Frequently Asked Questions

General

Instead of growing the vegetables/fruits in soil, when we grow plants either through soilless chambers or in a neutral medium like coconut coir, cocopeat, perlite, rockwool, expanded clay to hold roots of plants and dissolve all required nutrients in water and provide directly to plant, said method of growing is called Hydroponic farming.

These growing systems/mediums are susceptible to climatic conditions, hence we typically grow the plants in polyhouses with certain/complete climate control, hence depending on level of control we also classify our farms as “Protected Cultivation” to “Controlled Environment Agriculture”.

We are producing multiple varieties of tomatoes and cucumbers at a commercial level. The technology has successfully tested growing chillies, bell-peppers, egg-plants, okra and other vegetables and it will be suitably introduced in the next harvesting cycle.

Most hydroponic farms and vertical farms around the world are shutting down because many producers can successfully use technology to grow, but they don’t have the commercial side figured out. If they can grow produce, but are not able to sell or not able to sell to right people or not able to sell at right prices, in the long run they can not make the investment viable.

Our goal was to focus on access to high quality food, at industrial level productions, sell to the masses at regular market price and Tomatoes and cucumbers are crops that are consumed throughout India round the year. Since our focus is on growing the scale and having a huge quantity of production, we are focusing on crops that have a huge market, so we don’t have to spend effort and time building a separate supply network.

With our market studies, we have expanded our selection to eggplants, bell-peppers, okra and chillies etc. We also plan to grow exotic vegetables, salads, herbs, leafy greens and select fruits, however, since the size of that market is small, we will have limited production of such exotic veggies and fruits.

The technology is developed to house anywhere between 10,500 to 13,000 plants per acre. Depending on the specific variety of crop, type of crop and seasonality, we can expect a production of 2 kg/plant to 8 kg/plant and 2-3 cycles of every year. We always intend to optimise the production as well as average selling price, so we can produce maximum possible revenue per acre. For tomatoes, in lab settings, we have demonstrated 2 cycles per year with 90,000 Kgs/Acre of production per cycle. Large scale farms (after considering disease, harvesting and transport losses), we can have 120,000-140,000 Kgs/acres/year of production and these production levels are subject to type of varieties, seasonality and pricing in the market.

There are certain varieties which produce lesser production, but have much higher market rates. There are varieties which produce very huge quantities and are sold at market rates. Certain crops when grown in off-seasons can fetch 3-5 times its seasonal average selling price. Through market mapping, data analysis, non-seasonal growing, crop rotations and long term contracts, EEKI optimise and maximise the revenue per acre. 

In a stabilised market, 40-50% of produce will be sold in biggest mandis across tier-1 and tier-2 cities, 20-25% produce will be sold to organised retail chains/B2B clients, 10-15% produce will be exported and 10-15% of produced will be sold to retail customers under EEKI’s own brand.

Currently under our farms, we have various polyhouses viz. FanPad system, Naturally Ventilated Polyhouses (NVPH), Net houses and other polyhouse technologies. Growing technology includes EEKI patented hydroponic growing chambers, cocopeat based growing mediums and automation and AI technologies. The growth is heavily dominated by technology and depending on what kind of technology we use and what level of automation we have, capital investment cost (CAPEX) for setting up farms varies. Selection of technology also depends on climatic conditions of farms, in harsh climatic conditions, we have to use completely climate-controlled technology, which requires significant capital. Moderate climate can reduce the requirement of completely controlling all climate parameters, hence the cost also reduces.

As per the current designs we have planned, we will have various combinations of technologies starting from 80 Lakhs/ Acres to 1.7 Crs/ Acres.

The polyhouse and growing chambers have an average life of 20-25 years, while coco peat based growing medium, electronics and protection polythene will require a periodic replacement. Entire project has an average life span of 15 years.

Investment

The minimum investment is 2 lakhs, and each partner receives a share in the LLP structure proportionate to their investment size.

We offer 3 plans with returns ranging 12%-15% p.a. Customers have an option to top-up the investment when they have surplus investible corpus.

All the farms’ assets are housed under an LLP and all retail partners are fractional owners/partners in LLP with ownership in proportion to their investment. The land is on a long-term lease (for 10-15 years), owned and financed by EEKI, given to LLP on a nominal market rent in said geography. All retail investors are currently financing farm assets and not land, however, for the next clusters we introduce, we can include the cost of land and farm assets and have complete ownership in LLP.

Yes, the returns shared with retail investors are guaranteed and any fluctuations in production will not be passed on to investors. We have already created a buffer for mitigation of losses and any further losses beyond said buffers, will be absorbed by EEKI.

Once the preliminary site assessment and land development activities (land levelling and basic availability of transmission line/electrical connection), Farm construction typically takes 4-6 months and 2 months of germination time (growing seedlings/saplings from seeds to plant that can start flowering/growing vegetables). After construction, there will be continuous production and investors will get the returns on a quarterly basis.

Once the preliminary site assessment and land development activities (land levelling and basic availability of transmission line/electrical connection), Farm construction typically takes 4-6 months and 2 months of germination time (growing seedlings/saplings from seeds to plant that can start flowering/growing vegetables). After construction, there will be continuous production and investors will get the returns on a quarterly basis.

The investment will have a Lock-in period of 5 years. During this period, neither EEKI nor investors can exit. In event, investors wish to exit during the Lock-in period, the investment will have a 20% hair-cut. However, the same can be waived upon mutual agreement between parties.

There are some competitors/companies which offer just 1 year Lock-in, which is significantly lower than EEKI’s Lock-in period. These competitors work on a completely asset light model, where investment is not backed by any tangible security. In the event there are adverse issues with production, depending on severity of loss, investors may not just lose returns, but also their principal invested.

EEKI business model is capital heavy and it requires substantial commitment not just from EEKI to set-up, operate and stabilise business, but also from retail partners to provide patient capital and then enjoy the benefits over a long term of investment horizon. Min 5 year Lock-in works both ways. During this period, neither EEKI nor Investors can exit, EEKI can have time to stabilise business, can fix hundreds of problems that occur in normal course of business, while investors can recover 75% of their investments. It’s a long term partnership, providing Win-Win situation for both parties.

All activities right from set-up, to plantation, growing, operations, hiring contract staff, training, grading-sorting-packaging, transportation, exports, payment collections, compliances, documentation etc. will be taken care of by EEKI. Investors will not need to involve themselves in day-to-today operations. However, any suggestions/leads by any investor, if it is useful for us to save costs, increase yields or have a better supplier network will definitely be welcomed.

In terms of annual revenue generated by farms operated by EEKI, following will be bifurcation:

  1. Cost of growing, electricity, farm labour and transportation: 50% of revenue
  2. Audit, Insurance, Lease payments, Escrow charges, Compliance fees and other misc expenses: 10% of revenue
  3. Profit share distributed to all retail investors: 30% of revenue
  4. EEKI’s margin for set-up/ growing and technical know-how: 10% of revenue

Following a six-month setup period, you will get returns on a quarterly basis.

Risk for investment

  1. Natural calamities and damage to polyhouse is covered through an insurance contract from any of top-5 insurance companies India. Insurance claims can be utilised to rebuild the damaged farm and continue to provide returns on on-going basis.
  2. Who will take care of Repairs and maintenance? – Damage due to natural calamities, terrorism etc. will be covered under insurance. All other repairs and maintenance in normal mode of operations will be taken care of by EEKI. As a practice, EEKI uses only quality materials from Grade-A suppliers and pay extra to avail suitable extended warranties/Annual Maintenance Contracts (AMCs), so in case of damage to high ticket items, EEKI don’t carry risk of paying out of own pockets to replace them.
  3. What happens if there is drought in the country and farmers are not able to produce: Since we are able to grow outside soil, in climate protected conditions and using technology, the possibility of getting harvest is significantly higher than open field cultivation. When there is low supply and high demand, prices of vegetables sky-rocket and hence higher revenue is recognised.
  4. If EEKI wants to exit in the Lock-in period: In event EEKI has surplus cash available and wishes to buy-back the farms, we can mutually negotiate with investors and provide an open-offer. Those who wish to sell their ownership to EEKI at a premium as agreed in open-offer. Other investors can continue with investment and will continue to receive profit share as agreed.  
  5. If EEKI goes bankrupt: Our investment is capital intensive, asset heavy. Complete ownership of assets is with LLP and LLP is owned by all retail investors. We have been asked about the worst case scenario, in the event EEKI is bankrupt and the entire project ownership is with investors, they can mutually appoint any third-party entity to run the project and ensure that their investment continues to pay.

EEKI uses market intelligence and crop rotation. Hence, when everyone in the market is growing tomatoes and there is a huge supply, EEKI chooses not to grow tomatoes. We rather grow non-seasonal crops like cucumber and chillies during this time. Non-seasonal crops have very low supply and hence fetch above market prices.

Secondly, with our long-term contracts with organised B2B suppliers and exports, we can export produce to places and suppliers that give above market rates for extremely high quality produce. Cumulative impact of all these activities ensures that irrespective of low prices in domestic markets, EEKI can fetch better prices and remain profitable.