Award: Entrepreneur with Social Impact
Founder & director, IKSL
Interests outside of work: Reading. He has just finished The Billionaire’s Apprentice and And the Mountains Echoed. Also enjoys travelling and meeting people
Why he won this award: For creating a business model that bridges the information divide that exists in rural India and the agriculture sector
In 2007, Ranjan Sharma invested Rs 49 lakh—his entire Provident Fund savings—into an idea. That is as good a measure of his conviction as any. The plan: A SIM card that can improve the lot of the Indian farmer.
Having spent 27 years in the fertiliser industry (in Sriram Fertilizers & Chemicals and Oswal Chemicals and Fertilizers), Sharma had had a ringside view of the obstacles that kept the agricultural sector from achieving its potential. Key among them was the information gap in last-mile extension services. Further, after leaving the sector in 2005, Sharma had started Matrix Energy, a company that promoted the use of SIM cards in electric meters to monitor usage and help reduce distribution and transmission losses. There, he had learnt how SIM cards could be used effectively.
Standing at the intersection of both sectors, he saw the possibility of a robust business model built on SIM cards that would provide useful information in an easy-to-understand and, preferably, cost-effective manner. For instance, updates about the right time to sow, or ways to protect crops from pest attacks. These were intended to shield the farmer from climatic vagaries and keep him apprised about changes in the economic environment.
Sharma needed partners. He roped in domestic fertiliser giant IFFCO (Indian Farmers Fertiliser Co-operative) for its wide distribution network and credibility, and Bharti Airtel, as the sole service provider, for its technology. Since then, IFFCO Kisan Sanchar Limited (IKSL) has become a friendly, neighbourhood service, delivering free voice messages to farmers four to five times a day. Its subscriber base has grown to over 30 lakh, covering 19 states. In 2012-13, it delivered 86,000 voice messages and generated Rs 231 crore in revenue and a net profit of over Rs 7 crore.
“The real issue is the massive information gap facing the farmer,” says Sharma. “It is in the last mile where the government has failed them.” He mentions his experience during a pilot project in the Barabanki district of Uttar Pradesh. “The growth of sugarcane was stunted—they grew to just half the expected height of five or six feet. This led to lower realisation of money,” he says. “But there is a sugarcane research institute [Indian Institute of Sugarcane Research] in neighbouring Lucknow.”
Sharma took the farmers from Barabanki to the institute, which, despite its proximity to the sugarcane fields, wasn’t aware of the problem. They even had a solution handy but had no way to disseminate the information. Instead, they were waiting to be approached with problems.
That, in a nutshell, is how India loses out on agricultural productivity, says Sharma.
THE GAME CHANGER
IKSL’s is a win-win model for all stakeholders. While there is no commercial transaction between IKSL and the farmer (the information is free), there is significant reward for Bharti Airtel as the service creates stickiness for them—there is less motivation for a subscriber to move to a competing operator.
Frequently shifting loyalties is a serious problem for telecom service providers: An Indian customer sticks to an operator for an average of four months. Tariffs, therefore, are designed to recover the cost of customer acquisition during that period. In rural areas, the average revenue per user is roughly Rs 100 per month. If an operator retains a customer for four months, it makes Rs 400 while the acquisition cost is more than Rs 100. Consider, then, the worth of IKSL to Bharti Airtel if its content manages to help retain farmers and rural subscribers.
But the true value of IKSL’s efforts is in bridging the information divide in rural India. Sharma says that after the initial effort of trying to establish the model, “the focus, over the last 18 months, has squarely been on deepening and widening our reach”. In April 2012, IKSL functioned in 42 agro-climatic zones across India; today they are in 112. In UP alone, they have given paddy-related information across the state’s seven zones in June and July this year.