduce the stakes in the company, an exit strategy could be adopted. Muramalla and Al-Hazza (2019) mentioned that exit strategy is a way to earn substantial profit if the business is making profit or to liquidate responsibilities in case of losses. Here, the possible exit strategy that can be adopted is by means of an Merger & Acquisition (M&A). This will allow Agro Tech to use complementary skills and resources from the other company. Additionally, costs and resources can be saved too.

The management structure is required for the effective operation as they are submerged with the business and design the process for the effective run. The managers are required for the business as they belong from the respective managerial departments (like financial manager, operational manager and relationship manager). The managers are required to understand the requirements and communicate with the customers to know about their requirements. The two-line managers are and sub managers are needed for the business to strengthen the business regulations. Based on this, the managers focus on the surveys, value customer feedback, and process accordingly by considering all the parameters. The managers draw the ideas with the innovative technologies to reach the top-notch position in the market.

The trade of the machinery can measure the business expenses and from the survey, the customer's perception would clear. The acceptance by the customers can drive the business regulations and narrate the marketing strategies enhance the business visibility (Van der Ploeg and Long, 2019).

Section 11: Limitation and risk analysis

The limitations faced by the business idea can arise in terms of the cost of modern technological devices. Farmers of the Indian agricultural sector need to be convinced so that they are ready to adopt the service and enhance productivity as well as profits for their sales. In addition, several other limitation will be discussed below:

  Businesses will produce only agreed products and the number of customers for agreed products is limited.

  Company did not make plans about environmental protection.

  Recruitment policy of the company is yet to be decided.

  Farmers of India are not financially established which can create trouble for companies.

  Price of a company's product may not attract small farmers.

Risk type 1

Known knowns

Costs of sourcing the modern devices

Mitigation plan

Suppliers will be contacted beforehand to avoid any confusion of devices

Discussion/example

By discussion with suppliers, Agro Tech Limited will be able to ensure that its business provision of innovative technology to the farmers is not delayed and demonstrations of the same are available at any time too.

Risk Owners 

Cost accountant and financial manager 

Risk type 2

Unknown unknowns

Farmers denying the use of modern device or innovative technological idea

Mitigation plan

The farmers would be shown with best-case examples of using and adopting the device or technology. Transparency of information will be maintained.

Discussion/example

In dealing with unknown unknowns, it is important that adaptable skills like confidence, agility and responsiveness be maintained (BBS Communications Group, 2019). Here, Agro Tech would need to put in earnest efforts for the benefits of farmers and assure them with productive and profitable results in their farming business.

Risk Owners 

Managing directors and marketing managers 

Risk type 3

known unknown risk

Bad weather

Mitigation plan

The Company has to modify product design depending on changing weather. Depending states climate, product design should be done (Ray et al., 2019)

Risk Owners 

Supply chain and production manager of company 

Risk type 4

Unknown Known Risk 

Future Financial Crisis

Mitigation Plan 

Company can reserve their profit and manage their asset appropriately for mitigate financial crisis. In addition, debt, inventory management will be required for the company.  

Discussion/example

The risks associated with the agricultural context can severely hamper the business production. Climate change can affect agricultural damage and the cost of the innovative machines can outbound the farmers. Based on this, the business's risks can typically hamper agricultural production and generate the loss for the farmers. The implication of the technologies can eradicate the issues from the system and assist the farmers in cultivating more production (Van der Ploeg and Long, 2019). Additionally, a mitigation plan is represented to forecast more production and satisfy the customer requirements.

Risk Owners 

Finance manager 

Section 12: Conclusions

In the case of the companys products and services, it will be important to take note of key products that will be needed for the company. It will be important to create value for the customers by understanding their needs. The products for the farmers will be in the range of INR2000 to INR 10000. In addition, events like technological awareness in farming would be productive for the company so that the business will be able to reach more customers and benefit the national agricultural sector largely. The hierarchy of the company will be inclusive of a Managing Director, five sub-managers, and two line managers under each sub-manager. The company will need to ensure that it includes the employees in decision-making. Likewise, limitations for cost of the product can be faced here. Risks relating to known known, known unknown and the unknown unknowns domains have been discussed so that it provides insight into the measures that will be required from the company.

 

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Appendix

Appendix 1: Income statement

 

 

 

 

Appendix 2: Balance sheet

 

 

 

 

Appendix 3: Sales forecast

 

 

Appendix 4: Cash flow statement

Cash flows 2021
Particulars	January	February	March	April	May	June	July	August	September	October	November	December	Total
Cash collection	39100	39032	39812.64	39758.895	4140.3645	4138.174	4135.9385	4218.6573	4472.9805	4477.4855	3842.9435	3795.352	190925.43
Cash disbursement
Purchases	2260.13	2456.12	2564.12	2564.12	25631.00	2546.00	2253.00	2456.15	2845.12	2965.18	12586.36	13546.21	74673.51
Rent	651	700.00	556.00	588.63	655.13	751.12	564.12	542.13	564.13	962.12	554.00	665.00	7753.38
Electricity	364	565.00	552.12	654.12	654.12	752.15	856.13	962.12	663.12	665.12	753.15	856.12	8297.27
Internet	556.12	321.12	354.12	365.00	378.00	356.00	345.00	389.00	365.00	355.00	365.00	312.00	4461.36
Phones	356	370.12	356.12	356.12	365.12	452.12	362.12	321.12	396.12	456.12	447.52	456.13	4694.73
Gas	842	865.00	856.00	852.00	896.00	874.00	852.00	851.00	853.00	856.00	1125.00	1025.15	10747.15
Advertising	702	755.00	756.00	785.00	789.00	741.00	752.00	756.00	732.00	725.00	952.00	985.00	9430
Insurance	355.15	352.16	324.12	385.12	356.12	321.32	312.21	366.63	452.12	402.45	496.32	755.55	4879.27
Maintenance and repairs	564	665.00	662.00	663.00	636.32	665.21	669.36	452.12	485.25	459.36	412.12	555.55	6889.29
Salaries	4565.12	4563.12	4125.25	4222.23	4555.52	4889.96	4775.45	4666.23	5551.25	5632.28	5575.12	5523.12	58644.65
Interest	875.12	856.23	896.23	852.12	856.23	1525.12	1556.36	1452.23	1223.23	1548.56	1575.56	1452.23	14669.22
Taxes	3365.12	11254.23	1523.12	3652.23	3215.12	3526.23	3321.23	3521.23	3620.23	3203.12	-3251.12	3652.23	40602.97
Total cash disbursement	15455.76	23723.1	13525.2	15939.69	38987.68	17400.23	16618.98	16735.96	17750.57	18230.31	21591.03	29784.29	245742.8
Budgeted cash	23644.24	15308.9	26287.44	23819.204	-34847.32	-13262.06	-12483.04	-12517.3	-13277.5895	-13752.82	-17748.09	-25988.94	-54817.37
Beginning balance	5000	18644.24	-3335.34	29622.78	-5803.576	-29043.74	15781.684	-28264.73	15747.42282	-29025.01	15272.188	-33020.27	-28424.35
Ending balance	18644.24	-3335.34	29622.78	-5803.576	-29043.74	15781.684	-28264.73	15747.423	-29025.01232	15272.188	-33020.27	7031.3363	-26393.02

 

Cash flows 2022
Particulars	January	February	March	April	May	June	July	August	September	October	November	December	Total
Cash collection	55250	56355	57482.1	58631.742	59804.377	61000.464	62220.474	63464.883	64734.1808	66028.864	67349.442	68696.431	741017.96
Cash disbursement
Purchases	2260.13	2456.12	2564.12	2564.12	25631	2546	2253	2456.15	2845.12	2965.18	12586.36	13546.21	74673.51
Rent	651	700	556	588.63	655.13	751.12	564.12	542.13	564.13	962.12	554	665	7753.38
Electricity	364	565	552.12	654.12	654.12	752.15	856.13	962.12	663.12	665.12	753.15	856.12	8297.27
Internet	556.12	321.12	354.12	365	378	356	345	389	365	355	365	312	4461.36
Phones	356	370.12	356.12	356.12	365.12	452.12	362.12	321.12	396.12	456.12	447.52	456.13	4694.73
Gas	842	865	856	852	896	874	852	851	853	856	1125	1025.15	10747.15
Advertising	702	755	756	785	789	741	752	756	732	725	952	985	9430
Insurance	355.15	352.16	324.12	385.12	356.12	321.32	312.21	366.63	452.12	402.45	496.32	755.55	4879.27
Maintenance and repairs	564	665	662	663	636.32	665.21	669.36	452.12	485.25	459.36	412.12	555.55	6889.29
Salaries	4565.12	4563.12	4125.25	4222.23	4555.52	4889.96	4775.45	4666.23	5551.25	5632.28	5575.12	5523.12	58644.65
Interest	875.12	856.23	896.23	852.12	856.23	1525.12	1556.36	1452.23	1223.23	1548.56	1575.56	1452.23	14669.22
Taxes	3365.12	11254.23	1523.12	3652.23	3215.12	3526.23	3321.23	3521.23	3620.23	3203.12	-3251.12	3652.23	40602.97
Total cash disbursement	15455.76	23723.1	13525.2	15939.69	38987.68	17400.23	16618.98	16735.96	17750.57	18230.31	21591.03	29784.29	245742.8
Budgeted cash	39794.24	32631.9	43956.9	42692.052	20816.697	43600.234	45601.494	46728.923	46983.6108	47798.554	45758.412	38912.141	495275.16
Beginning balance	0	32652.12	35624	321256.12	-32561.52	658421.12	-32654.12	-28635.52	-31256.523	-45621.32	8965.125	-456321.2	429868.33
Ending balance	39794.24	-20.22	8332.9	-278564.1	53378.22	-614820.9	78255.614	75364.446	78240.1338	93419.874	36793.287	495233.29	65406.83

 

Cash flows 2023
Particulars	January	February	March	April	May	June	July	August	September	October	November	December	Total
Cash collection	76500	78030	79590.6	81182.412	82806.06	84462.181	86151.425	87874.454	89631.94265	91424.581	93253.073	95118.135	1026024.9
Cash disbursement
Purchases	2260.13	2456.12	2564.12	2564.12	25631	2546	2253	2456.15	2845.12	2965.18	12586.36	13546.21	74673.51
Rent	651	700	556	588.63	655.13	751.12	564.12	542.13	564.13	962.12	554	665	7753.38
Electricity	364	565	552.12	654.12	654.12	752.15	856.13	962.12	663.12	665.12	753.15	856.12	8297.27
Internet	556.12	321.12	354.12	365	378	356	345	389	365	355	365	312	4461.36
Phones	356	370.12	356.12	356.12	365.12	452.12	362.12	321.12	396.12	456.12	447.52	456.13	4694.73
Gas	842	865	856	852	896	874	852	851	853	856	1125	1025.15	10747.15
Advertising	702	755	756	785	789	741	752	756	732	725	952	985	9430
Insurance	355.15	352.16	324.12	385.12	356.12	321.32	312.21	366.63	452.12	402.45	496.32	755.55	4879.27
Maintenance and repairs	564	665	662	663	636.32	665.21	669.36	452.12	485.25	459.36	412.12	555.55	6889.29
Salaries	4565.12	4563.12	4125.25	4222.23	4555.52	4889.96	4775.45	4666.23	5551.25	5632.28	5575.12	5523.12	58644.65
Interest	875.12	856.23	896.23	852.12	856.23	1525.12	1556.36	1452.23	1223.23	1548.56	1575.56	1452.23	14669.22
Taxes	3365.12	11254.23	1523.12	3652.23	3215.12	3526.23	3321.23	3521.23	3620.23	3203.12	-3251.12	3652.23	40602.97
Total cash disbursement	15455.76	23723.1	13525.2	15939.69	38987.68	17400.23	16618.98	16735.96	17750.57	18230.31	21591.03	29784.29	245742.8
Budgeted cash	61044.24	54306.9	66065.4	65242.722	43818.38	67061.951	69532.445	71138.494	71881.37265	73194.271	71662.043	65333.845	780282.06
Beginning balance	0	68653.12	2356	76521.12	1752	72563.21	2689.36	74233.23	1245.32	75632.12	742	76532.12	452919.6
Ending balance	61044.24	-14346.22	63709.4	-11278.4	42066.38	-5501.259	66843.085	-3094.736	70636.05265	-2437.849	70920.043	-11198.28	327362.46