Case Study

Kissan Savera: Tapping Growth Opportunities in Organic Fertilizers Business

Devesh Baid
Associate Professor,
International Management Institute, Bhubaneshwar, Orissa, India.

Abstract
Demand for organic fertilizer was increasing. Ashok and his brother started using cow excrete in form of urine compound
and compost in their fields which showed beneficial results. This motivated other relatives and villagers to use cow excretes
in their fields. Now the demand was more than supply. Looking at business opportunity, Ashok started making organic
inputs as a seasonal venture. Sales were good and he wanted to extend this as a full time activity. Financial grant was
available from agencies but first he wanted to understand the cost involved and profit made during the last season.

Keywords: Product Costing, Joint Cost Allocation, Profit and Loss, Organic Fertilizers, Cow Excrete, India

Introduction waste was collected every morning and segregated into

With increasing demand for organic farm products,
demand for bio-fertilizers was increasing. So Vijay
Kumar started trading in bio fertilizers in his village.
These were manufactured by big corporates and sold as
branded products. Farmer’s response was good and sales
picked up in short time. When Ashok, his elder brother,
visited home in April 2014 and came to know about
increasing sales of bio-fertilizers, he spoke to his
brothers about preparing cow urine compound which can
act as disinfectant for crop protection and compost as
organic manure out of cow dung.
Vijay, youngest of four brothers has passed high school.
His father was a farmer and the family owned
agricultural land in the village. Ashok was doing his B
Tech in bio-technology from an agriculture university. In
his first year, he was taught about controlling insects,
bacteria, fungus etc. using bio-fertilizers. He now
thought it was time to implement his learning. Since
family had a few cows, he decided to start making urine
compound and compost on pilot basis at home.
Idea Testing
Ashok got a sloppy pucca (constructed of bricks and
cement) floor with a small pucca pit at one end. It cost Rs
1500 approximately. This was done to collect cow
excrete (dung and urine). Cows were tied on this pucca
floor in morning and evening when they usually urinate
and excrete so that all waste got collected in the pit. This
urine and cow dung by a simple process of filtering using
mixed cotton cloth. For dilution approximately 10 litres
of water was added to 1 litre of filtered urine. Neem oil
was also added to this so that it created a coating and
stayed on plants for long. Neem has medicinal values and
was applied as repellent for stem borer in mango trees.
This urine compound was sprayed on chilli fields grown
for self-consumption. The sprayer had an agitator to mix
oil in water while spraying. Dry cow dung was broadcast
as organic matter. All this work was done by helper who
looked after the animals and fields and involved no
additional cost.
Chilli was sown in March. The first spray of urine
compound was done in May beginning initially with
flowering. It was observed that there were no insects for
around two weeks from the period of spray. During this
period there were no rains, so the compound was not
washed away. Routine fertilizers and chemicals were
applied as usual. Ashok left for university by mid May.
He had asked his brother and helper to continue spraying
urine compound at intervals of fifteen days. Since these
were bio-ingredients they had no negative effect even if
sprayed more, in fact it increased the fertility of soil. It
was observed that chilli fruit was better and there were
fewer incidences of insects this time. The family
continued spraying for other horticulture crops,
especially vegetables such as brinjal, tomato, etc. grown
for self-consumption and it showed similar results.
Soon other relatives also adopted this practice. Ashok’s

BVIMSR’s Journal of Management Research 207 Vol. 9 Issue - 2 : October : 2017

Case Study Kissan Savera: Tapping Growth Opportunities in Organic Fertilizers Business
uncle was highly respected in the village and people
listened to him. Villagers believed about the benefits of
urine compound and cow dung as cow is considered holy
in the Indian mythology. They had heard about the
medicinal benefits of cow urine in old stories. Even
current scientific literature has reported 1 to 1.5 per cent
urea and 0.8 to 1 percent phosphorus in urine. It can also
be used as disinfectants. Many villagers who had cows
also started using urine compound and dry cow dung in
their fields. Beneficial effect was observed by all due to
this treatment.
Start of Business Venture
After two years, there was enough demand for these
products. Requirement was seasonal during flowering
and fruiting of horticulture crops especially vegetables
grown in the area like chilli, brinjal, and tomato. One
hundred litres of urine compound was required for one
spray on one acre plot where these crops were grown.
Spraying had to be done at least twice during flowering
and fruiting of crop at a gap of 15 days. These are short
duration crops and normally take 3 to 4 months to grow.
There were many farmers who had no cows and they also
wanted to use this. The cost of producing compound and
compost from cow excrete was very low and it could be
sold at low price compared to other bio-fertilizers
available, and still earning good margins. In 2016 Ashok
decided to scale up this as a business venture. Two dairies
in the nearby village were approached for cow excretes.
They agreed to supply cow excrete at Rs 1/ litre and were
happy to find a market for their waste.
As of now only material, transport, and labour was paid in
cash. Excrete was collected from the dairy by a tractor
and payment was made immediately. This was brought to
his home where a place was earmarked for filtering,
mixing, and packing urine compound. Five people were
employed on daily basis for collection, filtration,
packing, and delivery of urine compound. They also put
dry cow dung into pit and later compost into fields. Four
unskilled workers were paid at the rate of Rs 150 per day
while one skilled worker was paid Rs 200 per day. In all
five people were employed for 18 days during the last
season.
Purchases during the season were 18000 litres. In 24
hours, a cow gives 12 to 14 kg of dung and 5 to 6 of litres
BVIMSR’s Journal of Management Research
urine. Some variation takes place due to food and season.
A ratio of 2:1 was considered for cost calculation
purposes. One tractor was engaged for bringing cow
excretes from the dairy. Every trip brought around 1000
litres of excrete. It took on an average three hours a day.
The tractor was engaged at Rs 100 per hour. In all 18 trips
were done during the previous season. Blended cloth was
used to filter excrete. If purchased from the market it
would cost Rs 25 per meter. Two meter were used each
day for 18 days to filter excrete into urine and dung. The
cloth was later used for other miscellaneous work like
cleaning of floor. This was a very small cost component.
Ten litres of water and 100 grams of neem oil were added
to 1 litre of filtered urine resulting in 11.1 litres of urine
compound. However, allowing for wastage and spillage it
was taken as 10 litres of compound for revenue purposes.
Ten kg neem seeds gave 1 litre of oil. Neem seeds were
collected from their orchard which had lot of neem trees.
The seeds were crushed and oil was used for urine
compound. As per Ashoks estimate, this oil could be sold
in market at Rs 100 per litre. However, family incurred
only crushing charges at Rs 2 per kg. Water was taken
from well but it would be good to take water cost at Rs 1
for 10 litres. In case of scaling, family may have to use a
motor pump for drawing water from the well.
Filled containers were sold at Rs 30 in 10 litre packing.
Containers were returned by customers within two days’,
else their deposit of Rs 10 for containers was forfeited.
Containers used for delivery of urine compound were
taken from the shop so there was no cost. But if second-
hand containers were bought it would cost Rs 10 per
container. Around 200 containers were in use at a time
and each container was used approximately 18 to 20
times before being discarded.
Dry cow dung was put into a large pit created for this
purpose. After eight to nine months of decaying when the
compost was ready, it was used as manure before crop
plantation. This acted as organic fertilizers in field. Over
two years the family has reduced consumption of
chemical fertilizers, pesticides, and insecticides in their
field. Now they are planning to move towards complete
organic cultivation. This compost had a ready market and
could be sold for Rs 1 per kg. One hundred kg of cow
dung gave 60 kg of compost.
Currently a part of the porch was used for purpose of
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 Case Study Kissan Savera: Tapping Growth Opportunities in Organic Fertilizers Business
filtration, packing, and pit. If the same land was taken on
rent, it would cost Rs 5000 per month. Currently, the
porch was used for purpose of growing vegetables for
self-consumption, play area, etc. It was difficult for
Ashok to quantify the benefit from these activities.
Younger brother Vijay overall looked after the business.
A full time manager for similar work in village would be
available at a salary of Rs 6000. Other miscellaneous
expenses were estimated at Rs 75 for each working day.
This included tea for employees, electricity, general
expenses etc.
Ten percent of sales was estimated as selling cost if
Ashok started sales from a separate premises. Otherwise
his brother would continue selling at 10 percent
commission on sales. He was not sure of taxes (both
direct and indirect) he would have to pay if he started this
as a full time business. He thought of marking 20 percent
of profit for this purpose.
Way Forward
Last season, the business had done extremely good. Sales
were expected to grow. Demand for organic manure was
increasing as organic products were getting a premium
price not only in domestic market but were also preferred
in the international market. Ashok had enrolled for a post
graduate programme in agriculture business
management and was planning to start this as a full time
business after he graduated in April 2017. He also came
to know that government agencies were giving subsidy
for setting up dairies and compost manufacturing. But he
wanted to know first the cost and profitability of the
business.
Teaching Note
Case Synopsis - This is a case of small business activity
started in a village by two brothers Ashok and Vijay. One
brother started using cow excrete in the form of urine
compound and compost in fields which showed
beneficial results. So they started this as a seasonal
BVIMSR’s Journal of Management Research
venture. Sales were good during the previous season and
Ashok was planning to turn this into a full time activity.
Financial grant also available from agencies like
NABARD but first he wanted to calculate the total cost
incurred and profit made during the last season.
Course Positioning - The case can be used in a course on
managerial accounting or cost accounting to students of
management in agri-business or entrepreneurship. It can
also be used in executive education programmes targeted
at bank officers or development sector executives for
evaluating cost and profitability of projects in agriculture
and allied fields. Besides it may be useful in short
duration programmes offered to farmers and small
entrepreneurs for improving their commercial
understanding.
Teaching Objective - The case focuses on the concept of
joint cost (by-product cost), preparation of profit and loss
account of a new enterprise involved in producing urine
compound and compost from cow excretes. Many costs
are not incurred in cash and there is self-consumption of
cow dung. In such a situation it takes into account
opportunity cost of resources consumed to calculate
actual profit from the venture.
Concluding Comments - Based on calculations it can be
said that the project is profitable. It has earned
approximately Rs 40,000 in the last season after taking
into account all cash and non-cash cost and making
provision for taxes. Cash flows generated by the business
were above Rs 1, 00,000 as many costs are not incurred in
cash. However, before taking this as a full time activity
Ashok should analyse demand and product shelf life,
especially of the urine compound.
Suggested Readings - To have a better understanding of
concepts, students are advised to read chapter on joint
cost treatment and preparing profit and loss account from
Cost Accounting: A Managerial Emphasis by Charles T
Horngren, Srikant M Datar, and Madhav V Raja
(Pearson, 2015).
209 Vol. 9 Issue - 2 : October : 2017
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