Business Case Studies & Business Publications

Aggois: Last-Mile Financing for Small-Ho...

Vemireddy, Vidya, ...

Case

Aggois: Last-Mile Financing for Small-Holder Farmers

Vemireddy, Vidya; Deb, Shrey; Yadav, Shweta

IIMA-CIIE0027 | Published October 12, 2021 | 17 pages Case

Collection: Indian Institute of Management, Ahmedabad

Add To Cart Buy Now

Product Details

Product Overview
Learning Objectives

The business model adopted by Aggois model aimed at resolving the problem of farmer financing — particularly, the lack of receivables financing, which left them (farmers) with no option but to choose between high rates with delayed payments under MSP or prompt payments at lower rates in private transactions. The product was named RapidPay and the value proposition was two-fold: (1) provide liquidity to farmers for their next crop immediately post-harvest; and (2) make it economically beneficial by providing them the option to sell at MSP and get financing at much lower rates of interest than local moneylenders. While the results from early pilots have been promising, the CEO Prathmesh Kant now needs to look at multiple strategic options that can help Aggois scale and also become financially sustainable: Scaling up the financial model and build long-term financial partnerships; Diversification into storage-based receivables financing; Acting as a platform for third-party products such as insurance and input credit financing; Entry into non-MSP based receivable financing by mitigating the credit risk of private players; Leveraging technology as a driver for growth.

Challenges faced by farmers within the Indian agricultural finance sector: (a) general constraints and (b) specific constraints related to MSP based agricultural produce sales A discussion about agricultural finance business model based on receivable financing: (a) Key grassroots partners involved (b) Processes (c) Operational challenges