#08 - MAY 2008 by CyberMedia (I) Ltd

publication a

Vol 2 / Issue 08 / May 08

/Rs 30

How Much should you ask Your VC for? New highways open up opportunities for motel chains How to save electricity in your ofﬁce LEDs will light up your future Big Bucks in Farm banks Food for thought in food processing High performance computing for high growth Farming eight birds other than hens

unique idea of the month/

Branded Puja Kits innovation/

PC Laundry sector/ Robotics CASE STUDY - Jayesh Parekh Focus without myopia Xxxx xx xxxx xxxxxx xxxx India’s brain regain’s Xx xxxxx xxx inﬂxxxxx uencexxxxx on venture investing

Vol 2 / Issue 08 / MAY 08

BOARD OF ADVISORS C K Prahalad

University of Michigan

N R Narayanamurthy

Chief Mentor, Infosys

Kanwal Rekhi

Chairman, TiE

Romesh Wadhwani Chairman & President, Wadhwani Foundation Gururaj ‘Desh’ Deshpande

Chairman, Sycamore Networks

Saurabh Srivastava Chairman, Indian Venture Capital Association Kiran Mazumdar Shaw R Gopalakrishnan

Chairman & MD, Biocon Executive Director, Tata Sons

Philip Anderson

Professor of Entrepreneurship, INSEAD

Shyam Malhotra Editor-in-Chief Krishna Kumar Group Editor ANALYSTS Arunjana Das Binesh Kutty Chhavi Tyagi Shilpi Kumar Sreejiraj Eluvangal Vimarsh Bajpai

/cover story

How much should you ask your VC for? 42

OPERATIONS Ajay Dhoundiyal Product Manager VIjay Rana Design Anil John Photography SALES & MA Jaideep Mario Gabriel Imran Ali Chandan Sengupta Dayanath Levaj Jagdish Nivedita Dwarkanath Naveen Barsainya

MARKETING Associate VP West West North South South South South-East Asia

PRINT & CIRCULATION SERVICES NC George Associate VP T Srirengan GM, Print Services Sudhir Arora Circulation Services Manager Pooja Bharadwaj Assistant Manager, Reader Service Sarita Shridhar Assistant Manager, Reader Service Printed and published by Pradeep Gupta. Owner, CyberMedia (India) Ltd. Printed at International Print-O-Pack Limited, B-204-206, Okhla Industrial Area, Phase 1, New Delhi-20. Published from D-74, Panchsheel Enclave, New Delhi-17. Editor: Krishna Kumar. Distributors in India: Mirchandani & Co, Mumbai. All rights reserved. No part of this publication may be reproduced by any means without prior written permission. BANGALORE 205, 2nd Floor, # 73, Shree Complex, St.Johns Road, Tel: 41238238 CHENNAI 5B, 6th Floor, Gemini Parsn Apts, 599 Mount Road, Tel: 28221712 KOLKATA 307, 3rd Floor, Ballygunj A.C. Market, 46/31/1 Gariahat Road Tel: 65250117

New highways open up opportunities for motel chains

MUMBAI Road No 16, D 7/1 MIDC, Andheri (East) Tel: 28387241 DELHI D-74 Panchsheel Enclave Tel: 41751234 PUNE D/4 Sukhwani Park North Main Road, Koregaon Tel: 64004065 SECUNDERABAD #5,6 1st Floor, Srinath Commercial Complex, SD Road. Tel: 27841970 SINGAPORE 1, North Bridge Road, # 24-09 High Street Center Tel: +65-63369142 CORPORATE OFFICE Cyber House, B-35, Sec 32, Gurgaon, NCR Delhi-122001. Tel: 0124-4031234, Fax: 2380694.

108 pages including cover

DARE.CO.IN 2

MAY 2008

As highway trafﬁc zooms across the country, the need for motels is on the rise. Behind the shining neon signs, lies a jackpot worth Rs 3,200 crore

DARE.CO.IN

/contents

others/ How to save electricity in your ofﬁce .... 46 Towards a cashless world .................... 68 Muga- The Silk of Royalty ..................... 58 High Performance computing ............... 56 Think Beyond Hens ............................... 72

unique idea of the month

Branded Puja Kits Prakash Mundhra offers around 32 puja items required for a festival-speciﬁc puja packed into one designer kit.

Philip Anderson .......... 34 Paranjoy Guha Thakurta ... 71 Anurag Batra ........... 76

In Robots we Trust

The time is ripe for you to make an entry into the world of industrial and service robots

/INSEAD Case Study Jayesh Prakash

18 60

Brain regain blogs/columns

opportunity/

art/ Mural from metal ...............................102 Initially reluctant to carry on with his family business, Liladhar Wahane discovers later that the art passed down through generations holds big potential

Rupin Jayal ............. 82

opportunity/

LEDs will light up your future!

coming soon

That small dot of a light that one sees all around holds huge business potential

DARE.CO.IN interactive business models,

wiki proﬁles, business

graph of the day, idea

pic of

opportunity /

the day, sector spotlight, blogs,

Brand Cruelty-Free ..............................30

news, discussion fora, keyword

Big Bucks in Farm Banks .....................40

, rss feeds, contacts,

based alerts

mentoring, market trends, webinars,

newsletters, live chat,

opinion polls,

leads, slideshows,

professional guidance,

search, on demand,

archives, event calendar, research, directories, faqs

Food Processing .................................54

innovation/

PC Laundry

Armed with a homemade cleaning cream and a team of six, Umesh Sainani from Mumbai is riding on a captive and still untapped service base of millions of PCs

Industrial Safety ..................................86

strategy / Burn Rate............................................36

NEN /

Creativity: A Survival Strategy ..............92 MAY 2008 3

DARE.CO.IN

blogs/edit

There’s no easy way out Entrepreneurship is not a bed of roses... and the devil is in the everyday drill, in the execution

he other day I received an e-mail from an aspiring entrepreneur. “I want to be an entrepreneur,” the mail began, “so give me an idea, give me a plan

and get me funding.” I am not joking. I actually have the mail that says exactly this, using a lot more words! How I wish life was that easy! Let’s assume, for the time being, that someone gave you all the three. Will it work out? Ideas are a dime a dozen. Converting an idea into a business plan is also fairly easy, if you know a bit about working with spreadsheets. And as anyone who has done basic budgeting will tell you, it is very easy to manipulate those numbers to show whatever results you want. Even funding can be organized. What next? Will that make you succeed? Will that make life any easier? Entrepreneurship is not a bed of roses, as anyone who has attempted to go down that path will tell you. And the devil is in the everyday drill, in the execution. I never tire of telling anyone who cares to listen that it is not just the idea, but the execution that matters. Let me modify that a bit. It is not the idea, or the business plan that matters. It is the execution; the passion in the execution and the way you react to situations as they evolve that more often than not decide between failure and success. Like they sang, there is no easy way out; there is no shortcut home.

/Krishna Kumar

MAY 2008 5

Feedback DARE.CO.IN

Everyone has their own interest of reading, but it is surprising to realize that what you wish to read comes to your home in the form of a magazine. I am student pursuing a bachelor’s degree in biotechnology. Since my passion is to do a job full of risk, I made up my mind to become an entrepreneur. It’s by chance that I came across DARE. You might ﬁnd it funny that the magazine caught my attention for it appeared to be a horror magazine. Then I noticed the cover story — 11 Threats that can close down your startup. I was excited because I had to make a presentation on entrepreneurship, and I was looking for such a magazine for about a month. I want to thank CyberMedia from the bottom of my heart to have come out with DARE. I have gone through each and every article meticulously, and I must say that they are all above expectations. DARE has found an important place in my shelf. Could you please come up with articles for graduation students? Swati Rana

Respected Sir, Firstly I want to thank CyberMedia again for giving birth to DARE. I also thank you for publishing my letter in the March issue due to which I got a call from Invest Care and they wanted to meet me. I just want to say that I am thrilled and delighted. I want to convey one thing to all those who want to be entrepreneurs that “If you have the will, you will have a way.” So get up, DARE and start doing. Thank You Saurabh Sukhani

DARE Response: Glad to know we could be of help. All the best with your venture

MAY 2008

I am 26 and a software engineer from Coimbatore. It was in my college final year, I read the book “Rich Dad Poor Dad” by Rober Kiyosaki, which justified why I should do a business. After reading the book and some of its sequels, I have grown a strong passion and love for business. I have been thinking about many ideas, out of which a few stand out as promising. 1. This is not a new idea but burgeoning one in India. GPS enabled Taxis (Call Taxi) in Southern India. The Indian maps are just now being developed by few companies, which could be used for GPS control of Taxis in reaching customers on time, guiding drivers remotely, exactly and also, would help the control center to monitor other parameters like speed, shortest distance to reach the customer or to drop him at the destination, to pick out and direct the nearest call taxi to reach the customer in the proximity saving his time, etc. 2. This is a new idea but involves R&D. A type of paint that can change color. Though infinite flexibilities are offered in devices like computers, where one can configure it any way he wishes anytime, TV where one can switch channels, there are some that can't be easily changed once done. E.g. Color of a house. Once painted, it’s again, a backbreaking job, if owner decides to repaint the house. Now think about this: The owner can change the color of the house just with his remote control just like he switches channels in TV. He can change the color depending on the mood of the day. He can even preprogram so that the color can keep changing as scheduled like a color changing in a fountain. A lot of much more cool features can be brought in, just with just one feature enabled. This is more promising than the previous idea but could take years if much R&D is involved. Currently I am trying to catch experts in chemistry to check the feasibility. I do not have enough money for this. So I intend to approach VCs with these ideas. Being an engineer, I have not much experience in creating business models/doing market surveys. I

am learning them and doing them. So I would be grateful if DARE could help me on this. Apart from VCs, I am also looking for like minded people to form a team (I am not a MBA. So I would surely prefer a MBA). I request DARE to help me on this venture. Parthiban Rajendran Dear Sir, My son who is studying entrepreneurship in Ahmedabad, told me about DARE. I purchased it from Delhi airport and fell in love with the magazine, resulting in my subscription of DARE. I am an entrepreneur myself, who had started a business in 1994 in Kolhapur, a upcoming city of Maharashtra, known of sugarcane, jaggery and leather chappals. I have reached a turnover of Rs. 25 Crores in automobiles. I also have a diagnostic center, in memory of my doctor uncle, which is operated on NLNP basis, as our commitment to society. Recently I have registered and launched a brand in men’s wear with own capital of Rs 50 lac, and looking for investors, who can invest in multiples of Rs 10 lac. I can offer security and good returns. Our total requirement is Rs 2 crores. Arvind Tolye, CONFIDO Dear Editor, With DARE, you have hit upon the nail of the need for a magazine which guides startups and people who take risks with new ventures. I would ardently request you to increase the information on new business possibilities which will help people to plunge into new business. This will be particularly helpful to those who have an existing business and yet want to venture out or diversify. Also networking between people who want to join hands together could be a very noble duty that DARE can DARE to perform. This will bridge the gap between knowledge and capability, between resources and utilization, between those who want to do and those who can do. My special thanks to you for the

Feedback DARE.CO.IN

article — 11 threats that can close down your startup. It is a straight and honest article and the points are universally valid — as solid as the Bhagwad Gita. I thank you for all that DARE dares to give. Dinesh Agarwal Garg Group of Companies I am from Coimbatore. I have products for the Indian market. I am looking for angel investors/venture capitalist to fund my projects. Mobcom (see picture) is a mobile ofﬁce automation system, designed in Swiss patent international. It is a briefcase with built-in printer (Canon IP90V) with IrDA, bluetooth, and battery. A notebook can easily be carried inside the briefcase. The product can be used with AC as well as DC power supply. Can you please advice me how to take this further, and get VC or Angel investment? S Sunil Kumar, Tradesman Ltd

Dear Sir, You have created a great magazine and added substantial value to the ecosystem for entrepreneurship in India. I would like to invite social entrepreneurs to check out the no-smell, ecofriendly, inexpensive NIRGANDH brand of public toilets and urinals developed by our small company at www. thakareqpt.com. I invite motivated persons to consider joining the team as creative designers, scientists and engineers, marketers and ﬁnance experts. 8

MAY 2008

I have been teaching entrepreneurship at IIM-B and Princeton after a 20 year stint in the corporate sector. I have promoted a company called Startups where we hand hold entrepreneurs, particularly those who do not have the beneﬁt of management education. We work with aggregates in different parts of the world in micro-enterprise development by helping people build sustainable biz models beyond poverty lines. One of the reasons I am writing to you is that I am interested in mentoring Ronak Thakkar (Feedback page, April 08 issue), so do give me his contact details. Nandini Vaidyanathan

DARE Response: Thank you for writing in to us, Nandini. We have emailed Ronak’s contact details to you. I am already 61 plus years old and an IIT Delhi alumni. I would like my vision of comfortable, ecofriendly facilities for the aam aadmi to be carried forward even as I will be unable to put in physical efforts into the venture in the next few years. I believe that this will also be a big business for every participant, which can not only be scaled up but also replicated many times over much like production of motorbikes, air conditioners, and refrigerators etc. It can further be diversiﬁed into energy production from human excreta as electricity via microbial fuel cells or hydrogen etc. I hope people interested in Solar paints, wind energy, bio- chemical energy, electronics, manufacturing technologies, plastics, material sciences etc will want to come together with non engineering persons and create top of the line products for the 2 billion persons who remain un served even now. M S Thakar

Dear Sir, I am an avid reader of your magazine since its first issue. Every word has a thousand meanings and inspiration for a budding entrepreneuer. I always thought I knew about business, but today I admit I didnt know enough. The magazine has an in-depth coverage of almost all that a budding business needs. With your magazine as a support system, an entrepreneuer would feel proud to introduce himself as a struggling businessman. Please keep on doing what you are doing and the we will see a lot of organized and well planned businessmen in the making. DARE has been able to bridge the gap that was there since ages. We own over 200 acres of farmlands in rural Jharkhand. The lands are lying barren because of irregular rains and lack of irrigation facilities, migrating laborers have added to the problem. From this platform, I seek suggestions from a lot of like-minded individuals. Is there any thing that I can do with these huge farmlands? Mukul R Gupta New Delhi Being entrepreneurs ourselves, we are avid readers of the DARE magazine. It sure is a veritable melting pot of ideas, innovations and spirit of enterprise that is steering India today. At Pivot Training, we have established ourselves in the niche corporate training space and are now looking at building scale. Our target clients are banks, insurers, fund houses and financial services BPOs. We would appreciate if you could publish an article on the training industry — particularly the financial services industry; a welcome inclusion would be details of VCs, investors etc. who are exploring this domain for investments. Pankaj Gulati, Pivot Training

DARE Response: Thank you for writing into DARE. Your idea is indeed a very good one and we will have an article on opportunities and growth prospects soon in DARE.

What you refuse, we reuse!!! We at Eco Wise provide comprehensive waste management solu ons ranging from collec on, transporta on, treatment and disposal of your waste. We diverted over 5000 tons of garbage from ending up in landďŹ ll last year out of which around 3250 tons was composted and 1250 tons was recycled to give trash another life. So contact us for comprehensive waste management solu ons and

We Re

HOME WASTE MANAGEMENT SOLUTIONS

IS E

BE ECOWISE!

cycle

, We Reuse, We

COMMERCIAL WASTE MANAGEMENT SOLUTIONS

uc d e R

INDUSTRIAL WASTE MANAGEMENT SOLUTIONS

CONTACT US: ECOWISE WASTE MANAGEMENT PRIVATE LIMITED. Phone: 9971712669, 9811177864 Email: thaparm@eco-wise.net Website: www.eco-wise.net

E C O W I S E : P R O V I D I N G E N V I R O N M E N TA L LY S A F E O P T I O N S

news

DARE.CO.IN

/news World trade may slow down in 2008 World trade growth slid to 5.5% last year from 8.5% in 2006 and may grow even more slowly in 2008—at about 4.5%—as sharp economic deceleration in key developed countries is only partly offset by continuing strong growth in emerging economies, according to World Trade Organization economists. The ﬁnancial market turbulence, which has considerably reduced economic growth projections for some major developed markets, has clouded the prospects for world trade in 2008.

PE firms pump $3.3 bn in Jan-Mar 2008 The private equity turf remained hot during the first quarter of the calendar year 2008, as the value of the deals witnessed a northward movement. Between January and March, 97 private equity (PE) deals worth $3.3 billion took place, according to Venture Intelligence, a research firm. During the corresponding quarter of the last calendar year, the value of the deals was $2.7 billion spread over 101 deals. Among the big investments was the $395 million pumped in by LNM India Ventures and Farallon Capital into Sophia Power. The quarter also witnessed investments by global PE major KKR into Bharti Infratel, and that of Morgan Stanley into TowerVision. Other firms that went the PE way included Ballarpur Paper, InterGlobe Tech Quotient, Cairn India and Narayana Hrudayalaya.

Canaan-TiE business plan contest Canaan Partners, a global venture capital ﬁrm, and The Indus Entrepreneurs (TiE) have announced the launch of the TiE-Canaan Entrepreneurial Challenge, a business plan competition open to early-stage entrepreneurs from across the country. Entrepreneurs from across India will have an opportunity to compete for business mentoring, access to earlystage investors and recognition in the second edition of this unique business plan contest. The deadline for submission of the business plan applications is May 12, 2008. Eight teams will be shortlisted based on their potential scale of the business, the strength of the team and sustainable differentiation in the business model. These shortlisted applicants will be invited to participate in the ﬁnal round in the month of June (2008) that will see them presenting their plans and ideas in detail to an eminent jury of the country’s leading entrepreneurs and corporate heads. At this stage the shortlisted participants will gain valuable inputs and be mentored on their plans by these jury members. 10 MAY 2008

DARE.CO.IN

/news

Four-fold growth for technical textile sector by 2020

Simpliﬁcation of labour law, innovation key to MSMEs growth

A four-fold growth to $37 billion by 2020 has been projected for the country’s technical textile market by a FICCI-Technopak report. The sector has been witnessing 11.25% growth, and is pegged at $8.3 billion. Poor investment and low-quality research and development are coming in the way of the growth of this sector.

An analysis of a CII survey findings revealed that respondents feel that simplification of labor laws (72%), promoting innovations (66%), and regulatory changes (65%) are the top three key enablers for the repositioning of Indian SMEs in the changing global scenario. On the procurement preference policy front, 81% of surveyed respondents support the development of the Procurement Preference Policy for MSEs as statutory under Section 11of MSMED Act 2006, that makes it mandatory for all the central government ministries/departments, its aided institutions and public sector undertakings, etc., and must be executed by all officials to whom procurement authority has been delegated.

Organic produce export rises 187% in 2006-07 The Agricultural & Processed Food Products Export Development Authority (APEDA) has reported the export growth rate of organic produce at 31%, 10% and 187%, valued at Rs 95.33 crore, Rs 104.87 crore and Rs 301.24 crore during the years 2004-05, 2005-06 and 2006-07 respectively. At present the government has no proposal to formulate a new policy to encourage consumption and growth of organic produce. However, the government has already taken up a National Project on organic farming from the year 2004-05 onwards for production, promotion and market development of organic farming in the country. The main components under the project are: training programmes and ﬁeld demonstrations on organic farming; setting up of organic input units; capacity building through service providers and market development, says a government press release.

New Ventures to help SMEs go green In order to develop more enterprises in clean and green technologies, New Ventures India, a joint program of CII-Sohrabji Godrej Green Business Centre and World Resources Institute, launched Coaches Network during the Green Investor Summit on 9th April in New Delhi. Top investors, business leaders and successful entrepreneurs would be part of the Coaches Network. The members of this network would devote time in nurturing seed and early-stage green companies.

New regulatory structure for medical devices sector

RIM a big opportunity Remote infrastructure management (RIM) could realize $26 billion to $28 billion in revenues by 2013, and India could capture a disproportionate share— $13 billion to US$15 billion—of this potential, creating 325,000 to 350,000 jobs in the process, according to a Nasscom report. The study conducted by McKinsey & Company highlights that the $524-billion infrastructure management services (IMS) industry, which manages enterprises’ core IT systems, including hardware, software, connectivity and people, could become as important as the ADM and BPO industries that have dominated the rise of offshoring in the last decade. 12

MAY 2008

The government is in the process of creating a new and better regulatory structure for the medical devices industry as part of its effort towards achieving quality healthcare for all. Debasis Panda, Joint Secretary, Ministry of Health and Family Welfare, said this while addressing the Medical Technology Conference on the theme of ‘Interactive partnership—accelerating sustainable healthcare’ organized by CII in New Delhi on April 15. Poised to touch Rs 140,000 crore in ﬁve years time, the Indian healthcare sector is all set to become one of the largest in the world.

GDP growth to moderate at 7.9% for fiscal 09: Assocham The Indian growth story is set to moderate with inflation and high interest rates impacting major industrial sectors and dampening consumer demand, according to 82% of the CEOs surveyed by Assocham. They have stated that the GDP growth figure may remain close to 7.9% for the fiscal 2008-09. The growth rate recorded by Gross Domestic Product (GDP) was 8.7% for the previous fiscal. Around 75% of the corporate heads consider the challenges thrown by an appreciating rupee may come in the way of sustaining high growth rates by the Indian economy.

DARE.CO.IN

opportunity/robotics

The demand, for both industrial and service robots, is projected to grow at a brisk pace. The time is ripe for you to make a quick entry into this sector /Vimarsh Bajpai

riven by his “passion” for robotics and a tiny sum of Rs 10 lacs, Pulkit Gaur started a robot manufacturing company, Gridbots, in March last year. The idea was to manufacture and bring to market a series of consumer, industrial and military robots. The challenges were many for the Ahmedabadbased startup. “Absence of resources, talent and funding were the main challenges,” says Gaur. But one year down the line, Gaur and his team seem to be much on track. Having done some work for the National Institute of Design, Central Bureau of Investigation and the Home Ministry, they are now preparing to launch autoGRID, out of their gBOT series of consumer robots,

MAY 2008

which can perform functions like home cleaning, surveillance and telepresence. The robot could be priced at just Rs 15,000! Gaur is among a small group of Indian entrepreneurs who are betting big on the growth of the robot market in India. “Robotics and automation are not very developed domains in the Indian market and most of the market is occupied with imported products and there is a lack of native solutions and products that suit Indian needs,” says Gaur, who wants to bridge the gap. “We took this challenge as an opportunity to come up with something innovative in Indian markets, which would be Indian from bottom to top, and hence this company came into existence,” says Gaur. The growing interest in robotics by Indian players was evident at the

ﬁrst Robo Expo 2008, organized by the business chamber CII in January this year. The event witnessed several new launches and participation by

DARE/players Players – Indian •

Precision Automation and Robotics India

•

Gridbots

•

India Robotics and Automation

•

Hitech Robotic Systemz

•

J Robotics Technologies

•

TRI Technosolutions

Players – Global •

ABB

•

Rockwell

•

Kuka Robotics

•

Motoman

•

Hyundai Robotics

The list is only indicative.

DARE.CO.IN

opportunity/robotics DARE/robofacts 1. The robotics business is broadly divided into two sectors—industrial and service, with service robots of two types—professional and personal. 2. The world's total stock of operational industrial robots in 2006 was 951,000 units, 3% greater than 2005. 3. By the end of 2006 about 40,000 service robots for professional use were installed worldwide. 4. According to estimates, around 3.5 million personal robots are in use. 5. The global market for industrial robots is projected to rise at an average of 4.2% to touch 139,300 units in 2010. 6. The industry in India is expected to grow by 2-2.5 times of the global average. 7. There are about 1.2 million industrial robots working in factories worldwide, according to the Industrial Federation of Robotics. 11 robotics companies. These included ABB, Hi-Tech Robotics Systemz, Rhythmsoft, Rockwell, Kuka, Motoman Motherson Robotics, Panasonic, and Precision Automation and Robotics India (PARI).

Kinds of bots The robotics business is broadly divided into two sectors—industrial

PULKIT GAUR Gridbots

and service. Industrial robots find application in manufacturing industries and are used for purposes as diverse as welding, painting, packaging, assembly, ironing etc. The automobile segment is one of the biggest employers of such robots. “The automotive industry is still the predominant user of industrial robots, but the rubber and plastics industry and the electrical/electronics industry are gaining in importance,” says the World Robotics 2007 report. According to its estimates, the world's total stock of operational industrial robots in 2006 was 951,000 units, 3% greater than 2005. Service robots, on the other hand, are used mostly for defense, rescue, security and surgical applications. These are also used in unmanned aerial and ground-based vehicles by the military for reconnaissance operations. Service robots are of two types—professional and personal. Personal robots are involved in functions such as vacuum cleaning and lawn mowing. By the end of 2006 about 40,000 service robots were installed worldwide for professional use. “There lies a lot of scope for home and industrial robots in India as well as international markets. Industrial robots are replacing humans in achieving specific and repetitive tasks in a better way and with more efficiency,” opines Gaur. According to some estimates, around 3.5 million personal robots are in use around the world. Globally the robotics business has always been a lucrative one with industrial robots having the biggest

GAGAN GOYAL

TRI Technosolutions, a robotics startup

We started with a few lacs. Recently we have taken funding from a VC ﬁrm. share in the manufacturing world. Under pressure to increase productivity and cut costs, industrial houses across the world have employed robots to not only reduce turnaround time, but also achieve precision. According to the International Federation of Robotics, many simple manual operations are no longer cost-effective in high-wage countries. Therefore some production has been shifted to low-wage countries. However, even then, more demand in terms of product quality can only be satisﬁed by automation. In India, PARI is one of the leaders in the robotics business. Global manufacturing giants such as Hitachi, Bosch and Caterpillar are using its industrial robots. Companies such as LG, Samsung, Honda, etc are also using PARI robots. Another Indian company, HiTech Robotic Systemz, has developed a social-robot called NEEL, which the company claims “can

We wanted to come up with something innovative in the Indian markets, which would be Indian from bottom to top, and hence Gridbots came into existence. MAY 2008

DARE.CO.IN

opportunity/robotics trial robots working in factories worldwide. In 2006, China was the third largest robot market in Asia, with 5,800 newly installed robots, about 29% more than in 2005.

MILIND SHASTRI

Director with a German robotics startup

Starting your own biz

Some challenges specific to robotics companies include finding and maintaining an expert team, as there is dearth of people with good interdisciplinary experience/ education. mingle socially with humans by intelligent human interaction, instruction following, and personalized solutions etc.” The company has an impressive lineup of robo-products. Similary, TRI Technosolutions is an IIT Bombay alumni venture in the field of educational robotics and embedded systems with current focus in college level education. It was founded in November 2005 and is currently incubated at SINE, IIT Bombay. “We started with initial capital of few lacs. Recently we have taken funding from a VC firm,” says co-founder Gagan Goyal. TRI has conducted over 120 workshops to cater to the needs of nearly 15,000 students across the various cities of the country. TRI is a constant facilitator in the scientific and technical education of students by providing them requisite resources through a wide variety of robotic kits, software based programming tools, ba-

sic and advanced level workshops and Web-based learning resources.

On a high The Indian robot market is still in its nascent stage, but on a high-growth trajectory. The country is becoming a major hub for the production of industrial robots. The global market for industrial robots is projected to rise by an average of 4.2% to touch 139,300 units in 2010. In India, however, the industry is expected to grow by 2-2.5 times of the global average. According to the World Robotics 2007 report “in 2006, the number of industrial robots supplied in India almost doubled to about 850 robots. At the moment, the actual numbers are quite small, but this escalation in the supply of robots testiﬁes to the dynamism of the Indian market.” Goyal of TRI is bullish on the growth of the industrial robotics market in India. “There will be good growth in the near future, but to a limited extent. For home and personal robotics, currently, I think there is not much of a market in India. But this market is going to be very big 5-10 years down the line or maybe more,” he says. The Industrial Federation of Robotics estimates that by the end of 2010 there will be about 1.2 million indus-

THE THREE LAWS OF ROBOTICS A robot may not injure a human being or, through inaction, allow a human being to come to harm. A robot must obey orders given to it by human beings, except where such orders would conﬂict with the First Law. A robot must protect its own existence as long as such protection does not conﬂict with the First or Second Law. — Isaac Asimov

1 2 3

16 MAY 2008

Given the projected rise in demand for both industrial and service robots, the business seems to be a lucrative one. As for the cost of setting up a robotics startup in India, Milind Shastri, Director with a German robotics startup gives his estimates. “Company registration including professional fees could be between Rs 30,000 and Rs 50,000; the cost of training, relocation and adjustment of manpower (depending on the structure of the company and the type of management procedures) could be upto Rs 2 lacs; office space and set up may cost between Rs 30,000 and Rs 1.5 lacs,” he says. Shastri says the essential technical equipment (depending on the type of product or service) could cost Rs 50,000-Rs 10 lacs, and set aside Rs 20,000-Rs 1 lac for general office equipment. As the business is high-tech, and involves specialized skill-sets, the challenges could be many. Shastri says that apart from the usual challenges faced by startups, some of those specific to robotics companies include finding and maintaining an expert team, as there is dearth of people with good interdisciplinary experience/education. Goyal of TRI, whose initial challenge was mainly getting good people to work with agrees. “The issue has been solved to a certain extent now because of time and validation of the idea,” he says. “Other challenges could be those related to technical services like specialized robotic equipment products, etc. Finding investment is a typical problem,” says Shastri. To deal with the challenges, Gridbots started making their own native software and hardware modules to overcome the problems of resource availability. This enabled them to come up with quite efficient solutions to their problems at DAR E lower costs.

Think Innovations ... Think Us!

ELECTRONICS . GADGETS . ACCESSORIES 速

For Further Details Visit www.mitashi.com. Call us at :022 - 25156676. Fax : 022 25006660 Email : contact@mitashi.com

Mumbai - Vijay Sales - 022 24216010, Croma - Juhu - 022 67103333, Malad - 022 67254411, Pune - Span Mktg - 09371081216, Dass Ele - 020 56092480, Nigdi (Pune) - Deepak Agencies - 09823108247, Nagpur - Ashar Mktg - 09422110893, Nasik - Fun Digital - 09372512567, Mangaon (Raigad) - Sarthak Ele - 9422695276, Aurangabad - Mario World - 09325202329, Jalagaon - Janta Shopee - 09822410888, Amravati - Mario World - 9372414309, Kobra - Anumeet Ent - 9425532321, Bhopal - Sanjay Traders - 9425378494, Surat - Navin Ele - 09825039944, Croma - 0261 669700, Ahemdabad - Shree Khodiyar Traders - 09426826220, Sales India - 079 27546312, Croma - 079 66095000, Rajkot - Navrang World 09898719197, Indore - Lotus Ele Supermarket - 0731 2390039, Coimbatore - Kirti Ele - 09944127250, Bangalore - Viveks - 080 41461910,Croma 080 66969850, Mysore - Kwality Tronics - 09448462660, Chennai - Viveks - 044 42128740, Hyderabad - Tirumla Music Center - 04023316455, Delhi - Aryaki Ele - 9811819884, Kolkota - H.V.Doshi & bros - 9830071157, Siligiri - Popular ent - 9434049115 ,Orissa - Mohit s a l e s C o r p - 9 8 6 1 0 3 4 8 5 0 , A s s a m - B h o r a l i B r o s - 9 8 6 4 0 2 9 9 3 7 , Pa t a n a -S a n j a y Tr a d i n g - 9 3 3 4 7 0 7 9 6 0 , 9 4 3 1 4 4 6 4 8 3 .

DARE.CO.IN

case/INSEAD

ProPoor: Social entrerpreneurship and the serial entrepreneur /Philip Anderson

n early 2003, Jayesh Parekh, one of the founders of Sony Entertainment Television (SET), found himself at crossroads. Five years earlier, the serial entrepreneur had discovered a way to use his business skills in order to contribute to the social development sector, founding and financing ProPoor, which had become the leading Web portal for non-government organizations (NGOs) in South Asia. Although he was deeply involved in several successful ventures and had become wealthy through them, he was devoting more and more of his time to philanthropic causes. Once one has achieved his financial goals, he wondered, how should an inveterate entrepreneur manage the last half of life? Jayesh Parekh was born in Mumbai to a Gujarati family, but spent his first 18 years in Kolkata where his father started a branch office of his family’s company. Parekh earned a bachelor’s degree in electrical engineering from Maharaja Sayajirao (MS) University in Baroda in 1978, and that fall entered IIM Calcutta. After two trimesters, he faced a major life decision: finish IIM or get an engineering degree in the United States? He recounts: "I grew up in a lower middle-class family, and I had nothing to fall back on. I couldn’t afford the fees in the US, but the University of Texas in Austin then offered me a research assistantship that would pay for a master’s degree in electrical engineering. My father had retired and we had no family money. Friends told me that if you have something to fall back on in India, IIM would assure a good professional 18 MAY 2008

career, but I wanted exposure to the US education and corporate life, so I took the chance and it changed my life." After earning his master’s degree in 1980, Parekh worked for 18 months at the university’s Center for Electromechanics, which sponsored his US green card. While in Texas, he met and married his wife Mona. Parekh relates: "We met in Kolkata, where she is from a wealthy diamond and jewelry family, so it was at best a platonic relationship. She had studied interior design in India, and asked me for help when she decided she wanted to continue her stud-

“

Although Jayesh Parekh was deeply involved in several successful ventures and had become wealthy through them, he was devoting more and more of his time to philanthropic causes

”

ies in the USA. I contacted several US colleges on her behalf, and she ended at Brooks College in Long Beach, California. She didn’t know anybody in LA, so she frequently visited me in Austin, where I had good friends. She moved to Austin in 1981 , and we married, very much against the wishes of her parents, who vehemently objected to her marrying such a commoner." Shortly after marrying, Parekh began working for IBM in Houston as a

ProPoor Stats 922,785 16,423 $0 Hits this year

Active subscribers

Our overheads :)

These numbers, impressive as they are, reﬂect only a fraction of the volunteer effort — from the grassroots to board rooms — at work throughout South East Asia. If you know an NGO that is not listed on our data base, not participating in this interactive forum, and not taking advantage of the resources we make available, please make sure they learn about this Website and register soon. SOURCE: www.ProPoor.org

systems engineer, helping Chevron’s geologists and geophysicists get their applications for modeling oil ﬁelds to work on high-powered computers and vector processors. In 1989, after ten years’ absence from India, IBM started an offshore operation serving Indian customers based out of Singapore. When they sought experienced people to staff the operation, Parekh moved to Singapore as a systems engineer in April, 1989, to re-locate closer to fam-

DARE.CO.IN

case/INSEAD

grew up in a lower middleclass family, and I had

nothing to fall back on. I couldn’t afford the fees in the US, but the University of Texas in Austin then offered me a research assistantship that would pay for a master’s degree in electrical engineering — JAYESH PAREKH

MAY 2008

DARE.CO.IN ily in India. In 1991, he took up an opportunity to move into sales and marketing, and fully expected to stay with IBM when he was confronted with a life-changing choice in 1993. The company was moving back into India, and Parekh had two choices: go to Bangalore or return to Houston. He relates: "At that time we couldn’t see ourselves living in Bangalore, and I realized that if I went back to the US, I would retire at IBM. I don’t know a better company to work for, but my brother and I were the first generation of our family that had ever worked for somebody else. I went back to Houston for my exit interview, and my career manager asked if I intended to join a competitor. I said no, I’m starting my own business, so he checked a box on my exit form that said ‘re-hirable,’ which gave me a fallback. I figured that Singapore was an entrepreneurial place so close to India that I could start a business there. The salesman in me transformed into an entrepreneur." It is only in retrospect that Parekh realizes how risky and difficult a step this would be. He comments: "If I had known then everything I know now, I would never have quit IBM to start a business in Singapore. I lived a typical expatriate life and I didn’t know about half of the bills that IBM was paying for me. Once I realized how high the cost of living really was, we had to downsize, moving our kids into local schools and leaving our Orchard Road apartment for a relatively humble one. I was stupid to bet all my money on entrepreneurship,

case/INSEAD but one thing people don’t talk about is that your stars have to be aligned when you believe it’s time to start a business. It’s also a question of who you ﬁnd at a point in time: will you do it alone or hunt in a pack? Having a partner gives you security, conﬁdence and camaraderie."

“

I discovered that a lot of NGO leaders were not communicating with each other. Someone would present a case study and would start excitedly exchanging ideas with someone else in the room— you’d ﬁnd they were less than 100 miles from each other but never talked

”

One partner was Balwant Singh, who had befriended Parekh when both worked for IBM in Singapore. Singh had grown up in Malaysia and had then become an Australian citizen. The ﬁrst time he visited India was when IBM sent him there on business. The other was Mona Parekh, who had not worked for a commercial business since her husband had joined IBM, but who became the startup’s business and administration manager. Her hus-

band recounts, “We didn’t have a lot of money and I needed a lot of help. So we all took a haircut and bootstrapped a business.” The social connections the partners had built in corporate life proved handy for their new company, Frontier Technologies. They distributed the business intelligence software of a company whose founder was a good friend from Houston, and distributed hardware from Datavision, whose Singapore ofﬁce was run by an ex-IBM engineer. They also marketed the services of a software laboratory in Ahmedabad. In 1994, while Frontier Technologies was growing, Parekh went to the home of his good friend Sudesh Iyer for lunch one day and his host showed him a seven page business plan for a Hindi cable and satellite television channel. Parekh recalls: "I told him I thought it was a great idea, but that it wouldn’t go anywhere. The next day, he called me and told me he couldn’t sleep all night because of what I had said. He had been trying to raise money with Sushil Shergill, who was teaching advertising in the US. I said, ‘You can’t start a TV channel with a seven-page business plan.’ He said that they needed someone with a different education and professional background who spoke the language of big companies like IBM. I said ‘I don’t know much about TV but I can learn, and yes I’ll help." More partners were brought in, including Singapore-based banker Rakesh Aggarwal, actor Jackie Shroff,

arekh and Mehta began talking about the possibility of moving ProPoor to the Bay Area, where CharityFocus would take over the operation. But CharityFocus’ model had been to provide a one-off service and move on; it had little experience running an ongoing operation. Furthermore, the impact on the existing staff in Kolkata had to be considered

“ JAYESH PAREKH WITH NIPUN GUPTA 20 MAY 2008

”

DARE.CO.IN

case/INSEAD Shemaroo Films managing director Raman Maroo, and former Mahindra & Mahindra head B.R. Sule. The seven page business plan grew to a 35-page plan for the ACE TV channel. During meetings in Los Angeles with Sony Pictures Entertainment to obtain programming, it emerged that Sony was considering whether to start a television network in India. Says Parekh, “Sony worked with us to create a 300page business plan for an extremely powerful broad platform.” After 15

months of negotiations, Sony Pictures Entertainment formed a 60:40 joint venture with the seven Indian partners, and Sony Entertainment Television was launched in October, 1995. Over the next 13 years, the Hindi cable and satellite general entertainment channel spread to 120 countries and became one of the most popular channels in India. With two businesses growing at the same time, Parekh received an invitation to attend a conference in Manila

sponsored by the UK-based World Humanity Action Trust to discuss the effect of new media and communication technologies on the social development sector. Parekh recalls, “I didn’t pay attention to it at the time, but my father was visiting us in Singapore, and when he came to my ofﬁce, he used his salesman’s training to read upside down the invitation sitting on my desk. He asked if I was going, and I said no, I get invited to these things all the time, but he suggested that I go

Screenshot of www.myindiansites.com where you can ﬁnd an overview of businesses Jayesh Parekh is involved in directly or indirectly and then followed up the next day until he was sure I was registered.” Parekh had not heard of the social development sector before, and at the conference he learned about the world of non-governmental organizations

(NGOs). “I found veterans from India, Sri Lanka, Bangladesh and Pakistan who gave me a lot of information over two evenings about what the private sector can do,” he says. One Sri Lankan encouraged Parekh to present a paper

at a conference on using multimedia for poverty eradication at a remote place in India. There, Parekh recalls: "I discovered that a lot of NGO leaders were not communicating with each other. Someone would present a MAY 2008

DARE.CO.IN case study and would start excitedly exchanging ideas with someone else in the room—you’d ﬁnd they were less than 100 miles from each other but never talked. It hit me they were islands that needed more than e-mail or telephones to connect them.

case/INSEAD Some inquiry persuaded Parekh that NGOs could use a portal that contained comprehensive information about South Asian NGOs so that they could ﬁnd one another, learn and cooperate with each other. When he bounced this idea off a friend of his

who was earning a master’s degree in the US, Ami Doshi, she began doing research to populate a spreadsheet with information about 800 NGOs. Parekh’s ex-roommate from university in Baroda, Anil Shah, owned a boutique technology company that created Web

arekh’s ex-roommate from university in Baroda, Anil Shah, owned a boutique technology company that created Web sites, and offered to build the portal at cost. — JAYESH PAREKH WITH ANIL SHAH

MAY 2008

DARE.CO.IN

case/INSEAD sites, and offered to build the portal at cost. Parekh funded and helped to structure the site and ProPoor was launched in 1998. Using a small staff, ProPoor added thousands more NGOs to the site and gradually added functions such as case studies, a space where volunteers could give service to projects, a guide to upcoming conferences, and a daily news service. In 1999, the partners in Frontier Technologies sold the company to Applitech Solution Ltd, an Indian software company that wanted a sales and marketing footprint in Asia. When the partners in Sony Entertainment Television sold a small stake to a major US group at a multi-billion dollar valuation, he was able to help fund the startup of MobiApps, a company that provided mobile asset tracking systems with headquarters in Singapore and development ofﬁces in India and the US. Parekh’s entrepreneurial journey had yielded wealth and success, and as the founding Chairman of MobiApps, he was involved in the business but was able to rely on other partners, including Balwant Singh, to manage day-to-day operations. Meanwhile ProPoor was evolving in unexpected directions. “The most important thing for me was that NGO leaders found it useful,” he says. “I had no ambition of money; if they were beneﬁting from it, I was happy. That was the need of the hour, and I wanted to fast-forward progress and just do it, without waiting for anyone to give us money with a lot of caveats.” But more and more of the hits to the portal were coming from outside the region, as foreigners discovered ProPoor. These users wanted to know which NGOs most merited their support because they were well-run with low overheads and produced results. “We realized that a lot more people were using it than NGOs in South Asia, and saw that there was so much more the portal could do if it expanded for worldwide use,” Parekh says. Thus in early 2003, Parekh faced several options with respect to ProPoor. One was to let it continue to grow organically as fast as its small Kolkata-

“

Using a small staff, ProPoor added thousands more NGOs to the site and gradually added functions such as case studies, a space where volunteers could give service to projects, a guide to upcoming conferences, and a daily news service

”

based staff and Shah’s technical team could manage. Another would be to inject significantly more funds into it and build a fundraising infrastructure that would turn it into a major umbrella organization for nonprofits. A third would be for Parekh to establish his own charitable foundation that could raise funds for ProPoor and perhaps other worthy endeavors. A fourth option would be to turn the site over to CharityFocus, a US-based nonprofit organization that specialized in building Websites for other nonprofits. CharityFocus was founded in 1999 in the San Francisco Bay Area by Nipun Mehta, then 23 years old, and four friends. With the dotcom boom at its height, they garnered favorable publicity by building Websites for non-profits

for free, at a time when commercialquality sites cost tens of thousands of dollars. Mehta had an amazing knack for attracting volunteers and helping them produce results. Says Parekh, “Somehow he got work done by volunteers from different locations, and he had a fabulous administration module to pull them together.” Parekh and Mehta began talking about the possibility of moving ProPoor to the Bay Area, where CharityFocus would take over the operation. But CharityFocus’ model had been to provide a one-off service and move on; it had little experience running an ongoing operation. Furthermore, the impact on the existing staff in Kolkata had to be considered. In early 2003, Parekh felt that he had to decide what direction ProPoor should take and how best to build on its track record of success. More fundamentally, how did he want to structure his life so that he could express his passion for entrepreneurship while expanding the range of his contribution to the social development sector? He comments, “The spirit of service is in all of us—in some cases it resonates early on, while others need a trigger point. The sense of giving back to the community surfaces when you are really successful.” The question before him was how best to manage his life as a serial entrepreneur with a strong social conscience. Contd. on Pg 90 MAY 2008

DARE.CO.IN

opportunity/semiconductors

That small dot of light that one sees all around holds business potential that is only starting to ripen

/Binesh Kutty

or the longest time, incandescent bulbs, which replaced lanterns, reigned as the solution for lighting the world over. Compact ﬂuorescent lamps (CFLs) that consume less power to get as much lighting are slowly and steadily gaining acceptance in the market. As a result incandescent bulbs will soon be shelved for good. However, even as CFLs are gaining momentum, they already have an emerging threat in the form of an even lesser power consuming and higher-efﬁciency technology—light-emitting diodes (LEDs). The stage is already set for LEDs to take over as the next big thing in the lighting industry. The act is in its making. LEDs are already penetrating into homes and businesses, but mostly as a decorative lighting solution. For regular indoor lighting though, not much is 24

MAY 2008

being done. Not to say that it does not hold the potential to do that. All that is required to ride on this new wave of lighting technology is innovation. What the market is ready for and what is not being offered are LEDbased products for regular indoor lighting at an affordable price.

Enlightening facts LEDs consume less power and have higher energy efﬁciency than CFLs or incandescent light sources and have an extremely long lifetime, which means the product produces more or less no ‘waste’ in the form of spent light bulbs. LEDs do not contain any mercury. They can actually cut down that electricity bill manifold, even in comparison to compact ﬂuorescent lamps (CFL).

DARE/LED WHAT IT IS, HOW IT WORKS A diode, the simplest sort of a semiconductor device, is a material with a varying ability to conduct electrical current. Light-emitting diodes (LED), in layman’s terms, are just tiny light bulbs that ﬁt easily into an electrical circuit. However, unlike ordinary incandescent bulbs, they don’t have a ﬁlament that will burn out or get hot. It is solely the movement of electrons in a semiconductor material that illuminates LEDs1. The color of the emitted light depends on the composition and condition of the semi-conducting material used, and can be infrared, visible, or ultraviolet. Simply put, blue, green, and red LEDs can be combined to produce any color, including white. 1

http://electronics.howstuffworks.com/led.htm

opportunity/semiconductors DARE/LED vs. CFL vs. Incandescent Lamps INCANDESCENT LAMPS n 90% of electricity used is spent producing heat, not light n Rapidly being replaced by CFLs for lesser bills and environment friendliness COMPACT FLUORESCENT LAMPS (CFL) n 75% less electricity needed to produce same amount of light as an incandescent lamp n Current estimated sale, of one brand just in Gurgaon, is around one lakh units per month LIGHT-EMITTING DIODES (LED) n 15-20% less electricity needed to produce same amount of light as a CFL n Making a slow but steady entry in the market of lighting n Opportunities exist in way too many industries n Currently hot for home decor; Corporate office lighting space hugely untapped n More environment friendly than CFLs The best thing about LEDs is that even though they are really small in size, the light emitted is really bright. This fact itself opens up a vast canvas for innovation in making products. The trick is to house LEDs in a variety of fixtures. Further variations of LEDs include organic light-emitting diodes (OLED), polymer light-emitting diodes (PLED), light-emitting polymers (LEP), flexible OLED (FOLED), and phosphorescent OLED (PHOLED). These variants have been put to innovative use in apparel displays, etc. According to a report by the International Energy Agency, the adoption of more energy-efficient lighting systems could prevent a cumulative total of 16 billion tons of carbon from being added to the world’s atmosphere over the next 25 years. Despite advances in lighting technology, between 67% and 75% of the world’s lights utilize older, less energy-efficient technology.

DARE.CO.IN istence and benefits. What is en vogue now are compact fluorescent lamps. CFLs were rolled out to replace the current breed of incandescent lamps. The benefits? They use less power, have a longer rated life, and give out the same amount of visible light as incandescent lamps. CFLs have sure brought about an acceptance by companies and industries across the globe to do their bit for the environment. A dipstick survey with a distributor of one CFL brand in one suburb in the National Capital Region got some interesting figures. This single dealer achieves a monthly sale of 20,000 units in the home segment, and roughly 15,000 units in corporate offices. The rough estimate of CFL unit sales, including all distributors in Gurgaon, according

Industry overview As mentioned earlier, LED-based lighting is still in a very nascent stage. It has been in the Indian market since a couple of years now, but is instilling acceptance and adaptation very slowly. The reason, according to dealers and distributors, is the price factor. The market, they added, is not yet completely aware of its exMAY 2008

DARE.CO.IN

Mathew Job Marketing Director, Lighting Division, Philips India

opportunity/semiconductors Can you give our readers an overview of the lighting industry in India? India, being one of the fastest growing economies in the world, is witnessing a boom in construction as well as investments in infrastructure. This is contributing to accelerating the growth of the lighting industry. Of late, lighting as source of energy has become a hot topic of discussion and debate globally. According to the International Energy Agency: • Lighting is responsible for 19% of the world’s electricity consumption. • Artiﬁcial light accounts for almost one-ﬁfth of the world's electricity consumption, substantially more than the output of all the nuclear power

stations in the world This has lead to the growth in energy-efficient lighting, which can play a significant role in assuaging the impact of global warming. As per a report by the International Energy Agency, the adoption of more energy-efficient lighting systems could prevent a cumulative total of 16 billion tons of carbon from being added to the world's atmosphere over the next 25 years. Despite advances in lighting technology, between 67% and 75% of the world’s lights utilize older, less energy-efficient technology——some dating as far back as the 1950s. Tell us more about the advent of LED-based lighting solutions in India. In 2006 alone, we sold energy-saving products that contributed to a reduction in installed load of more than 1000 MW of power. Philips pioneered the concept of energy-efficient lighting globally and in India with the introduction of compact fluorescent lamps. In 2007, an LED lighting range was launched for Indian homes, which includes an array of products for innovative energy-conserving lighting solutions. These products feature saturated colors, digital control, energy efficiency and such. The advantages of LEDs include longer lifetime, compact size and flexibility in design, digital control programmability, light output with no ultraviolet and infrared radiation and usage safety because of low voltage and low heat operation. These will expand applications of lighting in homes in ways one could only dream of a few years back. We believe that LEDs is the next wave of lighting technology. LED lighting systems provide a much higher color saturation and brilliance than by filtering conventional light sources. Different color effects are now possible from the same light source. Prior to this, LEDs have been used in many architectural and commercial applications. Now, home users can utilize LEDs for decorative purposes, save energy and reduce their electricity bill. Recently, we have introduced LED-based products for office, shop and city beautification segments in India. Recently, at the Light India International 2008 exhibition held in Delhi, we showcased our innovative and futuristic lighting solutions in office, urban, retail, hospitality and consumer lighting segment through concepts like future bazaar and experience zones. Typically, who would you say are the current target clients for LED-based lighting globally? The current applications for LEDs in lighting are mostly in the decorative space. This means LEDs are mainly used for city beautification applications, shop windows and in urban homes. Where is the market—India or abroad? While the penetration of LEDs is more in the western countries, the time gap between their adoptions there and in India is coming down significantly. 26 MAY 2008

to him, is roughly about 100,000 units per month. The adoption of CFLs, he says, is catching on rapidly. So does LED hold the potential to change the face of the lighting industry? The possibility exists. There are believers, and then there are ones who have already taken the plunge. Take the case of Rajesh Purohit from Pune. About six months back, Purohit, owner of Lucifer Lights, spotted an opportunity to start a new business—LED-based lighting for home and office illumination. When asked about the reason for choosing this business, he says, “LED has a vast potential in India due to power shortage and high electricity costs. Even though many have heard about LEDs and their benefits, people are waiting for products that can be utilized for direct lighting. LED for domestic lighting is a hot business area. Even though many are trying to bring out products for this, no one has been able to. Our product, as opposed to other companies who have LED-based decorative, signboard and outdoor lighting, can be used for lighting up homes and offices.” One can easily gauge that this is a brave attempt, especially with the knowledge that there are so many other bigger players who are still not tapping this market aggressively. So, what is it that makes Purohit believe that he can survive the onslaught of a possible big players’ rush? “Our product is a cluster of LEDs and we manufacture the fixtures with reflectors required to hold this cluster and illuminate an area. Our product is a 4W fixture, which can easily replace a 15W CFL. In terms of energy efficiency, our product consumes 75% less power than CFLs, and 90% less power than incandescent lamps. These fixtures are developed and manufactured by us, and we are in the process of getting it patented,” says Purohit. Ask Purohit about his clientele, and he says, “Even though my interest lies in servicing the average household, the price factor is a problem in capturing them. I have a good client base in terms of corporate offices. By

DARE.CO.IN

opportunity/semiconductors DARE/product evaluation We got our hands on Philips Deco LED, LED Candle, LED Nightlite, and LED Flash Light. Deco LED comes in 6 variants—red, green, blue, yellow, warm and white, and is meant for outdoor use. These 1W bulbs light up as much of an area that a 20W incandescent bulb does. What is even better is the fact that the lamp is made of plastic, which makes it unbreakable, durable, and safe. The claimed life is 20,000 hours. One other variant of Deco LED is a color changing one, again meant for outdoor use. This one cycles through seven colors—about 3 seconds for each color. Besides outdoor use, this variant can easily create an extremely pleasing ambience if installed above a false ceiling. The LED Candle is a really innovative concept. The idea is to light up enough for a romantic candle light ambience, minus the flame and smoke, for about 50 hours using 2 AAA batteries. The flickering effect coming off of the wick-shaped lamp fitted on a round fixture, that houses itself in a smoked glass exterior, is comparable to the same effect as a scented candle that has been used for a couple of hours. The lamp can be operated using an easy push button mechanism. However, the light emitted from this LED candle, though romantic, is not as much as a scented candle. We would recommend having a couple of these, instead of a single unit, to light up enough to walk around without stumbling in the dark. The LED Nightlite throws in another innovation, a built-in light detecting sensor. The idea? This lamp lights up automatically as dusk sets in. In presence of natural lighting or room lighting, it turns itself off. Although, we did find the sensor to be too sensitive. There were times when the lamp lit up even in the presence of room lighting. The LED Flash Light is housed in a tough aluminum, waterproof, and ergonomic construction. It runs on standard AAA batteries. The light emitted is what we can say ‘super bright’, good enough for lighting up the path on a pitch-dark night adventure in a jungle. July 2008, we are looking at rolling out products for street lighting.” This coming from a few-months-old company sounds way too ambitious, doesn’t it? Purohit gleams with pride and claims,

“I am not exporting my products yet; as I am not geared up enough to even meet the domestic demand. Such was the case that 20 days after launching the products, we started planning ex-

pansion. In the ﬁrst month itself, our billing crossed Rs 1.6 crore.” How is that for potential? The story of LEDs does not just stop at business. THRIVE is a non-proﬁt MAY 2008

DARE.CO.IN RAJESH PUROHIT Lucifer Lights

LED for domestic lighting is a hot business area. Even though many are trying to bring out products for this, no one had been able to. Our product, as opposed to other companies who have LEDbased decorative, signboard and outdoor lighting, can be used for lighting up homes and ofﬁces.

organization that won a $177,250 Development Marketplace (DM) grant, funded by the Global Environment Facility, in 2006 for a project that includes producing and bringing LED lights to 10,000 Kondh tribe homes in the hills and forest tracks of southern Orissa. We spoke to Dr Ranga Bodavala, THRIVE’s project team leader to know more about this.

opportunity/semiconductors Apparently, nearly 8000 of THRIVE’s LED Home Lights are being used today in Koraput, Orissa, 8500 in Afghanistan and many in Malghat, Maharashtra, Paderu, Visakhapatnam, Ranchi, and Jharkhand as well. These are also being used in Kenya and Cambodia. About the ball park ﬁgure of the total amount that the government will save by implementing this project, Ranga says, “If the government provides one crore LED Home Lights, one to every needy family in a typical state, they will save roughly Rs 900 crores on kerosene subsidy a year. There will also be an economic improvement in productivity to the tune of at least Rs 3,000 to Rs 5,000 crores, as well as the social beneﬁts to health and education in rural and tribal areas as the LED Home Light enables people to continue working and studying after the sun sets.” Besides this, the use of LED for lighting is also a potential carbon credit minter. If a kerosene lamp is replaced by a LED Home Light it avoids one ton of carbon emissions in 3 years, which is equal to US$ 30 in terms of carbon credits. Ten million or one crore LED Home Lights will save 10 million tons of carbon emissions or in dollar terms, US$ 300 million! Going beyond a social cause, this project is also encouraging village entrepreneurs. The scheme of action is that for every 200 to 250 installed LED Home Lights, THRIVE trains an entrepreneur (woman or man) who will collect a small fee (Rs10 for each charge a minimum of twice to a maximum of thrice a month, depending on the use) for charging the LED Home Lights, either through grid power or at a solar charging station where there is

no grid power available. The village entrepreneur can earn a monthly income of Rs 2,000 to Rs 4,000, based on the number of LED Home Lights he maintains and services. “Even though this is being implemented,” informs Ranga, “we still have to see this become a huge success.” What are the trends like internationally? Here are a few indicators. According to a report on engadget.com, incandescent light bulbs will be shelved by 2012 in United States. Whether they will be replaced by CFLs or LEDs is still being debated. Many believe that CFL is a transitional technology. According to a news report on rapidonline.com in April, LEDs are being tried out for practical use in St Paul, in Minnesota. According to this report, the trial saw success in using LEDs at trafﬁc signals and walk signs, a move that saved $85,000 in labor costs and $180,000 in electricity. If successful, the LEDs could be rolled out to the city’s 37,000 streetlights.

Getting into the business According to Purohit of Lucifer Lights, “Getting into this business was all about taking a big risk. To add more, I would say ample amount of funding also helps. In addition to that, one needs people who can help out in terms of technology, research and development, and sheer product knowledge. LED travels in a straight beam, and knowing how to spread that light to the best level is the trick. One needs to have good knowledge of physics, geometry, etc, or you can rope in experts from these ﬁelds.” Of course, there are other challenges en route to success. LED, as a raw material, to make LED-based lighting

DARE.CO.IN

opportunity/semiconductors DARE/business potential hints from an NGO project After the sun sets, life in a rural household practically comes to a standstill. Activities like cooking and dining become complicated, as even a kerosene lamp is a luxury for families who cannot afford lighting that is brighter and longer lasting. The plight of fishermen is very similar. Lanterns do not satiate the kind of lighting required, and also adds an element of fire hazard on the boat. Moreover, there is a chance of a fishing trip and their livelihood being ruined when they run out of kerosene or the lamp fails due to strong winds. Lamps using kerosene provide low quality illumination, are highly polluting and dangerous, pose a health hazard and depend on a steady supply of kerosene. THRIVE, a non-profit organization, funded by the Global Environment Facility brought about a pleasant change in the lives of these rural folks—LED Home Lights. The kerosene subsidy is approximately Rs 75 a month (Rs 900 a year) for each family, for 3 liters of kerosene a month. With just one year’s kerosene subsidy THRIVE supplies a long lasting LED Home Light to each family and includes charging the batteries for a year. THRIVE LED Home Lights consume about 0.6 watts and are nearly equal in luminance to a 25 watt incandescent light bulb or an 11 watt CFL lamp, saving about 90% of energy. So do LED Home Light actually provide enough illumination for indoor lighting? Let these figures speak for themselves—8,000 LED Home Lights in Koraput, Orissa, 8,500 lights in Afghanistan, thousands of lights in Malghat, Maharashtra, Paderu, Visakhapatnam, Ranchi, and Jharkhand. LED Home Lights are also being used in Kenya and Cambodia. The story goes that LED Home Lights have successfully provided a brighter, cleaner, healthier and more affordable light that allows children to study, village tradesmen to continue working and helps women complete their daily tasks, besides improving security and safety of the family at night. THRIVE is also encouraging village entrepreneurship. For every 200 to 250 installed LED Home Lights they train an entrepreneur (woman or man) who collects a small fee (Rs 10 for each charge a minimum of twice to a maximum of thrice a month, depending on the use) for charging the LED Home Lights, either through grid power or at a solar charging station where there is no grid power available. The village entrepreneur can earn a monthly income of Rs 2,000 to Rs 4,000, based on the number of LED Home Lights he maintains and services.

DR. RANGA BODAVALA THRIVE

The governments have waited for many decades to give to the poor of Asia and Africa a light source that does not pollute, that does not burn out and should cost less. LED home light comes at low cost and high reliability, promising to banish the darkness of centuries and open the world of safety, productivity, knowledge and happiness to the 2 billion deserving women and children across the globe. products has to be imported from other countries. This obviously is a hurdle in trying to bring down the price of the actual product. Innovation in this ﬁeld is vastly unexplored as of now. This calls for a lot of research and development to make products that click with the market. So what we have here is a technology that is tried, tested, and ready to be exploited. It is a bulb of an idea that DAR E is already lit.

DARE.CO.IN

opportunity/well-being

Brand Cruelty-free The Rs 11,300 crore opportunity in alternatives to animal testing for health and beauty products is waiting to be tapped /Arunjana Das

amela Anderson has kept Baywatch at bay. Alicia Silverstone has shed her furs (read clothes) for it. We are talking brand “crueltyfree.” Given the general furore against the use of animals in testing of pharma and beauty products on the rise, the tag “cruelty-free” packs in a lot of punch. Major pharma and lifestyle companies

are seeking cover under the tag on account of both, public and government pressure, and it is time for the country’s entrepreneurs to make use of this phenomenal shift to alternatives of animal testing. The market is worth Rs 11,300 crore on a global scale, the melting pot of which is India. India is a hotbed of health and life-

style products, be it production, testing, or consumption. Months after the historic ruling of the Madras High Court on the Novartis episode, there has been the proverbial tidal wave that has swept Indian shores. Generics is just one part of the story. The wave has left behind a fertile ground for contract research organizations (CROs),

DARE.CO.IN

opportunity/well-being outsourced testing services, and other such organizations to ﬂourish. Meant for both domestic and overseas pharmaceutical and beauty products companies, they are virtually the pumping stations for the entire global pharma and lifestyle ecosystem. The only problem in the rosy picture is that the red color comes from the blood of poor creatures who cannot speak for themselves—animals. Use of animals for tests and experiments ranging from the innocuous to the lethal has triggered a revolution of sorts amongst responsible consumers, the government, and even sympathetic employees of pharma and lifestyle companies. The extent of cruelty that these animals are subjected to during numerous tests done for the “beneﬁt” of the human race has left many of them baying for the combined corporate medico-lifestyle blood. The initial excitement has now transformed into laws or guidelines in many countries that have banned or partially banned the use of animals in such experiments. One such law that is bound to dry up the collective pharma well-being business in India is the partial ban by the European Union on production and marketing of all cosmetic products involving animal testing by 2009, whether alternative non-animal

DARE/common tests involving animals Although several kinds of tests involve subjecting animals to different levels of suffering and agony, there are three that are the most commonly used: Draize test, skin irritation, and Lethal Dose (LD) test. The Draize test is usually done by putting in drops of the product to be tested in the eyes of rabbits. Their eyelids are held tight by clips to prevent them from blinking, their necks kept immobile in stocks to prevent them from escaping from that burning-hell agony. Those who try escaping end up with broken necks. The skin irritation test is done by shaving off the fur of the subject animal and smearing the product to be tested generously on the newly exposed skin and covering it with plaster. In a duration ranging from 10 to 30 days, the plaster is taken off so that the perpetrators can admire their handiwork and take down “helpful” notes about the irritation levels of the work. The result takes the form of labels on products that say something to the effect of, “Do not use on delicate areas. Wash away in case of exposure.” The LD test seeks to determine what a lethal dose is. The animal is subjected to increasing doses of the toxic product until it dies. The dose that is required to kill it off is deﬁned as the lethal dose. Proud to be humans, aren’t we? testing methods are available or not. These products can be marketed in the EU till 2013, after which a complete ban will be put in place. Considering the aftermath needs, India will have to stop shop by 2013. Clearly, a crisis is in the ofﬁng. As Krishna says in the Bhagawat Gita, in times of crisis, He reincarnates and rescues the world again and again. The authority, it seems, has been delegated. Thus was born “cruelty-free.”

DARE/EU guidelines on animal testing A partial ban has been called by the European Union on production and marketing of all cosmetic products involving animal testing by 2009, irrespective of whether alternative non-animal testing methods are available. The ban includes products produced or tested anywhere in the world. Exceptions cover three types of toxicity tests: reproductive toxicity, toxico-kinetics, and repeatdose toxicity. These products can be marketed in the EU till 2013, subsequent to which a complete ban will be put in place.

Why alternatives? In the spotlessly shinning new-age laboratories of the world’s leading educational institutions and companies dispensing healthcare and beauty products, Hitler still lives. So do his concentration camps. The so-called “guinea pigs” range from guinea pigs to rabbits, cats, dogs, monkeys and chimpanzees. The suffering and pain inﬂicted on the animals is horrendous. Ninety percent of the animals either die during the tests or are euthanized subsequently. It is not just the mortality rate that is the issue, though. Medical experts around the world have leveled serious doubts as to the efﬁcacy and use of these experiments. Empirical evidence shows that the extrapolation of the test results from animals to humans is a dicey affair. Medicines on which rats have survived have proved lethal

DARE.CO.IN to humans. There are several tests that show widely varying effects, even from mice to rats. When extrapolation from one sub-species to another is fraught with such perils, what can one say about extrapolating from mice to humans? Incidentally, penicillin, the world’s ﬁrst antibiotic, has proved fatal to rats in 70 percent of cases. What if Alexander Fleming had decided to test it on rats before testing it on humans? The very concept of “life-saving drugs” would have been shaken. The issue has gained wide publicity, thanks to campaigns by organizations such as People for Ethical Treatment of Animals (PETA), People for Animals, and personalities such as Menaka Gandhi. The repercussions are visible far and wide. Fur is already a much hated fashion accessory on the ramp, especially given that Pamela Anderson, Alicia Silverstone, and their ilk have appeared nude on cover posters and ads actively campaigning the cause of animals. Companies are falling over one another to claim that their products are “cruelty-free.” Leading beauty product companies such as Avon, Amway, L’oreal, and Estee Lauder are now shifting to non-violent testing procedures to home in on the “cruelty-free” tag.

The effect If you don’t test on animals what do you test them on? A question asked crudely, but pretty much on every tongue that is going to be affected by the rising bile against animal testing. What are the alternatives? The alternatives are computer programs that simulate the functions of a live animal or a plant tissue that can mimic the reactions produced by ani-

opportunity/well-being DARE/alternatives • Computer modeling • Embryonic stem cell test using cells derived from mice for birth defect testing • Phototoxicity test using cells grown in culture for assessing skin irritation induced by sunlight • Human skin model tests replacing rabbits in skin corrosion studies • Human skin leftover from surgical procedures or donated cadavers used for gauging absorption of chemicals into the skin • Plant tissues mimicking the reactions of a rabbit’s eye in the Draize test mal organs and human tissues to produce the actual results. These alternatives are not only non-violent, but are much more reliable, efﬁcient, faster, and cost-effective; to the extent that you are left wondering why animals have been used in the a ﬁrst place. Easy availability is the only reason why animals have been traditionally used, of course; but with the rising number of corporate healthcare and beauty product companies such as Avon, Amway, and L’oreal endorsing the cause, all that is changing now. Sympathetic detonation has taken over, and many more are following suit. Post-2013, there will be a shortfall of around 1,000 crore lab animals in the EU alone. The Food and Drug Administration (FDA) and the US Army is now using Topkat, a computer program that is used to determine the irritation and toxicity levels of new drugs. There are several other such mathematical and

computer models that incorporate various reactions of the human body to certain ailments. There are also computerized virtual organs available to test the absorption and metabolism patterns of a drug on a particular human organ before testing it on an actual person. Lately, human tissues grown in vitro, that is, in test tubes, from donated human cells have replaced animals to quite some extent in major pharmaceutical laboratories. Last year, some $800 million were spent the world over on CROs specializing in the testing of new drugs using such alternatives. Several startup companies have cropped up offering human tissue engineering solutions. Pharmagene Laboratories of Royston, England, was one of the ﬁrst few companies that used only human tissues and sophisticated simulation testing programs in place of animals for drug development and testing. It studies human genes and analyzes the effect of certain drugs. MatTek, Admet, and Xceleron in the US are a few others that grow human tissues in test kits and ship them as and when an order is placed. Given the skills of the Indian workforce in computational biology and human engineering, there is no reason why CROs already working in the arena of drug testing cannot develop their own computer simulations or human tissues for drug testing. The samples can be used either in their own laboratories or retailed to educational institutes or pharma and beauty product companies. The programs and test-kits would be like any other product, except that, they would not only be saving billions of innocent lives every year, but also bring home Rs 11,300 crore. D A R E

25 years of

our focused

VISION To expand globally in the knowledge domain through quality media products and services

DARE.CO.IN

blogs/INSEAD

Achieving entrepreneurial balance: focus without myopia It is important to be open to new experiences and ideas, then to be focused when making decisions, and then ﬂexible when executing the plan /Philip Anderson

ne of the first pieces of advice that any veteran entrepreneur will give a novice is “stay focused.” Countless ventures have failed because they were a little of this and a little of that but never became the vendor of choice for any given customer segment. Countless more have never even opened their doors because the founding team kept pursuing too many options and never followed through on one of them enough to turn it into a viable business. Certainly it’s good advice to know yourself, know what you are trying to do and focus like a laser on doing it as well as you possibly can. But consider the INSEAD case in this issue of DARE, which profiles serial entrepreneur Jayesh Parekh. As Jay would be the first to tell you, his entire career has been based on being open to the unexpected. Although Jay’s family background predisposed him to start a company some day, he launched his first venture because, as he says, “the stars were aligned.” IBM wanted him to give up his expatriate life in Singapore, and with encouragement from his wife and a friend who became his partner, he changed his career in the blink of an eye, building his first enterprise on opportunities that friends or work colleagues brought his way. A year later, the venture that made his fortune was the product of simply helping a friend, then being willing to learn about a new industry. Three years later, he discovered social ventures simply by being willing to attend a conference, then deciding to fund his own venture when he spotted a need. Most entrepreneurs I have interviewed tell me that a great deal of their success has stemmed from luck. Maybe it’s true that luck is the difference between successful and unsuccessful startups; after all, Napoleon once said that the one quality he valued above all in a general is luck. However, I tend to think they actually mean chance, not luck. They are aware that one or two 34

MAY 2008

moments in their careers made all the difference, that if a couple of events had happened one way instead of another, their fates might have been dramatically altered. Yet it seems to me that most of us have as many chances in life as are needed to make a fortune as entrepreneurs. The “lucky” ones simply recognized and seized several of them—and I’m willing to bet that even they unknowingly missed far more opportunities than they discovered. Is there a way to maximize your exposure to chances to change your life? I believe there is—and it involves losing focus in the right way at the right time. Jayesh Parekh could have said in 1994 when asked to join the venture that grew into Sony Entertainment Television, “Sorry, I’m running another venture right now and I would lose focus if I became involved in something else.” That would have been a perfectly reasonable response…that would have cost him the opportunity of a lifetime. His willingness to explore, to step outside his zone of comfort and tackle an uncertain but promising prospect, is just as much the hallmark of an entrepreneur as is “keeping the main thing the main thing.” How can entrepreneurs reconcile the need to stay focused with the need to be open to life’s unexpected breaks? I’d like to suggest that we distinguish between three different types of focus: in what we experience, how we decide what to do, and how we pursue our goals. It seems to me that a lack of focus in our experiences, combined with laser-like focus in how we choose and controlled focus as we pursue our goals will give us the right balance between chaos and myopia. The key to having “lucky” experiences like Jay Parekh’s is to look deliberately for variety in our experiences. When he heard an interesting idea for a Hindi television channel, Jay was willing to devote some time in order to see just how promising it might become. The opportunity came his way because he had built a broad and diverse circle of energetic, interesting friends. If all your friends are from IBM, the only kind of ideas you’re likely to discover are those related to IBM’s businesses. You’re certainly not going to see a seven-page business plan for a new entertainment channel. An interesting sociological theory called the “strength of weak ties” suggests that the most novel opportunities

DARE.CO.IN

blogs/INSEAD we discover come not from our friends but from friends of friends. Most things your friends know are things you also know; friends of friends are close enough to share with you, but far enough away to be exposed to different influences. And this is one of India’s great advantages: far more than China, it is a place where a lot of people are open to meeting other people they don’t know very well. I remember well the first time I visited Mumbai. The research director of INSEAD’s Rudolf and Valeria Maag International Center for Entrepreneurship then was Aparna Dogra, an ex-Reliance executive whose husband was one of my MBA students in Singapore. Three days before my trip, whose purpose was to get to know some Indian entrepreneurs and venture capitalists, our schedule was in chaos. Aparna told me not to worry, that although it was difficult to pin down meetings in India well in advance, the beauty of Mumbai was that it was easy to meet important people on the spur of the moment. “You wait and see,” she said, “one person you talk to will call another, and suddenly you’ll have an appointment that afternoon with someone you couldn’t ordinarily see without a month’s notice. That’s Mumbai.” And of course, she proved to be right. India has any number of ways in which ordinary people can meet entrepreneurial veterans who can help them. The Indus Entrepreneurs (TiE) is one. NASSCOM is another, for those in the IT sector. If you know someone who has graduated from a good university, whether in India or abroad, you can take advantage of the extraordinary connections that batchmates maintain throughout their lives. There really is no excuse for an Indian not to come across dozens of opportunities per year, if he or she simply is open to meeting many different kinds of people and taking advantage of the rich social mosaic that is India. Staying too focused on what you already know or who you already know is precisely the wrong thing to do. In contrast, absolute focus is required when deciding how you are going to evaluate the many opportunities you uncover. First, you have to know what you love to

do, what you do well because you truly enjoy it. Second, you have to know when and how you bring value to other people. The two partners who asked Jay Parekh to help them didn’t need a television industry expert. They needed someone who exuded professionalism, who walked and talked like an IBM veteran. Usually, people don’t help you just because they like you—they help you because they value ways in which you have helped them or can help them in the future. Decide how you can be of most value to others and hone the skills, knowhow, and other resources that cause people to seek you out. When an opportunity comes along, ask yourself whether you truly can add value to those who would turn it into a business. Then ask yourself what you will stop doing in order to make time for it. When people don’t fulfill their promises, it is usually because they have made too many of them. If you agree to take on something new, you must have the mental strength to drop something you are doing that is less valuable. Otherwise, you end up unfocused because you never devote enough time to any one thing to do it as well as is necessary to succeed. Finally, employ controlled focus as you pursue your goals. Often when you try to execute a plan, things work out, but in a different way than you had planned. Ruthless execution means you will not be deflected from your goal, but you can be quite flexible in how you get there. Notice what’s working and what’s not, and follow up vigorously when something succeeds unexpectedly. Rigidly pursuing just one path to your goal regardless of what you learn is not focus: it is tunnel vision. Entrepreneurs are focused, but not at all times in all ways. If you are open to many experiences, even those outside your present scope, then are focused when making decisions while staying flexible when executing a plan, you’ll strike just the right balance. “Stay focused” is great advice—as long as you think critically about what DAR E it really means. INSEAD Alumni Fund Professor of Entrepreneurship, Director, Rudolf and Valeria Maag International Center for Entrepreneurship and Director, 3i Venturelab

SMS “DARE <your comments, questions or suggestions>” to

56677 or Email us at dare@cybermedia.co.in MAY 2008

DARE.CO.IN

strategy/ﬁnance When you say that you’ll give your employees Rs 6 lakhs as salary, you put that as a ﬁxed cost. But when you hire that employee there will be further expenses like his food bills, travel bills, you’ll have to take him out for motivational activities. These are the other indirect expenses; the cost of employee is just one side of it. If you don’t factor that in, your burn rate would be much higher than you expected. — Harpreet Grover Co-founder, Cocubes

Mind That Burn! Budgeting for startups is about achieving the ﬁne balance between conserving precious resources and reaching the market ahead of others /Chhavi Tyagi

hat the life of a startup is beset with problems is no secret. But perhaps the most fundamental of the problems is managing its limited resources, especially money, wisely. Every startup faces a period in its early life when it spends money from a depleting stock, with very little of the resources coming back as revenue.

36 MAY 2008

If your planning and expectations turn out to be wrong, you can always raise more capital. However, there is only this much of capital that you can raise, whether it is from personal sources or from professional resources like funds and investors. Indeed, a company that has not been able to meet its original revenue generation

may not be everybody’s favorite to get funding. From the point of view of the entrepreneur, borrowing more and more money from outside when you aren’t even sure if and when you would be able to pay it back will bring with it a new set of problems. The rate at which a firm, typically a startup, uses its cash while striving to grow its revenues to match and exceed its expenditures is called the ‘burn rate’—similar to the rocket-science equivalent used to make sure that the rocket burns just enough fuel to keep it on its track, but not so much that the fuel will run out before hitting the orbit. Of course, managing cash flow is crucial to any business, but for a startup it is a matter of life and death as inflows tend to be few and far between, while expenditures like salaries keep increasing. While a mature company can bring back some balance by trimming its expenditures to match with its revenues, for a startup, there are usually no inflows by which to balance out its outflows. If a startup spends its funds too slowly, it risks allowing a more aggressive and well funded competitor to capture the market through faster development or bigger marketing. Early consumption of cash leads to a shortage, while too much dithering affects the competitiveness, scaling up of the business, etc. In one case, the firm crashes to the ground before it even hits the orbit and in the other, it reaches so late that the market is already crowded. So how do you make optimum use of cash without compromising on essential expenses? There are broadly two ways to ensure that the burn rate remains optimal and your company does not run out of resources mid-way, nor

DARE.CO.IN

strategy/finance does it expend its resources so slowly that its competitors steal the thunder before it is able to hit the market. The first secret is planning—make sure you have worked out estimates well before you even start out. The second is to make sure that you avoid unnecessary expenditure and conserve resources, and, just as important, you leverage all additional sources of income, even at the so called ‘pre-revenue’ stage. The first thing to do is to try to foresee as many expenses as possible—draw up a budget of the expected expenses and incomes, if any. Mostly, there will be more outflows than inflows, but there may also be other situations—including an early spurt of revenues followed by a dry period. Therefore you have to do an analysis of all the probable situations that your business can face. Making more than one budget could be an answer; there could be a pessimistic budget, an optimistic one and one based on the current market trends. This strategy makes you ready to face any situation that may arrive in the course of the business. Amit Chopra, a practicing financial consultant says, “The most primary thing for a startup is to make a budgeted cash flow statement. And in doing that, a conservative approach serves well. In the initial days receipts may not come, but that notwithstanding, payments have to go. A startup cannot afford to delay payments as it needs to build a healthy relationship with its vendors." Therefore making a provision for all the expenditures in the beginning sounds like a good idea. Harpreet Grover, Co-founder, Cocubes speaks from his experience when he says, “Initially when you start upfront and you think you’ll need x amount of money, multiply by that by 1.5 and you would be fine”. However to put a cap on your expenses first you should have an estimation of the expenses that you would be required to make. In this too, direct expenses are easy to remember and plan, but what actually eats into the cash are hidden or indirect costs. Grover explains this with an instance, “When you say that you’ll give

your employees Rs 6 lakhs as salary, you put that as a fixed cost. But when you hire that employee there will be further expenses like his food bills, travel bills, you’ll have to take him out for motivational activities. These are the other indirect expenses; the cost of employee is just one side of it. If you don’t factor that in, your burn rate would be much higher than you expected." And these hidden expenses are attached to all the business activities. For example, as Grover puts it, “Much before you calculate the indirect expenses of employees you must factor in the hiring cost of those employees, as even hiring for one position takes about 50 interviews. Every time you meet a prospective employee in a CCD or somewhere else, you drink coffee, s/he drinks coffee. That is Rs 200 spent every time. And for all the interviews taken together it accumulates to a huge sum of Rs. 10,000." There are several such expenses that a startup never takes into account and therefore they do not find their way in the preliminary budgets. They become noticeable only when the cash statements start showing deficits. Thus, you would do better to factor all of it in before you start making provisions.

Tighten the belts, find new doors to knock The most obvious way to make sure that a limited resource lasts for a long time is of course to use it as sparingly as possible. However, the answer is not to cut down blindly, but smartly. Another often overlooked aspect of managing cash flow is to explore avenues of generating cash as a startup, however impossible it may seem at first. Startup days are all about making smart compromises. Everything offers ways of creative cost-cutting, right from the beginning—hiring and infrastructure are the two most obvious examples. Most startups generally go on a hiring spree initially and it is only later that they realize the huge expenditure that it has become. In order to rectify their mistake they may start handing out pink slips to the employees. Apart from spoiling your reputation as an

HEAR IT FROM THE HORSES’ MOUTH “You should always go for a pilot before going the whole hog. Instead of manufacturing all the 200 machines at one go and then marketing them, make 20 and evaluate the response.” Amit Chopra, a practicing financial consultant “There are two ways of doing it. Either you are funded or you have lots of money in your bank account and you start burning it or you create the money this month that you are supposed to burn in the next.” Mrutyunjay Mishra Director, JuxtConsult “If overall you think you need five, start with ten. But also keep in mind that if you need five you probably would be able to raise just four, be prepared for this too.” Harpreet Grover Co-founder, Cocubes employer it is also a wastage of your resources as large sums are spent in the hiring procedure. What becomes necessary thus is to gauge your requirement beforehand and then hire people. As a startup you always have an advantage in that prospective employees are aware that there is going to be a great mismatch between the work flow and the workforce and that it is they who would have to shoulder the responsibility. One way MAY 2008

DARE.CO.IN to achieve this willingness from employees is to make them a part of the project like instead of giving a high salary to the employees why not give them a share in the stock of the company? Sometimes it may happen that you do not have enough cash with you to even accommodate your existing workforce. In times like these many startups start reducing the number of employees, which in turn affects the work flow of the company and thus the profitability. These startups generally get caught up in a vicious circle from where it gets hard to stay afloat. Therefore instead of cutting down you can take your employees into confidence like Mrutyunjay Mishra, Director, JuxtConsult did. “Once we did not have any money left with us to pay our employees. Then we held a meeting and put a simple question to them: Is it okay with you guys if you do not get your salary for this month? We offered to get a soft loan from our promoters to do the pay up but then we had fine guys working with us and they said they’ll manage without a salary for that month,” he shares. Office infrastructure offers another great opportunity to control your outflow. Instead of going for a swanky office, which is going to cost a bomb considering the realty price, it is best to make do with what is available. Take the examples of Mishra and Grover. One got his office registered from a basement, half of which was a warehouse, and the other did not buy any commercial space to start his office but started from a room in his house. Many startups start their operations from houses and go for a commercial space much later. In this scenario hiring a chartered accountant to handle your accounts seems like a luxury. While some startups believe they did right to invest in a CA and that it was more than worth it, there are some who think that startup finances are just plain common sense. Hiring a CA becomes more of an individual choice. Apart from all these ways to control your outflows, you should also think of keeping your revenues at pace with the outflows. One good way of ensuring this 38 MAY 2008

strategy/finance In the initial days receipts may not come, but that notwithstanding payments have to go. A startup cannot afford to delay payments as it needs to build a healthy relationship with its vendors. — Amit Chopra A practicing Financial Consultant is to have at least one client in hand even before you start operating or even get a commitment from them. Before a product is launched or a service is planned there are numerous market surveys that are done to find out the need for the product/service that you are planning to offer, to calculate the number of buyers for it. All these steps are taken to ensure that the product/service becomes a success. Likewise, it makes good sense to start your operations with ready clients so that you know where your first cheque is coming from. At times when there are limited means of inflows and it becomes hard to keep pace with expenses, client advance becomes an important source of cash inflow. However, the real trial is getting clients who are willing to offer you an advance. Agrees Mishra, “Fifty percent advance is a term we kept harping on and without it we just didn’t work. Sure it wasn’t easy to get clients who were willing to pay 50% in advance, but we also weren’t willing to work without this advance unless very critical. We were confident that we would get clients as there was nothing unprofessional in our terms."

Wikipedia defines burn rate as: Burn rate is a synonymous term for negative cash flow. It is a measure for how fast a company will use up its shareholder capital. If the shareholder capital is exhausted, the company will either have to find additional funding or close down.

Negotiation power does not only help in getting an advance on payments, but it is also an essential tool when it comes to vendors. “During the startup days we were in need of four computers because of which the likely expenditure was coming to two and a half lakhs. Negotiations with suppliers lead to an understanding where we could take the computers for the ﬁrst three months on a rental of Rs 2,000 and in the fourth month we paid the entire cost of the system. This way the vendors, by delaying their payment, got Rs 6,000 extra and we delayed our burn out and could create other infrastructure that we wanted like Internet access,” explains Mishra.

And Finally... Though burn rate is a common state confronted by startups in all the industries, the individual character of each industry makes for different dynamics. The same rules would apply to a startup in the manufacturing business as to a startup offering a service. However, a manufacturing startup involves more complex operations and the risk of being caught in the cycle of negative burn rate gets higher in this industry. Therefore, for the manufacturing industry, sooner or later, borrowing capital becomes the only option. Taking all these factors into consideration, there is a big difference when it comes to managing cash for a manufacturing venture than one in the service industry. “A startup in the manufacturing business has to deal with lots of complex dynamics. There is the possibility of the product becoming redundant, technology going obsolete by the time your product hits the market. And there is always that problem of acquiring raw material as and when required,” says Chopra. As Narayana Murthy sums it up in the ﬁrst issue of DARE, “In services, two principles are very important. Have an idea which is so good that the customer is willing to pay advances. Secondly, create milestones every month so that there is a steady cash ﬂow. If it is a product idea, then obviously you need venture capital”. D A R E

INNOVATION

DARE.CO.IN

PC Laundry

Armed with a homemade cleaning cream and a team of six, Umesh Sainani from Mumbai is riding on a captive and still untapped service base of millions of PCs /Binesh Kutty

ne can sense the modesty when Umesh Sainani says, “This is a very small business that I am up to…” Sainani runs Amba’s Computers Cleaning and Polishing from Sion, a busy suburb of Mumbai. Like the name suggests, he is in the business of ‘polishing’ PCs in ofﬁces in the city.

The start Three to four years back, Sainani was at the ofﬁce of a friend. The PC of this friend was in a pretty messed-up state, in terms of cleanliness. His friend, in dismay, asked Sainani if something could be done to make it all spic and span. One would have passed this as general whining, but Sainani was already seeing a business potential in that small talk. The next thing this graduate, who had no knowledge about chemicals, knew was that he was experimenting at home. The target was to make a cream that could change the face of a dingy PC. Turns out, it was only a matter of time and lots of failed experiments. In about six months he had brewed the perfect homemade recipe to make dirty computers shine.

Rolling out the business The funds that were required to start off came from his own pockets, as mentioned by Sainani. The next step for Sainani was to procure customers for his business. Big corporate ofﬁces, call centers, management schools,

movie halls… places that housed a good number of PCs, formed to be his target customers. He adopted the method of cold calling offices and requesting them to let him give them a free demo of his service. “Once they see the demo and the results,” says Sainani, “they are always ready to give me a contract.” Customers also came through references from friends to do up the PCs at their offices. The business was starting to gain momentum at this point. Word-of-mouth started working for him. The time had come for him to increase his manpower. For this purpose, he got some students from his locality to work for him. Sainani trained these students to develop a skill to clean the computers like he does. With human resource in place, Sainani started giving more demos and taking more orders. Sainani now has a decent customer base that includes 15 big offices, and 20-25 small offices. For these customers, Sainani holds a contract of cleaning the PCs once every month. Ask him how much he charges for his services, and Sainani replies, “It really depends from company to company. In a setup of 50 plus PCs, the charge could be around Rs 5,000.” Besides cleaning and polishing computers, Sainani also offers the service of cleaning the likes of air conditioners, fans, windowpanes, etc. “I can even get rid of permanent marker stains,” he proudly informs.

Challenges in the business Like many startups, Sainani too faces the problem of procuring and retaining human resources. Then there is the problem of an order being feasible. Sainani explains, “I do not service individual computers or an ofﬁce with less than 50 computers, as it is simply not feasible for me to travel all the way to clean just one computer.” With existing customers, timings also get taxing. “At multiplexes, they typically want me to clean the PCs in the morning at eight, before opening the counters,” says Sainani, “While at many ofﬁces they want us to come in after eight thirty in the evening.” As mentioned by him, in this business the timings are allocated by the customers and not by him.

What the future looks like Sainani has a dream to take his business to the next level, and he is already working on it. In terms of expansion, he plans to set up branches in Pune and Nasik within the next one year. A couple of years back, a company offered Sainani to help in setting up franchises for his business. Back then he was not fully prepared to go out in a big way. He explains, “If I took orders and could not service them properly, it would not have been a good thing for my business.” With the waters tested now, he is all set with more ideas on his mind to grow both horizontally and vertically. He is currently looking DAR E for funds. Any takers? MAY 2008

DARE.CO.IN

society/agri

Big Bucks in Farm Banks

Increasing productivity of major food grains by 10% can help deal with the impending food crisis. Can entrepreneurs take up the social cause of promoting community farming to boost yield, while making proﬁts? /Vimarsh Bajpai

f late, stern warnings on food security and prices have been pouring in from the highest echelons of the government and international organizations. At the Global Agro-Industries Forum (GAIF) in New Delhi on April 9, the Director General of the United Nation’s Food and Agriculture Organization (FAO), Jacques Diouf, talked of serious global shortages of rice, wheat and maize even as the world food prices have risen by 45% in the last nine months. At the same conference, Prime Minister Manmohan Singh linked the steep rise in food prices in India to macro-economic stability saying, “We are once again faced with a situation where rising demand for food grains and other food items is running into supply constraints, both domestically as well as internationally.” A food crisis is hitting the world hard, and can have serious repercussions for developing countries such as India and China, which together have more than 2 billion mouths to feed. Food riots are raising their ugly heads in poor countries such as Haiti, Cameroon and Ivory Coast leaving scores dead and injured. The call to contain the situation has also come from the European Union, which has warned

40 MAY 2008

of a “humanitarian tsunami.” According to estimates, grain stocks globally are at their lowest in 30 years, and 36 countries are said to be facing a major food crisis, of which over 20 are in Africa alone. Although India is in the safe zone as of now, compared to many other countries, but it cannot insulate itself for too long in today’s era of globalization. Inflation is hitting the common man hard, and is giving poll-bound UPA government sleepless nights. Prices of rice have risen 20% in the last one year, while that of wheat have gone up by 8%. For the week ended March 29, inflation hit a high of 7.41%, which is the highest since November 8, 2004. The relief though is that the weight of food products in the wholesale price index (read inflation) is around 22%, while that of manufacturing products is around 64% and that of fuels is around 15%. During 2007-08, the agriculture, forestry and fishing sector is likely to grow at 2.6% only, as compared to 3.8% in 2006-07. Almost stagnant productivity, low levels of investment and unpredictable climatic changes are being held responsible for this. This has not happened over a day, but has crept in slowly. The growing population in Asia, particularly India

DARE/second green revolution PM’s call for Second Green Revolution We need a Second Green Revolution. We need new technologies, new organizational structures, new institutional responses and, above all, a new compact between farmers, technologists, scientists, administrators, businessmen, bankers and consumers. The global community and global agencies must fashion a collective response that leads to a quantum leap in agricultural productivity and output so that the specter of food shortage is banished from the horizon once again. I believe that farming is increasingly becoming an unviable business proposition for many rural households. Small and marginal farms have become an unviable proposition. We therefore need to make farming viable at this scale. and China has led to an unprecedented demand for food. Crop failures can also be blamed besides the increase in production of bio-fuels. India’s productivity has almost stagnated. Poor storage and transit facilities have also led to shortages.

Increasing productivity To meet the food demand of its growing population, India will have to increase productivity. With more than 60% of our population involved in agriculture, the government can ill-afford to ignore the primary sector. The Green Revolution of the 1960s saw the introduction of high-yielding varieties of seeds and better use of fertilizers and irrigation. No doubt it made India self-sufﬁcient in food grains and reduced our dependence on imports, but it seems to have lived its course. “We need a Second Green Revolution. We need new technologies, new or-

DARE.CO.IN

society/agri DARE/food grain cultivation Food grain Rice Wheat Jowar Bajra Maize

Area under cultivation

Production

42.85 26.2 9.24 9.34 7.12

85.72 69.73 7.22 8.15 13.64

Productivity (kg/hectare) 2001 2662 782 872 1916

Area: Million Hectare Production: Million Tonnes Yield: Kg/Hectare ganizational structures, new institutional responses and, above all, a new compact between farmers, technologists, scientists, administrators, businessmen, bankers and consumers,” the Prime Minister said at the GAIF. To usher in the Second Green Revolution, DARE suggests increasing productivity by 10% of all major food grains. We take the example of rice, wheat, jowar, bajra and maize. Their average productivity has been 2001 kg/hectare, 2662 kg/hectare, 782 kg/ hectare, 872 kg/hectare and 1916 kg/ hectare respectively. The total average annual production of these food grains has been 184.46 million tons. If their productivity increases by 10%, it could make a huge difference to the overall food production. Not only this, increase in production would also mean huge monetary gains for farmers. The big question is who will bell the cat? Making agriculture viable is the need of the hour, but other steps such as community farming, crop rotation, increasing crop density, multiple cropping, improvement and renewal of seeds and better agronomic practices would also be needed. Let’s focus on the opportunity of creating farm banks and the use of mechanized agricultural practices.

Farm banks The total average area under cultivation for major crops under review has been 94.75 million hectares. According to some estimates, despite high growth, the average yield in India is generally only 30-50% of the highest average yield in the world. This is

Prices per quintal (as on 17.4.08)

Value of produce (Rs) (as on 17.4.08)

Productivity (up 10%)

Production (up 10%)

1000 1090 1100 675 640

10,000,000,000 10,900,000,000 11,000,000,000 6,750,000,000 6,400,000,000

2201.1 2928.2 860.2 959.2 2107.6

94.292 76.703 7.942 8.965 15.004

Value of produce (Rs) (after 10% increment) 11,000,000,000 11,990,000,000 12,100,000,000 7,425,000,000 7,040,000,000

1 quintal = 100 kg 1 million ton = 1,000,000,000 kg Assumption: 10% increase in production dismal given the fact that a massive chunk of India’s population depends on agriculture.

The concept Most farmers in our country have small holdings that keep a lot of land unutilized or underutilized. After the abolition of the Zamindari system, under which one person or a single family held large swathes of land, agricultural land got divided into small blocks across the country. The Zamindari system was marred by large scale persecution of poor farmers, who worked mostly as bonded laborers under greedy moneylenders. Also, the decline of the joint family system further led to division of agricultural land. Can we now look at reposing trust in each other, and work towards community farming? Farm banking or community farming would involve pooling land together and treating it as large single unit. This would help bring more land under cultivation, and thus lead to rise in productivity. The National Bank for Agriculture and Rural Development (NABARD) is said to have recently announced its plans to introduce community farming, which would involve consolidating several small land holdings in Andhra Pradesh. It is believed that the scheme would strive to boost the per capita income of small farmers.

The ground work Exceptional leadership qualities to get people together to pool in their farms are needed to make the farm bank concept a success. In a society deeply di-

DARE/agri-prescription • • • • •

Farm banks Crop rotation Multiple cropping Improvement and renewal of seeds Increasing crop density

vided on religious and caste lines, this would not be an easy task. Removing barriers between small farms would make huge chunks of land available for cultivation. The second step after pooling in the farms together would involve using best agricultural practices. Thanks to the superb advances in the ﬁeld of plant breeding, biotechnology, plant genetics and physiology, and soil science, there is plenty of scope for putting these to use. Good agronomy practices are also linked to crop rotation, irrigation, and pest control.

What’s in it for me? At Rs 1,000 a quintal, the value as on April 17, 2008 of rice produced (85.72 million tons) was Rs 1,000 crore. Presuming that the production jumps by 10%, this would rake in a whopping Rs 1,100 crore! The gains for an entrepreneur would come in the form of an effective revenue sharing model. An entrepreneur may take a share of the pie with the rest getting distributed among farmers, who are the major stakeholders. This can be replicated for all major food grains. With a potential food crisis on the horizon for India, the solution for hunger is in increasing productivity and DAR E making stakeholders richer. MAY 2008

DARE.CO.IN

opportunity/funding

How much should you ask your VC for? This piece explores how to calculate the venture capital infusion required for running a proﬁt-making company. What we discuss here is one possible approach. There are many others /Krishna Kumar

onsider this scenario: You have been running your own setup for some time now, say fourfive years, and have a decent product and a decent client list. Cash-flows are not that great, but are manageable and you make decent profits too. You have heard a lot about venture capital and are tempted to approach a potential funder. The question is, how much do you ask for. This piece will attempt to convert the black art of determining how much to ask your venture capitalist into understandable thumb rules. But before that, a disclaimer—the numbers I have used are only for illustration and will vary depending on industry, stage of your business, state of the economy and so on. Before we get into the calculations, you need to be clear about some basics. Firstly, we are not going to be bothered so much about turnovers and profits as much as we are going to be bothered about valuation. While valuation is linked (in some unseen, complex way) to these two numbers, it is a completely different beast. Valuation

“ The three reality checks you need to do before venture funding are the rate of return the VC gets, the need of the VC to exit and the options available for the same and ﬁnally, the stake you would be left with after the VCs's exit. 42

MAY 2008

The name of the game is valuation. Valuation may have nothing to do with your actual turnover. It depends on the industry you are operating in, your proﬁtability prospects, clients you have, intellectual property you own and so on.

”

opportunity/funding

DARE.CO.IN

is the amount someone will pay to buy your company, lock stock and barrel, and is best expressed as market price of a share in your company x total number of shares. It also takes into account factors like future prospects, brand value, etc. So, how do you find out the value of your company? Assuming that you are profit-making, a quick and dirty estimate of your value can be had from the P/E ratio (share price/ earnings per share) of listed companies in your sector. For example, let’s say that the average P/E ratio of your industry is 24 and that you have a profit afThe infusion of capital (funding) into a running, profit making business, should increase its valuation by ter tax (PAT) of Rs 1 crore a significant amount over a thre to five year time frame and a share capital of Your current earnings per ten rupee valuation of Rs 72 crore, assuming the Rs 50 lacs. same P/E. So, in your case, price per share/ share = Rs 1 crore/(50 Lac/10) = Rs 20. The whole premise behind the inThus price per share/20 = Rs 24. earnings per share = 24. Therefore, expected price per share jection of venture capital is that you are not happy with this Rs 72 crore = 20 x 24 = Rs 480. Therefore current value of your com- valuation five years down the line, and want to increase it manifold. The inpany = 480 x 5 lac shares = Rs 24 crore. Note that we have taken an jected capital will be used for achievindustry average P/E. Depending ing this. Time to start dreaming! How much on how conservative or aggressive you want to be, you can take a P/E do you want the valuation to become? at the higher or lower end of the indus- Let’s say that your target is Rs 500 crore (this has to be many times the current try spectrum. There are a couple of other things projection of Rs 72 crore for the VC you can add at this point to increase route to be successful). Assume for the time being that the valuation. These include a value for any brand name you have created, funds’ infusion happens not by ina value for marquee clients you may creasing the number of shares, but by have, value for any intellectual prop- increasing the face value per share. erty you may have registered in the This assumption makes calculations company’s name and so on. For pur- easier; we will correct this later on. poses of simplicity, I am ignoring these Our last equation now becomes Rs 500 crore = market value per share x 5 additional valuations. Now, if business were to continue lac shares. Therefore market value per as usual, where would your company share = Rs 10,000 At the P/E level of 24, 24 = 10,000/ be five years down the line? After detailed calculations, let’s assume that EPS. So the expected EPS to meet your your company would be doing a profit target valuation = 10,000/24 = Rs 417. For this EPS, the profit after tax has of Rs 3 crore on the same capital base five years from now. This converts to a to be 417 x 5 lac = Rs 21 crore

“

You need to provide an exit to the investor through an IPO, or a strategic sale. Indian entrepreneurs are increasingly open to a strategic sale as a way of unlocking the value in their company, and in increasing their personal wealth

”

MAY 2008

DARE.CO.IN

opportunity/funding

Thus, your dream actually is to achieve a PAT of Rs 21 crores five years from now. That is, as against a business as usual PAT of Rs 3 crores, you want to achieve seven times that. A quicker way to calculate this is (500/72) x 3. What needs to be done to achieve a PAT of Rs 21 crores? Time to get back to your spreadsheets and rework the numbers. Typically, you would need more marketing money, more manpower to create and service your products, money spent on product development, infrastructure and so on. Let’s assume that after the calculations you figure out that the investment required for this is Rs 25 crore. Now that is the amount you are going to ask your VC for. At this point you will also know whether you need to approach a VC, an angel or a PE fund. If the investment requirement was, say, under Rs 5 crore, then you would be better off approaching a group of angel investors. On the other hand, if your need is in the hundreds of crores, then a PE fund should be your target. We are not through yet. We need to do a reality check on these figures.

Reality check 1: Rate of return If a VC infuses Rs 25 crore for a 15% share in the company, the total value of the company at present becomes 25 crore/15% = Rs 167 core, the value of your part of the shares become Rs 142 crore, and the number of shares of ten rupee face value is now 2.55 crore and not ﬁve lacs! Now, before you go bleary-eyed at these ﬁgures, relax and take a deep breath. These numbers are not real, or at least not yet. Assuming that the business performs

“

If you ﬁnd the calculations too complex, e-mail us at

dare@cybermedia.co.in and we will send you a spreadsheet with all the steps and formulae

”

according to plan and in five years, you reach the targeted valuation. What’s the value of the VC’s share? 15 % of 500 is Rs 75 crore. Thus, his investment of Rs 25 crore over 5 years fetches him Rs 75 crore. His rate of return, assuming no dividends or change in share capital or holding pattern 200% over five years or about 40% annual. Now that is just about attractive for a VC who typically looks for annualized returns of 30-40 % plus. If it does not work out that way, we need to make our project attractive enough. We can either see how to increase valuation further with the same investments, figure out how to produce the same value with a lesser investment or alternatively, reduce some of the conservatism in our calculations (re-

member that we had taken the industry average P/E in our calculations).

Reality Check 2: Exit options For the VC to be able to exit your company at the end of the term is important. That is the only way he can get his returns. And the preferred modes of exit are either an IPO or the company being sold. At the end of the ﬁve years, would your company be big enough for an IPO? At the point of exit, the value per share is (Rs 500 crore/2.55 crore) = Rs 196. Take a hard look at market capitalizations in the BSE. Even before the current downward ride, there are not too many listed companies with a marcap of around Rs 500 crore and having that kind of a share price. So, either you aim for a much higher valuation in the stock exchange or, more likely, you will have to provide an exit for your VC through the sale of your company. Key question: Are you ready for such a sale? Or are you emotionally too bound to your creation? Are there likely buyers in the horizon?

Reality Check 3: Self interest At the end of the period, you should still have enough of a share in the company to retain a controlling interest. Unless the valuations are really large and you go the IPO route, offering a small percentage to the public, what this means is that you should have a majority stake even after a couple of rounds of investments and an IPO. So, if an early stage investor asks for, say, 50% of your company, then you need to think really, really hard before sayDAR E ing yes to it.

SMS “DARE <your comments, questions or suggestions>” to

56677 or Email us at dare@cybermedia.co.in 44

MAY 2008

DARE.CO.IN

strategy/startup

How to save electricity in your ofﬁce From little nip-tucks to a complete shift, a lot can be done to slow down that manically racing meter /Binesh Kutty

hen 2.2 million homes and 2100 businesses in Sydney turned off their lights for one hour on March 31, 2008, it reduced the city’s energy consumption by 10.2% for one hour. Just to give a better perspective, that is equivalent to taking 48,616 cars off the road for a year! Looking at the impact, Earth Hour 2008 saw 24 global cities participating, which included 286,000 people and over 20,000 businesses. While you are reading this piece, hundreds of companies and individuals are signing up, by the minute, for Earth Hour 2009. That’s just about global warming. There’s also something closer to home—electricity consumption burns

a big hole in the pockets of businesses. The good news is that there are things that you could do to slow down the manically racing meter.

Air conditioning optimization The most obvious cost-cutting can happen by using ceiling fans instead of air conditioners whenever possible. The differential in operating cost is approximately 30 paise per hour for fans as opposed to Rs 10 for air conditioning. Replacing the metal blades of a fan with ﬁber blades can save 20% energy overall. However, if air conditioning is all that you have, each degree set above 22° Celsius will use 3-5% less energy.

The recommended temperature to set the thermostat at is 25° Celsius, which is both comfortable and cost efficient. Further, going for multi-coated glazing windows helps in restraining cool air escape. It is also advisable to install weather-strips under doors, windows, and ducts to avoid air leakage. Getting multiple coated glazes on glass windows also reduces air conditioning energy usage by about 40 percent. It also helps to install green meshes on west facing windows and doors, so that it blocks direct sunlight heat and reduces the load on the air conditioners. This can be uninstalled in winters to let sunlight come in and reduce the need of heaters. Many businesses also have a large number of plants with drip irrigation, which helps to reduce the heat as it increases moisture in the air. For those who are planning on installing air conditioning in new offices, it is advisable not to go for centralized air conditioning. The reason, says Lipika Sud, Honorary Secretary, Indian Institute of Interior Designers (IIID, Delhi), “Because it is a single unit, it has to be run for the entire office, irrespective of selective places where it is required after normal work hours. I would definitely recommend split air conditioning, which allows you to cool specific pockets where the cooling is required.” Besides this, cleaning the filter of air conditioners enables quick cooling while being energy efficient.

Backup equipment basics “The rule of the thumb,” says Pratik Chube, Country Manager, Emerson India, “is to take high efﬁciency prod-

DARE/electricity hogging elements • Air conditioning • Backup (generators, UPS, etc) • IT components (PCs, data centers, etc) • Lifts/elevators • Lighting systems • Refrigeration • Water puriﬁcation 46 MAY 2008

DARE.CO.IN

strategy/startup LIPIKA SUD

Honorary Secretary, IIID

Centralized air conditioning is a single unit, it has to be run for the entire office, irrespective of selective places where it is required after normal work hours. I would definitely recommend split air conditioning, which allows you to cool specific pockets where the cooling is required ucts. This depends on what the utilization of the product is going to be. You should map and synchronize the products efficiency to manage the load.” For a new setup, there are three basic assessments when it comes to buying power backup solutions. First, it should be a reliable solution, which means that it should not disturb critical continuity. Second, it should have scalability, so that the solution is future proof and can be incorporated without making legacy equipment defunct. Third is that one should not look just at the capex (capital expenses). The payback time should be quantifiable in terms of productivity or in finances. The generator, as a solution for power backup, has many inherent flaws. The biggest drawback being that it cannot withstand a strong surge in current. Typically, when any electrical equipment starts, it uses current that is three times more than what it takes after it has started. Furthermore, irrespective of the load, the consumption of power by a generator is constant.

DARE/ITC green center HOW THEY SAVE ON POWER It is the largest building in India that has been awarded the highest rating of Platinum by the US Green Building Council. It saves over 50 per cent in energy costs compared to conventional buildings. All that glass you see on the building? It’s special e-glass, which filters out all the heat and noise, but not the light. The roof is coated with special high-reflectance ‘albedo’ paint. These two features alone are responsible for the building’s 375-ton AC plant as opposed to the 500-ton plant that was initially suggested. Walk into the large atrium and you immediately notice the absence of artificial lighting. This is possible because of the large skylight and windows surrounding the atrium. Also in the lobby is a touchscreen terminal, listing out ITC’s Green initiatives. Looking at a typical office inside the building, full-length glass ensures ample light. The electrical lights meanwhile have sensors, and will come on only when needed. Niranjan Khatri, GM of ITC’s WelcomEnviron initiatives explained, “An office building built using conventional methods is a ‘sick’ building.” Studies have also shown that working in natural light increases productivity and reduces lethargy. If employees fall ill regularly or are not at their productive best, the company actually pays for it through lifecycle costs. This kind of health cost has not been quantified yet. The Green Center however, uses special carpets and paints with low VOC (volatile oxide compounds). CO2 sensors refresh air if needed. A more productive workforce leads to greater profitability in the long run. The rooftop houses the solar power water heating system with a 4000-liter tank. Outside, all lights are capped to prevent night sky pollution. This is out of respect for nocturnal bird life and astronomers who find it difficult to view stars because of the excessive light given out from a city.

Moreover, there is a lot of pilferage that happens in procuring fuels, and there is an added cost on employing a person to manage it. Generators emit a lot of carbon, which is unhealthy. The trend off late is shifting from generators to invertors, and other alternative backup solutions.

IT and electronic components best practices Did you know that a computer that is on for 24 hours uses more power than

an energy-efﬁcient refrigerator? Near about 50% of power is hogged by the monitor alone. Setting up a company wide policy to switch off the monitors of idling workstations can help you curb a lot of wastage. Approximately 40% of energy costs can be cut down if one were to put computers and peripherals like printers and copiers on sleep mode when not in use. Electronic devices, such as battery chargers for laptops, phones, cameras, etc, keep drawing power if plugged in. MAY 2008

DARE.CO.IN

strategy/startup

DARE/ten commandments for data center energy efficiency Emerson’s Energy Logic is a vendor-neutral roadmap for optimizing data center energy efficiency that starts with the IT equipment and progresses to the support infrastructure. In a 5,000-square-foot data center model based on real-world technologies and operating parameters, the following 10 Energy Logic strategies freed up two-thirds of floor space, one-third of UPS capacity and 40 percent of precision cooling capacity. 1. PROCESSOR EFFICIENCY A typical thermal design power (TDP) processor in use today is between 80 and 103 watts (91 W average). For a price premium, processor manufacturers provide lower voltage versions of their processors that consume on average 30 watts less than standard processors. In a 5,000-square-foot data center modeled for testing, these versions create a 10 percent reduction in overall data center power consumption. 2. POWER SUPPLIES As with processors, many of the server power supplies in use today are operating at efficiencies below what is currently available. Best-inclass power supplies are available today that deliver efficiency of 90 percent. Use of these power supplies reduces power draw within the data center by 124 kW or 11 percent of the 1127 kW total. 3. POWER MANAGEMENT SOFTWARE Data centers are sized for peak conditions that may rarely exist. In a typical business data center, daily demand progressively increases from about 5 am to 11 am and then begins to drop again at 5 pm. The inbuilt power management features are disabled because of concerns regarding response time; however, this decision may need to be reevaluated in light of the significant savings this technology can enable. Assume that the idle power draw is 80 percent of the peak power draw without power management, and reduces to 45 percent on enabling it. With this scenario, power management can save an additional 86 kW or eight percent of the unoptimized data center load. 4. BLADE SERVERS Blade servers consume about 10 percent less power than equivalent rack mount servers because multiple servers share common power supplies, cooling fans and other components. More importantly, blades facilitate the move to a high-density data center architecture, which can significantly reduce energy consumption (by around 20%). 5. SERVER VIRTUALIZATION Implementing virtualization provides an incremental eight percent reduction in total data center power draw for the 5,000-squarefootfacility model. 6. COOLING BEST PRACTICES Best practices, such as the hot-aisle/cold-aisle rack arrangement; sealing gaps in floors, using blanking panels in open spaces in racks, and avoiding mixing of hot and cold air, helps in cutting down power consumption. Computational fluid dynamics (CFD) can be used to identify inefficiencies and optimize data center airflow. Additionally, one could enable temperatures in the cold aisle to be raised if current temperatures are below 68° F, and also raise chilled water temperatures from 45° F to 50° F. These practices alone reduce overall facility energy costs by one percent with virtually no investment in new technology. 7. 415V AC POWER DISTRIBUTION In most data centers, the UPS provides power at 480V, which is then stepped down via a transformer, with accompanying losses, to 208V in the power distribution system. Converting UPS output power to 415V could eliminate these step-down losses. In the model, an incremental two percent reduction in facility energy use is achieved by using 415V AC power distribution. 8. VARIABLE CAPACITY COOLING Newer technologies, such as digital scroll compressors and variable frequency drive in computer room air conditioners (CRACs), allow high efficiencies to be maintained at partial loads. In the chilled water-based air conditioning system used in this analysis, the use of variable frequency drives provides an incremental saving of four percent in data center power consumption. 9. HIGH DENSITY SUPPLEMENTAL COOLING Optimization by moving from traditional data center densities (2 to 3 kW per rack) to an environment that can support much higher densities (in excess of 30 kW), requires implementing an approach to cooling that shifts some of the cooling load from traditional CRAC units to supplemental cooling units. Supplemental cooling units are mounted above or alongside equipment racks, and pull hot air directly from the hot aisle and deliver cold air to the cold aisle. Supplemental cooling units can reduce cooling costs by 30 percent compared to traditional approaches to cooling. 10. MONITORING AND OPTIMIZATION Rack densities are rarely uniform across a facility and this can create cooling inefficiencies if monitoring and optimization are not implemented. Cooling control systems can monitor conditions across the data center and coordinate the activities of multiple units to prevent conflicts and increase teamwork. Simply encourage unplugging these when not in use. Coming back to IT, data centers get the meter running overtime. Best practices, from facility lighting to cooling system design, have proven useful 48 MAY 2008

in helping some companies slow or reverse the trend of rising data center energy consumption. Read through Emerson’s 10 commandments (see box) to eradicate wastage to quite an extent, and actually use power intelligently.

“When buying servers, the IT department should not buy products judging by the nameplate rating of efﬁciency,” explains Chube of Emerson, “Servers without virtualization invariably run at 45 percent efﬁciency.

DARE.CO.IN

strategy/startup PRATIK CHUBE

Country Manager, Emerson India

DARE/Some simple tips to slow down the meter LIGHTING • Try to use as much natural light as possible during the day time • Install compact fluorescents or high-efficiency bulbs • Install movement-sensors, time-based lighting systems AIR-CONDITIONING • Set the thermostat to 25° Celsius for comfort and cost efficiency • It is better to not opt for central air conditioning and go with split air conditioning • Glaze the windows with multiple coatings for better air conditioning • Install weather-stripping under doors, windows, and ducts

The rule of the thumb is to take high efficiency products. High efficiency does not mean the nameplate rating. It depends on what the utilization of the product is going to be. You should map and synchronize the products efficiency to manage the load Brand A might boast of 95% efficiency at 100 percent load, and Brand X might have a rating of 90%. But when they are compared at 45% load, Brand A might turn out offering lesser efficiency. It is important to evaluate the rating in a bracket of 45-60 percent load, and not go by nameplate efficiency rating.”

Efficient lighting A lot of electricity is wasted on this one, and there are many solutions to cut down on the same. The first to-do for this is installing compact fluorescent lamps (CFL). CFLs convert electricity to visible light up to five times more efficiently than ordinary bulbs, and thus consume 75 percent lesser energy as compared to incandescent light bulbs. A 15-watt CFL produces the same amount of light as a 60-watt incandescent bulb. There are many automatic devices that can help in saving energy used in lighting. Installing infrared sensors, motion sensors, automatic timers, dimmers, solar cells and such wherever applicable to switch on/off lighting circuits is a good idea. Motion sensors in areas such as washrooms, store

IT & ELECTRONIC EQUIPMENT • Set up an IT policy to switch off monitors of idling PCs • Unplug electronic equipment when not in use (phones chargers, copiers, printers, etc) rooms, etc are highly recommended. Advises Palash Nandy, DGM, Legrand India, “Movement detectors should ideally be installed in washrooms and common areas. Also, using a time based lighting system, which can be programmed to suit ofﬁce timing and requirement patterns, helps cut down on the electricity bill to quite an extent.” One could also try installing mirror optic lighting systems, which will double the lighting while cutting down the number of light bulbs by half. The best source of light, daylight, is the oft-ignored resource for lighting solution. Installing full-length glass windows to allow natural light inside also helps in slowing down the meter.

Refrigeration fine-tuning One could begin by making sure that all refrigeration units are kept away from direct sunlight or other heat emitting appliances. A lot of energy is wasted if the cooling escapes through the sealing. Place a lit flashlight inside when it is dark outside to see if the light escapes; if it does, it is time for you to change the sealing. While it is important to not let the cooling inside escape, it is equally important to let the heat around refrigerators escape. Allow ample space for continuous airflow around it. Also keep in mind to not stuff the refrigerator so much that the air circulation inside is stifled.

PALASH NANDY DGM, Legrand India

Movement detectors should ideally be installed in washrooms and common areas. Also, using a time based lighting system, which can be programmed to suit ofﬁce timing and requirement patterns, helps cut down on the electricity bill to quite an extent Besides all these tips, it is advisable for businesses to run a power audit that investigates all processes followed in the company and the equipment used. Based on the analyses derived, companies should implement correctives that can help in cutting down the DAR E electricity bill. MAY 2008

DARE.CO.IN

/unique idea of the month

Branded

Puja Kits Every festival has different gods and prayers associated with them. Prakash Mundhra offers around 32 items required for a festival-speciﬁc puja into one designer pack /Shilpi Kumar

ored of gifting your associates dry fruits and sweets on special occasions? Chinese gift items seen too passé? Or are you looking for a gift that could not only serve as a utility item, but also instill emotions in the receiver? Well, if you can identify with any of this, Prakash Mundhra, CEO of Sacred Moments, a company that manufactures the Blessingz puja kit, could turn out to be a blessing in disguise. Thanks to Mundhra, designer tags are now not only limited to clothes, shoes, and bags, but even something as sacred as your puja items. Ask him what purpose these puja kits serve, and the 27-year-old promptly replies, “Every festival has different gods and prayers associated with them. We offer around 32 items required for a festival speciﬁc puja, including sindoor, haldi, kumkum, puja booklet, cotton, agarbatti, honey, and even Ganga jal, into one designer pack. In Holi, for example, we have a celebration kit that includes balloons, colors and water guns.”

50 MAY 2008

But such items are readily available in the market, at a cheaper price, right? Well, clariﬁes Mundhra, “Those items can never be given as a gift in corporate organizations, because they aren’t packaged aesthetically. Our products are reliable, more organized and delivered right at your doorstep, which is why clients are willing to pay a good price for them. The manuals are both in English, as well as Hindi, and every single item is labeled properly. The concept of designer puja kits gives corporate clients the option of a novelty gift, yet an ethnic one.” Sacred Moments’ puja kits are being exported to countries like the United States, the United Kingdom, Canada, South Africa, Australia, and Indonesia.

Building ground As a student of the Symbiosis Centre for Management and Human Resource Development (SCMHRD), Mundhra participated in a variety of business plan competitions. In his ﬁrst year of college, for example he took part in the Mera Gaon Mera Desh contest, or-

ganized by ITC, where they were looking for a business idea that would align with their already existing business. Since ITC was into Mangladeep agarbattis, Mundhra proposed for them to get into other branded puja items, such as, Mangladeep haldi, Mangladeep kumkum, and so on. “The plan did not click with ITC, but I went ahead and participated in Zee TV’s Business Baazigar and won the Baazigar title,” claims Mundhra. It took him six months to modify his business plan and come up with the idea of puja item outlets. “Just like we have Archie’s Galleries for greeting cards, I was thinking of something along the lines of Shubhlabh outlets for puja items,” he says. But soon enough he realized that his plan had ﬂaws and that it would not be a viable proposition. In the last eight months of his MBA, Mundhra arrived at the idea of puja kits. “With the Rs 50,000 I had won from Zee TV, I went on to research the idea and created my ﬁrst designer puja kit under the brand name Blessingz.” He showcased his business plan to venture capitalists judging business

DARE.CO.IN

“I managed to get sales of around Rs 34 lacs in the ﬁrst year, and can say that I have earned less than what I would have made in my job, but the satisfaction of achieving it on my own surpasses the monetary gain." — PRAKASH MUNDHRA, SACRED MOMENTS 52

MAY 2008

/unique idea of the month

DARE.CO.IN

/unique idea of the month plan competitions, who gave him a lot of feedback and suggestions. In May 2006, after his MBA, Mundhra faced the dilemma of joining the company he got placed with versus starting his own venture. “I thought I would not be able to take such a bold decision, but the entrepreneurship instinct was too deep inside and I started feeling that it was now or never,” he reminisces.

Executing the idea Mundhra made an investment of around Rs 5 lac on designing, producing, and procuring the puja items. Where did he get the funds from? “There were talks with a venture capitalist, but the investment wasn’t so great, and I decided I could do it myself. I took loans from my friends and relatives, but paid them back soon after,” he says. To save on extra costs, he used his father’s old ofﬁce, which was also close to all his suppliers. While sourcing materials for his kit, Mundhra chooses from a range of items that are available in the market and then, with the help of priests, customizes them for the kit. Some of the raw materials like sindoor, kumkum, and turmeric are procured locally. Other materials such as ghee sachets are sourced directly from the manufacturers in Tamil Nadu, Bihar, Mathura, etc. The production happens from both Mumbai as well as Ahmedabad. Designers work with him on a freelance basis and ensure that all the items are designed as well as packaged aesthetically. Since everything is handwrapped, the packaging starts months in advance. Diwali kit packaging, for

example, starts in April. The labeling of the product also has to be done wisely. Mundhra only has the Blessingz brand name printed on a few of his items that have a longer shelf life. The cost of the Blessingz puja kit ranges from Rs 200 for economical to Rs 350 for premium. “We have also recently launched the Bhakti puja kit that was made keeping the retail market in mind and is in the Rs 200 range,” says Mundhra. Orders can either be made by mailing him or through a few online gifting sites that have these kits on sale. With corporate companies ordering around 5,000 kits in bulk, Sacred Moments has managed a turnover of Rs 81.32 lacs in two years. “I managed to get sales of around Rs 34 lacs in the ﬁrst year, and can say that I have earned less than what I would have made in my job, but the satisfaction of achieving it on my own surpasses the monetary gain,” claims Mundhra.

Fighting it out Asked about the challenges faced while setting up the business, Mundhra replies, “There were a lot of hassles with the production aspect. It was difﬁcult coordinating for the raw material, which is procured from so many different locations." Delivering the kits on time was also arduous. He recalled an incident where he had to personally deliver a kit at midnight to a client at the airport. As he puts it, “In business, the customer is not the king but ‘Brahma’, as it is he who creates your business. So you have to keep him happy and satisﬁed." At the moment, setting up distribution channels for the retail market

is proving to be quite a challenge for Mundhra. “But MBA has always given me the optimism as well as the techniques to work around such problems,” he says.

Looking ahead According to Mundhra, an entrepreneur cannot succeed without continuous innovation. Soon he plans to come out with a collection of puja kits for Ganpati puja, Durga puja, Pongal, general puja, and griha pravesh. He also plans to move beyond Hindu puja kits and plans to manufacture Ramzan kits. Currently he is working on increasing his production capacity in order to reduce the response time. If there is a word of advice Mundhra has for entrepreneurs, it is the fact that they have to be ready to walk alone. “You cannot keep waiting for someone else to join you if you want to start a business. Once you decide to walk the road, you will be surprised to ﬁnd that you can get support from seemingly strangers as well." Besides his family members, Mundhra says he has received immense support from K S Subramanian, SCMHRD director, his suppliers, as well as his designers. He leaves aspiring entrepreneurs with yet another provoking thought, when he says, “I believe many a time we want to show the world that entrepreneurship is our one and only dream, but at the back of our minds we have several other dreams hovering. So if owning a Mercedes is as important to you as becoming an entrepreneur, you would be better off in a corporate job. For an entrepreneur, the one and only dream is business, business and business." D A R E

Sun Startup Essentials Jumpstart your Startup For more information log on to: http:/in.sun.com/startup © 2007 Sun Microsystems, Inc. All Rights Reserved. For information on Sun's trademarks see: http://www.sun.com/suntrademarks. All other trademarks mentioned in this document are the property of their respective owners.

MAY 2008

DARE.CO.IN

opportunity/opportunity food processing /f&b

FOODfor

DARE/quick points 1. Food processing is the ﬁfth largest industry in India

THOUGHT Even though India holds an important position in world food production, the same cannot be said about its food processing industry. But the industry is growing and the potential is huge /Vimarsh Bajpai

eing the largest producer of milk and cereals and the second largest of wheat, rice, inland ﬁsh, fruits and vegetables, India holds a strong position in food production on the world stage. This fact notwithstanding, the country’s food processing industry is in a nascent stage. Only around 2% of fruits and vegetables are processed, and the ﬁgure stands at 26% for marine, 6% for poultry and 20% for buffalo meat, as against 60-70% of the overall food production in developed countries. Going by those numbers, there is a huge potential waiting to be tapped in the food processing sector in India.

Canned and Packed Food processing involves the use of various techniques that give food longer shelf life. These techniques involve removal of moisture from food to prevent the growth of microorganisms. Common techniques are curing, drying, canning etc. The processed items are then packed and marketed at higher prices. Food processing may or may not involve changing the raw material completely. With food habits changing because of altering lifestyles and more and more people taking to urban living, the food processing industry is likely to see a major boom. Availability of raw materials due to high food pro54

MAY 2008

DARE/sectors 1. Dairy Products: Milk and milk products contribute to nearly 17% of the country’s total expenditure on food. 2. Fruits and Vegetables: India is the second largest vegetable producer and third largest fruit producer in the world. 3. Meat and Poultry: Only 1% of meat production is converted into value-added products. 4. Fisheries: Fish production in India currently stands at 6.4 million tons. 5. Packaged Foods: Size $2 billion (2005-06); low penetration 6. Beverages: Size $155 million SOURCE: KPMG Research

duction in India, and cheap labor has made food processing in India an attractive industry. The growth of business depends a lot on the nature of the produce and processing methods. The food quality should be top-class, and therefore, procurement of superior quality of raw materials becomes imperative. This industry is labor inten-

2. The size of India’s food processing industry is $110 billion and is likely to grow at 10% to touch $330 billion by 2015. 3. It employs more than 1.6 million people. 4. Exports of processed foods grew over 190% between 2002-03 and 2006-07. 5. Foreign direct investment in the sector will touch $325 million by 2009. sive, providing employment at each step—production of raw materials, processing at various units in organized and unorganized sectors, packaging of end product, transport and selling at retail stores. However, there are several constraints that are coming in the way of the growth of this industry. Non-availability of adequate critical infrastructural facilities such as cold chains, packing and grading centers, lack of adequate quality control and testing infrastructure, inefficient supply chain, lack of varieties of farm produce that is fit for processing and seasonality of raw material are some of these constraints. The government, on its part, has tried to introduce some measures to tide over the situation. These include developing infrastructure and supporting the industry through research and development. The government allows 100% foreign direct investment in most of the processed food items, except alcoholic beverages and those pertaining to the small-scale sector. The Food Safety and Standards Bill has created a regulatory body for the sector. It also gives total tax deduction on profits for five years and on 25% of

opportunity/f&b food processing

DARE.CO.IN

DARE/major players PLAYER

SECTOR

Dabur

Beverages and Culinary

Gits

Snacks and Dairy

Godrej

Beverages and Staples

MTR

Snacks and Icecreams

Haldiram’s

Snacks

Parle Agro

Beverages

HUL

Beverages, Staples, Dairy

Britannia

Bakery Products

Amul

Dairy

proﬁts for the next ﬁve years to new agro-processing units. The government is also developing 30 mega food parks that are likely to cover the entire food processing cycle.

A Growing Market Employing over 1.6 million people, India’s food processing industry contributes 6.3% to the GDP and 16% to exports, according to a report by India Brand Equity Foundation and KPMG. Some experts peg the market size for processed foods at $102 billion, with the potential to grow by 10% to $330 billion by 2015. At present, the processing segment holds a 32% share of India’s booming food industry. Exports of processed food have grown at over 190% between 2002-03 and 2006-07, increasing from $6.98 billion in 2002-03 to $20.51 billion in 2006-07. FDI inﬂows in the food sector have been high and according to estimates, they are likely to touch $325 million by 2009. Major global players such as Coca-Cola, Danone, Nestlé and Cadbury are already present in India. According to the IBEF-KPMG report, products that have growing demand in the export market are pickles, chutneys, fruit pulp, canned fruits and vegetables, concentrated pulps and juices, dehydrated vegetables and frozen fruits and vegetables along with processed DAR E animal-based products. MAY 2008

DARE.CO.IN

opportunity/IT

High performance, higher opportunity Across industries, clusters or networks of PCs or servers are being used to perform intensive tasks that were earlier in the domain of supercomputers. This opens up a niche opportunity for large as well as small players from the computer industry and for entrepreneurs who want to offer high performance computer services /Krishna Kumar

hink supercomputer and you probably imagine a high-tech insulated setup outside India, inhabited by the nerdy professor or the military man. This is not true anymore, with supercomputers today being used by other industries than universities and the military. And more and more

are coming up outside the US. Top500. org has been maintaining a list of the world’s 500 fastest supercomputers and India ranks ninth in the number of installations in this list, with the world’s fourth fastest being a system installed at the Computational Research Labs of the Tata group at Pune.

DuxSoft SPARX rendering cluster SPARX from DuxSoft (dusoft.net) is a high-performance computing rendering solution for the animation industry. It currently has two deployments; on a pay-as-you-use model at renderarm.com and as an in-house solution at Accel Animation Studios. SPARX is a cluster environment, currently with 25 server class machines doing the rendering work and four server class machines doing cluster and job management. There is a storage pool for the large storage requirements of rendering. Additional workstations are connected to this network for development tasks. HOW MUCH DID IT TAKE TO DEVELOP AND DEPLOY SPARX? According to Indivar Nair, Architect and VP, Technical Services at DuxSoft, the software took around five months to create, using a team of about seven people. Five months and seven people? Yes. Nair points out that all of them came with many years of expertise in their chosen domains and that unlike boxed software for mass use, such high-end applications are typically created in far lesser time. What was the big challenge? Integrating all the different software together and making it installable on multiple platforms and hardware. Renderarm currently charges Rs 18 per gigahertz of rendering power used by a customer. A typical movie frame takes anywhere between 30 minutes to four hours to render, depending on the complexity. An average frame takes about two hours. Studios like Anibrains, Esco Toonz, Suyambu and p2rnet are customers of renderarm.com. How much does it cost to set up a SPARX cluster? Development costs, consultancy charges, manpower costs and hardware costs and software included, the figure is under a crore, with hardware accounting for the bulk of it at fifty lacs.

56 MAY 2008

For the technically inclined

Krishna Prasad

Indivar Nair

Bharanidharan T

SPARX is developed on Linux (openSUSE), uses the Sun Grid Engine for its job scheduling and management activities and can be integrated with the Microsoft Active Directory Service or any other LDAP service to provide common authentication and single sign-on. The user interface is Web-based, from any standard browser. The Web interface is developed on PHP. The Web pages have been written in plain HTML, with very little JavaScripting and AJAX support. Networking and storage are deﬁned based on user requirements. Gigabit networking is normal, but if very high bandwidths are required, then InﬁniBand can be used. Similarly, you could use SAN (Storage Area Network) storage connected to each node if you have very high storage requirements. Deploying the Render Farm Management module on 25–50 node farm takes around three hours.

Aamir Shahinshah

DARE.CO.IN

opportunity/IT Do you see HPC in the Indian industry beyond military and academics? Absolutely. HPC is now used in automotive, manufacturing, product development, VLSI design, chip designing, and so on. In fact there are clearly marked domains where HPC is used. These include CAE (computer-aided engineering product designing—all the way from airplanes and automotive design to smaller products like mobiles are designed on HPC platforms ), EDA (electronic design automation), visual content creation, which is movie-making and game development, life sciences, and biotechnology—drug discovery Faisal M Paul and oil exploration. Country Manager, High Performance Computing All of this is today done out of India. and Linux business, Hewlett-Packard When you sell HPC platforms, is it a direct sale or a channel sale? That depends on the vendor’s business model. Large customers are mostly sold to directly. Even there a partner comes into the picture for the project implementation. What type of partners get into the HPC business? I assume these are not your typical box pushers. It depends on what kind of value the partner brings in to the project. If they offer good service expertise, then we sell through the partner and the partner services the deal. Then there are partners who contribute in terms of solution pieces. We integrate that solution piece along with our infrastructure and sell that along with the partner. The partner can be as large as an Infosys or TCS or one having a turnover of a couple of crores. What are the barriers to enter the HPC business? Let us look at entrepreneurs entering the HPC business. If one needs to set up a rendering organization for instance, the entry barrier is a little high. He can get to solve some rendering and designing projects, he can get small pieces of a movie, which is one small character for example. He can look at starting as a design partner for a bigger house. In CAE, you can look at a development facility that, say, designs components for automobiles. The expertise that India has in HPC has now gone one step up the value chain in terms of our designing capabilities and understanding of the domain. How big is the opportunity in India? The market opportunity, including infrastructure, applications and services is 250 million dollars. Entrepreneurship in this space, I guess is currently at about 20% of this, that is fifty million dollars a year and growing. In fact, there is no strict definition of what a supercomputer is, and increasingly, we use the term high-performance computing for this class of computers. Another interesting point is that they no longer require specialized hardware or software. These number crunchers can be put together as a high speed network of hundreds of common PCs or servers. The trick is in making the application software to split the job at hand across each of these individual machines and then collect back and collate the results. Creating such software is also not a very difficult art. The process is fairly standardized. That brings us to the question: Who uses these machines besides the military and academia? A whole host of in-

dustries are today installing and using high performance computing systems to crunch through large volumes of data. Construction companies, animators, medical researchers, the ﬁnancial sector, Internet businesses, media companies, retail players, the telecom industry… the list virtually spans the whole spectrum. And what do they use them for? Let’s see some examples.

Animation Any movie today has tons of post-production effects as well as animation. Each minute effect has to be created and ﬁnished (rendered is the industry term) frame by frame. Needless to say, these have to be of very high quality.

The way this is done is to submit the job, frame by frame, to a render farm or a render wall—a group of servers dedicated to the job. Each frame could take hours to render. For example, for the blockbuster animation movie, Cars, Pixar Studios used up 2300 CPU hours on their render farm. Over the Hedge used up over 15 million rendering hours spread across thousands of servers. But you need not start off all that big. A small-sized render farm for animation work can be created using fifteen to twenty or even five machines. Another opportunity is in the render services. These are render farms that allow users to use specific services, loading their projects over the Internet. These render farms charge on the basis of software used, number of frames and time consumed. A number of international render farms are available and recently, DuxSoft has started a similar service in Mumbai (see box).

Airliners and construction The ﬁrst aircraft that was completely computer designed and engineered, the Boeing 777 made its debut more than a decade back, in 1995. Modern airplanes are not just computer designed; even critical testing is simulated on computers. The Computational Research Lab at Pune, which we mentioned at the beginning of the article, has entered into a deal with Boeing to use the supercomputer there to “run the High Lift Computational Fluid Dynamics program that will model high lift aerodynamic simulations in three dimensions for Boeing.” Similarly construction companies too need high-performance computing resources to model and design bridges, dams and the like. These are just some examples where high-performance computing (HPC) is being used. There are several others, like the automotive sector, manufacturing, chip design, etc. The HPC market is very nascent in India, in spite of the status of the Pune installation. The market is just opening up and considering the fact that it doesn’t take ‘super’ investments to set one up, DAR E the time is ripe to enter it. MAY 2008

DARE.CO.IN

opportunity/muga

Muga – The Silk of Royalty

A Muga saree

The business of Muga, the golden silk, is worth Rs 200 crore now. With proper organization, the industry could grow to 10 times its current size /Arunjana Das

DARE/overseas markets Japan Greece South Africa

Golapi Bordoloi - a Muga weaver

he possesses no Midas Touch, but she weaves gold. Aged 23, Golapi Bordoloi, a shy and petite girl from a remote area in Assam, smiles unassumingly and displays the beautiful pattern of red and black that she has made on Muga, the golden silk from Assam. Perched on her shaal, a big mechanical contraption for weaving ﬁber, she relates how in her village, almost every house has a shaal and how almost every house produces this wonder silk. Muga is a non-mulberry silk obtained from a semi-domesticated silkworm known as the antheraea assamensis, found only in Assam. There are around 9500 sericulture villages in the state of Assam, Sualkuchi being the hub of the industry. Sualkuchi alone produces around 10 million me-

DARE/qualities and uses Qualities: Tough, porous, durable, easy to handle, golden luster improves with every wash Uses: Mainly sarees and other outﬁts. Also used to make bags, caps, umbrellas, etc. 58 MAY 2008

USA Germany France

ters of Muga every year, most of which is exported to Japan, where it is used to make kimonos. The annual turnover of the industry is over Rs 200 crore. The fabric dates back to the 11th century, when this golden silk used to adorn the royalty, because of which it widely came to be known as the Royal Golden silk. It was introduced to the world way back in 1662 by the French traveler Jean Joseph Tavernier. The silk has a shimmering golden color, the luster of which just gets better and better with every wash. It requires no dyes, is the most durable amongst all silks and is the kind that outlives several generations of the owner! So, why is it that when you utter the word Muga in the rest of the country, people give you blank looks? Or if you are talking to somebody in the medical industry, you are greeted with a discourse on Multiple Gated Acquisition scan? Yes. That’s Muga too! The primary reason behind the ignorance of the masses about Muga is because, in spite of being an old industry, it is still unorganized and obviously untapped. It still falls under the purview of small weavers and artisans producing the silk in their couple of acres of land, weaving fabric from the ﬁber and selling it off to small retail silk stores. Marketing is almost nonexistent. Although it was provided Geographical Indication (GI) status in July last year, the brand equity is not very high. In spite of all this, it is getting in revenues worth Rs 200 crores. What if there were to be an element of organization in the process? Instead

DARE/production The worm: The silkworm used to produce Muga is Antheraea assamensis, which is raised outdoors and is fed on two trees—som (machilus bombycina) and soalu (litsaea polyantha). Process: The worm feeds on the trees and strips them of their foliage, subsequent to which a mass exodus happens. The worms are then collected and transferred to another tree until they are mature enough to spin the fibers. When they are ready to spin their cocoons, they are collected by the keepers and placed into small containers made of dried twigs. The fiber they spin out is golden and is known as the Muga silk. The cocoons are then boiled and reeled in a reeling machine. of a couple of acres, what if somebody has around 10-20 acres producing some 100-120 MT Muga every year? What if that somebody were to employ workers to produce the silk and artisans to weave the fiber? Consider another scenario. Somebody comes up and offers to buy the silk and its products from the artisans and sells it in the domestic and overseas markets. Whereas the former is an entry point on the production side, the latter one is on the retail side. The actual worth of the Muga business is worth at least ten times more than the current Rs 200 crore. The missing link is an entity that recognizes the chinks in the wall and is able to DAR E see the worth.

DARE.CO.IN

60 MAY 2008

trend/INSEAD

DARE.CO.IN

trend/INSEAD

How will India’s

“brain regain” inﬂuence the venture investing scene? The trend is reversing. NRIs are returning to India with invaluable international experience, knowledge, connections and ideas /Philip Anderson and Ira Gowariker

ndia’s most significant advantage in global competition among entrepreneurs is the quality of people in the venture ecosystem. For many years, some of India’s most talented people went abroad for advanced education and then stayed overseas, causing many observers to wonder how the country could achieve prosperity in the face of a “brain drain.” In the past five years, however, the trend towards a “brain regain” has accelerated. India’s explosive growth and healthy stock markets have attracted non-resident Indians (NRIs) to return in a flow that has escalated from a trickle to a torrent. Yet India is not merely regaining lost talent. Most returnees have spent years, even decades, building up invaluable international experience. They bring knowledge, connections, and ideas that have been forged while working for some of the world’s most prestigious companies or founding some of the world’s most successful startups. What happens when these returnees bring the lessons they have learned back to India? Are they the key to creating a new hybrid style of company-building that fuses the best of East and West? If you are an entrepre-

neur in India, would you gain an advantage by having someone like them on your board of directors? To find out how they and others like them are influencing the country’s venture capital scene, we interviewed three prominent venture investors of Indian origin who have moved to India after living overseas: Ashish Gupta (co-founder of Helion Venture Partners), Dan Sandhu (Chairman of Vertex India), and Deepak Shahdadpuri (Managing Director at Beacon India Advisors). Although all three have followed different paths into venture capital, each brings entrepreneurial experience from the West back to India, along with global networks and access, which he is applying to today’s Indian venture sector in a distinctive way. The son of an Indian Army officer, Ashish Gupta grew up in Dehradun, Hyderabad and Mount Abu before graduating from IIT Kanpur. In 1988, he went to the US for a PhD. in computer science and after earning his doctorate in 1994, he worked for IBM and Oracle. He then co-founded, Junglee (a comparative shopping portal which was bought by Amazon) and IT solutions provider Tavant TechMAY 2008

DARE.CO.IN nologies, today one of the leading IT employers in India according to Dataquest. Through the Kauffman Fellows Program, a competitive program that provides two-year fellowships with venture capital firms, he joined the Woodside Fund in the US. This proved a springboard for co-founding Helion Venture Partners in 2006. In contrast, Dan Sandhu was born and raised in the UK, where he studied accountancy at the business school of the University of Leeds while promoting a rock band and starting a community radio station. He joined the Big Four accountancy PWC, working in due diligence, business reviews and flotations before moving into a commercial role with a startup in energy services, Mitsui Babcock. There he oversaw $750 million of capital projects in China before joining UKbased BPO firm 7c in 1998 as head of finance. When the firm was acquired by Vertex in 2002, he became the head of Vertex India and became well-known as one of the spokesmen for the Indian BPO sector and an influential figure in NASSCOM. Since becoming nonexecutive chairman of Vertex India in 2006, he has become a prominent angel investor. Like Sandhu, Deepak Shahdadpuri was raised outside India, growing up in Singapore before studying law at King’s College, University of London. When summer internships persuaded him that he did not want to pursue a legal career, he joined Big Four accountancy Ernst & Young after earning his degree and became a chartered accountant in 1995. In 1996, he joined the consultancy Bain & Company in London and in Singapore, and in 1998 Bain sponsored his MBA year at INSEAD in Fontainebleau, France. Upon returning to Bain, Shahdadpuri worked in strategy consulting and the firm’s private equity practice before joining an ex-Bain colleague and INSEAD classmate, Norman Fiore, at Reuters Venture Capital, a $400 billion global venture capital fund focused on technology ventures. In 2003, he founded an early stage venture fund, FS Capital Partners, and a year later he 62

MAY 2008

trend/INSEAD started Gem India Advisors, focused on private equity in India. In 2006, he launched Beacon India Advisors that advises the $200 million Beacon India Private Equity Fund, which is sponsored by Baer Capital Partners. The different path that each took into venture investing is reﬂected in the activities each is involved in today. Leveraging his strong technical background, Gupta became an angel investor in 1998 after Junglee was acquired and sat on several boards, including that of Daksh in India. He

Each investor notes that moving to India is not easy for a person coming from countries such as the US, UK or Singapore

“

”

raised Helion Venture Partners’ $350 million fund to invest in companies at any stage of development within technology-powered and consumer services sectors such as outsourcing, Internet, retail services, education and ﬁnancial services. Shahdadpuri’s consulting background led him to focus on consumer businesses when starting his $20 million GIA fund. “I saw an opportunity in that space and relatively few funds were focusing their efforts there,” he says. Deals such as Sula Wines and Baker’s Circle persuaded him to start the Beacon India fund, which he counsels as Managing Director of Beacon India

Advisors. Beacon is a sector-agnostic fund that typically invests $5-$25 million per deal, but has led rounds of up to $150 million that involve its limited partners and other selected investors, such as Goldman Sachs. Sandhu’s prominence in the BPO sector exposed him to many startups and he became convinced he could add value to them as an angel investor. “When I originally started as an angel investor, most of my time would be spent sourcing deals,” he says. “Now I am part of the Indian Angel Network, a group of investors keen to invest in early-stage businesses, so I am approached more correctly.” Sandhu prefers to invest in sectors he understands well, such as BPO, IT, media and retail, where he finds a strong team and believes his business network can be leveraged. Each investor notes that moving to India is not easy for a person coming from countries such as the US, UK or Singapore. Sandhu did not plan to return to India, but when the founders of 7c asked him to identify a CEO for their India operations, he ended up getting involved in setting up the operation. After nine months of traveling to India, he relocated to Gurgaon in 2001. Though his first three months were “lots of work and no sleep while we were running fast to get the business going,” he was pleasantly surprised that Vertex could retain a great team, even though India’s rapid growth meant there is a shortage of well-qualified individuals. He stayed in India because “watching Vertex India grow from scratch was like watching a baby grow, and I didn’t want to give up my baby!” Moving to India was a difficult transition for his family and it took time to settle his children, but, Sandhu observes, “There is controlled chaos in India and you can get by if you know where the control button is”. Since 2001, he notes, “A very noticeable change in India is that the business environment is more professional and individuals are global. Timelines are adhered to and skill sets are ever expanding.” Shahadpuri became convinced that India was a land of entrepreneurial

trend/INSEAD

DARE.CO.IN

India is a huge startup: there is little established process or infrastructure and there is a talent shortage, but the opportunity going forward appears massive, adrenaline is very high and everyone is excited â&#x20AC;&#x201D; Ashish Gupta Co-founder of Helion Venture Partners MAY 2008

DARE.CO.IN opportunity when his INSEAD MBA classmate, Minal Vazirani (co-founder of SaffronArt in Mumbai) brought 20 classmates on a trip in 1998. He continued returning, first socially and then on business for Reuters Venture Capital. By 2007, he was ready to move, observing, “Mumbai redefines the engines of global economy and as a newly married man, I was convinced it would be a great time to experience life in this city.” He adds, “Getting set up in India took some time but I feel that both professionally and personally we have made progress, having raised a $200 million fund and closed four deals committing $60 million. On the personal front, we have settled in well, found a nice apartment in Colaba and are getting into the Mumbai routine.” Gupta returned to India specifically to start a top-tier venture fund in a country where the venture capital sector is still nascent. “I had the opportunity to work with a very good team of long-term successful Indian executives and investors who are my current partners,” he says. “I chose Bangalore because it has a critical mass of IT companies, and because I have several friends here and hence is very live-able. The weather also helps!” Gupta believes that people raised outside India go through three stages of adjustment in relocating: getting used to the infrastructure, then getting used to intangibles such as relationships, and settling down. “Moving back has not been hard because we have family and friends supporting us. The hardest part was to leave behind relationships, having lived in the US for nearly 20 years.” Having committed his family and fortune to India, Gupta believes that the next few years will be a critical stage in the country’s growth. He observes, “India is a huge startup: there is little established process or infrastructure and there is a talent shortage, but the opportunity going forward appears massive, adrenaline is very high and everyone is excited. We are creating an expectation and achievement gap that is dangerous. Everyone sees 64

MAY 2008

trend/INSEAD fancy things on media but few have the ability to get those things. If we do not invest in education or ﬁnd other ways to enable the average person to get to their aspirations, we will have trouble. We are embracing capitalism without the necessary safeguards such as legal protection, enforcement, and so on.” All three investors see both advantages and disadvantages for venture capitalists who are ethnically Indian but have lived outside the country for a long time. Says Gupta, “The advantages I see include a better understanding

The disadvantages include an initially inadequate understanding of the subtleties of India; starting with a smaller local network; and the risk of applying the wrong patterns

“

”

of the entrepreneurial process and of venture capital; a better understanding of some sectors of the industry — especially those related to technology; and the ability to relate businesses and patterns that have developed overseas to Indian businesses that are similar. The disadvantages include an initially inadequate understanding of the subtleties of India; starting with a smaller local network; and the risk of

applying the wrong patterns. Making deductions using the US yardstick can be very misleading—for example, how do I assess a team that has family members on the board and how does the high real estate component of Indian overheads affect the business?” Sandhu agrees, commenting, “The advantages outweigh the disadvantages, and I have no regrets becoming an angel investor. Global learning and knowing how companies operate in different markets is an edge I have. But as someone who has been outside India practically all my life, I am a more cautious investor, not knowing how business dynamics work, and the retail market in which I have invested is in a nascent stage.” Adds Shahdadpuri, “My strong network around the globe is a distinct advantage, and having lived outside India through my formative years, I don’t carry baggage, which frees me up to explore sectors that Indian VCs would have been more reluctant about. A few disadvantages are my inadequate understanding of the regulatory environment, legal system and, sometimes, the motivation of entrepreneurs. Our team has a much better India experience with their network.” While having a global web of relationships helps each investor, all three have worked actively to build their contacts in India. For Sandhu, involvement in different associations has been vital. He says, “I became chairman of the TiE network in 2006 and I am actively involved in Indian Angel network and the NASSCOM committee. I am trying to get the British Business Angel group and India angels together under one banner.” Shahdadpuri has found both his old connections and his investments useful in expanding his social circle. He says, “The network I have built in India revolves around the relationships I had at INSEAD, Bain & Company, friends I have made over the years and the business I have worked with in the past. Each of the investments I have made to date have led to a better understanding of different sectors and opened access to a broader network

DARE.CO.IN

trend/INSEAD

A very noticeable change in India is that the business environment is more professional and individuals are global. Timelines are adhered to and skill sets are ever expanding. â&#x20AC;&#x201D; Dan Sandhu Chairman of Vertex India

MAY 2008

DARE.CO.IN

trend/INSEAD

Each of the investments I have made to date have led to a better understanding of different sectors and opened access to a broader network of people who I can access to identify other opportunities. â&#x20AC;&#x201D; Deepak Shahdadpuri Managing Director at Beacon India Advisors

66 MAY 2008

DARE.CO.IN

trend/INSEAD of people who I can access to identify other opportunities.” Gupta’s team at Helion has been particularly useful; he notes, “I am working with a team of very senior and well-respected people, and I leverage their connections to further develop my own network.” All three investors see little difference in the way that venture capitalists assess ventures in India as compared to Western countries. Shahdadpuri remarks, “VCs both in India and the West would assess a venture for its people, innovative business ideas (both simple and ground breaking) and the market place, but the difference merely lies in the emphasis given to each of these factors." Sandhu concurs, saying, “The assessment parameters would pretty much be the same: A good team, market, vision, strategy of the ventures are key. One challenge for VCs in India is the strong need for a support network, and VCs must nominate local teams to help in the assessment.” Adds Gupta, “Teams in India are in general less experienced and there are fewer repeat entrepreneurs. Because the ecosystem is less evolved, they have fewer mentors, and plans are less polished, which you have to factor in.” Will Indian ventures end up developing a model that combines the best of India with the best from the West? Sandhu is cautious, responding “I am fortunate to have worked in the UK, then in India, and currently in both countries. Business models that have the best of India and the West are beginning to evolve amongst Indian ventures, but I wouldn’t call these a blend necessarily as British and Indian companies have their own priorities.” Agrees Gupta, “It is likely to not be the ‘best of both’ but rather a blend of the two that works well here. It's hard to pin-point the best parts of the Western model as several attributes are not applicable to the local market.” But Shahdadpuri observes, “In fact entrepreneurs such as Rajeev Samant of Sula Wines have done just that. Rajeev believed in India’s opportunities so he came back to India from the US, grew in a niche sector by building a business model that would succeed in India. Di-

nesh and Minal Vazirani at Saffronart and Amit Mittal at A2Z Maintenance or Riyaaz Amlani at Impresario too identiﬁed a business opportunity and created a strong business to address it. All of these three entrepreneurs had the grit to grow the market and they have understood how they can make the most of technology.” Asked what it takes to build the kind of company he would like to invest in,

“

VCs both in India and the West would assess a venture for its people, innovative business ideas (both simple and ground breaking) and the market place, but the difference merely lies in the emphasis given to each of these factors

”

Gupta replies, “I would be interested in entrepreneurs that are intellectually honest, passionate and listen to the customer.” Sandhu adds, “In last month’s DARE issue, I stressed the importance of having a good management team. I think they should be passionate and be in a sector they understand. Plans can change so be ﬂexible and have a contingency plan. A good team can make a bad plan work and vice versa.” Shahdadpuri con-

cludes, “I look to back exciting growth companies with talented entrepreneurs who have created a business model that can succeed in India and those who have the vision to create a successful business across sectors.” All three expect and welcome the entry of more Indians into the private equity sector, but caution that the right experience base needs to be laid first. Says Shahdadpuri, “If you are interested in getting into venture capital, here is a word of caution: It is a difficult business, so don’t rush into it. A lot of people mistake it to be glamorous. The easy part is getting the investment, afterwards getting in the board can be much tougher. Typically, people who succeed as VCs are successful entrepreneurs who have grown businesses, and enterprising bankers or investors who have provided capital in a nonPE way.” Adds Gupta, “Venture capital should be taken up as a second career. It’s fashionable to get into venture capital, but few people realize that not enough operational skills are gained in this business to make the person employable in too many other industries. Further, this industry itself is relatively small in terms of the number of people that are hired, and it takes as many as five to seven years to discover whether someone is good at this business. Advises Sandhu, “Raise money yourself so that you can suffer the pain and joy of growing a business yourself!” Ashish Gupta, Dan Sandhu, and Deepak Shahdadpuri exemplify how the Indian venture investing scene is becoming more and more cosmopolitan. All have concluded that the best way to invest in India is to live in India, and all believe that the right way to operate is by connecting their global relationship networks to the local networks pf their friends, business partners, and portfolio companies. When combined with the strong connections that many Indian entrepreneurs have to friends and batchmates overseas, the Indian venture ecosystem can be expected to continue spawning and nurturing startup companies that can build on the experience of others DAR E around the world. MAY 2008

DARE.CO.IN

opportunity/tech

Towards a cashless world

As technology brings connectivity to the masses, alternate, and more convenient mechanisms for making both remote and over-the-counter payments emerge

/Sreejiraj Eluvangal

ow many times have you been tempted to shop online, but put off by the fear of entering your credit card details at an unknown site? How many times have you been forced to pay in cash instead of card because the merchant did not want to pay the 3 percent processing fee charged by the bank? Indeed, how many times have you found yourself scratching your head trying to send money to someone who does not have a bank account, or has one too far away from where he or she lives? Ever since placing real-time, remote orders became a reality, there has always been a market for solutions that also allow making payments remotely and in realtime. That said, years after real-time communication has become a mass phenomenon, thanks to the telephone and the Internet, real-time remote payment services are yet to catch up. There are nearly 280 million phones and Internet terminals in India for consumers to place their orders on. However, when it comes to making a real-time payment, the scenario is different. For example, there are only about 60 to 100 million active cards (credit and debit) in circulation. Internet and telephone banking, the only other ways for consumers to make payments remotely, are unlikely to add much to the numbers as their users are in all likelihood already counted among the credit and debit card users. Indeed, the actual number of users having access to any of these facilities may be still a fraction of the 60 to 100 million card-owners, as many users keep multiple cards. The remote payment bottleneck is not just a customer inconvenience. For businesses that rely on remote ordering but need to tap the non-card-owning masses as well for volumes, a robust collection mechanism can make all the difference between survival and death.

68 MAY 2008

DARE.CO.IN

opportunity/tech Typical are the cases of the pizza and ﬂower delivery businesses. They try to get around the problem of lack of real-time payment systems by taking orders on the phone and extending a temporary credit to the consumer, relying on the pay-on-delivery model. However, the system is far from perfect. “There is a lot of wastage in these industries, perhaps as much as 10 percent,” says Ravi Shankar, country head for direct banking at Yes Bank Ltd, “and the only way to make sure this does not happen is to collect the money upfront [at the time of ordering].” Yes Bank recently launched a system of mobile payments that costs only 1 percent of the order value.

Remote and Cashless Alternate payment mechanisms, whether in the form of cheque, credit card, or online, have evolved to meet two requirements — the convenience and security of being cashless, and the need to pay remotely. While in the days of snail mail cheques and demand drafts served the purpose well, today, in the era of real-time communication, faster alternatives based on the Internet and phone are evolving — initially motivated more by the need to pay remotely rather than by the convenience of being cashless. These solutions can be classiﬁed on the basis of whether the user needs to have a networked device like a PC or phone, or just a non-networked device like a credit card. For example, Net banking and phone banking are examples of networked device-based payment mechanisms, while magnetic cards (credit and debit cards used at the counter), RFID cards, and ﬁngerprint terminals are examples of nonnetworked device-based technologies. Broadly, the non-networked devices are better suited to the ‘convenience market’, while the networked devicebased services are essential to cater to the remote payment market.

Near-ﬁeld (Non-networked) Technologies This form of alternate payment technology involves a physical form of

identification carried by the consumer, including parts of their body such as fingers or eyes and a widespread network of terminals for verifying those markers. The most widespread examples are the credit and debit cards and the terminals (swipe-machines) and ATMs installed by banks and merchants for verifying them. Though magnetic cards are a mature technology in the proximity payment market, new technologies are emerging, promising even more convenience. The biggest challenger to magnetic cards is chip-based identification, such as RFID. These chips are

“

“The technology has helped transform countries such as Japan into nearly cashless societies. Today, you can leave home without your wallet, but not without the mobile in these countries

”

— Probir Roy Co-founder and director of Paymate

usually stuck on or implanted in mobile phones. The key differentiator and advantage of this technology when compared to magnetic cards is that it does not require physical contact with the verification terminal—the chips work from a distance. This ability to pay with just a wave has led to the technology being deployed widely in many countries. In India it is being used at some public transport facilities where speed of payment is crucial, including Mumbai’s buses, the Delhi Metro, and many toll booths across the country. “You only have to travel across the Asia-Pacific to find out how well the model of waving a mobile is working,”

says Probir Roy, co-founder and director of Paymate, an SMS- and databased payment platform provider. “The technology has helped transform countries such as Japan into nearly cashless societies. Today, you can leave home without your wallet, but not without the mobile in these countries,” he says. However, the technology is yet to catch on in India. “In three years from now, I expect 70% of the mobile phones to come with some kind of NFC [nearfield communication] chip,” says MN Srinivasu, director and a co-founder of BillDesk, one of India’s largest payments service providers, who enable back-office processing and settlement of electronic payment between banks and merchants. Vasu believes that even though the remote payment market, such as those based on the phone and the Internet will develop faster, the alternate proximity payment solutions (RFID, fingerprint scanning, etc.) will also hold their own, especially in transactions involving smaller sums and needing higher speeds, such as public transport. Vasu, however, sees stumbling blocks for the development of these platforms. Unlike the networked solutions such as those based on voice and the Internet, which depend largely on the consumers’ network devices such as phones and computers, the provider will need to install networked terminals wherever the consumer wants to use the service. “It won’t be an overnight solution. Technology is not the challenge here, the chips are there abroad. Operators like DoCoMo have pushed it. In India too, you will need someone with clout to do this. Besides, we will need to have chips costing around Rs 200 to 300 each,” Vasu adds. The cost of the chip is another stumbling block that critics cite. Currently, chips used in the Far Eastern markets cost around Rs 800—the same as a low-cost mobile phone. However, proximity technologies have one thing going for them—the sheer convenience of making payments with just a wave. As a result, even developMAY 2008

DARE.CO.IN ers of the remote payment systems such as Obopay Mobile Technology agree that near-ﬁeld communicationsbased services will not be completely replaced by networked technologies such as theirs. “There is no doubt that as far as over-the-counter retail is considered, NFC is the way to go,” says Aditya Menon, executive director for Obopay India, which is pushing a downloadable, mobile data-based payment application in tie-up with a host of banks, including Yes Bank.

Remote (Networked) Payments While the main appeal of NFC-based payment systems lies in convenience, networked payment solutions have a more urgent need to meet—that of faster, simpler, and cheaper transfer of money at a distance. “Every month my driver sends money to his family in Pudukkotai,” says Obopay’s Aditya, “First he has to go to the post ofﬁce, ﬁll out a form, and then stand in a line. After all that, he has to pay 100 rupees to send 2000 rupees home.” Now, imagine transferring money by selecting someone’s phone number from the contact list on your phone, clicking on options, and pressing ‘Pay’. Imagine paying for your pizza with no more information than the phone number on which you placed the order. For those without data connectivity on their phones, remote payments can also be made by calling a hotline number, entering your secret code, and punching in the telephone number of your pizza provider. “I am getting 1,500 new registrations every day and we haven’t even started advertising,” says Pallab Mitra, head of the m-commerce initiative of the country’s largest mobile operator, Bharti Airtel. Pallav is talking about ‘mChek on Airtel’, a SIM-embedded application that brings your bank or credit card account to your mobile, launched in September last year. The largest mobile-based payment system in the country, its 100,000-plus users have made transactions worth more than $ 4.5 million (Rs 18 crore) so far, 70 MAY 2008

opportunity/tech according to Mitra. The application, also available in a downloadable format, is usually pre-burnt into the SIM and uses encrypted SMS, enabling even the most basic phones to do phone banking. The target customer for such phone banking solutions is the guy caught in a traffic jam and ordering a dinner pack to be left at his front door. In this market, mobile operators like Airtel have a definite advantage as they can preburn applications onto the SIM. Others like ICICI Bank, Yes Bank, Obopay, and Paymate are having to device alternate strategies such as calling back the subscriber to confirm the transac-

“

In three years from now, I expect 70% of the mobile phones to come with some kind of NFC [near-ﬁeld communication] chip.

”

— M.N. Srinivasu Director and a co-founder of BillDesk

tion due to the less-secure nature of normal SMS. The increased overhead on low-end phones—Rs 3 to 5, including cost of the customer’s initial SMS and the subsequent conﬁrmation call — also limits the applicability of the service in extremely low-value transactions for non-telecom players. However, the odds favour banks when it comes to customers with high-end phones and data connectivity. Currently, laws in India prevent any mobile operator from offering services that can be classiﬁed under banking activities. This includes maintaining cash reserves on behalf of their customers, which can later be used to purchase products and services, and making settlements with merchants on behalf of their subscribers after the latter purchase their goods. As a result, mobile operators have to rely on tie-ups with banks to do the backend processing for their m-commerce

applications. While banks too have to depend on mobile operators when it comes to low-end handsets and voiceonly subscribers, for other customers, banks such as ICICI Bank have already launched their own free downloadable applications. Another new element not addressed by the aforementioned applications is privacy or anonymity. While cash transactions are inherently private, as it is not possible to trace back such transactions, bank account-based transactions can be tracked back to the purchaser. They also need the payer to have a bank account. This is where the third category of players, the scratchcard vendor, comes in. “We did Rs 1,500 crore worth of transactions last year,” says Naveen Surya, executive director of the Essel Group firm Intrex India Ltd, makers of ITZ cash card. The uptake of the product, which enables even someone without a bank account to make remote transactions, has been doubling for the last few years, Surya says. “Goods worth Rs 1,500 crore were bought and sold using ITZ card last year,” says Surya. “That is much bigger than what any of the new alternate payment platforms has been able to do on the ground.” Interestingly, the company does not charge the end-user for making use of the platform and relies on merchant commission for its earnings. It is currently accepted at over 3,000 websites and can also be transacted through SMS or even a normal voice call. “However, nearly 80 percent of the transactions are happening over the Internet,” says Surya. As the phone makes deeper inroads into rural areas, and rates continue to drop, Intrex is aware that voice may emerge as a stronger medium for making remote transactions. However, Surya says the method is yet to gain full acceptance among consumers. “Some people find it cumbersome, since there is going to be some amount of counter-checking by the machine as it reads back the digits you entered for confirmation. But if a simple transaction can be completed in one minute, it will beDAR E come popular,” he predicts.

DARE.CO.IN

/blogs

The Hidden Tax

Inﬂation is a tax that shrinks real incomes and reduces purchasing power /Paranjoy Guha Thakurta

obody likes paying taxes. When taxes are paid indirectly— for instance, when one purchases a commodity on which excise duty or customs duty has been levied—many do not readily recognize the fact that taxes have been collected. Even when service tax is imposed on a restaurant bill or when entertainment tax has been charged on a movie ticket, the incidence of tax is often not noticed. Such indeed is the way the human mind tends to work. If, on the other hand, an individual is asked to pay a direct tax on her or his annual income, it tends to hurt a lot. Why? The reaction is purely psychological. When income tax is paid by a person, she or he gets an impression that the government is taking away a portion of her or his hard-earned income. If one is particularly disillusioned with the country’s political and bureaucratic leadership, as large sections of the Indian middle classes are, then one complains that the taxpayer’s money is not being properly spent by the powers-that-be. At a rational level, most individuals understand that the government has to impose taxes of different kinds. The revenues collected are used not merely to pay the salaries and perks of our infamous netas and babus. The government collects taxes to spend on what society needs, such as electricity, roads, water, healthcare and education, to name some of the most crucial sectors of any country’s social and physical infrastructure. It is crucial that the State spends on these sectors simply because market forces are either not operational or work at the margins. At best, one can conceive of public-private partnerships in infrastructure ventures. That’s not all. The government of today’s generation also has to invest in facilities that will be enjoyed by future generations—say, in a park. The short point is that much as we hate paying taxes, we don’t really have a choice. Taxes have to be paid in all civilized societies and the best we can hope for is that the elected representatives of the people and civil servants will spend taxpayers’ money in a prudent, proper and efﬁcient manner, so that funds are spent on those who need them the most. After sixty years of independence, for the

first time, the share of direct taxes (on the incomes of individuals and the profits of companies) in total tax collections has gone above the share of indirect taxes (mainly excise and customs duties). This new trend in the government’s tax revenues signifies a positive development. Indirect taxes by their very nature are regressive. In other words, everyone pays the same tax, irrespective of whether the person is rich or poor. For instance, if 40 paise is the tax element on the retail price of a matchbox, the same tax is paid by a beggar on the street or by a Tata or an Ambani. Direct taxes, on the other hand, are progressive, which means the higher a person’s income, the higher the proportion this person pays as personal income tax. Direct taxes are, therefore, to be welcomed, as the amount collected by the exchequer has a relation to a person’s income and hence, her or his ability to pay. A not-so-well-known fact about India is that barely three per cent of the total population of the country pays income tax. There are just about 30 million income tax assessees in a nation of 1.1 billion people. Of those who pay income tax, roughly two-thirds have their taxes deducted at source before their salary reaches their hands or gets deposited in bank accounts. Gentlemen farmers with huge incomes don’t pay a paisa as tax because income tax is not levied on agricultural income. However, of late, a different kind of tax has been hogging headlines. This is a hidden tax called inflation. Inflation hurts the poor much more than the rich. The incomes and profits of the affluent often go up faster than the speed with which prices rise. But for fixed-income, salaried persons as well as the underprivileged, inflation is a tax that shrinks real incomes and reduces purchasing power. In recent months, inflation has been driven by high food prices. This is akin to a double tax on the poor who spend a larger proportion of their incomes to fill their bellies. According to the official wholesale price index, the rate of inflation in the country is currently in the region of seven percent. Few believe the government’s statistics. The reality in the marketplace is very different. Prices of edible oils, wheat, rice, milk, dairy products, fruits and vegetables have all jumped by far higher proportions. Why do you think India’s ruling politicians are jittery? They realize that even if the classes rule, DAR E it is the masses who vote. The author is an educator, an economic analyst and a journalist with over 30 years of experience in various media — print, radio, television, Internet and documentary cinema. MAY 2008

DARE.CO.IN

Think

opportunity/agri

BEYOND HENS Let us get you indulged in a little ‘bird watching’ of the business kind. Get a glimpse of the huge market that exists in farming exotic alternative birds

/Shilpi Kumar emember the song about Old McDonald and his farm? Besides having a “chick, chick here and a chick, chick there,” the farmer also had ducks, turkeys and even geese wandering around everywhere. In India, however, the scenario is not as

versatile. Currently, the Indian poultry industry is estimated to be over Rs 30,000 crore and is expected to rise to over Rs 60,000 crore by 2010. But with a steady production of 1800 million kg of poultry meat and 40 billion eggs annually, the industry largely focuses on

chicken eggs and broiler meat. Looking beyond the broiler chicken, there is a huge list of alternative exotic birds that hold good business potential and is largely unexploited in the country as of now. Let’s take a closer look at a few of them.

Emu

Another advantage is the fact that it requires very minimal investment in facilities and land area. Research shows that around 68% of the investment has to be made in purchase of breeding stock. The rest of the investments go on the farm and hatchery. Feeding cost per breeding pair per annum was estimated to be Rs. 3,600.

According to the Emu Farmers Association, there are currently around 900 emu farms across fourteen states in the country, with a majority of them in Maharashtra and Andhra Pradesh. Most of the income is generated through the eggs, which can fetch you somewhere around Rs 600 to 1000 per egg in the market. Since a pair of chicks can cost as much as Rs 15,000, farmers are hesitant to sell emu meat, even though it can be sold for anywhere between Rs 300-750 per kg.

ative to Australia, these softfeathered and ﬂightless birds are mostly farmed for their meat, oil and leather. Emu meat is considered to be low on fat and cholesterol. Its fat is used to produce oil for cosmetics, dietary supplements and therapeutic products. The feathers and eggs of emus are used for arts and crafts purposes and emu leather is used in combination with other leathers to make items like wallets and shoes. Whether being farmed in Australia, the United States, China or India, emus can survive in a variety of climates. One of the biggest advantages of farming this bird is its excellent feed conversion ratio. An emu can reach up to 2 meters in height and around 65 kg in weight, and yet its annual feed intake does not exceed more than 600 kg. Besides this, emus have a hatchability rate of more than 80% and a chick mortality rate of less than 10%. They are even immune to bird ﬂu!

MAY 2008

DARE/“emu”sing facts Average Life Span: 10-20 years Sexual Maturity: 2 to 3 years Breeding Years: 25+ years Mating Season: November to March Eggs per Year: 10-60 Incubation Period: 48 to 52 days Emu Products: Eggs, meat, oil, feathers, leather

DARE.CO.IN

opportunity/agri

Ostrich

DARE/about an ostrich Average Life Span: 30-70 years Sexual Maturity: 2 to 4 years

ative to Africa, these ﬂightless birds are the largest living species of birds and lay the largest egg of any bird species. They are farmed in over 50 countries, particularly for their meat, oil and leather. Like emus, ostrich meat is also considered to be extremely healthy. It is low on fat, cholesterol and calories and rich in protein and iron. There has been an increase in the demand for this meat, especially after the threat of mad cow disease, and it is becoming a popular choice in restaurants in Europe, Japan, Australia and China. Ostriches are also farmed for their feathers, which are being used as raw material for fashion accessories, show business, brushes and automobile accessories. Ostriches can tolerate a wide range of temperatures. The climate of India, with zero temperatures of the subHimalayan ranges and 45+ degrees of the Rajasthan desert, are found to be hospitable for setting up ostrich farms in the country.

Pigeon This species of bird can be found worldwide, but the greatest variety can be seen in the Indomalaya and Australasia ecozones. Pigeons and doves are used synonymously most of the time, but there is a tendency for doves to be used for smaller species and pigeon for the larger ones. Young doves and pigeons are called squabs. The powerful breast muscles of pigeons and doves make it an excellent form of meat. Squab meat is dark, rich and tender and ranks quite high on gourmet foods. Squab farming is extremely labor intensive and requires constant attention over the ﬂock. Un-

Breeding Years: 30+ years Egg Laying Period: March to September Egg Laying: 60 eggs average per breeding Incubation Period: 35 to 45 days Growth: 1 cm/day during the ﬁrst 6 months Marketable Age: 12 months Ostrich Products: Leather, meat, feather, oil Meat Output: 30-35 kg ﬁllet and steak

Setting up an ostrich farm requires a high capital cost as you have to invest on land for grazing, shelters, fencing and incubators. Young birds (upto to 21 days) ideally require an indoor space of 0.5 square meters per bird, with concrete ﬂoors and under ﬂoor heating. An outdoor space of 35 square meters per bird is required. Breeders require an indoor open shel-

ter and a minimum outdoor space of 1000 square meters per bird. Ostriches that are over one year need an indoor space of ﬁve square meters per bird. Running costs include the cost of feed, slaughter, as well as various veterinary treatments, as ostriches are vulnerable to avian diseases. Once in full production, returns can be expected from ostrich meat, skin, chicks, fertile eggs for incubation and infertile eggs for cooking and crafts.

like chickens and turkeys, pigeons are monogamous; therefore a one male to one female ratio should be maintained for fertilization and incubating eggs. Breeding pairs need to be replaced every 4-6 years. A good breeding pair can produce around 12 or more squabs each year. The second, third and fourth years are said to be good years for production. Squab farming is best suited to grain producing regions in dry, temperate climates, where there are no sudden ﬂuctuations of temperature and humidity. Close proximity to grains reduces the production costs. Another advantage is that the squab business does not require large amounts of land. You can keep around 5000 pairs of squabs in two-three acres of shed and each

pair needs around four square feet of nesting space. The shed should have a height of at least two meters, but preferably higher to improve ventilation as well as insulation against hot and cold weather. Six to nine square feet of ground space should be provided for each pair in the pen. An 8x12 pen can house 12-16 pairs. Running costs include providing pigeons with sufﬁcient nest building material such as pine needles, wheat straw, wood shavings, dried grass, etc, as they require new nesting material each time the female is ready to lay eggs. Pigeons usually lay one egg and then a second egg about 40 hours later. Eggs hatch around the 17th day of incubation. The nesting period ranges between 21-30 days. Most restaurants look for an average squab weight of around 350-400 grams. It is advisable to sell squabs that have full cover feathers under their wings. Older ones receive a lower price as they are less tender. MAY 2008

DARE.CO.IN

Turkey N

ative to North America, this large poultry bird is raised mostly for its meat. Turkey meat is considered to be leaner than beef or pork and is used to make hot dogs, sausages and ham. The modern domestic turkey is bred to provide extra amounts of white breast meat and to put on weight rapidly. As a result, they are also good converters of feed into weight. Turkey farming is extremely common in various parts of the world, especially in the United States, Canada, Germany, France, Italy, the Netherlands and the United Kingdom. In India, however, turkey farming is still in its nascent stage. It forms just about 2% of the total poultry production. The demand for turkey in India is mostly seasonal, especially during Christmas, Diwali and New Year and is slowly increasing for making biryani. A tropical climate is said to be the best for turkey farming. Various species of the bird are found in Kerala and Tamil Nadu, which is why they are the leading states in turkey production. Low investment in facilities and equipments makes turkey a viable bird for farming. The risk of disease

Goose M

ostly found in Europe, Asia and North America, geese are medium to large birds, fast growing and domesticated mostly for their meat, eggs and down feathers. Goose eggs, used in cooking, are large, weighing

MAY 2008

opportunity/agri and expenditure on medicines and vaccination is also negligible, when compared with other poultry. They require a high protein diet from the day of hatching until about four weeks. After four weeks, each bird requires 50 to 100 grams of concentrate. Adult birds can consume up to 200 grams of grass and weeds in a day. As for the space, till about four weeks, the bird needs around 1.25 square feet of floor space, 2.5 centimeters of linear feeder space and 1.5 centimeters of linear water space. At 1619 weeks, each bird needs four square feet of floor space, 6.5 centimeters of linear feeder space and 2.5 centimeters of linear water space. Breeders require five square feet of floor space, 7.5 centimeters of linear feeder space and 2.5 centimeters of linear water space. Research shows that a male turkey can get a profit of around Rs 600 at 24 weeks of age (around 15 kg). Similarly,

DARE/turkey trivia

around 120-170 grams and have proportionally more yolk than chicken eggs. Similarly, goose meat is fatter than other poultry meats. Their feathers are used for bedding and clothing. Geese are well adapted to hot climates and high rainfall regions and are mostly found in shallow waterways and marshlands. They are particularly well suited for domestication as it is easy and cheap to maintain them. They require less attention than many domestic birds and adapt easily to captivity. They also seem to be more resistant to avian diseases than other birds. Investments for geese farming include housing, incubator and dry

plucking machines. Artiﬁcial lighting, enabling 23 hours of light per day, needs to be provided. Good quality grass should also be available for grazing, since geese cannot easily digest coarse seeded grass. Stocking density should be about 125 birds per hectare. Drinking water and feed in the form of a mash or pellet should be provided. One of the biggest challenges faced is the fact that just like pigeons, geese are also monogamous. However, under commercial conditions and with good management, this can be dealt with. Young geese should have a minimum of six weeks together before fertile eggs can be expected. For best results, however, the duo should be reared together from birth. Over-feeding the geese can reduce fertility.

Sexual Maturity: 30 weeks Eggs per Year: 80-100 Incubation Period: 28 days Marketable Age: 14 weeks (males) 17 weeks (females) Marketable Weight: 7.5 kg (males)/ 5.5 kg (females) Mortality during Brooding Period: 4% Fun Facts • Turkey droppings are being used as a fuel source in electric power plants. A plant in Minnesota, United States provides 55 megawatts of power using 700,000 tons of dung per year. • Turkeys not only help in enriching the soil through their droppings, but are also efﬁcient weed removers. a female turkey can fetch a proﬁt of around Rs 400.

DARE.CO.IN

opportunity/agri

Duck D

ucks are aquatic birds, found in both fresh and sea water, and are farmed for their meat, eggs and feathers. Duck meat is not as lean as chicken and therefore it is less preferred. However, ducks lay more eggs per year than a chicken and the size of a duck egg is larger than a chicken egg by about 20 grams. In India, duck farming occupies around 10% of the total poultry production and contributes about 7% of the total eggs produced in the country. It is mostly being done in the eastern and southern states of India. Duck meat can fetch up to Rs 70 per kilogram and a dozen duck eggs can fetch roughly up to Rs 50. One of the biggest advantages of duck farming is that it can be integrated with other modes of farming, bringing in a double source of income. In duck-cum-ﬁsh farming

DARE/digging the duck The following are statistics of the Khaki Campbell breed of duck, which is said to be the best for egg production. Sexual Maturity: 120 days Eggs per Year: 250 Body Weight at 40 Weeks: 1.80 kg Daily Feed Consumption: 130 grams/ bird Duckling Mortality Rate (0-8 weeks): 3% Grower Mortality Rate (8-20 weeks): 0.2-0.5% Adult Mortality Rate (20-72 weeks): 5-7% for example, duck droppings serve as food for ﬁsh. In duck farming with rice cultivation, ducks loosen up the soil around rice plants and they keep a check on insects and weeds.

Chicken – SPF and GP C

oming back to chickens, there are various other businesses besides broilers. The demand for speciﬁc pathogen free eggs (SPF eggs) is increasing in research labs all over the world. The use of SPF eggs is mainly in the production of live virus vaccine to treat disease in poultry as well as humans. Fertile eggs produced in a normal hatchery contain various viral antigens and thus cannot be used for vaccine production. SPF birds are constantly monitored and it is ensured that they are reared in a controlled and sterile environment. In India, Venkateshwara Hatcheries claims to be

the only commercial producer of SPF chicken embryos in all of Asia and is one amongst the four manufacturers in the world. Also, there is a great demand for broiler breeder grandparent stocks. Most broilers originate from great grandparent eggs that come from a handful companies in the United States and the United Kingdom. Compared to Indian chicken that is poor in egg and meat yield and feed conversion ratio, imported grandparent chicken has a good g e ne tic pote nti al for high productivity. Srinivasa Hatcheries, Venkateshwara Hatcheries

Ducks do not require complex houses. They just need to be properly ventilated, dry and rat proof. Ducks prefer to be outdoors, so an easily accessible and large open area is recommended. The proportion of night shelter to outside run should ideally be 1/4: 3/4. A continuous water channel that is 50 centimeters wide and 20 centimeters deep should be constructed parallel to the shelter. A feeding space of around 0.5 meter per 100 ducklings should be established. Incubators are required for the eggs and brooders to keep young ducklings warm. Adequate lighting should be provided, especially to dayold ducklings. Ducks should be constantly monitored for avian ﬂu as they are especially prone to it.

DARE/great grandparents Great Grandparents • Imported as fertile eggs from nucleus breeding ﬂocks and hatched in a quarantine facility • Released at 9 weeks and placed on breeding farms • Produce fertile eggs that will be hatched to become grandparents of broilers Grandparents • Placed in separate farms after hatching • Produce fertile eggs that will be hatched to become parents of broilers Parents • Placed in separate farms after hatching • Produce fertile eggs that will be hatched to become broilers Broilers • Day-olds placed in separate farms • Reared until 35-55 days • Processed for human consumption and the Sugana Poultry Farm are some of the players in India with grandparDAR E ent stocks. MAY 2008

DARE.CO.IN

blogs/opinion

Want to be an Entrepreneur? Be a Good Man An entrepreneur’s ultimate success hinges on being a good human being in today’s idea-driven world /Anurag Batra

Depth of knowledge also bespeaks depth of spirit. A successful entrepreneur needs that: it adds a dimension to his powers of meditation, of thought. That is what carries him through the rollercoaster of a life in business, with its highs and lows 76 MAY 2008

o journey is more exhilarating than running one’s own business. At first glance, all entrepreneurial ventures may appear to be about capital, cash flows, products, marketing and sales. But that is part-truth, or ardh satya. I believe that successful entrepreneurial ventures are driven by good human beings. By a good human being I mean one possessing both head and heart qualities. Successful businessmen such as Ratan Tata or Narayana Murthy are known for their personality attributes, such as their views on life, attitudes and habits, which are reflected in their style of running their business. In the past India has also seen entrepreneurs as individuals who have manipulated the political system and were successful business people because of that. It might have been true 30 years ago but there has been a paradigm shift since then and being an entrepreneur today is about ideas, and capital follows ideas and the ability to execute them. The father of modern management the late Peter F. Drucker said, “Entrepreneurs need to search purposefully for the sources of innovation, the changes and their symptoms that indicate opportunities for successful innovation. And they need to know and apply the principles of successful innovation.” To my mind, such a successful entrepreneur must possess five basic qualities: talent, discipline, commitment, selflessness and forgiveness. Unarguably, talent is the foremost prerequisite for any successful entrepreneur. Without talent, there is nothing. With talent comes the ability to cope with setbacks, regroup and advance again.

But talent is not all. Successful businesses also require the organization of skills, resources and above all, proactive and positive attitudes, shared by the collective. For success may look easy, but it is not. A great part of it comes from commitment and hard work. Owning and running a business means long hours of dedication, personal sacrifice and tonnes and tonnes of hard work. The noted mountaineer Sir Edmund Hillary, who recently passed away, said that “It is not the mountain we conquer, but ourselves.” Discipline is very important for entrepreneurial success. It is the refining fire by which talent becomes a reality. Modern day management guru Deepak Chopra says, to have discipline is “to have a passion, to have a dream, to have a purpose in life. And there are three components to that purpose. One is to find out who you really are, to discover god; the second is to serve other human beings, because we are here to do that; and the third is to express your unique talent, and when you are expressing your unique talent, you lose track of time.” When I speak of selflessness as a necessary attribute, I mean a successful entrepreneur does not have an inflated ego: the enterprise takes precedence over his personal prestige. A couple of months ago, while addressing the captains of industry, Maruti Suzuki chairman and chief executive, Osamu Suzuki said, “During my initial years at Suzuki back in Japan, my wife and I would wait for our clients at the airport and then take them around our factory and escort them back.” Today in India, who doesn’t know the name

DARE.CO.IN

blogs/opinion of Maruti Suzuki, the leading car manufacturer in the country? Come to think of it, why go all the way to Japan to learn humility? Just look at our Metro man E. Sreedharan and the Delhi Metro, a picture of efficiency and safety, not just on the track but also on the construction sites working 24 x 7. Since the beginning of the Metro project, not a single human life has been lost, not a worker, nor anyone else in the proximity of the worksites. Awareness of safety norms and their observance is universal and unfailing. Why? Because Sreedharan leads by example: if he were to do an on-site inspection, he would first put on the worker’s fatigues and headgear. It is true that no enterprise has grown richer that doesn’t have a set of committed human beings. That takes me to another important trait of a successful businessman: forgiveness. Accountability is a must. But, as has also been demonstrated, so is a second chance. One shouldn’t overlook three powerful resources always available to oneself, namely, the power of love, prayer, and forgiveness. Mahatma Gandhi said, “The weak can never forgive. Forgiveness is the attribute of the strong.” The entrepreneur, as a leader, must set that example. I find inspiration in Lord Ganesha’s qualities: communication skills, wisdom and the ability to adapt to circumstances, qualities modern manag-

ers also need. Why is Ganesha, son of Shiva and Parvati, also Vigneeshwara, or the remover of obstacles? Let me illustrate with a tale. Shiva and Parvati once acquired a pot containing the nectar of supreme knowledge. Both their sons, Kartikeya and Ganesha, contended for it. The hapless parents set up a competition. The rules read that the ﬁrst one to go around the world seven times would have the vessel of supreme knowledge. Kartikeya, man of action, instantly started circumambulating the world on his peacock. With a mouse for a mount, Ganesha needed to do some quick thinking. He analysed the situation: he was being held back by his bulk and slow mount. As a solution, he recast the perspective and arrived at a different truth: his parents were bigger than the world (because the world, of course, ultimately came from Vishnu). So, Ganesha went around his parents seven times and claimed the pot of nectar. Adapting to his unique form as a given, he found a better solution to his problem and acted on it. The basis of the Hindu Trinity— Brahma the creator, Vishnu the preserver and Shiva or Mahesh the destroyer—makes up the three aspects of godhead. Vishnu’s preserving, restoring and protecting powers have been manifested in a variety of avatars. The seventh and eighth avatars of Vishnu, Rama and Krishna, are the heroes of

mythology. Vishnu lies supine in the infinite ocean from which the world emerges; he is called Narayana. From his navel grows the lotus out of which appears Brahma, the god who creates the universe. And Vishnu’s wife or Sree is the goddess of wealth and fortune. I feel that every successful entrepreneur should be blessed by goddess Saraswati and goddess Lakshmi. What it means today is that in the emerging knowledge society, one must win the blessings of the one to win the blessings of the other. That depth of knowledge also bespeaks depth of spirit. A successful entrepreneur needs that: it adds a dimension to his powers of meditation, of thought. That is what carries him through the rollercoaster of a life in business, with its highs and lows. I hope and pray that I live up to this framework and definition of entrepreneurship that I have just shared with you. I must tell you that I try to though it is not easy. At this point I am reminded of the saying “An entrepreneur tends to bite off a little more than he can chew hoping he’ll quickly learn DAR E how to chew it.” Anurag Batra is real life, first generation entrepreneur who is Much Below Average (MBA) from the prestigious Management Development Institute, MDI. When he is not busy writing such columns, he can be reached at anuragbatrayo@gmail.com. Anurag is the co founder and editor-in-chief of exchange4media group which includes exchange4media.com.

SMS “DARE <your comments, questions or suggestions>” to

56677 or Email us at dare@cybermedia.co.in MAY 2008

DARE.CO.IN

tips/startups

Not just a competition With more and more business plan competitions being organized, many see them as a fashion trend serving no genuine purpose. Maybe itâ&#x20AC;&#x2122;s time to give business plan competitions their due

/Arya Kumar and Aniket Tekawade

t is surprising to hear people say that not many business plan contest winners make it big or even get large VC funding. You could be of the opinion that this is largely a PR and brand-building exercise for the institutions and they donâ&#x20AC;&#x2122;t really mean business. But then isnâ&#x20AC;&#x2122;t it true that Travelguru was a Harvard Business

78 MAY 2008

School business plan product? A quick look at the recent winners of business plan contests (BPCs) conducted in undergraduate schools in India may suggest that winning BPCs these days has become more about great presentations and executive summaries and less about crazy, creative, innovative and mind-blowing

ideas. And this implies that business plans are written simply for winning big prize money and many winners could be cited acknowledging that they have no ambitions to take their ideas forward. And what about the contest itself? Does it really help winners get good funding, mentoring, guidance, sup-

DARE.CO.IN

tips/startups port and other resources? The question about right judging might be more individual in nature, but the more important issue that needs to be addressed is whether the winners are just awarded money or they are nurtured and handheld till they startup.

The international scene Most of the prominent business plan competitions provide access to the whole entrepreneurial ecosystem, like mentoring, incubation, and access to funding. Whether it is the Stanford Business Plan competition—E-Challenge, the UC Berkeley Business Plan Competition, Conquest—the business plan competition of BITS Pilani or Eureka by IIT Mumbai, it is the prospect of getting access to mentors, VCs or incubation that drives people to participate. As most ideas are born during picnics or cafeteria meetings and the team comprises of dormmates, not many have a clear perspective and a right picture of the startup scenario. Therefore creating and building an entrepreneur-conducive ecosystem including incubation on educational campuses becomes a necessary prerequisite. E-Challenge participants at Stanford learn about venture formation and explore their entrepreneurial dreams and vision in a conducive and supportive environment. It extends wide ranging support by way of resources such as general information for entrepreneurs, technical information, legal information, funding/venture capital, business plans, and national and community support organizations, so as to enable participants to translate their ideas into reality. The UC Berkeley Business Plan Competition nurtures entrepreneurial talent across the UC Berkeley community. Wide-ranging resources are provided to prospective teams that participate in the campus, so as to improve their chances of success. The Lester Center, the sponsor of the UC Berkeley Business Plan Competition, has created an eco-system that facilitates in nurturing the budding entrepreneurs by extending a variety of resources and a support system.

A study conducted by Critical I Ltd for BBSRC, which holds a business plan contest especially for biosciences related ideas, reveals an encouraging level of commercialization activity by past participants. Sixty-five percent of respondents have already actively commercialized their research outputs and a further 15% are still actively attempting to do so. The competition significantly increased the attractiveness of commercial exploitation for 88% of respondents and equipped all but 5% of them to better identify research outputs with commercial potential. This study confirms the positive impact that this business plan

“

Two-thirds of the winning

teams of Conquest during the last three years have successfully launched

their ventures. This gives a greater conﬁdence

”

in the role of BPCs

competition initiative is having on enhancing the commercial knowledge and understanding of participants and encouraging and stimulating them to commercialize their research outputs. There is a twist in the tale though. The report also says that two-thirds of those who have commercialized their research feel that it was likely that they would have done so, regardless of the impetus provided by the BPC. However, it is clear from qualitative research conducted that all participants beneﬁted signiﬁcantly from the BPC, not least in motivating them to devote time and energy in making headway into their idea. One suspects that a number of respondents may, ex post facto, have over-estimated their own determination and under-estimated the impact of the BPC in that regard.

What’s due This brings us to an interesting point. Is it that BPCs aren’t given enough credit and publicity that they eventually end up looking as unimportant stages in a startup’s life? A look at the winners of Conquest, the business plan competition at BITS Pilani, proves that BPCs might just be angels in disguise. The winners and runners-up of Conquest 2005: Mobile Medics and Habits have successfully launched their ventures and are moving ahead to respond to the challenges ahead. If it hadn’t been for the furore created by the first edition of Conquest four years back, these ideas might just have remained ideas that you discuss with friends and not have seen the light as startups. Twothirds of the winning teams of Conquest during the last three years have successfully launched their ventures. This gives a greater confidence in the role of BPCs as a major component in the promotion of entrepreneurship. The presence of hype around an event can be annoying at times, but it definitely gets people talking about it, often in awe. However, in undergraduate schools of technical nature, BPCs are often a trying experience to the purists around, those who can’t come to accept the fact that business and technology can in fact go hand-inhand. In reality we are trying to get one step closer to building an industrially self-sustained India. BPCs might sound sophisticated, hyped-up events but the bottom line is that this new genre of business challenge provokes people to think and act differently. It is like creating the product before the market exists. If there is a big prize luring students without any loss on their side, there might easily be a new creed of students dreaming of being the next Steve Jobs or Narayan Murthy! It might be that participants might just try out their hand at writing business plans for the sake of winning, but the unexpected success coupled with a favorable ecosystem on campuses might just make them give their DAR E idea a second thought. Arya Kumar, Chief Entrepreneurship Development & IPR Unit, BITS and Aniket Tekawade, Student MAY 2008

DARE.CO.IN

opportunity/ﬁlters

Unﬁltered growth The demand for ﬁlters is on an upswing, projected to touch $860 million by 2011. Manufacturing and dealership opportunities beckon entrepreneurs in this segment /Vimarsh Bajpai

etween 2001 and 2006, filter demand in India rose by more than 12% per annum while industry production expanded by 7.9% per year from 2001 to 2006, says a recent report by The Freedonia Group, the US-based industrial market research firm. The demand for filters globally is projected to jump by 5.6% annually through 2011 to $49 billion. Filters can broadly be divided into two types—air filters and liquid filters. While air filters find broad usage in automotive, chemicals and pharma industries, liquid filters are used in water purifiers and the oil industry.

Opportunity areas With vehicular pollution touching new levels, and India becoming a hub for automobile manufacturing, the demand for filters is set to rise. According to estimates, the automotive industry is worth around $34 billion a year and ropes in about 5% of India’s GDP. The industry produces about 1.5 million vehicles. Manufacturing and supplying filters to automakers could rake in good profits. The demand for internal combust engines and related filters stood at $180 million in 2006, and is projected to touch $290 million by 2011. Buoyed by the growth prospects, when Mann & Hummel, the German automotive components giant, set up its subsidiary in Tumkur, Karnataka in 2006, it wanted to produce and sell its air filter systems to automotive companies and original equipment manufacturers in India. The parent company had indeed read into the finer lines of the booming automotive industry here. Also, the country’s prowess as a major contract manufacturing hub made India an attractive market. Two years down the line, Mann & Huummel is reported to be contem80 MAY 2008

plating expanding its production facility in Tumkur, having spent around Rs 45 crore on the facility. It is also mulling setting up another facility somewhere in north India. The motive is clear: to make the most of the rising demand for ﬁlters in one of the world’s fastest growing economies. The other segment that holds promise is air puriﬁcation. With more

DARE.CO.IN

opportunity/ﬁlters

DARE/quick facts • World filter demand to jump by 5.6% annually through 2011 to $49 billion • China, India and Russia will post some of the strongest sales gains • Sales of filters in India totaled $550 million in 2006, making the country the fourth largest market in the Asia Pacific region • Filter production in India expanded by 7.9% per year from 2001 to 2006 • Between 2001 and 2006 in India, filter demand rose by more than 12% per annum • With shipments of $410 million in 2006, India is the fourth biggest producer of filtration products in Asia Pacific region and more offices and business centers dotting our urban landscape, the demand for cooling and heating systems is on an upswing. Air filters are used in these systems to remove dust, pollen, mold and bacteria from air and improve indoor air quality. These filters are used in building ventilation systems. The demand for air purification filters touched $140 million in 2006, and is projected to reach $215 million by 2011. Tajinder Pal Singh is a happy man. His company, Kanwal Enterprises, manufactures and exports filter-making machines, most of them used to manufacture air and automotive filters. He is quite upbeat about the demand side of his business. “The demand for

filters will always be there because all filters used in machines have to be replaced after a certain period of time,” says Singh. In a highly unorganized filter market, dotted by several small players across the country, Singh represents the optimistic side of the filter manufacturing business. While Singh manufactures machines used to make filters, Kolkatabased Amit Karmakar runs Clean Filter Industries, which manufactures and exports air filters used in air-conditioning and chemical plants. He too is quite upbeat about the growth of this industry. Karmakar cites the example of the use of filters in the chemicals industry. “Take the example of a nitric acid manufacturing plant. The air used cannot be ordinary air. It has to be filtered before entering the plant. This is where our ventilation filters are used,” he says. Demand is high from the medical industry too. “Operation theaters have to have clean air, and the filters have to be changed time and again,” he adds. Karmakar also provides filters to several leading air-conditioner manufacturers in the country. Filters are being widely used in airconditioning systems to maintain indoor air quality. For instance, Paharpur Business Centre in Delhi maintains indoor air quality with the help of its air purification plant comprising filters, air scrubbers and dehumidifiers. Filters are also used in maintaining air quality inside airplanes. Take the case of US-based Donalson, a leading manufacturer of filtration systems and parts. In December last year, top

DARE/top ﬁlter producers GLOBALLY* • Donaldson

USA

• MAHLE International

Germany

• Mann & Hummel

Germany

• DENSO

Japan

• Parker-Hanniﬁn

• Wix Filtration Products

• CLARCOR

• Sogeﬁ

Italy

*In 2006 aircraft manufacturer Boeing chose Donaldson to supply high efficiency particulate air (HEPA) cabin recirculation filter and electronic equipment (E/E) cooling filters for the new Boeing 747-8 aircraft. According to Donaldson, HEPA filters meet or exceed 99.97% efficiency on 0.3μm, the highest rating available for aircraft cabin recirculation systems, trapping dust, lint, smoke, bacteria, viruses, spores and other contaminants. Betting big on the growth of nuclear fuel technology, a US-based firm Nuclear Filter Technology provides ventilation for flammable gas mixtures in nuclear waste containers. The company is founded on a unique product that safely vents gases through a robust, chemically inert and radiationresistant carbon composite filter. With the demand for filters reaching new highs, it would not be wrong to call it a “green” opportunity. D A R E MAY 2008

DARE.CO.IN

/blog

Word of Mouth – Your Best Friend, Your Worst Enemy /Rupin Jayal appropriate choice for each individual and whether the product really lives up to the claims made about it. The logic for word of mouth — To understand and access, To evaluate and discriminate, To reassure, To debate, and To disseminate.

To understand and access

“T

he relative importance of word of mouth today is far greater than other sources of information. It is now 1½ times as important to consumers as it was twenty five years ago and approximately twice as important today as editorial or advertising. So word of mouth is not new, but in today’s environment its importance stands out heads and tails above the other options.” (Is WOM Just a Buzz? Ed Keller, The Keller Fay Group, Simon Chadwick, Cambier LLC1- MRS 2006) Why do people increasingly depend on their friends, relatives, neighbors, colleagues, other associates and peers to find out the “real deal” about products and brands and, even more importantly, is there anything marketers can do to influence or channelize it? Should they even try? In many markets, the key cause of the growth in the importance of word of mouth (and word-on-net) has been due to the growing disillusionment with the hype indulged in by most seller-generated content. In India it is perhaps more of a way to cut through the cacophony of messages in highly cluttered categories. It is also a way of making tech-driven and new, emerging categories more comprehensible. So it is possibly less about credibility and more about comprehension. However, in more mature categories, such as consumer durables and automobiles, it is a very critical way of finding the most 82

MAY 2008

This is especially so of new categories and technologies. A youthful population, fascinated by technology is constantly seeking “newness” as a source of excitement. The rapidity with which mobile phones have become ubiquitous and even more so the speed with which non-voice features are becoming increasingly popular is just one example of this. In automobiles, manufacturers generate a continual stream of new or modified products in order to sustain excitement and ensure a steady flow of potential customers. White good brands (refrigerators, washing machines etc.) keep creating new “hitech” features, with acronyms to match, to attract the easily distracted customer. However, the paradox is that while people are continually seeking new “hi-tech” features they often do not really understand what exactly is meant by them. So they seek out “oracles” amongst their friends, peer group, relations or colleagues to understand what this blizzard of tech acronyms, competing claims and promises really mean. For brands in this space it would be very effective to tap into this oracle group as its ability to influence is significant. Various studies have tried to identify this key influencer group and in categories such as automotive, IT and entertainment electronics it would not be difficult to do so. Even in other categories, such as food products, fitness, recreation, travel and apparel, it would be very useful to create a purposive marketing program aimed at this group. Also oracles like to be ahead of the information and knowledge curve in their area of passion so this becomes

a great opportunity to communicate proposed new products to them and “seed” the market prior to launch. Nokia does this by sending details of its latest range of phones to a “chosen few” who then revel in being the first to know, thereby reinforcing their oracle status. Apple is famous for their annual gathering where the “master oracle” announces the latest products to the Apple faithful. Oracles can be identified through specialist media they may use—automobile Websites and magazines for auto enthusiasts, similarly specialist outdoor and fitness magazines for those involved in fitness, gadget magazines for those obsessed with gadgets, and so on. Also there are events and fairs where it might be possible to identify your particular oracle group. Trade channels are another useful source of information and could help to identify those who are actually engaged with your category rather than being merely users of it.

To evaluate and discriminate In categories where there is a fair amount of awareness and knowledge and the tectonic shifts in technology are few and far between, most people still seek the advice of oracles or increasingly of Internet-generated feedback, to evaluate the best option for them. In fact, user-generated feedback is often perceived to be even more credible than published information. This is because it is believed that published feedback is often motivated and not entirely objective. In the future, in many categories, user-or oracle-generated feedback will make or break brands. As people get more involved with costs other than the actual price of the product or service, what they read about, the social initiatives, for example, of the company behind a product or service, may actually impact their choice. Body Shop is one example of this where the lack of ani-

DARE.CO.IN

/blog mal testing and the fact that the products demonstrably beneﬁt the communities from which they are sourced, becomes a strong reason to choose this brand over other personal care brands. Similarly, Shell has mounted a sustained campaign to reinforce its environmentally sensitive approach to what is perceived to be an environmentally unfriendly category. In India, the Tata Group is as well known for its social initiatives as it is for being a large business powerhouse. This is partly why the brand itself is held in such high esteem and a potential source of competitive advantage. So the oracles espousing your brand may not be the actual users of the brand but people who are very driven by social or environmental issues. Their advocacy could actually provide your brand a competitive advantage when people are evaluating you amidst a sea of similar products or services.

To reassure Many of us suffer from what is known as “post purchase cognitive dissonance.” What this means is that just after making a purchase, particularly a high value one, doubts assail us and we end up asking whether this really was the best choice. This is exacerbated when we do a lot of research and talk to lots of oracles before making a choice. Sometimes the power of this feeling is so great that it results in “purchase dissonance” and we find ourselves too paralyzed to make any decision at all. Reassurance from those we respect, post purchase, is very important. This applies equally to products and services. We might have fixed up a delightful holiday and are about to pay for it when we meet a seasoned traveller who convincingly shows us that we have just let ourselves in for a holiday from hell. Or that audiophile who has a mildly concealed sneer when we show off our recently acquired hi-fi music system. Or that automobile enthusiast who is completely underwhelmed with our gleaming new car. So while supporting sales through word of mouth is important, it is equally important to build conviction with those who have bought our product. It is not unusual to ruin a wonderful pre-purchase experience with a lousy post-purchase experience. Possibly the best place to actually influence and build favorable word of mouth is just after a person has bought

our brand. Instead of moving on to the next prospective buyer, it might actually be better to use the opportunity of a recent purchase to convert a customer into a brand advocate and to convert preference into conviction. Sometimes even a defect or problem can actually do more to build conviction, instead of disdain, in our customers. A routine purchase experience sometimes does not allow us to forge a deeper relationship. A problem solved, with delight thrown in for good measure, could create a customer advocate. A person I know bought a car that had some niggling problems. Instead of asking him to bring the car to the dealership his car was collected from his home, a standby car provided and when the car was returned to him the basic stereo system had been upgraded to a CD system. And no, this was not a super luxury brand. Even though he wasn’t a car enthusiast, his enthusiastic recounting of this wonderful experience won that car brand quite a few converts. So capture the moment when someone buys your product and service and seek ways to delight them and make them oracles of your brand.

To debate If your brand becomes a subject for debate that truly is the ultimate form of word of mouth. There was a time when the cola brands actually had separate camps and people in opposing camps would debate their latest advertising and poke fun at each other. If your brand is debated (but not derided) then it does hold a position far above that of more “ordinary” brands. Apple versus IBM, Harley Davidson versus Japanese/ Italian brands, Swatch versus conventional watches, Pulsar versus Karizma, Bullet versus “the rest,” Old Monk versus other brands, examples abound. Favorable word of mouth as brand advocacy is very precious, but word of mouth as hotly debated conviction is priceless. There is just one very important caveat. To be able to attain a level where your brand becomes a subject for debate implies that it has to have those who passionately advocate it. This also means that there will be those who oppose it. This is the price for building brand conviction and not just loyalty. For those who are true “Bulleteers” there is no other motorcycle like it. For those who are not, it is an unreliable,

noisy, sluggish and obsolete bike. But the power of the Bullet brand is this white hot debate. Without it Bullet may just have gone the way of its peers—do we even remember them anymore?

To disseminate One of the most important roles for word of mouth is to feed those who power it—the oracles. They gain their standing from being able to know first and know more. Thus, brands must ensure that their Website is current and has lots of information, not just of the brand, but of the category and possibly competing categories as well. The Website must be a fountain of knowledge for the oracles. It is equally important to know where the debates are, which sites are getting the maximum hits in terms of customer feedback and what is being said. Often you have people who ask and you have those who answer—the latter clearly see themselves as oracles. It is important to identify these people and possibly seek to start a relationship with them based purely on information and knowledge sharing. Any attempt to influence or “sell” to them, however, would almost certainly generate a backlash and that would make word of mouth your worst enemy. Both good news and bad news gets rapidly disseminated in today’s highly networked world. The power of an oracle comes not just from advocating the good but from also “protecting” people from the bad. Also, it is likely that a satisfactory experience will not get reported but almost certainly a bad one will. And many of the bad ones make for more entertaining reading! There is nothing like a bad experience to bring out the hidden poet, author or anarchist in all of us. Word of mouth is the most powerful tool with which to build brands. As people-to-people networks keep growing and communities increasingly become global, word of mouth will only become more important. Whether it is directly or through the Internet, people who know will significantly impact the decisions and opinions of those who are ambivalent and the latter will ever increasingly seek out the former. No one can afford to ignore such a powerful force. Words are loaded pistols. Jean-Paul Sartre (1905 - 1980) French author, dramatist D A R E The Author is Director-Strategic Planning at M&C Saatchi MAY 2008

DARE.CO.IN

Creativity: A Survival Strategy Entrepreneurship is incomplete without ample doses of creativity “Is this a swear word?” “No.” “In any language, is it a swear?” “No.” “Is there such a word?” “Not that I know of,” shot back Balki. “Alright, then Hoodie Baba it is!”

his conversation unleashed one of the most memorable taglines in Indian advertising: Bajaj motorcycles’ ‘Hoodie Baba!’. Balki of Lowe India created a phrase out of nothing at all and built it into a brand that phenomenally pushed Bajaj’s sales ﬁgures.

In this, Balki has a very powerful lesson to teach entrepreneurs: one must take creative risks while building a business. “Sometimes you just have to do something that makes you feel like a fool. You have to take that chance. Be-

NEN is India’s leader in entrepreneurship education, with over 350 academic institute members, and reaching more than 300,000 young people. New and future entrepreneurs can access NEN’s support through. www.nenonline.org

MAY 2008

cause somewhere a lot of being successful is telling yourself that you are not a fool. You move on with it, even though you know you might fall flat on your face. That’s the only way to do something creative,” Balki says. What Balki did with his tagline, entrepreneur Prakash Mundhra did with his business idea. He launched a rather unusual product, especially, perhaps, for an MBA from a top institute. Prakash packages ‘Ganga jal’ with other puja items in a neat orange box. His product Blessingz, launched in 2006, brought in revenue of Rs 34 lakh in the first year. Mundhra says he owes his success to the creative edge he enjoys over his competitors. But, as Tina Seelig, Executive Director of Stanford Technology Ventures Program explains, the role of creativity in entrepreneurship is not limited to a business idea or a marketing strategy. “Creativity defines the starting point, the middle point and the end point of a venture. You have to be creative

DARE.CO.IN

Unlock your creativity Want to tickle your mind to think differently? Try some of these creativity games. So Much in Common This game is a great way to pep up a gettogether. Form groups of three to five members and ask them to list down things that are common between them. The commonalities should not be obvious factors such as age, educational discipline, appearances, hobbies, nationality etc. Suggest that they think about outof-the-box things like: Have all of us used pirated CDs? Have all of us seen a tiger? Have all of us traveled without a ticket? Have all of us visited more than two countries? Have all of us met with an accident? Have all of us missed a flight? Is there anything all of us like or dislike? This simple game not only helps people get to know each other, but also makes them think differently as well. Design a Wallet “Design a Wallet” is a great game to create a sellable product. Form pairs and ask them to analyse their own wallets and that of their partners. Find out what the wallet means to each individual: A storage container? A photo album? A life organizer? A black hole? Find things that they love, and hate about their wallets. Get them to make a wallet for each other based on what they have learnt. Provide different colored papers, tape, glue, scissors, pens, rubber bands, color felt pens, color markers, paperclips and rulers to help them out. In the end, find out how many would buy the wallet that their team mate has created for them. This fun game develops a value oriented approach to creativity. For more creativity exercises, visit www. nenonline.org while identifying a business opportunity, while building your team, while streamlining your processes. In fact, you even have to be creative while shutting down your company. Creativity is essential for effective problem solving throughout the life-cycle of a company,” Seelig says. To Raman Roy, the ‘father of BPOs in India’, creativity is a “survival technique.” “Entrepreneurs need to constantly think out of the box to survive,” stresses Roy, who claims to get his creative kick in finding innovative solutions to client problems and seeing them work.

Students of Mount Carmel College in Bangalore put their creativity to test during the ‘Cooking with Constraint’ contest

Interestingly, the power of creativity is being realized not only by entrepreneurs who have been there and done that, but by aspiring entrepreneurs as well. Entrepreneurship clubs across campuses are experimenting with creative games to help students think differently. While the Rs 50 exercise is hugely popular, where students have to build a business using the threadbare seedfund, ‘Bad Idea to a Good Idea’ is another attractive game where students challenge themselves to improve the quality of creative ideating. Recently, Bangalore-based Mount Carmel College organized an event called ‘Cooking with Constraints’, where participants were given a stock of limited ingredients to prepare a creative lunch box within a given time. It was to replicate a circumstance entrepreneurs struggle with all the time: never enough people, never enough time, never enough money. Rajeev Roy, Coordinator at Centre for Entrepreneurship, Xavier Institute of Management, Bhubaneswar, often plays the ‘Ideas from a newspaper’ game with his students, which he feels

helps in creative idea generation. “Students comb through a newspaper and list down all the business opportunities they can derive from the articles. As an additional exercise, they also note the bad ideas and strategize around them to make them work as good ideas,” shares Roy. According to Roy, this exercise helps students to creatively tackle the dynamic business environment. Shirish Jajodia, a metallurgy student of IIT-Powai ﬁnds these creativity exercises an excellent way to tickle the mind and channelize one’s creative thoughts towards problem solving. “The effect is long term, as it builds conﬁdence in our creative abilities which is essential to our career development,” Shirish explains. Seelig, who runs courses on creativity in Stanford University, is enthused about creative games too. “Most people are naturally creative but they keep it under lock and key. Creative games conceptualized around brainstorming and idea generation even help in triggering the entrepreneurial drive in them,” she says. DAR E Content provided by NEN MAY 2008

DARE.CO.IN

opportunity/safety

The future lies in safety With increasing workforce and the rising importance of safety measures, industrial safety has become a safe bet

/Chhavi Tyagi

s India establishes itself as an economic superpower, the country is catching up with the rest of the world in terms of improving the working conditions of millions of its workers. Rising incomes and exposure to international work standards is bringing in a change in the way Indian companies look at workplace safety, opening up a market for those specializing in providing safety equipment and services. Compared to more developed countries, the industrial safety market in India is still in its infancy, mainly due to enforcement issues. The European Union (EU) for example, has a far better track record of enforcing safety laws than India. Though India has no dearth of laws like The Indian Factories Act, The Indian Explosives Act and The Building and other Construction Workers Safety and Welfare Act of 1996, very little of it is put into practice. “These Acts speak about employee safety in their purview. However, when it comes to implementation, many companies fail to adhere to them,” agrees the spokesperson for Maytas Infra Ltd., one of the few Indian companies that have implemented a comprehensive safety, health and environment (SH&E) program for their workers.

Safety ﬁrst? According to the law, it is the responsibility of an employer to make sure that

86 MAY 2008

DARE/ILO & WHO International Labor Organization (ILO) and the World Health Organization (WHO) deﬁne occupational health as: “Occupational health should aim at: the promotion and maintenance of the highest degree of physical, mental and social well-being of workers in all occupations; the prevention amongst workers of departures from health caused by their working conditions; the protection of workers in their employment from risks resulting from factors adverse to health; the placing and maintenance of the worker in an occupational environment adapted to his physiological and psychological capabilities; and, to summarize, the adaptation of work to man and of each man to his job.” no catastrophe befalls his or her employees during work hours. However, despite the abundance of laws, the market for providing industrial safety equipment and services has lagged due to lack of compliance by companies. The scene, however, is changing, says Ramdas Ugale, owner of Shree Sai Associates, a Mumbai-based safety and compliance consultant. “Developed markets like UK and US have a very mature safety market. In India it is just starting out. Not only are new products being launched, but even new sectors

are coming up. Employers are realizing the importance of industrial safety programs and spending more and more on them,” he points out. According to The World Bank, 80 million new entrants are expected to join the formal manufacturing sector of India over the next decade. The construction sector alone employs about 31 million persons currently—second only to agriculture in terms of employment, according to an estimate by the Construction Industry Development Council. With that, India’s working population (with an age bracket of 15-60) is set to overtake China’s in the next decade. Another report suggests that the manufacture of machinery and equipment other than transport equipment has contributed to the maxi-

DARE/10 most dangerous jobs According to the Bureau of Labor Statistics, the top 10 most dangerous jobs are: 1. Timber cutters 2. Airplane pilots 3. Construction laborers 4. Truck drivers 5. Farm occupations 6. Groundskeepers 7. Laborers 8. Police and detectives 9. Carpenters 10. Sales occupations

TiE Canaan Entrepreneurial Challenge 2008 Wanted: India’s Next Generation Entrepreneurs One of the most prestigious and challenging business plan competitions in India is back! TiE Entrepreneurial Challenge 2008, a national level business plan competition for early stage entrepreneurs in India beckons the best and the brightest with an opportunity to interact with the top VC’s and get mentored by some of the most successful entrepreneurs & professionals. But more importantly, it is an excellent platform to showcase your venture and get a real experience of selling it to real investors. Eligibility Criteria 1. The challenge is open to early stage entrepreneurs from across India who have already incorporated their companies 2. The Business should have a focus on Technology or Services (i.e., covering IT, internet, software, telecom, mobile, education, BPO, KPO etc) Judges and Judging Criteria Eight (8) plans will be short listed by a selection committee & then they will present to an eminent jury of top corporate executives, seasoned entrepreneurs and venture capitalists including people such as Pramod Bhasin, Raman Roy, Saurabh Srivastava, Mahesh Murthy, Sanjeev Bikchandani and Alok Mittal. The top 3 winners will be chosen based on their potential to scale, develop large businesses with sustainable differentiators and become a leader in their categories. Benefits to the Participants 1. Mentoring : 1. Eight (8) short listed candidates will be mentored before the final presentation by TiE –ENP (Entrepreneurship Nurturing Program). 2. The top 3 winners will continue to receive mentoring for 3 months after the event by NASSCOM, Canaan Partners & members of the Jury. 2. Access to Investors : 1. Short listed candidates will have access to a variety of investors including those from TiE, Indian Angel Network, Viedea & other early stage investors during the final event 2. Winners will also be invited to directly participate at the Deal Flow Session at TiEcon Delhi 2008. 3. Publicity 1. Winners will be featured in print & electronic media, enabling them to build awareness about their companies & products. How to participate in the challenge 1. Download application template from www.tienewdelhi.org/canaan/Registration.htm & submit before 12th May, 2008. 2. For further information on the challenge, please visit http://tienewdelhi.org/canaan

Questions? manish@tienewdelhi.org digbijoy@tienewdelhi.org

DARE.CO.IN

DARE/safety equipment Various body parts protection equipment like shields for head, face, ear, eye, and hand Height safety equipment Industrial heat protection garments and accessories like helmets, welding helmets, etc. Respiratory protection Furnace observation cobalt blue glass Emergency showers like eye-wash fountain, etc. Industrial safety shoes Marine/offshore equipment Welding, cutting equipment and accessories Fire-ﬁghting equipment and accessories mum number of accidents during the year 2005, making the want of safety equipment in manufacturing units very plain.

Safe opportunities Industrial safety provides two opportunities—that of manufacturing safety equipment for businessmen who deal with heavy machines and of providing training and consultancy services

DARE/training & consultancy Training and consultancy services provided by NSCI • Chemical emergency prevention, preparedness and response • Electrical safety • Occupational health and safety • Safety audits • Risk assessment and HAZOP studies • Safety awareness surveys • Disaster management services • OHSMS • Safety in material handling • Environmental legislation in India • Fire prevention and control in industry and business establishments • Identiﬁcation of hazards and risk control • Testing and examination of lifting machines, tackles and pressure vessels 88 MAY 2008

opportunity/safety to the workforce. Companies manufacturing industrial safety equipment get most of their clients from the construction industry; while training and consultancy firms have a wider range of clients to choose from. For manufacturers of safety equipment most of the demand comes from the manufacturing and construction industries. The service industry contributes the least amount of business, thanks to the lower risk of traumatic physical injury in the sector. The major wares produced by safety equipment makers are different types of shields, masks, height safety equipment and devices for protection in inhospitable work areas, such as under the sea, in mines, etc. The second opportunity in the field of industrial safety is in providing training and consultancy services to workers. Training is provided from general workers to top management, covering supervisors and safety committees at organizations. Besides teaching obvious precautions related to dangers such as physical injury, fire etc, training service providers in the manufacturing and construction sector also show workers how to handle their equipment in such a way that there is minimum amount of stress on their bodies. KC Gupta, Director General, National Safety Council of India, says more and more companies are volunteering for such training, assessment and certification programs. “As more and more companies are entering into joint ventures with partners abroad or getting foreign investments, both their responsibilities towards their workers and the pressure to complete projects on time have increased. In order to make their workforce competent to attain these new standards, many companies are coming to organizations like ours.” In addition to providing training, organizations like NSCI also sometimes help their clients in getting their compliance documents in place.

The hurdles All European Union countries have their own regulatory authorities whose

KC GUPTA

Director General, National Safety Council of India

If the compliance increases more we’ll have ten times more of demand than we have now function is to enforce the basic legal occupational safety and health (OSH) standards in their respective states. It is one of the biggest reasons that the industrial safety market operates on a much larger scale than India. Though India also has its own set of acts and enforcement agencies, the compliance on the part of companies is very lax. But with globalization opening more options for the workforce with higher standards of work norms, the Indian industry is also pulling up its socks. “If the compliance increases, we’ll have ten times more demand than we have now,” says Gupta of NSCI. Another challenge for the industry is getting qualified manpower. Most industrial safety companies make do with engineering graduates with some work experience in the safety industry. Thus the requirement for specialized manpower makes it difficult for these companies to get a ready and well qualified workforce. However, the good thing is that like India’s economic boom, the industrial safety market is also very young. Most of the players have just entered the market and many Indian companies are beginning to realize that in a global marketplace, they have to adhere to global standards in the workplace too. The industrial safety industry seems set for a bright, and safe, future. D A R E

DARE.CO.IN ProPoor: case study - Contd. from Pg 23

90 MAY 2008

case/INSEAD

DARE.CO.IN

case/INSEAD

“T

he spirit of service is in all of us—in some cases it resonates

early on, while others need a trigger point. The sense of giving back to the community surfaces when you are really successful.” — JAYESH PAREKH In April, 2003, CharityFocus took over the ProPoor portal and began running it out of the US as an all-volunteer operation. Says Parekh: We realized that with a few software technicians out of Kolkata, there was only so much we could do, and Nipun had a lot of good ideas about how to revamp the underlying database. He was very sensitive to Anil and his people, and we ﬁgured out a way for all of Anil’s people to shift to other work, including another Website that I owned. I felt good that smart kids from CharityFocus would take control and give ProPoor a boost, so we shook hands and ﬂipped it to become a Charity Focus service. If you meet Nipun, once, you’ll believe CharityFocus can run an ongoing operation. I had full faith in the leadership and it was fascinating to watch the kind of people he could attract as volunteers. They do a superb job and the size of the database has doubled while the scope of services has expanded. I am a member of the CharityFocus Tiger Team and I follow up

what they are doing on a regular basis. The decision ﬂowed from a strategic decision by Parekh not to start his own charitable trust or foundation. “I decided that my time is best spent contributing to others who are doing good work,” he says. The older I get, the less I ﬁnd myself wanting to be attached to things.” He continues: "Over the past few years, more equanimity has set in for me. Maybe I acquired some wisdom when I passed 50. I had no feeling that ProPoor was my baby, and I have met a lot of people from the service sector who have made me believe that attachment doesn’t help. Poverty eradication is such a huge task that everyone has to pitch in—I don’t see how anyone can corner an aspect and try to own it." Over the past four years, Parekh helped a friend Rajesh Nair start an executive recruiting service, Searchworks and invested in several other startups (see http://myindiansites.com/ for an overview). “I dabble in some commercial activities and mentor some startups where I am a founder or investor,” he says. “Starting a company yourself takes a lot more time, and I prefer mentoring, strategizing, and raising funds for friends and NGOs to operations.” Parekh also became involved with several charitable organizations in-

cluding a number of NGO’s in Gujarat run by members of the same family: Manav Sadhna, Gramshree, and the Environmental Sanitation Institute. “Nipun introduced me to them, and I discovered this is a phenomenal group of people who employ Gandhi’s principles in action,” he comments. “I got interested because we are likeminded, service-oriented people. They don’t ask for donations, and I prefer that model to the many NGOs that are focused on fund-raising and writing beautiful reports for donors.” Parekh took a year-long sabbatical in 2007 and stepped down as chairman of MobiApps. “I decided to retire from commercial life and devote myself completely to non-proﬁt work and some spiritual meditation, but I yanked the lever too far in one direction,” he says. “I need some stimulation through commerce so I am an advisor to a couple of friends who are doing startups. My main aim is to simplify my life by exiting from existing businesses and not starting any new ones where I am personally responsible for taking it all the way through.” Today, Jayesh and Mona Parekh reside in Singapore and travel frequently to India, where they maintain homes in Mumbai and Kolkata. DAR E

MAY 2008

DARE.CO.IN

/straight talk

Business Plans: a waste of time? G

iven the emphasis on writing business plans — the competitions, the guide books and internet sites, the classroom exercises — NEN decided to ask its VC Experts: how important do you regard business plans? We were surprised by the sharply different views.

Avnish Bajaj Matrix Partners

o, I did not make a business plan for Baazee. In fact, we raised all our funding without a business plan. I mean, that is a little unusual. We didn’t even have an investor presentation. But I think real entrepreneurs don’t waste time with writing a business plan. They spend time trying to create the business. And that is what we were doing. We had started our technology product development; we had started signing up with people who would upload items on the site. We did not have a business plan. In fact one of my potential investors asked me, “When can we get a business plan?” I said, “When we have a business, then we will start planning. Right now let’s just build a business.” That said, I don’t want to discount too much the importance of planning. Planning is important. Sometimes what happens with entrepreneurs—it used to happen with me—is that you end up being a little cynical about process and planning and all of that. But it is still very important. The question is: do you need to write a 100-page document? No.

“

Kanwal Singh Helion Ventures

“ T

”

he business plan is very important for the entrepreneur to determine his or her own focus and ensure that he is on the right track. The depth of the plan will depend on the stage of the business. At the early stage the idea needs to be fleshed out in the context of the market opportunity, key differentiators, execution plan and financial projections. At later stages organization structure and detailed financial become more relevant in addition. We generally do read a business plan after we have decided to dig deeper into an opportunity. Also, we don’t just read the plan—we prefer to spend more time with the entrepreneur to discuss various aspects of the business. The entrepreneur should spend reasonable time on the plan to be comfortable that he or she has addressed all the key imperatives of the business. Very lengthy biz plans are neither required nor desired. 92

MAY 2008

ARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DAR ARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DAR ARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DAR ARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DAR ARE DA DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE RE DAR DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE RE DAR ARE DA ARE DA RE DAR DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE ARE DA RE DAR DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE ARE DA DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE RE DAR ARE DA DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE RE DAR ARE DA DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE RE DAR ARE DA DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE RE DAR ARE DA RE DAR DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE ARE DA DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE RE DAR ARE DA DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE RE DAR DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE RE DAR ARE DA ARE DA DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE RE DAR ARE DA RE DAR DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE ARE DA DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE RE DAR ARE DA DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE RE DAR ARE DA DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE RE DAR ARE DA DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE RE DAR ARE DA RE DAR DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE ARE DA DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE RE DAR ARE DA DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE RE DAR ARE DA DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE RE DAR ARE DA DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE RE DAR ARE DA DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE RE DAR ARE DA DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE RE DAR ARE DA DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE RE DAR ARE DA DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE RE DAR ARE DA DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE RE DAR ARE DA DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE RE DAR ARE DA DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE RE DAR ARE DA DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE RE DAR ARE DA DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE RE DAR ARE DA DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE RE DAR ARE DARE DA DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE RE DAR ARE DA DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE RE DAR ARE DA RE DAR DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE ARE DA DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE RE DAR ARE DA DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE RE DAR DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE RE DAR ARE DA ARE DA DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE RE DAR ARE DA RE DAR DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE ARE DA DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE RE DAR ARE DA DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE RE DAR DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE RE DAR ARE DA ARE DA DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE RE DAR ARE DA DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE RE DAR ARE DA RE DAR DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE ARE DA RE DAR DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE ARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DAR ARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DAR ARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DAR

SMS “DARE <your comments, questions or suggestions>” to

56677 or Drop us an email:

dare@cybermedia.co.in

DARE.CO.IN

/straight talk Bharati Jacob

“ “ “

Seedfund

nvestor presentations? Well, you know, we rarely make entrepreneurs use their PPTs in our presence. Not that the PPTs are useless. Preparing the presentations would help the entrepreneurs clarify their own thoughts while they are putting it in a structure. We want to see the PPT deﬁnitely: that stays as a reference. But we want to hear; what the entrepreneurs are saying extempore. And we may believe in the business model, but we still challenge their ideas, their assumptions, to try and understand how much they have thought through. This is the same for a business plan. Essentially, when you read a business plan you are asking: Has this guy put enough thought into this idea, or gone and done enough research? Not doing library research so much, rather, has he may spoken to real life users of what his service might be, and has he understood what the market is? Or has he gone and seen how the selling happens in the marketplace? Has he has gone and done this kind of research?

”

NEN: So if it’s not about writing 100 page business plans, what’s the best way to prepare to start your business? Here our VC experts had some agreement:

Avnish Bajaj Matrix Partners

think the best way to prepare is to learn on the job. Let’s say you want to do something on the Internet. Go work at an Internet startup today, a venture-funded startup, and see how those companies are growing. I get a lot of requests from students, for example, students from Harvard, who want to come back and start a business. They ask me, “What is the best way to do it?” I say, “Well, come to one of my portfolio companies, work there for a year. See, you will understand all the dynamics about the Indian market and about the Internet.” So I think the best way to prepare yourself is to immerse yourself in the domain if you can. But that said, I did not do that. I came and jumped right into entrepreneurship. So there is no clear recipe, but if you want to take a little bit more methodical approach, come and work in a startup, see what it’s like, and then experiment with building these things yourself.

Alok Mittal

Canaan Partners

”

think there is importance in learning business planning and other elements that are taught in a classroom. Most of these elements combine form and content. And I think what a lot of the training does is to educate people about the form, including what you should include, what to discuss at what stage. I think the gap that this sort of training possibly can’t cover is the content. That comes if you have been in the middle of the problem yourself. And as a venture firm, that’s what we emphasize. So if you are a first time entrepreneur, it pays to have experience. Because you can sit in your classroom and imagine a problem, or you can be sitting below in the industry and see the problem happen around you day in and day out. The latter definitely gives you a far better perspective. Is there a problem? Can I solve it? If someone is going to pay me for solving it and how? So I think the content problem is something that the people have to solve through experience, but the form problem can be solved through academic training. I think business plan competitions, training around term sheets, around how to read a balance sheet: all those are fairly important in themselves.

”

NOTE: Some of the comments may have been edited for clarity, without changing emphasis or meaning.

More NEN Straight Talk available at www.nenonline.org 94

MAY 2008

DAR E

DARE.CO.IN

100

AUGUST 2007

opportunity/geo

DARE.CO.IN

opportunity/motel business

New highways open up opportunities for motel chains As highway trafﬁc zooms across the country, the need for motels is on the rise. Behind the shining neon signs, lies a jackpot worth Rs 3,200 crore

/Arunjana Das

he idea is to let every Mary and Joseph on the road have a place to stay overnight without burning holes in their money pouches. Motels let you have the comfort of a hotel and charge you the prices of a manger! Motels, or rather motor hotels as they were originally known, came up in the outskirts of American towns around the mid-1920s as lowcost overnight shelters for road warriors (read bikers, long-distance drivers, and even outlaws!). They can be usually spotted by the generic constructional structure, being a string of cabins strewn together in an L, U or T shape. More recently, they have come to be recognized by the bright and colorful neon signs claiming boldly “room available” or “no vacancy”, as the case may be. Change the settings a little. Instead of the dusty outskirts of a suburban town in the US, imagine the lush green free space that is found aplenty as you drive along one of the country’s national highways. Imagine also that it is night and you would rather be taking your forty winks than driving with your head lolling on the steering wheel. Wouldn’t you wish Indian highways too had drive-in motels where you just parked and crashed on a bed? And most importantly, where you didn’t wake up in the morning feeling ripped off. With the improving state of the road network in the country, especially national and state highways, and more and more Indians hitting the highways, the number of road-warriors lolling their heads on steering wheels has increased many times over. Take the case of the Delhi-Chandigarh National Highway. In one day, it sees over 10,000 vehicles crossing it. At least one-fourth of the number comprises traffic at night. It starts off enthusiastically with quite a few summer resorts as you start from either end. The greenery and scene look quite rich, so do the people who stay in those resorts. An average Indian family driving down the highway at night isn’t DARE potential motel business space : 66,590 km looking for a resort to National Highways crash in. The lesser State Highways : 131,899 km fish would do just Major District Roads : 467,763 km as good, as long as comfort and safety are Assumption: 1 motel every 10 km on NH, provided. Here is where every 15 km on SH, and every 30 km on the concept of the no-frills major district roads aura of motels holds signifi- Potential no. of motels required on: cance. A chain of motels at approNational Highways : 6,659 priate distances along this road providing State Highways : 8,800 lodging and perhaps dining facilities for a Major District Roads : 15,600 single night at reasonable prices will give the bigger fish a proverbial run for their Total no. of motels required: over 31,000 customers and money.

96 MAY 2008

opportunity/motel business DARE/cost and revenue

(SH) and major district roads (MDR) span around COST 131,899 km and 467,763 Average no. of cabins in one motel : 10 km respectively. AssumCost of setting up one cabin : Rs 10,000 ing there is to be a motel Maintenance costs per month per cabin : Rs 1,000 every 10 km on a national Dining facilities per month : Rs 50,000 highway, every 15 km on Misc expenses per month : Rs 10,000 a state highway and every Total Annual costs* : Rs 5,52,000 30 km on a major district Cost of setting up 10 cabins : Rs 100,000 road, the country would be Misc setting up costs : Rs 50,000 running on at least 31,000 Total setting up costs : Rs 150,000 motels. The traffic on these roads varies, depending REVENUE on the time of the day, loCost per cabin per night : Rs 300 cation, tourism potential, Dining per month per cabin : Rs 55,000 etc. Extrapolating the DelAnnual revenue : Rs 1,053,000 highway Revenue from 31,000 motels : Rs 3,200 crore hi-Chandigarh example with conservative *Total Annual costs: (Maintenance cost/month/cabin*10*12 assumptions to the greater + dining facilities/ month*12)*0.6 + Misc/month*12 Indian-on-the-move pie Assumptions : Room occupancy = 60% throws up a figure over Rs Misc setting up costs: Rs 50,000 3,200 crore! DISCLAIMER: The above estimates are very conservative and have been done The figure will rise even for minimalistic settings. further if one were to take into account the rising popularity of Business space Out of the 33 lakh km long road network village tourism in the country. Nationin the country, national highways (NH) al/state highways and major districts span some 66,560 km, state highways roads account for only a little over

DARE.CO.IN 22% of the entire roadways network of the country. The remaining comprises semi-urban and rural roads, out of which around 60% is kaccha (non-tarred) road. With tar and concrete reaching literally the last mile, it won’t be long before these streets

DARE/motel models Teepees: Teepees are conical tents, originally made from tree barks or animal skins and popularized by the Red Indians. Motels in the shape of teepees are quite famous amongst the general populace in the West, although there are only a few such motels left. Mud-Huts: With the rising scope of village tourism, mud-hut motels on rural and semi-urban roads could soon become an excellent way of treating the tourist to a pre-scene taste of rural India. Over and above being low-cost, these huts are easy to maintain and more efﬁcient thermodynamically. Houseboat-style: This would work well with riverside motels. Made of wood and generally easy to make and dissemble, you would literally have a mobile motel at your hands!

MAY 2008

DARE.CO.IN are ready for the motel culture to take off. In keeping with the suburban setting, motels could even take the shape of low-cost quaint earthen huts or teepees. Manoj Patel, owner of Wigwam Motels on Route 66 Rialto, California, bought the teepees from the previous owner who liked to “do it in a teepee” or rather advertised for his motel in this fashion! Turned out not many noble folks like doing it in a teepee! Quite understandably, the motel was rundown with seedy customers availing the rent-by-the-hour facilities. All that changed with the new ownership, with the addition of modern amenities to the existing teepees and appropriate disposal of the distasteful sign! Come to think of it, the motel business in the US has been taken over to a huge extent by Indians, especially by those who call themselves Patels, so much so that small-town Americans believe Patel to be an Indian synonym for a motel!

Setting up If Indians can pull it off in a foreign land, doing it in our own country shouldn’t be that difﬁcult. And it doesn’t even have to be a teepee. Just needs to be a cabin with modern facilities offering comfort and safety at reasonable prices. Setting up a motel doesn’t require any substantial initial investment apart from the cost of land.

DARE/Indian motels Leela group of hotels announced their new venture of motel chains in November last year. The motels will be built along popular pilgrimage routes and exotic riverside areas. By way of value-addition, they will also provide special herbal treatments and local medical therapies to the tourists. The Kerala Tourism Development Corporation (KTDC) has already come out with a string of its motels, justly called Aaraam Motels. With room-rates ranging from Rs 150 to Rs 400, it’s an awesome kill for the economical traveler setting out to explore Kerala. 98 MAY 2008

opportunity/motel business DARE/bates motel Alfred Hitchcock’s thriller, Psycho, was one of the ﬁrst movies that featured motels in popular cinema. Revolving around the Bates Motel, the Psycho had successfully woven a web of thrill around the concept of motels, raising the commoner’s curiosity towards them. A few more movies later, ranging from wild-west cowboy movies to murderous thrillers, motels were ﬁrmly established in the minds of the American traveler. In fact, the motel business in the US got a phenomenal push from Hollywood.

The cost of setting up one motel with average lodging and dining facilities and comprising say 10 wooden cabins with minimalistic setting will set you back by around a few couple of lakhs in the beginning, with the annual costs being anything from Rs 5 lakh to Rs 10 lakh depending on the facilities you put on offer. The annual revenue from such a motel could be anything from Rs 10 lakh to Rs 20 lakh, depending on where it is and the amount of trafﬁc that the corresponding highway experiences. Once the highway concept takes off, more and more motels can be built in well-frequented tourist spots such as hill-stations, riversides or pilgrimage routes and destinations. The Leela group of hotels announced their new venture of motel chains in November last year. The motels will be built along popular pilgrimage routes and exotic riverside areas, with the ﬁrst motel in the chain to be located near the Mookambika temple on the Karnataka-Kerala border. By way of valueaddition, they will also provide special herbal treatments and local medical therapies to the tourists. To make the system sustainable, they are planning to grow medicinal plants and herbs in the lawns of all their pilgrim motels.

The Kerala Tourism Development Corporation (KTDC) has already come out with a string of motels, justly called Aaraam Motels. With room-rates ranging from Rs 150 to Rs 400, it’s an awesome kill for the economical traveler setting out to explore Kerala. Although many small budget hotels claim to be motels, KTDC and Leela group of hotels are the only two involved or planning to get involved in the motel business in the true spirit of the concept. The best thing about the motel business is that once you whitewash the canvas, you can get real creative and paint a pretty picture without spending too much. A no-frills motel design built with a couple of lacs will set you going good. As for the actual structural aspects of the motel, you can choose to chuck minimalism out of your window and let your imagination run wild. Teepees, house-boats, mud huts are all potential designs. Styling your motels on the lines of themes inspired by regional tastes would also be a good idea to domestic and foreign tourists looking for a good night’s sleep and intent on doing the same like the Romans in Rome! Mary and Joseph shouldn’t have to hear the words, “No room in DAR E the inn” again.

Organizations DARE.CO.IN

covered in this issue, in alphabetic order; ﬁrst appearance

A2Z Maintenance ............................. 67

Ernst & Young ................................... 62

Kingﬁsher .......................................... 96

Samsung ........................................... 16

Aaraam Motels .................................. 98

European Union................................. 86

Kuka Robotics ................................... 14

SCMHRD ........................................... 53

ABB ................................................... 14

FS Capital Partners ........................... 62

Leela group of hotels ......................... 98

Seedfund ........................................... 94

Admet ................................................ 32

Gem India Advisors ........................... 62

Legrand India..................................... 49

Shell................................................... 83

Amazon ............................................. 61

Global Environment Facility ............... 28

LG ...................................................... 16

Shree Sai Associates ........................ 86

Amba’s Computers Cleaning and Polishing ..................................... 39

Goldman Sachs ................................. 62

Lowe India ......................................... 84

Sogeﬁ ................................................ 81

Gridbots ............................................. 14

Lucifer Lights ..................................... 26

Srinivasa Hatcheries.......................... 75

Habits ................................................ 79

MAHLE International ......................... 81

St Paul ............................................... 28

Harvard Business School .................. 78

Mann & Hummel ................................ 80

Stanford Technology Ventures Program .............................. 84

Helion Venture Partners..................... 61

Matrix Partners .................................. 92

Helion Ventures ................................. 92

MatTek ............................................... 32

Hitachi................................................ 16

Maytas Infra Ltd. ................................ 86

Hitech Robotic Systemz ................... 14

Mitsui Babcock .................................. 62

Honda ................................................ 16

Mobile Medics ................................... 79

Hyundai Robotics .............................. 14

Motoman............................................ 14

The Food and Drug Administration (FDA) ......................... 32

BillDesk.............................................. 69

IBEF-KPMG ....................................... 55

Mount Carmel College ...................... 85

The Freedonia Group ........................ 80

BITS Pilani ......................................... 79

IBM ................................................... 61

NASSCOM ........................................ 62

The Industrial Federation of Robotics ..... 16

Body Shop ......................................... 82

ICICI Bank ......................................... 70

National Institute of Design................ 14

The Keller Fay Group......................... 82

Bosch................................................. 16

IIT Bombay......................................... 16

National Safety Council of India ........ 88

BSE ................................................... 44

IIT Kanpur .......................................... 61

Nestlé ............................................... 55

The Kerala Tourism Development Corporation (KTDC) .......................... 98

Cadbury ............................................. 55

IIT Mumbai......................................... 79

Nokia ................................................. 82

Cambier LLC ..................................... 82

IIT Powai ............................................ 85

Nuclear Filter Technology .................. 81

Canaan Partners ............................... 94

ILO ..................................................... 86

Obopay India, .................................... 70

Caterpillar .......................................... 16

Impresario.......................................... 67

Oracle ............................................... 61

CII ...................................................... 14

India Robotics and Automation.......... 14

Paharpur Business Centre ................ 81

CLARCOR ......................................... 81

Indian Institute of Interior Designers ...... 46

Parker-Hanniﬁn .................................. 81

Clean Filter Industries........................ 80

International Crop Research Institute for Semi-Arid Tropics (ICRISAT) ........ 41

Paymate............................................. 69

Apple ................................................. 82 Archie’s Galleries ............................... 52 Baer Capital Partners ........................ 62 Bain & Company................................ 67 Bajaj................................................... 84 Baker’s Circle..................................... 62 Beacon India Advisors ....................... 61 Bharti Airtel........................................ 70

Coca-Cola.......................................... 55

Stanford University ............................ 85 Sugana Poultry Farm ......................... 75 Sula Wines......................................... 62 Tavant Technologies .......................... 61

International Energy Agency ............. 25

People for Ethical Treatment of Animals ......................... 32

Cocubes ............................................ 36 Danone .............................................. 55

International Institute of Rural Reconstruction (IIRC) .............. 41

Pharmagene Laboratories ................. 32 Philips ............................................... 26

Dataquest .......................................... 62

Intrex India Ltd. .................................. 70

The Lester Center.............................. 79 The National Bank for Agriculture and Rural Development (NABARD)... 41 The Robotics Institute ........................ 14 TATA Group........................................ 83 THRIVE ............................................. 28 TRI Technosolutions .......................... 15 University of Leeds ........................... 62 Venkateshwara Hatcheries ............... 75 Vertex ................................................ 62 Vertex India........................................ 61 WHO .................................................. 86

DENSO .............................................. 81

ITC ..................................................... 47

Precision Automation and Robotics India ............................ 14

DoCoMo ............................................ 69

J Robotics Technologies .................... 14

PWC .................................................. 62

Wix Filtration Products....................... 81

Donaldson ......................................... 81

Jean-Paul Sartre................................ 83

Reuters Venture Capital..................... 62

Xavier Institute of Management ......... 85

Emerson India ................................... 46

JuxtConsult ........................................ 37

Rockwell ............................................ 14

Xceleron ............................................ 32

Emerson’s Energy Logic .................... 48

Kanwal Enterprises ........................... 80

Sacred Moments ............................... 24

Yes Bank Ltd...................................... 69

Emu Farmers Association ................. 72

King’s College .................................... 62

SaffronArt .......................................... 64

Zee TV ............................................... 52

100 MAY 2008

Wigwam Motels ................................ 98

People DARE.CO.IN

covered in this issue, in alphabetic order; ﬁrst appearance

Aditya Menon..................................... 70

Milind Shastri ..................................... 16

Alicia Silverstone .............................. 30

Minal Vazirani .................................... 67

Alok Mittal .......................................... 94

Minal Vazirani ................................... 64

Amit Chopra....................................... 37

Mrutyunjay Mishra ............................. 37

Amit Karmakar ................................. 80

Napoleon ........................................... 34

Amit Mittal ......................................... 67

Narayana Murthy ............................... 38

Aparna Dogra .................................... 35

Naveen Surya, .................................. 70

Ashish Gupta .................................. 61

Niranjan Khatri .................................. 47

Avnish Bajaj ....................................... 92

Norman Fiore .................................... 62

Bharati Jacob..................................... 94

Osamu Suzuki .................................. 76

Dan Sandhu....................................... 61

Palash Nandy .................................... 49

Deepak Chopra ................................. 76

Pallav Mitra ........................................ 70

Deepak Shahdadpuri ......................... 61

Pamela Anderson .............................. 30

Dinesh .............................................. 67

Peter F. Drucker ................................. 76

Dr. Ranga Bodavala ........................... 28

Prakash Mundhra ............................. 52

E. Sreedharan.................................... 77

Pratik Chube ..................................... 46

Ed Keller ............................................ 82

Probir Roy.......................................... 69

Gagan Goyal...................................... 15

Pulkit Gaur ......................................... 14

Golapi Bordoloi .................................. 58

Rajeev Roy ........................................ 85

Harpreet Grover................................. 36

Rajesh Purohit .................................. 26

Jacques Diouf .................................... 40

Raman Roy........................................ 85

Jayesh Parekh ................................... 34

Ramdas Ugale .................................. 86

K.S. Subramanian.............................. 53

Ratan Tata ......................................... 76

Kanwal Singh..................................... 92

Ravi Shankar ..................................... 69

KC Gupta .......................................... 88

Riyaaz Amlani ................................... 67

Liladhar Prahlad Wahane ................ 102

Shirish Jajodia ................................... 85

Lipika Sud .......................................... 46

Simon Chadwick ............................... 82

M.N. Srinivasu ................................... 69

Sir Edmund Hillary ............................. 76

Manmohan Singh .............................. 40

Steve Jobs ........................................ 79

Manoj Patel ........................................ 98

Tajinder Pal Singh .............................. 80

Mathew Job ...................................... 26

Tina Seelig......................................... 84

Menaka Gandhi ................................. 32

Umesh Sainani .................................. 39

DARE is not an acronym. It represents the daring spirit of the entrepreneur. The red color for the R of DARE represents the ﬁre in the belly of the entrepreneur. You could think of the D representing the face, A representing the chest, R representing the belly and E representing the feet of the human body. Hence the red R. The entrepreneur dares to do things. (S)he dares to do things differently

SMS “DARE <your comments, questions or suggestions>” to

56677 dare@cybermedia.co.in MAY 2008

101

DARE.CO.IN

/art

Mural from metal

Initially reluctant to carry on with his family business, Liladhar Wahane discovers later that the art passed down through generations holds more potential than a job /Shilpi Kumar

he story of 29-year-old Liladhar Prahlad Wahane, a craftsman from Nagpur, is quite an unusual one. Although his family had been in the business of creating handmade wrought-iron wall hangings for generations, this was not something that Liladhar had planned for himself. So it was only natural that after finishing school, he started working as a sales representative in a popular confectionary company. Little did he know, however, what destiny had in store for him. “Fourteen hours a day, and a mere Rs 3,000, made me realize soon enough, that it just was not worth all the sweat and toil I was putting in,” he says. Fast forward to many years later, and what do we see? Liladhar spotted at a popular crafts mela, in the midst of wrought iron wall hangings; the same that he had so firmly rejected once upon a time. There is not even a hint of sadness in him. Instead, the passion he has for his work not only reflects from his eyes, but also in the way he deals with his customers. “Instead of deciding on a wall hanging that looks pleasing here, I suggest you pick one that suits the décor of your house, the color of your walls,” he advises a

customer who has just walked in. Ask him where all the passion comes from and he says, “It is not that I wasn’t interested in the work. As a child, I used to watch my parents make the wall hangings and helped out in whatever way I could. But it was only when I took up the business full time, about ten years ago, that I realized that there is so much scope for creativity in this craft, and the passion came automatically.” Besides Liladhar, his family of six, including parents, brother, sister-in-law, his sister and a friend are the creative heads behind these beautiful iron wall hangings. “Ideas come from anywhere and everywhere. We get inspiration from magazines, paintings, photos and such and trace the ones that appeal on to metal, using carbon paper.” Liladhar’s team of ten workers then proceed on to cutting, carving, embossing, welding and painting. 102

MAY 2008

DARE.CO.IN

/art

"It was only when I took up the business full time, about ten years ago, that I realized that there is so much scope for creativity in this craft, and the passion came automatically." — LILADHAR PRAHLAD WAHANE

The time it takes to complete a piece and its price depend on size and intricacy. Pointing out the Radha Krishna jhula, he says, “This one took about a month to make and is priced at Rs 3,500. Then we had a Rajasthani painting that we sold for Rs 50,000 and that took us about

six months to make. The smaller ones priced at around Rs 500 take about two days.” So, does he frequently visit such melas to sell his products? “I sell most of my products to wholesalers, since I don’t have a shop of my own. It is only when I have pieces left over that I sell them in exhibitions. This is only the second time I have come here and it hasn’t been proﬁtable at all.” Why? “If I go to a private exhibition in Mumbai or Bangalore, I get more customers of the right proﬁle, and hence more

DARE/process l

Trace designs onto wrought iron sheets

Emboss the design; carve each part separately

Weld the carved parts together

Rinse in chemical to prevent rusting and discoloring

Finish with acrylic paint

sales, even though I have to spend more to get in there.” How is he planning to take his business forward? “I can easily increase volume and proﬁtability by copying other people’s works; but I want to do something unique. Within the next four years, I plan to do something using the iron that is wasted while making my wall-hangings. This would not need any further investment, and the products would be made in less time. They could also be sold at a cheaper price, thus appealing to more customers.” Till then, Liladhar is happy with the Rs 10,000 per month he manages to save, after paying for all the expenses, DAR E including to run his family. MAY 2008 103

DARE.CO.IN

OCT 2007

/exit

NOV 2 007 DE

JAN 2008

FEB 2008

104

MAY 2008

08 0 2 R MA

2 R P

8 0 0

C 2 00 7

RNI No.DELENG/2007/22197 Posting Date: 5th & 6th of every month. Posted at Lodi Road HPO.

DL(S)-17/3314/2008-09-2010