Gramco im 27 april 2012

© Intellecap. All rights reserved • www.intellecap.net • info@intellecap.net Proprietary and Confidential
Gramco Infratech
Investment Advisor - Intellecap
1

© Intellecap. All rights reserved • www.intellecap.com Proprietary and Confidential
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Index
3
Sr.No Index Page No
1 Executive Summary 4
2 Industry Overview 7
3 Company Details
Gramco-Company Snapshot 14
Comprehensive Post Harvest Management Solutions Company 15
..helping “Iron Out” the duplication in the system 16
And yet follow a differentiated business model 17
Quality Infrastructure 18
And an Integrated Back End IT program… 19
…aiding expansion in a phased manner 20
Expansion Strategy 21
Creating Social Impact in the Post-harvest Value Chain 22
Led by an experienced Promoter 23
Proposed Organization Structure 24
4 Financial and Non Financial Summary 25

© Intellecap. All rights reserved • www.intellecap.com Proprietary and Confidential 4
Executive Summary

Key Investment Highlights
5
Favorable
Macroeconomics
Early Mover
Advantage
Quality storage
and processing
facility close to the
farm
Strong Promoter
Background
Extremely Supply
Constrained
Industry
 Demand-Supply gap in the agri-warehousing sector is estimated to be 17 Mn MT
 Logistics is a fast growing industry and warehousing is the most profitable within the logistics segment
 Implementation of GST is expected to ease the inter-state movement of agricultural commodities
 Warehouse Act 2007 would make warehouse receipts negotiable and increase acceptability of warehouse
finance among both banks and farmers
 Existing farmers and agri business players face shortage of quality post harvest infrastructure. Key to
success lies in establishing early relationships with farming communities and agri business houses
 Meticulously planned warehouses with infra-red cameras installed at strategic locations for constant
surveillance.
 Focusing on servicing the last mile & viably handling farm produce closest to growing locations
 Facilities planned to reduce manual handling to the minimum possible thus saving costs
 Developed on .NET 3.5 framework and SQL 2008 backend platform to help enable scale up. Multi lingual
functionality using unicode and barah keyboard ensuring scale up in most Indian languages.
 Promoter group brings with them knowledge of local markets and relationships with agri-business
houses which is crucial to the success of this business model
 The promoter has an excellent understanding of the crops in the regions that Gramco will operate
 India loses more than INR 580,000 Mn worth of agricultural food items every year due to lack of post
harvest infrastructure, which represents a huge market opportunity for Post Harvest Management
Solution companies
Integrated Model
to create long term
relationship with
the farmer
 Input Supply- walk-in store in every location
 Procurement and processing
 Collateral management once 10-15 warehouses are operational
 Seeds Program – to provide quality seeds to farmers through a contract farming programme
 Local Weather updates- has already tied up with AccuWeather

Transaction Overview
Funding Requirement USD 2.5 million ~ INR 130 Mn
Number of Investors and
current ownership
1-2,
100% owned by the promoter family
Expected Stake Significant Minority
Role of Investor  Strategic direction through board representation
 Passive Role in Management
Financial Return Expected ROE ~ 36% in FY ’18
Exit Route  Strategic Sale- Gramco will build a network of ~70 high quality locations in the next 5 years and these will be
attractive to large companies in the agri-business sector
 IPO within 7 years
Uses of Funds  Expansion of Warehouse network from 2 currently to 41 in the next 3 years
 Expansion into allied activities for post harvest management. Investment in real and tangible assets
Strengths  Promoter has 15+ years of experience , well known amongst the local farm community. He was formerly the
co-founder of Gram Mandi, a online market place for agricultural produce
 Highly fragmented and unorganized industry represents a massive growth opportunity
Threats  Competition from Established Players
 Regulatory Risks
Opportunities and
Additional Revenue
Lines
 Wholesale of FMCG products to village stores
 Collateral management in tie-up with commodity exchanges
 Partner with spot exchanges and act as an aggregator
 Partner with the Government in its procurement programmes

Industry Overview

Indian Logistics Industry : Overview
Highlights of the Sector Highly Fragmented Industry
 Indian Logistics Industry is valued at INR 4,068 Bn
 Logistics costs account for 13-14% of GDP which is higher
than that of developed nations at 10-11%. Key reason for
this is the relatively higher level of inefficiencies in the
system
 Highly fragmented market with only 8% organized market
share
 Strong demand leading to large scale investments from
logistics and warehousing players
 Dismal state of warehousing currently
 Inefficient facilities
 Lack of Technology
 Lack of skilled labor
 Small and distributed warehouses due to current tax
structure
 Most warehouses are primarily stocking points and are
very small in size
Indirect tax regime incentivizes companies to maintain separate
warehouses in every state
Each company has 25-30 warehouses across India
Resulting in facilities which are often
small and nothing more than poor quality
godown
These facilities are typically managed by
local C & F agents (Clearing and
Forwarding), having poor knowledge of
latest warehousing technology
Resulting in high inventory levels and low
service standards (damages etc.)
Source :Skill gaps in the Indian Logistics Sector : White Paper , KPMG

Warehousing is the most profitable business in logistics,
expected to grow at 35-40% p.a
3rd Party Logistics service to witness sharp growth
Supported by Key Growth Drivers
Warehousing accounts for 20% of total activity in the logistics sector
Source : Industry Report , Knight Frank Global 2008
Source : http://www.indiainfraguru.com/logistics/warehousing.html
Expansion Demand
Reorganization
Demand
 Growing Domestic Trade
 Infrastructure initiatives by
Public and Private Players
 Outsourcing to private players
 Implementation of VAT and GST

Agri Business represents a massive Logistics Opportunity
Retail companies struggling to integrate backward
 Organized retail was valued at USD 300 Bn in
2008 and expected to grow at a CAGR of 11% till
FY 2015
 Food and Vegetable (F&V) segment is loss making
for the organized players
 Key Challenge faced is managing the
supply chain
 None of the retail chains have been able to
manage the supply chain efficiently
 Duplication of costs that prevail in the
system due to inefficient supply chain
management
 Limited grading and sorting facilities
implies that standardizing the produce
becomes difficult
 Ensuring right quality of produce at the right price
is the key
 Most retailers in the organized segment
have struggled to cope with the large
number of intermediaries
 Extending the supply chain and managing
linkages to farmers has been plagued by
inability to deal with a fragmented set of
suppliers
Urgent need for intermediaries who can reliably link the farm to the markets after undertaking basic processing of the product
Warehouse capacity not growing in line with demand
Mandis :
 Malpractices by commission
agents
 No grading of produce
 Limited Price Transparency
 Located at a considerable
distance from farms
Private Warehouses:
 Highly unorganized
 Fragmented market
 Located close to the Mandis
 Catering to large traders
Government Procurement
[MSP Linked]
 Storage in godowns of FCI,SWC
and CWC
 Warehouses in bad condition
 Capacity of only 60 Mn Tonnes
 10% post harvest loss
 FCI not building significant
additional capacity
 Additional capacity growing at
a slow rate
 91,050 tonne in 2009-10
 177,300 tonne in 2010-11
 60% farm produce retained by
the farmer
 Local Procurement
Food grain
216 Tonnes
Oilseeds
23 Mn
Tonnes
F&V 103
Mn
Tonnes
Storage in small rooms
Open storage
 High storage loss of 5-10%

…across various Industry Segments
Warehousing Needs
Public Agri Processors Others
Private Agri Processors &
Traders
Agri - Inputs Agri Outputs
Food Corporation
of India
National
Agricultural
Cooperative
Marketing
Federation of India
Ltd. And others
Farm Equipment's
Pesticides and
Fertilizers
Seeds
Wheat
Soya
Rice
Cattle feed and
other ancillary
products
Disintermediation across Industry Segments

Favorable regulatory environment leading to increased private
attention
Increased Interest from Private Players
Sector has just begun to attract PE attention
Name Headquarters
SohanLal Commodity New Delhi
Shree Shubham Logistics Mumbai, Maharashtra
Adani Agro Logistics Ahmedabad, Gujarat
NCMSL Mumbai, Maharashtra
Star Agri Mumbai, Maharashtra
Legal and Regulatory Framework
Key
Initiatives
Shift to GST Tax Regime
Warehousing Act
Government looking at PPP models
Infrastructure Developments
 Major transition from Central Sales Tax to the existing VAT
regime coupled with the introduction of Single-tax Goods &
Services Tax (GST) allowing for convenience in inter state
movement of goods
 The Warehousing Act, 2007 introduced a negotiable
warehouse receipt (NWR) system
 Negotiability will make warehouse funding more attractive
for the banks
 Incentivizes the farmer to obtain money by pledging agri
outputs
 Food Corporation on India (“FCI”) has been giving 10 year
leases to private warehouse players
 Possibility of Private Players to tie up with Government
bodies
 Development of Commodity Exchanges –Gramco can act as
a facilitator to link farmers to the exchanges
Company Investor Amount (USD Mn)
Sohan Lal Nexus/May
field
7.1
NCMSL IFC/Rabo 20
Star Agri IDFC PE 30.0

Company - Details

Gramco - Company Snapshot
About the Company Business Highlights
Founded in 2009 with an initial capital of INR 15 Mn
Provides integrated post harvest management solutions
including warehousing, value addition, seed multiplication
program, Inputs and Procurement
Present at 2 locations near Indore in Madhya Pradesh; plans
to scale up to 70 locations in the next 5 years
Also provides allied services like cleaning and testing
5000 tonne warehousing capacity between the current two
locations, plans to operationalize another location with a
5000 tonne capacity by Q4 FY 2013
Tied up with Bank of India to provide warehouse finance to
farmers
Proximity to the farm (catchment area has a radius of
15km) compared to most others players who are located
30-40 kilometers away
Provides multiple services to the farmers thus building
long term relationships and ensuring client stickiness
Forging Key Alliances in early stages of its growth; tied up
with a leading Oil seed processor & edible oils company
for procuring seeds. Promoters have strong relationships
with other prospective buyers across the chain Bank. Tie
up with Bank of India for WR pledge finance; in talks with
other players in the eco system
On ground infrastructure to be backed by a
comprehensive IT platform which will assist in monitoring
all aspects of operations
Tied up with AccuWeather to provide daily/hourly
weather feed for 29,000 locations across India. Company
is developing a unique application – marrying weather
and farm activity.
A mixture of owned and leased locations to assist in quick
scale-up of operations

Comprehensive Post – Harvest Management Solutions Company
Four Key
Revenue
Streams
DiversifiedRevenueLines
Procurement Warehousing Trading Agri-Input Sales
Cleaning Income
Pledge and Warehousing
Finance
Seeds Program
Ancillary
Revenue
Streams
Direct Procurement for
agri business
houses/retailers
Revenue : Commission
on the procured
quantity .
Quality warehouses
with processing
facilities
Revenue : Capacity
shortages will ensure
utilization of ~80%
Procurement of goods
and trading on its own
books
Revenue : Huge upside
potential due to
seasonality of the farm
produce
Financing the farmer on
collateral of his stock
Revenue : Fee from the
farmers on the total
amount financed.
Procured quantity and warehouse
capacity utilized is the key driver
Revenue : Fee based income on the
amount of goods procured and
cleaned
Acts as a last mile reach
enabler for companies
producing/manufacturing farm
inputs
Revenue : % commission and
markups on the agri inputs
supplied
Engage in contract farming
arrangement with farmers to
provide quality seeds
Revenue : Through sale of seeds
bought back from contract
farmers

..helping “Iron-Out” the Duplication in the System
Farm Produce Mandi Trader
Processing
House/Company
Godown
Retail Outlets
INR 25-60 transportation cost per quintal
Loading Unloading Charge of INR 6-7 per quintal
Traditional Market Approach
Loading Unloading charge of INR 4-5
Local Distribution ChargesHandling, Wastage, Spillage charges add upto INR 10-15
Gramco Approach
Total costs add upto INR 45 – 87 plus local distribution and transportation charges applicable Mandi Onwards
Farmers Gramco Warehouses
Company
Godown/Processing
House
Retail Stores
INR 10- 15 transportation cost per quintal
INR 15-25 depending on location Local Distribution Charges
Total Costs add upto INR 25-40 plus local distribution expenses, resulting in significant cost and time savings for retailers/processing
houses

And yet follow a differentiated business model
NCMSL Star Agri ITC Choupal Gramco
Key selling
point
Promoted by NCDEX
and the banks, the
credibility is high
Excellent connections in the
trading community
Internal customer base for
produce
Massive reach – 10 states and
40,000 villages
Closer to the farm than any other
player. Excellent ties with
processors. Located in the heart of
major industrial / cash crop belt
Who is the
primary client?
Traders and banks Traders and banks Internal ITC business groups and
the farmer
Agri-Processors and the farmers
Business
Model
Focus primarily on
warehousing and
collateral management.
Provide support to the
commodity exchanges and
traders by providing
warehousing facilities and also
dematting stocks held by it so
that the dematted receipts
can be traded.
A more integrated model with a
hub located close to the
town/city and a e-choupal
located in the village. E-Choupal
serves as an information
dissemination point rather than
as a service point
Locations provide an integrated set
of services & are located, so that
farmer can access them easily.
Offering state of the art services
with total transparency .
Scalability Leased storage capacity
and limited set of
services implies high
scalability . Focused on
Hedging community &
speculators
Scalable as it follows the
rented model, poses
restrictions on the number of
services that the company
might add
Sagar Choupals are highly capital
intensive, located mainly on
Highways. E-choupals are highly
scalable as it follows a low capex
model in e-choupal.
Scalable with the ability to provide
full set of services as the company
shall follow a buy plus lease model .
Services  Storage and
Preservation
 Collateral
Management
 Procurement and
Supply Chain
 Warehousing
 Storage
 Logistics
 Collateral Management
 Cleaning and Testing
 Social and Farm Forestry
 Watershed Development
 Agricultural Productivity
 Women Empowerment
 Livestock Development
 Procurement
 Warehousing
 Agri Input Sales
 Seeds Program
 Pledge financing
 Processing
 Gramco’s focus is on
the key link in the
agri-supply chain
i.e., farmer, which
will enable it to
control other links in
the chain
 Scalability is the
function of cash flow
management and
capital expenditures
by the Company,
Gramco plans to
follow a
combination of Buy-
Lease models that
shall help it to
increase revenue
lines and also
rapidly scale
 Gramco has limited
competition in the
category that it
operates given its
unique business
model

Quality Infrastructure
State of Art technology put in place to provide the best quality outputs
Gramco shall serve
as “one stop shop”
for all farmer
needs
Funnel shaped
hopper from which
the contents are
passed into the
elevators
From the Elevator
the material is then
passed on to the
cleaner and finally
stored in a Silo
Typical Gramco
Warehouse Unit
Use of Infra Red
Cameras to avoid
pilferage and track
movements

and an Integrated Back End IT Program…
Technology Implementation across locations to monitor growth
MIS developed on the .NET 3.5
Framework
Key Features Include :
 Language Independence
 Simplified Deployment (Ease of
Installation & Maintenance)
 Enables Safe and Secure
Transactions
3 Inter-Linked Core Modules
Web Modules Desktop Modules Kiosk Modules
Installed on
Warehouse Managers
Computer, source of
input for all
transactions
Report Generator,
providing customized
information for the
end user
Main Module to be
hosted locally and on
the server
Warehouse Manager
Mandi Manager
Pricing Manager
Commodity Manager
Finance Manager
Basic Registration
Details
Commodity
Inward/Outward Flow
Receipts
Inspection Accounts
Farmer Accounts
Account Module
Insurance Module
Weather Forecast
Reports
Farming Practices
Farmer Assistance
LocalResourcesonEachModule(IndicativeList)
Each time a new farmer is registered in the
Gramco System , an unique ID card is issued.
‘
 The id card Stores key relevant data of
the customer
 Quickens the internal processes each
time the Farmer enters the warehouse
system
 Enables the farmer to keep track of his
goods and income from Gramco

…aiding expansion in a phased manner
 ~75,000 tonnes
warehouse capacity
 15 Operational
warehouses
 41 operational
warehouses
 205,000 tonne
warehouse capacity
 Expansion into
ancillary services
 70 warehouses with
a strong presence in
Western India
 Tie up with all major
players involved in
the agri industry
 350,000 Tonnes of
warehouse capacity
Short Term Goals
( FY ‘14)
Medium Term Goals
( FY ‘16)
Long Term Goals
( FY ‘18)
Headquarters
Short Term Expansion Plans
Medium Term Expansion Plans
Long Term Expansion Plans
Zonal/Regional Offices
FY 2014 Expansion plans within Madhya Pradesh

Expansion Strategy
21
 Service driven model which leverages existing warehouse
infrastructure without any additional investment
 Strong growth in commodity futures markets creates scope of
rapid expansion
Collateral
management
Leasing land
for warehouse
network expansion  Increasing shareholder returns through reduced CAPEX intensity
 Reducing risk inherent in identifying, owning and monitoring land in diverse
locations
Selling warehouse
capacity to state
agencies  Maximizing capacity utilization by supplementing direct farmer produce with orders from state warehousing
corporations
 Reducing volatility in rental incomes with consistent capacity utilization by tying up with high volume customers

Creating Social Impact in the Post-harvest Value Chain
22
Increases farmer bargaining power in the market by preventing distress sales during harvest
season
Provides rudimentary value addition activities like cleaning, sorting and grading services
that can fetch higher prices for farmers
Boosts farmer income by allowing them to store their produce during harvest time, when
prices are low; receive credit, using the product as collateral; and wait until prices are more
favorable for selling
Facilitates linkages of farmer organizations to local and national markets as appropriately
competitive
SocialImpact

Led by an Experienced Promoter
Promoter Profile
Mr. Raman Singh Saluja, Founder & Managing Director Gramco
 15 + years of experience across industries like manufacturing, renewable energy , international trade
and agriculture sector
 Co Promoted Agro Web Online Private Limited (Gram Mandi) between 2000 -02. This was an online
effort and first of its kind to integrate agri supply chain
 Headed the diversification in clean energy for Sterling Structurals, a local steel mill. Negotiated a
technology transfer/collaboration agreement for assembly of high capacity WEG between Sterling and
Norwin A/S of Denmark.
 He also has the distinction of been appointed as the Nodal Officer for Madhya Pradesh, by
Government of India, Ministry of Agriculture, under MANAGE. His responsibilities included to
promote & implement program to train agri graduates in MP for setting up Agri clinics. A role which
he executed successfully between 2001-2003
 Youngest amongst the 18 invitee members of the Steering Committee formed by TERI under the - Tata
Energy Research Institute's Repository of Environmental Activities & Technologies (TREAT), in 1998/99
with an objective to draft recommendations to assist in advising the government in framing policies
and mechanisms for development of CDM under Kyoto Protocol
 MBA from Institute of Management Studies, Indore. and B.A from D.A.V college Chandigarh. Did his
schooling from one of India’s best residential schools Daly College, Indore 1977-89.
 Raman Singh Saluja
comes from a successful
business family with a
track record of building
organizations from
scratch
 Managed expansion for
Gram Mandi, achieved
procurement worth INR
140 Mn in less than 18
months; the other
promoter of Gram Mandi
is part of the family which
runs the largest oilseed
processor in India
 Family, Co Promoter of
one of the largest private
steel mills in Sri Lanka

Proposed Organizational Structure
Proposed Organization Structure Proposed Team Structure
 Head Office based out of
Indore will be a lean office to
house the heads of corporate
functions such as Financial
Resources, Human Resources
and Information Technology
Head Office
Regional Office
Warehouses/
Locations
 Are the point for service
delivery. They are the key to
relationship building with the
farmers
 Regional presence shall help in
scaling operations within
different states
Managing Director
(Raman Singh Saluja)
Finance Head
Support Staff
Operational Head
Warehouses & Seeds
Support Staff
Technology Head
Support Staff
Regional Manager
Assistant Manager
Support Staff
Corporate Office
State/Regional Office Warehouse
Warehouse
Manager
Site
Supervisor
Mall In
charge
Support Staff

Financial and Non Financial Summary

Key Operational Indicators
Financial
Indicators
FY
2013 E
FY
2014 E
FY
2015 E
FY
2016 E
FY
2017 E
FY
2018 E
Income (INR
Mn)
33 176 585 1,230 1,878 2,637
Expenses (INR
Mn)
43 196 580 1,162 1,721 2,391
PBT (INR Mn) -10 -19 6 68 156 246
PAT (INR Mn) -10 -19 6 75 136 209
PAT Margin -30% -11% 1% 6% 7% 8%
Net worth
(INR Mn)
123 103 259 334 470 679
D:E 47% 217% 147% 207% 191% 166%
RoE -8% -17% 3% 25% 34% 36%
RoA -1% 1% 6% 11% 13% 15%
Outreach
Indicators
FY
2013 E
FY
2014 E
FY
2015 E
FY
2016 E
FY
2017 E
FY
2018 E
Operational
Warehouses
2 15 28 41 55 70
Total
Employees
25 114 203 292 392 485
Sales/Employee
(INR Mn)
1.3 1.5 2.9 4.2 4.8 5.4
-10 -19 6
68
156
246
-10 -19 6
75
136
209
-50
-
50
100
150
200
250
300
FY 2013 E FY 2014 E FY 2015 E FY 2016 E FY 2017 E FY 2018 E
PBT (INR Mn) PAT (INR Mn)
-8%
-17%
3%
25%
34%
36%
-1% 1%
6%
11%
13% 15%
-20%
-10%
0%
10%
20%
30%
40%
FY 2013 E FY 2015 E FY 2015 E FY 2016 E FY 2017 E FY 2018 E
ROE ROA

Contact Details
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Tel: +1 650 207 0880
Email: pmehra@intellecap.com
27
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The material is based upon information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be
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Gramco im 27 april 2012

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