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[Startup of the day] Indore-based Gramophone aims to remove the information asymmetry faced by farmers

Jai Vardhan
14th Oct 2016
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Accessing basic agricultural facilities like crop protection, crop nutrition and quality seed is a huge challenge for farmers, usually requiring that they go to cities to procure them. However, Indore-based Gramophone, a platform for all kinds of agricultural inputs for farmers, intends to change this. Farmers can buy the aforementioned requirements and agri hardware at their doorstep.

gramophone
(From L to R)Tauseef Khan and Nishant Vats

The brainchild of Tauseef Khan and Nishant Vats Mahatre, Gramophone believes that technology can remove the information asymmetry prevalent in the agriculture system. Tauseef says,

Farmers can access crucial mentoring on crop advisory, and weather information coupled with the best products to grow. This will improve productivity and help farmers sustainably increase the income from agriculture.

Both the co-founders have deep domain knowledge and have worked in several agri-business companies. Tauseef had stints at AgTech-focused venture capital funds while Nishant worked as investment analyst at Clinton Giustra Enterprise Partnership. The two were batchmates at IIT Kharagpur and IIM Ahmedabad.

Use case and problem statement

Imagine how we purchase medicines. Sometimes, we just go to the medical store and ask for aspirin, but on other occasions, we first get a diagnosis and prescription from the doctor and then buy the prescribed medication. Now, imagine for a moment what the situation would be like if there were no doctors and all we had was the pharmacist to depend upon, both for prescription and material. That’s what happens in agriculture, and it’s a huge problem.

“Since there won’t ever be enough ‘doctors’ to serve 140 million farmers in India, we’re creating a tech platform where we are seamlessly integrating both the advisory and sale of inputs,” says Tauseef. This also solves another menace in the agricultural inputs markets, one of spurious/substandard products, which make up 40 percent of the inputs sold in the market.

Why the agri inputs space is interesting

There is significant concentration of demand both over time and geography. Nishant adds,

All we need to know is two or three data points, and we can get an entire schedule of what products an individual farmer is going to need across the season.

Secondly, customer lifetime value is significantly high as a farmer is going to need inputs every season, year after year. For example, a chilli farmer, in one season, would need Rs 60,000 worth of material per hectare.

Offerings and revenue model

The duo have been working on Gramophone for six months now. “This included a lot of on ground research to finalise the place we would want to start. “We relocated to Indore, I from Bengaluru and Nishant from Mumbai, to set up operations,” says Tausif.

The company has built automated crop advisory for farmers on its platform. Tauseef says,

Once the farmer is on our platform, we know his exact input requirements based on certain data points about his crop and lands size, among other factors. Our technology backend is built in such a way that we can scale across geographies by simply manipulating a few parameters specific to the new geo.
business-components

Gramophone generates revenue through the direct sale of agri inputs and commissions on sales through the marketplace. It also plans to develop an ad platform for digital advertisements in rural areas.

Market opportunity and potential

Gramophone’s primary market would be that for the direct sale of inputs, a $26 billion market in India, with other sources of revenues being from commissions on linking credit, facilitating trade of farm output, and through a data platform for businesses catering to rural areas, as it would have critical data about things like farmer profiles and transaction history.

So far, the duo has been bootstrapping. "We got commitments from senior management at leading e-commerce companies and industry veterans from the agriculture input sector who have spent decades leading various agribusiness companies,” adds Nishant.

Competition and road ahead

Currently, there are several players in the AgTech domain trying to solve various problems in agriculture. This includes companies like Agrostar, BigHaat, and few other companies providing agri inputs directly to the farmers. Agrostar has been funded by IDG and Aavishkaar.

There are other companies like EM3, (equipment rental services company) who are trying to solve for farm mechanization. Mahindra has launched its rental service by the name of Trringo early this year. Agribusiness provides an opportunity of $200 Billion across agri inputs (seeds, crop protection, crop nutrition, equipments and agri hardware) and has a huge potential for agricultural credit through the data generated through these platforms.

Entrepreneurs have a huge scope for solving various problems and increasing farmers’ realisations. Gramophone’s team appears to have the relevant background as well as an understanding of the business and farmers’ pain points. YourStory firmly believes that technology can solve the problems faced by the agriculture industry at scale, and given the increase in internet penetration, this is the inflexion point for relevant tech-focused startups in the agriculture sector.

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