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Vol 3 / Issue 01 / Oct 09

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SHOULD THE RTI ACT BE APPLICABLE TO BUSINESSES?

Should the RTI Act be applicable to Businesses?

Ice Cream Industry in India All You Need to Know about M&As Potatonomics: From Farm to the Fork

entrepreneur of the month/

Satish Kumar Agarwal, Kamdhenu Ispat investor of the month/

VOLUME 3 ISSUE 01

Profit from a Passion

Samir Kumar, Inventus Capital partners

Doing Business in Colombia

columns/

Four issues with using SaaS

When Co-Founders Split Land of the Rising Sun: It's time to wake up and look outside the window

Why Calling for Customer Support Leaves a Bad Taste

92 pages including cover

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Marketing Strategies for SME’s, 31st October 2009 Effective and result oriented marketing is one the most critical components for developing sales channels and reaching your target market. On 31st October 2009, join us for an in-depth program covering the challenges and opportunities for SME’s in today’s market, tips on how to leverage technology, internet and new media for robust & low cost marketing strategies. For registration/partnership opportunities, contact Nitin Agarwal – 9818477719/ nitin@tienewdelhi.org

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Vol 3 / Issue 01 / OCT 09

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

Chairman & MD, Biocon

R Gopalakrishnan

Executive Director, Tata Sons

Philip Anderson

Professor of Entrepreneurship, INSEAD

Shyam Malhotra Editor-in-Chief Abraham Mathew President Krishna Kumar Group Editor ANALYSTS Aman Malik Aswathi Muralidharan Binesh Kutty Vimarsh Bajpai Vivek Kumar OPERATIONS Ajay Dhoundiyal Product Manager Prasanna Srivastava Product Manager VIjay Rana Design Anil John Photography SALES & MA Jaideep Mario Gabriel Abhinav Trivedi Dayanath Levaj Jagadeesh Kingshuk Sircar

/opportunity

Ice Cream

Industry in India

MARKETING Associate VP West North South South South-East Asia

PRINT & CIRCULATION SERVICES Rachna Garga VP T Srirengan GM, Print Services Sudhir Arora Senior Manager Circulation Pooja Bharadwaj Assistant Manager, Subscriptions 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: 43412333 CHENNAI 5B, 6th Floor, Gemini Parsn Apts, 599 Mount Road, Tel: 28221712 KOLKATA 23/54, Gariahat Road, Ground Floor, Near South City College, Tel: 65250117

Though India has a low per capita ice cream consumption of 300 ml per annum, the trend is slowly changing due to a number of reasons. DARE explores the dynamics of the business.

Should the RTI Act be applicable to businesses?

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We have Wajahat Habibullah, Chief Information Commissioner and Arvind Kejriwal, Magasasay Award winner and Right to Information crusader talking about this and related issues.

OCTOBER 2009

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/contents

entrepreneur of the month

Satish Kumar Agarwal Kamdhenu Ispat

Kamdhenu Ispat Limited, established in the year 1994, is one of the largest manufacturer of international quality Steel Bars in India. The company is listed on BSE and NSE with annual turnover of Rs. 375 crores and a brand turnover of Rs. 3000 crores.

blogs/columns Vijay Anand ............. 19

opportunities/ Kites: A micro opportunity .......................... 50 Business of western musical instruments ... 72

going global/

strategy/ Potatonomics:From Farm to the Fork ........... 16

Doing Business in Colombia

Why calling for customer support leaves a bad taste in the mouth ................. 27 All You Need to Know about Mergers and Acquisitions........................................ 53

from the blogs/ 4 issues with using Software as a service (SAAS) .................................... 62 Hotel projects for the Commonwealth Games 2010 .............................................. 80 society/ Hanging by a thread .................................. 88

Managing Director Inventus Capital partners

Inventus is an early stage investor in companies that leverage technology to deliver products and services.

Sep’09 Winners......... 70

capital

come

business companies

company

cost country crore customers delhi don’t entrepreneur entrepreneurs experience growth help high idea india indian industry investment

look

make

management market marketing money need number people products second services start team technology think time used value venture want waste work world years

investor of the month/

Samir Kumar

contest/ Oct’09 Contest ......... 69

brand

The last decade has seen Colombia improving extensively on its business environment. It now offers great opportunities in diverse sectors

Internal Controls: A Primer For Small Businesses ................................. 64

Anurag Batra ........... 75

based

Opportunity/ The Combine Harvester

This big farm equipment offers manufacturing and rental opportunities

INSEAD/ Profit from a passion ................................. 20

EVENT/

Empowering Business in Patna .......................40 TiEcon Delhi 2009..........................................56 Headstart: Startup Saturday ...........................78

NEN/

An evergreen campaign.............................. 82

others/ Exchange ..................................................8 Feedback ............................................... 12 OCTOBER 2009 5

Contents Oct 09.indd 5

10/7/2009 1:57:20 PM

Editor Note Oct 09.indd 6

9/26/2009 2:39:39 AM

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blogs/edit

The pain of scaling up As organizations grow, they need control systems and well

very entrepreneur dreams of scaling up his business as fast as possible. In the planning stage scale is the most obvious thing to achieve. In real life scale

comes at considerable cost and pain.

defined policies and

Small organizations have the luxury of being nimble and

processes to help

flexible. Large ones on the other hand have to sacrifice quite

sustain the growth. Else they would have to halt mid way and attempt painful re-engineering

a bit of the flexibility and the speed of decision making at the alter of process and controls. Small organizations can afford to tailor decisions and policy to specific individuals. Large ones on the other hand have to have policies and programs for groups, often without much scope for variation at the individual level. And many loose the plot during the course of furious growth because they forget to put in place processes and procedures and checks and balances that will sustain the organization as the focus moves away from the individual towards larger and larger groups. It then takes painful re-engineering to get back on track. So, as we get ready for the next cycle of growth, keep in mind the need to have checks and balances, control systems and policies and processes in place.

/Krishna Kumar

OCTOBER 2009 7

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Exchange DARE.CO.IN

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PREMIUM

am looking for potential buyers / strategic partners for a technology, which has been

granted a patent. This technology relates to an exhaust cooker,

ublished: July 2009 Pranab Debnath was looking for individuals,

private and public limited companies interested in doing bamboo business on a large scale.

which utilizes waste heat/gas from the exhaust pipe

Response: September 2009

of a vehicle to cook food. The device can be used for

I am the Director of Anveshan Biotech Pvt

any kind/size of vehicle. We have working models of

Ltd (Bangalore), a manufacturer of tissue

the device for demonstration purposes. The device is

culture plants. We would like to know more about

thus helpful in energy conservation. Rakesh

Pranab Debnath’s business plan to better understand his business idea.

Arvind

am an interior designer from Pune. I am looking for an interior designer who can be my mentor

and will guide me. Pooja Ahuja

e are looking for entrepreneurs (successful or

have started an HR consultancy firm “Effective People”, to provide growth & change management,

professional training and outbound experiential learning programmes after spending around 3

failed) to join our team at First10.

First10 is a fast-growing, direct marketing

decades in various corporates. I would like to interact

company based on the internet, and has emerged

with entrepreneurs in the same field or any other

as one of the few firms in India that focuses on

field who may be interested.

conversions. It follows a simple four part process to

Atul Srivastava

increase sales from clients website: 1. Attract potential customers to your website using Pay Per Click campaigns: Google Adwords, Yahoo Search marketing! & Microsoft adCenter. 2. Optimize your website & landing pages to collect your customers contact information. 3. Educate & Engage the consumer about your product/service via email marketing campaigns. 4. Increase online sales by driving the customer back to your website. We are now looking specifically for a creative web designer / art director to join our team. Anyone with a passion for startups can contact us.

Sandip was looking for mentors as well as

people to join him professionally for helping him implement an idea in the rural/agriculture sector and build a brand. Response: September 2009 In the September issue there was an exchange request by Sandip, who was looking for professional help with building a brand.

We’re constantly looking for exceptional talent to

I am keen to pursue a conversation with him to

complement our team.

evaluate how we may be able to help him. Arjun

PREMIUM

ublished: September 2009

Deepak

Premium Exchange Requests are broadcasted via print magazine, our twitter posts, published on our website marketplace, and on one of our weekly e-newsletters. Premium Exchange Requests have an extremely nominal fee. For more details, contact Ajay Dhoundiyal at ajaydh@cybermedia.co.in or (91) 98106 90745

OCTOBER 2009

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have been involved in evolving and running several businesses that have a wide social (especially

rural) footprint. My present venture is a project called ‘SoyFit,’ under which we have established a

ublished: August 2009 1. Sushil is the manager with Pragati Ek Kadam

Welfare Society, an NGO that works for improving the

complete system of decetralised production of Soya

livelihood of rural poor by helping them set up small

based health products in geographically spread

businesses. He was looking for people who can fund

out micro-industries (called ‘Franchisees’), under

projects.

the same raw material, quality standards and brand.

2. Lakshmanan has an art gallery in Chennai and was

Extensive training, technical support, marketing

looking for buyers from abroad.

support and hand-holding is available.

3. Vaibhavi is the owner of GalaKidz, a company that

The project in its simplest form, requires an investment of Rs 6-8 Lakh from a franchisee in typical B cities, and gives back a net profit of Rs 1 lakh if operated on 30% installed capacity. We currently have five units operational in North India and are

focuses on educating children through entertainment, and was looking at scaling up. 4. Harpreet Singh has a startup in the online space based on a gaming/auction model, and was looking

expanding to another ten by November 2009. We wish

for angel investors for funding the project.

to scale it up to forty units across India by December

5. Sharbendu Banerje has started an venture to test

2009. The whole project is bankable and especially

the business potential of an integrated sourcing and

designed with youth employment in mind. Health

marketing platform for organic and eco-friendly

foods have a good future present and market due to

products, and was looking for investors.

rising health awareness. At a later date, we intend to involve more youth for marketing of this product line

Published: July 2009

under micro-financing project ‘ Kaamyaab Yuva’.

1. Dr. Sanjay Sharma has a concept on rural healthcare

We would like to get in touch with small entrepreneurs willing to set up farnchisee units in their areas, enablers of youth employment, angel investors, and NGOs to contact us who think they can

services and wanted to meet people willing to be a part of his team. He was also looking for angel investors to kick off the project.

carry this project further.

Response: September 2009

J.S. Sandha, Jagriti e-Sewa, Jalandhar (Punjab)

Abhijeet Bhandari had contacted DARE seeking the contacts details of the above mentioned entrepreneurs.

ARE is one of the most encoring magazines I have ever read for entrepreneurs! I am a social

entrepreneur and founder president of Milaan, an organization working for quality education and vocational training in rural India from 2007. Now, I wish to scale up the project from around 100 children to 1,000 children and youth by 2012. I am looking for investors, partners and mentors for the project. Dhirendra Pratap Singh

PREMIUM

am into pisiculture business in West Godavari district of Andhra Pradesh, with lush green coconut

plantations around the fish tanks. We even have ready guest houses near the ponds. How can I make it into an agri-tourism destination? Need guidance. Raju C

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PREMIUM

an Sarokar is working with socially excluded groups on the issues of community organization,

am interested in fish farming. Since I am a fresher, I am looking for people who can guide me. Manish Chandra

mobilization, livelihood, capacity building, gender equity, domestic violence as well spreading awareness on issues of environment, drugs, HIV/AIDS and so Jharkhand. We are looking for partnership to fund our

project as well as provide resources for accelerating

own business based on importing solar products

our efforts.

from China. I have no knowledge in importing any

on. We work mainly in Giridih and Ranchi districts in

Manohar Kumar

am not a big player in the Indian electronics industry to invest in crores, but I want to start my

product and its associated intricacies like import duty, etc. Could you please guide me through the process? Balraj Bhardwaj

am planning to start a Pre-School in Chennai or any where Tamil Nadu. I have finished my

MBA. I want information regarding the process, investment, support, legal requirement, etc to start the preschool. Philomi

am looking for people who can provide me with information on starting a business of making hand

made paper using agriwaste. Anantha

ublished: July 2009 Pranab Debnath wanted to meet individuals

who would like to involve with him in doing bamboo business on a large scale.

ublished: August 2009 Sumit Agarwal was planning to start a food

venture in Gurgaon-NCR, and was looking for team members and people interested in the venture.

Response: September 2009 I am the Director of Anveshan Biotech, based

Response: September 2009

in Bangalore. We are the manufacturers of

I would like to get some more information

tissue culture plants. We would like to know more

about this business idea, as I am also

about Pranab Debnath business plan to better

planning to start on my own and having a like minded

understand his business idea.

business partner would really help me at this stage. Arvind

PREMIUM

Sharninder

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12 businesses that are illegal

hours/days in periods when workload

be vested interests who would prof-

in India ARTICLE

is low.

it from the existing arrangements.

All illegal income is taxable under the

Of course this works only with a high

Never be afraid of competition but

Income Tax Act. Courts have held that

degree of maturity on the part of the

ready yourself subtly but patiently.

illegal income too is taxable and if some

employees and the trust of the man-

There is always room for for more

one is doing illegal business – neces-

agement on the abilities of employees

than one in every domain. Perhaps

sary expenses to conduct it are allow-

to deliver.

you would need just to redefine

able expenses - only such net income

Anthony Balraj

is taxable. It is another point that such

your target market. It really does not matter, it has been

a person doing illegal business could

But That’s Been Done Before! ARTICLE

done before. If it has been done before,

also be held under various other Acts as

I guess there are two pitfalls innovator

you can always do it better. That is the

applicable to his illegal activities.

- entrepreneurs might well avoid.

spirit of innovation

Mahesh Kapasi

1) Never pin your project on a single

M A J Jeyaseelan

idea. On the other hand, look at Ten Things that Have Gone Out of

creating a full system. Single in-

Flexi-timings and startups ARTICLE

Business in Our Life Time ARTICLE

cremental ideas keep occurring to

I believe that in many of the Indian

We had been using cyclostyle or du-

almost everyone. If you are keen

cos, Private - PSU - Govt, some people

plicating machine for taking multiple

then

work and others don't. And those who

copies of a document which is replaced

have the patience to build a lot of

work generally work flexitime. But

by Photocopying machine.

other things that would make that

here the word has a different mean-

Another development happening is

idea stand out and succeed. After

ing. They work the scheduled 8 hours

cable-less interaction between differ-

all there are Windows, MAC and a

and put in as much time as is needed

ent devices (keyboard, mouse, cordless

whole list of Linux versions co-ex-

ignoring most of their social responsi-

phone, remote key for car etc).

isting and thriving in their own way.

bilities or getting sick and continuing

In my view complete alternatives

on prescriptions.

S. Balakrishnan

commercializing

any,

Jaco

have an in built success mantra. Do Flexi-timings and startups ARTICLE

not rush to the market. Take time

I agree with the point that it is not about

to add more value to your core idea

Growing Sula Vineyards ARTICLE

an organization being big or small. It

and differentiate it from the rest by

I really enjoyed reading this article. I am

has got more to do with the nature of

way of innovative value addition.

very encouraged to see a quality wine

work within the organization. For ex-

2) Competition is something that you

company run by a quality man in India.

ample, in a small company where or-

should be prepared for really very

I believe the philosophy and culture of

ders fluctuate on a daily or monthly

early. It might not be in the form of

Sula makes it great and that will be hard

basis, flexi-timings are highly suitable

alternative product but the power

for the competition to match.

and even recommended because it

of all other products or services that

gives the employees the responsibil-

you would be substituting. Cus-

ity and the freedom of putting in ex-

tomers would need to be prepared

What is Balance of Payments

tra hours to fulfill commitments and

to switch over from something that

and What Does it Mean for Your

thereby increase the company profit-

is existing. Even if it is paper based

Business? ARTICLE

ability for that period, and then com-

system that you are replacing with a

To get a better view of how a country

pensate themselves for those extra

software based system, there would

is performing in terms of its interna-

Ashok

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tional transactions and trade activities, it is better to analyze BOP half yearly. The first half of 2008-09 shows healthy BOP whereas the second half shows the impact of the global crisis on trade and capital flows. Both exports and imports declined substantially but due to starker fall in imports, the trade deficit get reduced. However stating that picture as improvement is not correct if you track the monthly performance of exports and imports and calculate the year on year growth for this fiscal year. There is fall in exports of about 30-34% and around 30% in imports. Also study of various confidence indices (see RBI monetary policy review) reveals that the way ahead is hazy and given the dismal performance of monsoon, agriculture performance is bound to be affected too. And if farm output declines by 5% then affect on GDP will be around 0.51% so just stating that way ahead is bright is not right. Ravi Kumar

CREDIT PRODUCTS FOR MICRO, SMALL & MEDIUM ENTERPRISES Products & Services: Term loans l

Why cannot we have night food streets in

for acquisition of Fixed Assets / Purchase of Machineries

India? BLOG

Working l

It is really nice to see your idea here. If you see,

Over Draft l

Facility

Simplified l

Lakshmi Business Credit

the culture that was started in Chandigarh is being implemented in Ahmedabad and if I am not wrong in a few other cities of India as well. I was also thinking to work on it as provides a good business scope to target almost all the stratas of the society. Pankaj

What is in a Re? BLOG

Capital - Open Cash Credit

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/ Purchasing

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and Letter of Credit

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Finance

All at affordable interest rates At quickest possible time With better service

I suspect that these guys work for some shops for a fixed salary. The reason is simple – for one guy to pay off 30 train officers and countless station officers is not practical. It would sound reasonable for this prominent "chain-of-sta-

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tion-shops" guy to hire the services of

Watch Out: common mistakes

would be enough to make the consum-

many such sellers and do a one time

entrepreneurs make ARTICLE

er do the switch, then such things are

payoff. The economies work better this

My sympathies. I wish all these had

better left out. These are areas where

way, don't you think so?

succeeded. I recommend passion,

established companies would score

Gopalakrishnan

patience and perseverance as the key requirements for entrepreneurs. Per-

just as new formulations of soaps and detergents are dished out every three months. Start ups can hardly make it in

Watch Out: common mistakes

haps the most important test every

entrepreneurs make ARTICLE

idea must pass before being commer-

In the early stage of my startup I was told

cialized is the additional consumer

two things a. Unless you do not close all

value that it hopes not just generate

start ups that have made it big, it also

doors behind you, one keeps looking

but deliver to the customers.

becomes clear that they have actu-

such areas unless the objective is to sell out to an established player very early. If we look back at the history of the

for options (read going back to jobs).b.

So the real challenge is not wheth-

ally grown bigger by being at the right

The only way to survive - dig your heels

er you can produce a new product

place at the right time. If you want to

or service but actually whether you

create history, you must have the pa-

would be able to enable the consum-

tience to pursue things with persever-

ers to consume the values that you

ance till such good times come. It is no

would be producing.

magic out there.

and give your business a time of 2 years at least - do not let go of hope before that. I have found both these advice very useful in our small enterprise. Pawan Bhandari

spend more on educating your consumers than actually producing the

Business Plans: a waste

product. Some times the consumer in

of time? ARTICLE I think there is a merit of planning a business, documenting. It even in bullets gives clarity. I guess most of the people would agree to business planning but writing a lengthy document is not required. Most of the MSE I have come across suffer from the fact that they have not done business planning. This leads them to be opportunity driv-

spite of being attracted to your prod-

Which is the best business to be in? ARTICLE I completely agree with it. I have run a business of furniture manufacturing

uct/service might not be in a position

and I am also indulged into few trad-

to avail of it because of factors like time

ing (middleman) businesses. The pri-

pressure, travel constraints, etc.

or one is full of stress if not managed

It is also equally important to gauge

properly and the middleman thing is

the competition not only in terms

less stressful simply because the risk

of direct competitors but also from

factor is pretty low.

all possible substitutes. In fact, the

But the most important factor in any

worse competition is always in form

of it is your value addition in the chain

of consumer inertia. Why should the

en and prevents them to be focused.

consumer adopt a new way of doing

Conclusion - Business Planning is a

things and get away from the comfort

must - Business plan - may be not.

of doing things the way he has been

Pawan Bhandari

M A J Jeyaseelan

Some times you might have to

and your USP. If you are clear about that then I feel each business has its own advantage (whether retail, producer or middleman). Still in a micro perspective above article makes sense.

accustomed to? What is net incentive for the consumer?

Dharmendra Arora

Is the incentive

Maharashtra Government Signs MoU

large enough to force the consumer to

The Business of Body Art ARTICLE

with Microsoft India BLOG

rethink and switch over to your new

I have 3 genital piercings,wearing gold

Good way for MICROSOFT To make

product or service.

& silver rings,as well as my wife. We en-

money in India, There are so many indian companies who can do this.

mental innovations that add a little Saju

I guess, if you are thinking of incremore value but not to an extent that

joy it very much. Are we the only ones with in Assam? Austi

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/sector

Potatonomics: From Farm to the Fork As the potato criss-crosses the supply chain from a farm to the end consumer, its prices bloat manifold, making the commodity a lucrative one to deal in /Aswathi Muralidharan

very time there is a rise in the prices of agriculture products, there is much public outcry on the inefficiency of the governments, whom we all love to blame. However, has this ever made you pause and think why a kilogram of rice costs what it does or for that matter why a kilo of vegetable or fruit is priced at that price point? Well, though it is a known fact that the middle men are the actual beneficiaries, while the farmers who actually produce the food are the worst sufferers in the food value chain, the question is how much price escalation happens at each level and why? For a better understanding of this, we decided to trace the journey of one of the most common items on your daily menu, potato, from your neighborhood vegetable vendor to the place of its origin i.e. the farms. So why potato you might ask? There are several reasons behind it. One, potato is one of the commonest of all vegetables. In other words, it is a vital part of an average Indianâ&#x20AC;&#x2122;s diet. Two, it is grown in almost all the states of India, which have very diverse climatic conditions. Three, on the global map, India is the fourth largest producer of potatoes after China, Russia, Poland and the US.

Top Ten Potato Producing States (2004-05)

SOURCE: CPRI

Where is potato grown in India? Potato is grown in almost all states of India, with the exception of Rajasthan,

WHERE DO YOU GET YOUR POTATOES FROM? Period

Source

January-May

Uttar Pradesh, West Bengal, Bihar, Punjab, Madhya Pradesh, Assam, Karnataka, Haryana, Maharashtra, Orissa, Gujarat

May-June

Spring crop in hills and North Western plains

July-August

Southern Hills

October-December

Punjab, Uttaranchal

December-January

Southern hills

Goa, and Kerala. According to figures from the Cetral Potato Research Institute (CPRI), the total potato production in the country in 2007-08 was approximately 28 million tones. The crop was cultivated in an area of 1.28 million hectares, which is approximately 0.65 percent of the total cropped area of the country. Nearly 80 percent of the total produce came from the IndoGangetic plains of north India, and from the months of November-March. Uttar Pradesh and West Bengal are the largest growers of potatoes among all states, accounting for almost 70 per-

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/sector The Potato Value Chain

cent of the total produce. Next in line come Bihar, Punjab and Gujarat, which together account for approximately 15 percent of the total potato production. However, while the potatoes produced in UP and Bengal are mostly used for consumption, those from Punjab are used as seeds.

FARMERS Rs. 20000 per acre (Seeds + fretilizers, Pesticides, Farm Labor) = ~ Rs 2 per Kg If he sells at Rs. 500 per quintal = ~Rs. 5 per Kg

First Step: The potato farmer For understanding “Potatonomics” better, DARE spoke to a number of farmers including Jaswinder Singh Sangha, a large-scale potato farmer and the general secretary of Jalandhar Potato Growers Association. Singh explained, “Though UP and Bengal are the largest potato producing states in India, the potatoes produced in these states are used mainly for consumption. On the other hand, Punjab produces very good quality of potatoes that are used as seeds. Entire India gets its potato seed supply from Punjab, which are sold under different trademarks.” Since the purpose of cultivation in these states is different, the cost of production also differs. For example, in Punjab the entire potato is sown as a seed, whereas in other states, one potato is cut into several pieces, depending on the number of nodules it has, before sowing. “Therefore,” Sangha explains, “When farmers in Punjab use almost 15 quintals of potatoes for sowing one acre of land, our counterparts in Bengal and UP use only two to three quintals per acre during the sowing season. This affects the prices drastically. However, the UP and Bengal potato farmers have to pay heavy freight charges.” On an average, the cost of production of potatoes per acre for a farmer is approximately Rs 20,000, which includes Rs 10,000 worth of seeds, and another Rs 10,000 worth of fertilizers, pesticides, farm machines and labor. The yield per acre ranges somewhere between 80 and 150 quintals, depending on the climate conditions, quality of seeds and so on. Calculating on the basis of these numbers, the cost incurred for producing one kilogram of potato for a farmer is approximately Rs 2 per kg.

AGGREGATOR/ COMMISSION AGENT Procures at ~ Rs. 5 per kg Spends on clod storage, freight, license charge Selling Price: ~ Rs 12 kg

VEGETABLE VENDOR Buys at ~ Rs 10-12 adds on his cost and sells for ~ 13 per kg

After harvesting a potato crop, which is classified as a semi-perishable item, a farmer has two choices—he can either sell his produce at a local mandi (vegetable market) in the vicinity or to an aggregator who stores the produce in cold storage, and transports and sells whatever he has procured at a larger mandi. This is the second link in the chain, which is taken up later in the article. Farmers at this stage face several problems too. Small land holdings, lack of mechanization, lack of good quality seeds and other necessities like fertilizers and over-dependence on weather are just some of the problems. Another major problem faced specifi-

RESTAURANTS AND HOTELS Buys at ~Rs 10-12 If an average dish costs Rs. 50 and uses 100 gms of potato, then he sells at Rs 500 per kilo

cally by potato farmers is marketing. Sangha explains, “Marketing their produce is a big problem for farmers, who more often than not either lack skills, infrastructure, or money. This forces a small farmer to either sell in the local mandi or become a pawn in the hands of the middlemen.”

Second Step: Aggregator/ Commission Agent As it is difficult for farmers to sell their produce directly at the large mandis, the produce then passes through the aggregators, who are also known as the commission agents. Sangha explains, “At the time of harvest, aggregators or commission agents from far OCTOBER 2009 17

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/sector

CONTRACT FARMING While munching on crispy, thin potato wafers or perfect golden French fries, you must have wondered where these players get their potatoes from. Since these players have to be consistent with the quality as well as supply, they opt for contract farming tie-ups with farmers. Under the contract farming system, the companies make a pact with the farmers to provide them with seeds, technical know-how and low-level mechanization and then buy back the produce at a minimum standard price (MSP) as pre-determined under the contract. The farmer, on the other hand, primarily supplies his land and labor. This MSP varies from year to year depending on the prevailing demand and supply. Depending on the contract, a farmer can also sell his produce in the outside market under certain circumstances such as a higher price for his produce. Companies such as PepsiCo and McCain are entering into contract with farmers to ensure uninterrupted supply of potatoes. It has been reported that PepsiCo now sources nearly 50 percent of its requirement of 50,000 tonnes of potatoes per annum for its products through this channel. For a farmer, this has several advantages and disadvantages. The advantage for him is that he does not have to shell out much money during the sowing season as the major inputs are provided by these companies with a promise of buyback of the produce. However, there have been reports of companies backing out on the price due to the “inferior quality” of the produce. The disadvantage is that, for example in Punjab, farmers generally sow three crops (paddy, wheat, vegetables or potatoes) per season. If the farmers enter into contracts with the companies, it becomes binding on them to keep the potatoes for a longer time than the potatoes used for consumption purpose. Because of this, the next crop suffers. Whereas, in Punjab, the government buys back the paddy and wheat produce from the farmers without quality concerns at a pre-determined price. Therefore, though the trend is on the rise, contract farming is yet to take off on a larger scale. away flock to the potato producing regions to buffer their stocks. They pay the prevailing price and store them in cold storages.” The price of potatoes for the aggregators depends on the anticipated demand and the supply (or produce) in the prevailing year. For example, Sangha says, “Last year, when we had a bumper potato crop in India, the prices of potatoes per quintal fell to almost Rs. 250-300. This year the prices for the aggregators is somewhere around Rs 450 – 500 per quintal.” Therefore, the procuring price per kilogram for a commission agent is approximately Rs 4.50 – 5 per kg. After procuring, the potatoes are then sent to the cold storage by these aggregators. Virender Kumar, a commission agent at the Okhla Vegetable and Fruits Market in New Delhi says, “Though there are several government and private cold storages in India, their number is very low compared to the agricultural production. The cost of storing one quintal of potatoes ranges between Rs 80 and 120 for six months. 18

This price fluctuation depends on a number of things. For example, if there is a bumper crop then there is a shortage of space in cold storages, and the prices go higher for us.” However, the potatoes become sweet when stored in cold storage for long. A spokesperson of the CPRI explains, “When stored for long, the sugar content in the potatoes increases, which is not preferred by the consumers. Therefore, they are treated with CIPC, a chemical, through a technique called fogging. This is done to reduce the sugar content as well as stop the growth of nodules. Such potatoes are sold in the market under the name of ‘sugar-free’ potatoes.” As these potatoes are sold at a higher price in the market, they fetch higher returns to the commission agent. As and when the need rises, the commission agent releases the stock and then sells his stock at the bigger mandis. The final selling price also takes into account two major things—the freight charges of transporting the potatoes from the farmers

to the mandis as well as the license cost to the commission agent that has to acquire in order to do business. This year, as the demand for potatoes is high and the supply is low, these commission agents are getting a greater profit margin. Virender Kumar says, “Last year, the potatoes could not help us recover the cost of storage. However, this year we are witnessing very good profits of almost twice and thrice the price at which we procured them from the farmers. Initially a packet (50 kgs) that was bought for Rs 200 was being sold for Rs 400, then it increased to Rs 500 and now it is selling at a price of Rs 600.” Therefore, the selling price of potatoes by a commission agent would be at approximately Rs 10 to Rs 12 per kilogram.

The Third Step: The vegetable vendor and Restaurants From the vegetable mandi, the potatoes are mostly bought directly by consumers like us, or by vegetable vendors, and those in the food business, who create another link to the chain. The neighboring vegetable vendor who procures from the mandis, obviously adds on his own cost before selling it at your door step. Now, the price also depends on which city you are in and even the locality where you live. The average prices at which a vegetable vendor in New Delhi sold per kilogram of potato this summers was Rs.13. The price also depends on the festival season. Like, for example, the North Indian cities celebrate the nine-day festival of Navratras with much enthusiasm. During this time, the consumption of potatoes goes up significantly. Due to the increase in demand, the price of potatoes has almost touched from Rs 25 to Rs 40 per kilogram depending on the variety. On the other hand, the hotels and restaurants who bought vegetables for as low as for Rs.12 a kilogram in the mandi, sell you the final prepared dish at an average price of Rs 50 a dish. If you assume that they use an average of 100 gms per dish for say a alloo pyaz subji, then they earn almost the Rs 500 from DAR E one kilogram of potatoes!

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blogs/opinion

When Co-Founders Split you will play in the organization, and set the right expectations in terms of how you will work. Running a company can be very demanding, and at times very strenuous, especially when juggling the finances of the organization and prioritizing the company above your own needs.

Ways to avoid a disaster /Vijay Anand

he good old book says that two people cannot walk in the same direction unless they agree with each other. And once in a while in the corporate world, two people— even two very good friends—decide to walk in different directions. What results is usually a messy war, emotional and legal, which leaves nothing much to salvage. Well over 80% of partnership firms in India break off. However, tuned the right way, disagreements causing these break ups, can actually be valuable information to grow the company bigger.

Signs to look out for Trust is the basis of a partnership. Any act that even suggests a breach of trust eventually leads to problems. Amongst all signs, there is one very classic sign that leads to the inevitable—the matter of money. Ultimately, any enterprise that is borne for the purpose of wealth creation and to make a difference has the nature to create wealth for the entrepreneurs themselves. So look out for anything you might do that might give the wrong notion to your partner about you attempting to garner more than your share of wealth and that starts right from the day equity is decided. Start off on the right foot, understand each other’s demands, the roles

Legal contracts: Contracts are signed not as a means to create conflicts but to avoid conflicts. The mere process of signing a contract itself helps—trying to find words and putting them down on paper gets a lot of clarity through the discussions involved. Setting expectations right: More often than not, the partnership starts to wobble when one of the partner feels like he/she is putting more time into the company than his/her partner. Defining roles clearly: If this is the first time you are working together, start with getting involved in some activity that demands you to show team spirit. It is vital for your partner to know where you’ll drop, and where your expectations begin for the other to pick up. Are you going to handle the business activity? How strong are you in that? Can you complete an entire sales cycle from marketing to closing the deal and also delivering? What’s the role of the partner and the support you expect throughout this process? Define these clearly. Communicating regularly: There are several tools that enable a company, and even a remote employee to have bearings on what the team is up to and where some support is required. If you plan properly and can communicate clearly where you are, what you are up to and what you need, it makes it easier for everyone.

If and when it happens There is nothing more heartbreaking

than two passionate entrepreneurs coming together to build a company and then splitting half-way through. The first reaction that usually arises out of founders splitting is to kill the baby and with that decision, everyone is usually happy. It, however, gets more complicated if one of the founders shows signs of wanting to continue with the company. Try not to get emotional and sort out your differences. Continue building the company as much as you can, but if it can’t be resolved, figure out what your expectations are—reasonable ones—and see how both of you can have that without causing too much damage. If it gets increasingly hard to stay focused, bring in a third-party negotiator or someone from the board to sit with you and go through your needs and arrive at a settlement. If the company is to go on, without one of the founders, agree that the continuing founder will communicate with the team about the scenario—showing the partner in the right light—and ensure that the team morale is managed. Try to salvage the relationship even if you didn’t get a chance to see it to the end. There might be a very good possibility that in the near future you might find a problem that you both will work better on solving. Don’t burn bridges. If you want to keep a relationship, focus on all the good things that came out of it. If you want to end it, look no further than what all it DAR E cost you. Vijay Anand is an entrepreneur who has experience starting and building various technology startups, starting at the young age of 16. He is currently the Incubation Manager at RTBI, an incubator in IIT Madras that focuses on building rural-focused businesses. He is also the founder of Proto.in, India’s premier technology showcase event and is involved in various initiatives that are shaping up the emerging entrepreneurial scene in India. He blogs as The Startup Guy at www.vijayanand.name and tweets regularly at www.twitter.com/vijayanands.

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/INSEAD

Proﬁt from a passion /Irawati Gowariker and Philip Anderson

f Vincent Van Gogh had viewed his extraordinary creations as a means of livelihood, imagine how radically different his life would have been. He lived for his art per se, and, the uncertainty of his next meal made little difference to him. Ironically, Van Gogh’s legendary paintings were not able to sustain him during his own lifetime. Convinced that creative icons such as Van Gogh are at one end of the spectrum, professional singer Manisha Joshi feels, “While I may be rightbrain dominant, I don’t think my right and left brain abilities are like chalk and cheese. I am passionate about music. I have also tried to logically figure out how I can make a living from my music”. More and more people like Manisha are blending their creative juices with latent left-brained abilities of analysis and practical thinking, thus, heralding an inspiring age of creative entrepreneurship. This article, profiling five

creative entrepreneurs, is dedicated to all those who indulge in some form of creativity on weekends but would like to, longer. After receiving eleven awards for his debut film Riding Solo to the Top of the world, we wondered why filmmaker Gaurav Jani would need a promotional tour at all. At his promotional screening in Bengaluru, Gaurav revealed that his journey since 2006 as an independent film-maker has been as uphill as pushing his bike up some difficult terrains while filming Riding Solo. This made every marketing effort inevitable. “Funding was taking very long as everyone I approached wanted to see my travel plan first. But an exploratory travel like the one I had in mind couldn’t be planned. Spurred to take up “Light, Camera, Action” all by myself, I borrowed a camera to make a 10-minute specimen film! But the journey got me carried away and I pursued

70 days of travel right up to the remotest Changthang plateau in 2006”. Having directed, scripted, shot, edited and even narrated the film all by himself, Gaurav’s creative mind was realistic about keeping it lean all the way. “Dirt Track Productions operates from a go-down and we are a twomember team. Documentary films, unlike feature films see very slow recovery. And we wanted it marketed by those who had conviction in its content. So we innovatively distributed our films by investing in our website www.dirttrackproductions.com, with a payment gateway,” Gaurav adds. Gaurav self belief “Deliver good work and the money will follow” revved his first film to success. “Word spread when it got nominated at Mumbai International Film festival and people that have bought my film have arranged promotional screenings; at my forthcoming US tour, they have arranged as many as 20 screenings”. Over a clash of

Gaurav Jani on film location

Spurred to take up “Light, Camera, Action” all by myself, I borrowed a camera to make a 10-minute specimen film! But the journey got me carried away and I pursued 70 days of travel right up to the remotest Changthang plateau in 2006

— Gaurav Jani Dirt Track Productions

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/INSEAD

While I may be right-brain dominant, I don’t think my right and left brain abilities are like chalk and cheese. I am passionate about music. I have also tried to logically figure out how I can make a living from my music

— Manisha Joshi Manisha Joshi with music composer husband Milind background score, Gaurav had to turn down an offer by National Geographic. Having given up a relatively cushy job as assistant director to acclaimed film director Ram Gopal Verma, Gaurav combined his love for motorbike riding and exploration by tying them enterprisingly into the creation of documentary films. “I become a better film-maker through my screenings as the audience gives me an honest opinion of shortcomings”. This struggling entrepreneur is uncompromising only on two counts: about creating a stagemanaged exploratory film similar to most reality shows today and about getting into mainstream films.

The second creative entrepreneur is professional singer Manisha Joshi, whose voice you will hear when the Samsung refrigerator commercial plays on TV. Married to popular music composer Milind Joshi, Manisha’s music and life are joined at the hip. “I don’t come from a family of musicians so after I won a gold medal in natyasangeet, I followed my then music guru Khadilkar to Pune. Thereon to Mumbai, the land of opportunity for a singer like me”. Manisha has, since, provided playback singing to a whole host of films, advertisements, TV serials and Marathi plays. “I feel inspired by anything beau-

Professional Singer

tiful in life and music is my favourite form of expressing it”, says this gifted singer. Having launched a CD titled Ranga Nawa along with her composer husband, Manisha feels that she was able to provide the “3rd dimension in the poet-composer-musician effort”. While selling our CD, we were able to meet more people; more relationships mean more opportunities for artists like me”. Willing to embrace plurality, Manisha formally started learning Hindustani classical music under renowned artist Devaki Pandit. But Manisha’s thirst for music didn’t leave her throat dry when she took to teaching music as a stable

Gaurav and his bike while filming 'Riding Solo'

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When 8 out of 10 of my clients like being in the house, apartment or a factory that I have designed, I know it has worked

— Rajendra Jadhav Consultant, Chaugule Sant & Associates means of livelihood. Having taught as many as 400 music-enthusiasts, she still remembers her first music student, “Saadi Hassan, a popu22

/INSEAD

lar college professor, unfortunately confined to a wheel-chair, wanted to learn music. He was the first person to call me Guruji. Hassan gave me the confidence that I could spread my talent and his remark “You have thrilled me with your music. If you can thrill someone with their art, then you will make a very good teacher” made me view music as a vocation”. Manisha is candid in accepting that, “Education in music doesn’t make you an artist, a fact I often share with my students. Music is a faculty and for those who are tone deaf or have no sense of rhythm, it is my responsibility to show them another path that they are better suited for. Recently, on gurupornima day, my students arranged a function and paid me a tribute by performing music that I have taught them”.

As much as Manisha values her students’ performing music taught by her on gurupornima, architect Rajendra Jadhav’s tall-standing creations are indeed incomplete without a feedback from those who live in them. The simple elegant beauty of Vinita Ram’s house inspires her to voice an opinion about its architect, “In my house, each room, the passages, dining, kitchen have different proportions, but they all contribute to an architectural grace of the house and an overall feeling of harmony. Rajendra is the most talented architect of our times” Asked to spell out his distinctive style as an architect, Rajendra Jadhav, consultant to Chaugule Sant & Associates, uncovers the functional, client-focused professional in him, “When 8 out of 10 of my clients like being in the house, apartment or a factory that I have de-

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Vinita Ram's house (Sindh society bungalow) designed by Rajendra Jadhav signed, I know it has worked. I take care to ensure play of light, ventilation and a layout that eases movement. You will typically notice clean lines, unobstructed views, neutral colours and the use of natural material in my designs”. But this architect is level-headed enough to balance his urge to have a free hand in his designs with customer expectations. Vinita Ram, President, The Studioworks, as Rajendra’s repeat customer asserts that, “Rajendra’s method of working is severely practical. He is courageous enough to challenge your choices continuously; neither does he foist his need to be radical. He is very patient about changes but with an active client-architect dialogue he engages you in, few changes are required.” Talk of repeat customers, our next creative entrepreneur’s repeat custom-

ers are unmistakably the top celebrities in Bollywood! It is said that the key to entrepreneurial success lies in the right side of the human brain-which processes images, colour and the ‘big picture’. The brand equity of fashion photographer Avinash Gowariker more than exemplifies this fact. But much about this creative professional is seeped in a practical, left-sided brain, his website header, ‘To break the rules, you should know the rules’ included. Avinash modestly pins down the rules he learnt, while commercialising his art, to luck. A juggler at every step, he says, “My entry into a creative line such as photography is a bit of a freak situation. Soon after school, I zeroed into career options by giving a thought to all that I did NOT want: a 9 to 5 job, a boss and a role that needed an academic bent of mind”. Having tried his

hand working for a construction company, an eye opener for Avinash, a 17year old then, was the lucrative side of a creative profession such as photography. “Photographer Urmila who was also a neighbour then, needed an assistant and she offered to pay me Rs. 250 per assignment back then. I still recall her counting a wad of notes after every assignment”. Avinash got visibility into Bollywood when iconic film director and cousin Ashutosh Gowariker offered him a role as an assistant director for one of his films. “Ashutosh’s offer was a promotion for me then”. For a celebrity photographer whose camera captures the best side of the Who’s Who of tinsel town today, Avinash’s first shoot with Aamir Khan kick-started his career. PROFIT FROM A PASSION

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opportunity/manf

The Combine Harvester This big farm equipment offers manufacturing and rental opportunities even as large multinationals are looking at India as a manufacturing hub /Vivek Kumar

he farm equipment market in India is now growing at a fast pace after a brief period of decline between 1999 and 2002. The main reasons for revival of this industry include easy availability of finance schemes and reduction in interest rates. Farm equipments are often costly for a small-scale farmer and loans are preferred to buy tractors, combine harvesters, threshers, etc. However, with increased awareness of benefits of these machines and various schemes, the market is looking upward.

principles: self-propelled and tractor mounted. Tractor mounted combine harvesters are cheaper as compared to self-propelled combines and are often preferred by farmers who have smaller holdings of lands. The demand of tractor mounted combines is estimated at around 3,500 and for self-propelled combines is around 1,500. The heartening factor for this segment is that only 10-15% farms use these machines for harvesting. The growth rate for the demand of combines is expected to be around

12% annually. This is where opportunity lies. Claas Industries from Germany is already into business of manufacturing these combines since 1991, and Kubota from Japan is also looking to start assembling these machines in India. Export opportunities are also increasing and lots of countries in Africa like Burkina Faso, Zambia, Madagascar, and in Europe like Germany are opening their market for Indian players. Pakistan is also becoming a considerable importer of these machines.

What is a combine harvester? Combine harvester is a farm equipment that can do multiple tasks such as harvesting multiple crops, threshing, winnowing, and collection of grains. The market for combine harvesters is still in its nascent stage but it is growing fast. Farmers in Western and Southern states of the country are looking to buy this equipment. The manufacturing of combine harvesters started around 1970 when Punjab Agricultural University, Ludhiana (PAU) helped locals to manufacture farm machinery. But It was around 9-10 years back when the demand for combine harvesters increased at a fast pace.

The market There are two main models for combine harvesters based on their working

BENEFITS OF COMBINE HARVESTERS Reduces crop losses. Tackles peak time labor shortage. Saves time Helps in maintaining the turn-around time for taking up the next crop. 24

Combine Harvester

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nancing facilities to farmers and the segment is seeing some sort of incremental demand.

The Way Out

SOURCE: FICCI

Constraints for the market The major constrain for the market of combine harvester is its price. The rate varies between Rs 5 lakh to Rs 22 lakh depending upon the models and functionality. Fragmented land holding, poor rural transport facilities, inaccessible farms and lack of local manufac-

turers and repairing facilities are some of the factors that have kept this industry mainly focused in North India especially in Punjab. Lack of proper knowledge about farm equipments and shortage of diesel in the country are some of peripheral constraints. Commercial banks and institutions like NABARD are opening up fi-

The panacea for this constraint of cost is custom hiring of farm equipments and it fits quite interestingly for combine harvesters. Tractor mounted combines could cost 20-30% less than self-propelled combines, and self-propelled combines are owned by contractors or farmers holding big fields. During the harvesting seasons, these machines are sent to different states and areas for custom hiring. Farmers having small holdings hire these machines on contract basis and let them harvest the crop for them. Contractors or owners of these machines send their groups in different states for harvesting season that could go on for around 2 months. The cost of combine harvesting of wheat and paddy is around Rs. 30004000/- per ha. If done manually, it takes around 20 laborers to harvest one hectare charging around Rs. 150/per day (this could vary state-wise). Apart from that, there is a cost of Rs. 1000/- per ha for threshing also. The

MODELS AND VARIATIONS Tractor mounted or Self-propelled combines Maize combine harvester Track Combines specifically used in wet lands Combines for soybean and gram

Cutter Bar that gets attached with the Combine Harvester OCTOBER 2009 25

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opportunity/manf Why is the production of Combine Harvester concentrated in Punjab when other states also use these machines? Manufacturer of farm machinery in Punjab in general is very high compared to other states. PAU Ludhiana in 1970s helped the local industries in establishing farm machinery industries. Even the first thresher which was designed at Allahabad Agricultural Institute, Naini Allahabad was taken up for manufacture by Martin Burn in Calcutta but became popular only when the same was taken up for manufacture by the manufacturers in Punjab. Thus, Punjab has better infrastructure for the manufacture of farm machinery compared to other states.

What regulations the government imposes on production of Combine Dr. Gyanendra Singh Harvester for standardization? Vice Chancellor, The BIS prepares standards for the Mahatama Gandhi Chitrakoot Vishwavidyalay, agricultural machinery, and Farm Madhya Pradesh Machinery Testing and Training Institute Budni, MP conduct tests to ensure quality. But these are not mandatory unless the farm machinery is to be purchased through Bank loans. What could be the set-up hurdles if somebody wants to start a business of Combine Harvester production? There are no hurdles in the manufacture of combine harvesters or any other farm machinery by small scale units. They must follow industrial laws and labor laws. Is there any promotional policy or incentives from the government to boost agricultural machinery industry in India? The Government of India provides financial incentives to the farmers through State Government in terms of Centrally Sponsored Implement subsidy Scheme. total cost of harvesting comes almost equal in both the cases but the time saved and labor-shortage-issues are solved quite nicely by opting for combine harvesting. In last 2-3 years, Punjab has faced acute shortage of labor coming from Bihar and Uttar Pradesh. The situation was so drastic that farmers used to sit at railway stations at Ambala and Rajpura and wait for laborers to alight so that they could be picked right from there. However, due to industrial initiatives by Bihar government, lots of laborers prefer to work in those units avoiding traveling and costs of living in different state. This is where farm equipments especially like combine 26

harvesters that have multitasking functionality come to the aid of agriculture sector. Other states are also facing labor shortage and state governments are encouraging R&D and innovations in farm equipments.

Areas of Improvement in Combine Harvesters Due to slow development of this segment in India, research and improvement in the functionality and efficiency of combine harvesters have been slow till now. Only cereal crops are harvested using these machines. Most of the straw is left in the fields and burned which has many environmental issues. Apart from this,

INSTITUTES INVOLVED IN TESTING AND EVALUATION Bureau of Indian Standards Farm Machinery Training and Testing Institute, Budni (Madhya Pradesh), Hissar (Haryana) Regional Research Laboratories under CSIR farmers are losing valuable animal feed material. Extending these machines to different crops like sorghum, cotton, sugarcane, sunflower, safflower, and pulses through design modification can be done. Harvesting of fruits is one more area where these machines can be extended for functioning but it requires a lot of design modification and quality enhancement measures. One major concern of improvement is the usage of combine harvesters during off-season. Capital investment in purchasing combine harvesters is huge, and there is great need of developing some jobs where these machines can be used during non-harvesting season.

Scope and opportunities The scope of this segment of farm mechanization is huge. Interestingly, till now, Punjab is the only state where almost all the manufacturers of combine harvesters are clustered. Manufacturers like Swaraj, Preet Combines, Kartar Combines, Standard Combines, and Deshmesh Combines are all from Punjab. There are number of smaller players in Punjab that manufacture low-cost combines that are suitable for farmers having small land holdings. States like Madhya Pradesh, Andhra Pradesh, Tamil Nadu, and Uttar Pradesh often seek supply of these combine harvesters from Punjab. Therefore, there are great opportunities for new start-ups in different parts of the country. For new start-ups, there is no big challenge in terms of market. Intelligent selection of material, improvements in design, and offering quality post-sales repair services could be the factors that could help them stamp DAR E their presence in the market.

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/strategy

Why calling for customer support leaves a bad taste in the mouth Customer support over telephone or e-mail is often a bitter experience for the customer. This arises out of the misalignment in the objectives of the customer, the call center taking the call and the vendor /Aman Malik

he call centre agent, a creature we all love to hate, has become an indispensible part of our lives. There is hardly any aspect of modern day life that remains untouched by the ubiquitous call centre agent, the first point of contact between a customer and the entire backend support paraphernalia that is offered to you when you buy a product. Often, however, our experience with this invisible friend, who is supposed to offer us timely support, leaves much to be desired, at times even leaving a bad taste in the mouth.

CUSTOMER’S EXPECTATIONS Immediate access Immediate solution to problem Expected resolution time Information on status Access to person directly dealing with the problem Ability to escalate if expectations not met Continuity – not having to explain the problem from start every time they call in

Today a call to customer support invariably involves three parties—the customer, an outsourced call handling agency or BPO, and the vendor who engages the BPO as the interface with the customer. Each one of them has different perspectives and objectives when it comes to a support call or mail. The issue is very simply and clearly one of a mismatch between customer expectation of help when things go wrong, and the management of the same by the support mechanisms. Simply put, the slip-up is nothing but a misalignment between what you, the customer, OCTOBER 2009 27

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DARE.CO.IN are made to expect and what you actually get. This happens because there is a fundamental mismatch between the customer’s quest for a satisfying experience and an immediate answer and that of the BPO and the vendor, who look for maximum efficiency and minimum cost, respectively. This piece is based on a dipstick survey of randomly selected people, so as to gauge where customer support systems are found wanting. These issues were then posed to senior executives both in the BPO industry and vendors whose products require the back-end support. The problems that people face are diverse and specific to the product or service and the support they require. Yet in the course of the exercise, across domains, several generalisations emerged. One of the biggest problems customers face is that either the customer care executives never come online or it takes inordinately long for them to get across to

/strategy an executive—an issue related to the number of deployed telephone lines and agents. Another problem that occurs often is that the person taking the call is either ill-equipped to deal with the problem (the problem may be beyond his mandate) or is unwilling to help the customer beyond a point, as there is no incentive for him to do so. In either case, there is a perceptible hesitation on the part of the agent to transfer the call to a higher executive (for that leaves a negative mark on his performance matrix). Other persistent problems faced by consumers include fears of data theft, not knowing where to turn for third-party add-ons, nontoll free numbers, etc. In private, industry insiders concede that such perceptions are not offthe-mark and that “an ever-expanding and fast developing eco-system” is the crux of the problem. The main issue in the customer-BPO interface, which causes problems like over-emphasis on procedure and inability or unwill-

ingness to solve a complaint that may be taking longer than usual to resolve, concede top executives, has to do with the way the performance of the customer care executives is measured. The performance matrix includes parameters like the average time they take to handle a call, number of calls handled in a specified time period, number of problems resolved, etc. “There is often no incentive for the agent to go out of his way to resolve a problem,” says the head of analytics of an IT major that runs a captive BPO. Problems like lack of comprehension of the complaint occur because executives are often not trained properly, an area where BPOs are found wanting. Another area where BPOs often do not fare well is that of security of data (“info-sec” in industry parlance). This leads to data theft, the most inane yet irritable consequence of which is the unwanted calls you get, selling you everything from insurance policies to that dream vacation. In the gravest cases of data theft however,

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/strategy money worth millions of dollars has vanished off bank accounts. While the bigger BPOs have learnt how to deal effectively with the problem, the smaller ones are found wanting. On the other end, there are gaps in how BPOs interact with their vendors or clients. While such incongruencies are specific to company-to-company relationships and intra-domain technicalities and therefore out of the purview of this analysis, they mostly occur because vendors have a tendency of looking at back-end operations as a cost centre and hence do not pay the required amount of attention on this area. The vendor, having outsourced customer support, may not be alert to newer support issues rising up through the system till they cross a critical threshold. Many vendors are known to narrowly straitjacket issues that can be handled by a customer support mechanism, consciously choosing to lose customers who face a problem outside the defined ones, unless the customers are part of a privileged set (high spend, influence, etc.)

THE AGENT’S DILEMMA Broad parameters on which the performance of call-centre agents is measured Number of calls taken in a stipulated timeperiod. The more the better for the agent, while the customer wants more time spent on her problem Average handling time or average time taken per call. The BPO wants to spend less and less time per call Call closure rate. In how many cases was the complaint resolved at first call. No one measures how happy the customer was at the end of the call. This narrow parameterisation leads an agent to often ask: “What is in it for me if I go out of my way to resolve the customer’s complaint?” The answer is not just nothing. The agent may actually be penalised for doing that. Some vendors are beginning to realise that such back-end operations can be revenue generators as the agent can make auxiliary sales to

customers even while his complaint is being redressed. So, you, the customer, may be complaining about a hard disk problem and the agent may be trying to sell you more RAM or you may be complaining about the high rate of interest for your home loan while the agent is trying to sell you a new insurance policy. Very clearly, there is a possible clash of desired outcomes at work. So, is customer service always messy? Not necessarily. An analysis of recent tweets about customer service response of a leading telecom vendor was revealing. There were comments from both extremes—there were customers going gaga over the excellent service and there were those tearing their hair out in frustration. Our point is that if the objectives of the three players—the customer, the agent and the vendor—can be better aligned and if customer expectations are better understood and managed, then there would be more customers going gaga than tearing their hair out. DAR E

Website:

www.dare.co.in Follow us on Twitter @daretostartup

il B

p t t h Customer care.indd 29

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dare@cybermedia.co.in SMS: 56677 (SMS Instruction: Type 'DARE <comments, questions, suggestions'> and send it to 56677) OCTOBER 2009 29

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legal/policy

Should the RTI Act be applicable to businesses?

The Right to Information (RTI) Act 2005 has been one of the most empowering legislations in the history of independent India. The intent behind the legislation is laudable and it has broken new ground. And there are many who believe that the RTI could achieve much more in the areas the legislation covers as well as its implementation. One such area that comes up for discussion is whether the legislation should be extended to bring the private sector within its ambit. We have Wajahat Habibullah, Chief Information Commissioner and Arvind Kejriwal, Magasasay Award winner and Right to Information crusader talking about that and related issues. /Vivek Kumar and Aman Malik 32

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legal/policy

Wajahat Habibullah, Chief Information Commissioner There has been talk of bringing the private sector within the purview of the Right to Information Act. Do private businesses in some way already come under this Act? To a certain limited extent, the private sector already comes under this Act. Section 2(f ) of the Act, which defines “information,” specifically lays down that any such information that a private party is required to furnish to the government, automatically comes under the Act and has to be therefore disclosed, under an existing law to that effect. Such information is however not accessible directly from the company but from the government department to whom the report has been sent. Moreover, organisations that were set up by an Act of the legislature or a government notification, and were subsequently privatised, automatically come under the purview of the Act. An ex-

ample of this is the power distribution companies in Delhi that were subsequently privatised. Such organisations are treated as public authorities and come under all the provisions of the Act. These companies have opposed our stand and we are awaiting a judgment of the Delhi High Court on the same. This also holds true in the case of stock exchanges, which are created by public notification of the Securities and Exchange Board of India (SEBI). Many of them have accepted that they are public authorities and therefore answerable under the Act. The Bombay and Jaipur stock exchanges have challenged this, and judgements of the court are awaited. Would it also suggest that such companies that deal in ‘public goods’ like say mineral resources, also come under the Act?

Any such information in relation to public goods that the company concerned would have conveyed to the government comes under the public domain. It then becomes the government’s prerogative on whether they want to disclose the said information or not, as there are certain exemptions to public disclosure under the Act. It lays down only a few areas where information cannot be given. The Delhi High Court has in fact held that information necessarily has to be given in each case and if the public authority wants to withhold the same, a proper justification has to be given to the satisfaction of the Information Commission. Is it true that only individual Indian citizens can file a petition under the RTI Act or does it extend to organisations? Can a foreign national also seek information under this Act? OCTOBER 2009 33

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DARE.CO.IN The law, as it is, simply says “citizen of India.” We have examined it and have come to a conclusion that organisations can apply through a citizen. And if an organisation does not apply under the name of any particular person then the information sought can be refused. Also, if a person who is a part of the organisation applies, we will assume that he is applying in his private capacity, as long as he is a citizen of India. We cannot go against the law, but can always interpret the same liberally. Even a foreigner can seek information if an Indian citizen applies on his behalf. A foreign citizen can only be denied information if it can be proved that in doing so, the national economic interest will be jeopardised. Information has been denied to several foreign companies in the atomic energy sector and even in the case of suppliers of generically modified seeds, citing national economic interest. On the other hand, these companies do come under the purview of the Act as they have revealed information to nodal ministries like the Department of Biotechnology. In your opinion, should an enabling legislation be brought about to bring the private sector as a whole under the purview of the Act? Such legislations have already been brought about in countries like South Africa and Bangladesh. Yes, such legislation could be brought about, but one will have to be very careful in drafting and then implementing the same, because the private sector is fundamentally very competitive. Considering the fact that most corporate entities are registered and therefore come under various guidelines that make them accountable, at least in theory, what will be the chief uptake from such legislation if it does come about? I seriously believe, had such a law been in position, the Satyam scam would not have happened because how the money was being spent, could have been brought to the public notice. 34

legal/policy ate sector has While the corpor ment hind the govern always been be untable, to be more acco the defensive. they are now on hom nisations from w ga or e at iv pr l Al was sought, have the information the High Court. actually moved

How has the corporate sector reacted to such a suggestion? Is the corporate sector weary of legislation like this? It is interesting that while the corporate sector has always been behind the government to be more accountable, they are now on the defensive. All private organisations from whom the information was sought, have actually moved the High Court. I have pleaded with the Chief Justice of the Delhi High Court that such cases be decided very expeditiously. I do not think as an entity, the corporate sector is weary of it. There may be individual organisations who might have something to hide. Is a legislation like this on the anvil? The government has talked of some amendments to the Act, but I do not frankly think that bringing the corporate sector into the fold is immediately on the mind of the government. It is concerned more with building instrumentalities for easy access of information, something that will take a year or two more. So, it will be a slow, but a steady process. At the moment the limits of the present legislation have not been tested. Have we withstood the test of law? We will know only when the High Court gives its decision. Why can there not be a public repository of all information that is disseminated under the RTI Act? The instrumentalities of the Act have not yet come into place. All records have to be computerised and made accessible through a network. This, when it does happen, will cut down the procedural hassles and people will not

have to necessarily take the RTI route for everything, barring certain information that may not be on the network. The bureaucracy has been resistant to the Act and makes life difficult for the common man who wants to access this information. What can be done about it? The resistance comes not from the senior bureaucracy, but from the lower levels, as they feel the Act makes them less “important.” It is the “maibaap” or “bada-sahib” attitude that prevails. It is attitudinal and will only go with time. Moreover, they have to be made to realise that their position remains important as they are the givers of information. What is the general profile of applicants? Can you name some wellknown people and organisations that have used the Act? I have had all manner of people, ranging from Nusli Wadia to the guy who was so poor he wanted to know how he could have a phone booth installed, as he had no means of livelihood. Political leaders like Jaswant Singh, Arun Jaitley and Abhishek Manu Singhvi have been using this Act. PSUs and NGOs like Kabir and Parivartan have also used the Act extensively. Resident Welfare Associations are major users of the Act. To that extent, this law is a great equaliser. Has the Act improved compliance by private establishments? Can you quote some examples? The best example is in the case of private schools especially in Delhi. The better schools all over the country are privately run. These schools however have to comply with government regulations, especially in relation to admitting people from the weaker sections of society; something they had been skirting before the RTI Act made it compulsory for them to furnish information to the government in the same regard. After the implementation of the Act, at least in the Delhi region, the problem of compliance has been solved to a large extent.

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legal/policy

Arvind Kejriwal, Magasasay Award winner and Right to Information crusader There has been talk of extending the scope of the RTI to the private sector. What do you think is the basic rationale behind this? The existing laws, especially as far as they concern the private sector, are inadequate. They allow businesses to conceal more than reveal. That is why we need an enabling legislation to make the private sector comply with provisions of the Right to Information Act. Several countries like South Africa and Bangladesh have already done that. Would the extension of the Act to the private sector not militate against the notion of privacy thus far afforded by the state to its citizens? What has been the reaction of the corporate sector to the suggestion? Are corporate organizations really private entities? Those that are listed have public shareholding and so fundamentally are answerable to the Indian public. Even the oneâ&#x20AC;&#x2122;s that are not listed often either have substan-

tial public borrowing or get sops from the state, and so should be publically accountable. We therefore need to redefine the notion of privacy. What behemoths like Reliance or the Tatas do, often affects large numbers of people and often the state itself. So, the corporate sector would naturally oppose it if it hurts their corporate interests.

ly ganizations real Are corporate or ? Those that are private entities and ic shareholding listed have publ are answerable so fundamentally es blic. Even the on to the Indian pu ve d often either ha that are not liste get ic borrowing or substantial publ ld ate, and so shou sops from the st countable. be publically ac

Considering the fact that most large corporate houses are publicly listed and are therefore liable to reveal financial information, what substantial difference would it make if they are brought in the ambit of the RTI? Despite the fact that their balance sheets list some financial information, listed companies are not liable to reveal everything. Critical information related to say tendering or contracting can be brought in the public domain if they are brought within the ambit of the RTI. The bureaucracy has been resistant to the Act and makes life difficult for the common man who wants to access this information. What can be done about it? The Act explicitly lays down a penalty clause for the concerned government officials, if information sought is not disclosed within a stipulated period of 30 days. This is perhaps the only law that links the salary of a public functionary to his performance. Beyond that, it is a systemic and an attitudinal issue. D A R E OCTOBER 2009 35

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/bio

OCTOBER 2009

Entrepreneur of the month Oct09.36 36

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/bio

SATISH KUMAR AGARWAL KAMDHENU ISPAT

Kamdhenu Ispat Limited, established in the year 1994, is one of the largest manufacturer of international quality Steel Bars in India. Listed on BSE and NSE with annual turnover of Rs. 375 crores and a brand turnover of Rs. 3000 crores. The company’s product portfolio comprises reinforcement Steel Bar (TMT/HSD), structural steel (angle, beam, channel and flat), binding wire (Kamdhenu Wirebond), plywood, housing projects (Kamdhenu Homez) and UPVC windows and doors and the recently added product portfolio of Kamdhenu paints—Color Dreamz

ow did Kamdhenu Ispat come about?

I am a mechanical engineer from IT-BHU. My father was a small businessman operating in the steel industry in the 1990s. We had a very small manufacturing unit in UP which catered to the needs of sugar industry manufacturers. I always believed that the steel industry has a lot of potential for business. At that point in time, our country started seeing a lot of construction and development activities. While this was happening, there were not many companies which offered good quality products. The only good and big players in the industry were TATA Steel and SAIL. It is during this period that I thought of getting into this business of providing best quality products at reasonable pricing and thus Kamdhenu Ispat got floated in 1994. Hence we began our journey in 1995 in Rajasthan, with a small unit and a production capacity of just 2000 metric tons per month. We started converting this commodity into a consumer driven product – as a branded product. We had started with a small capital of Rs 5 crore but with a dream of becoming a national player. Due to our various consumer awareness campaign, our product was very well accepted by the consumer. So much so that I noticed that we were not able to meet the grow-

entrepreneur of the month ing demand. I knew that we will not be able to cater to this surge in demand with our own manufacturing unit. It is then that I got this idea of outsourcing material from various other manufacturers – which I call as the franchisee model. In this model of business, our company works as a service provider for the steel industry. We have three known concepts in this franchisee business model. We provide 100% technological support to our franchising units, wherein we provide the complete quality management systems, quality teams. We also provide 100% marketing support. And thirdly, we also allow them to use our brand name – Kamdhenu, in their products. Whatever proceeds come from this affiliation, the manufacturers get to keep 80%, while passing on 20% to our company as royalty. Now, from that one single unit, we now have 59 units in total — 57 in India and 2 in Nepal. The construction industry is growing at 12-15% annually. Kamdhenu aims to become one-stop solution provider in infrastructure and construction sector of India. We focus mainly on construction sector having different products, but we are looking forward to make it into FMCG OCTOBER 2009 37

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/bio

model starting with cow-milk, butter and then moving to mineral water also.

What are the benefits of the franchisee model? For Kamdhenu, more franchisee units means increase in market share. It also helps in improvement of brand equity without investing in manufacturing activity. Since we have these units located in different parts of the country, we save on transportation costs and time. Inventory control for construction sector is also very important – and these units makes it easier to provide quick delivery of products to the consumers. Also in the future, services will be in major demand, and these units will surely come in handy. The sheer volume generated by all units put together gives us more bargaining power. For our franchisee units, the most important benefit is in the form of expertise and experience that we provide for running their business efficiently. They also benefit by getting a ready platform in the niche market by affiliating with us. The franchisee units get to leverage the brand Kamdhenu for the manufactured products, which in turn gives them access to the already in place nationwide Kamdhenu marketing network. These are some of the many benefits that franchisee units reap by being affiliated to Kamdhenu.

What, in your opinion, can curb the cartels and illegal activities in this industry? Yes, it is true that to some extent there are cartels of the big developers. There is no legal body to handle all this. The best method is education of consumers and making the process transparent. While engaging in building processes, consumers should take care of some legal formalities.

How does Kamdhenu Paints plan to gain market-share in a market already dominated by established players? We are concentrating on eco-friendly lead-free paints and our products have longer life than the existing products available in the market today. The main focus is to provide best quality with most reasonable price. Even though we are facing resistance from a lot of segments, we are rapidly gaining good customer faith in our brand of paints – Color Dreamz.

What were the challenges faced when starting the company? Back in 1994, I did not have much capital to start the business. Thankfully, our banker, State Bank of Bikaner supported me. Besides this, in the beginning of our business, we did a lot to promote our products in the market. These promotions worked for us, and brought about a limitation of us not being able to meet the production capacity required to meet the demand. Of course, this barrier was met and dealt with by introducing the franchisee business model. Just to give a better perspective – right now we have a production capacity of 15 lakh tonnes which requires more than 6000 crore rupees. We did not have that kind of money to invest, and this is where the franchisee model really helped us.

“ ” SUCCESS MANTRA

Work hard. Be honest. Provide best quality products at most reasonable prices

How does Kamdhenu differentiate itself from other similar players in the industry?

Besides SAIL & TATA Steel, Kamdhenu is the only brand with a strong presence nationwide. While there are regional players across the country, who manufacture local brands; none of them can match the quality of products that come from the house of Kamdhenu. We always strive to provide best quality at a very reasonable price. So the quality of our products is as good as TATA Steel, and we keep our prices Rs 5000-6000 a ton than them. We have all types of customers – starting from single home-builder, professional builders, corporate builders like DLF, GMR, Ansals, etc, as well as government authorities such as NHAI, Railways, Airports, etc. 38

What, according to you, is the next big thing in the construction sector? The construction sector in itself is a very big sector. House is a basic requirement of every person; yet only 20% population have their own homes. That said, low-cost housing is one area that can be focused on. Low cost housing is going to generate a huge demand in the future. Hence players with quality products at reasonable prices have a huge potential to tap in this sector. DAR E

OCTOBER 2009

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Kushi ad.indd 39

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xxxxx/xxxxxxx

Empowering Business in Patna C

isco, in association with DARE, hosted the â&#x20AC;&#x153;Empowering Businessâ&#x20AC;? event in Patna for small and medium businesses (SMB). The event was very well received by entrepreneurs in Patna. It was attended by

the CEOs, MDs and directors of companies from across verticals and saw an attendance of more than 70 delegates. The keynote address was delivered by Krishna Kumar, Group Editor, DARE, in which he talked on the need for innovation. The other two speakers from Cisco, namely Gopi Choudhury and Nirmalya Pal made presentations on business on fast track and securing network foundations respectively. It was followed by a very brief talk by Manoj

Krishna Kumar, Group Editor, DARE magazine

Tiwari on winning with Cisco capital. After the presentations, the floor was thrown open for discussion where the participants shared their experiences and suggestions. One of the most common suggestions that came from the participating entrepreneurs was requesting Cisco to partner for imparting basic technology skills in the workforce of the region, for then only can they hope to sell their hi-tech products in and around Bihar.

DAR E

OCTOBER 2009

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xxxxxx/xxxxxx

Gopi Choudhury Cisco

Nirmalya Pal Cisco

Manoj Tiwari Cisco

OCTOBER 2009 41

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Doing Business in

Colombia

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strategy/going global

The last decade has seen Colombia improving extensively on its business environment. It now offers great opportunities in diverse sectors /Vimarsh Bajpai

hen United Phosphorus (UPL), a major player in the agro-chemicals market, acquired a Colombian company Evofarms, last year, a marketing major in the same domain, it reflected UPL’s strategy to look at opportunities in the Latin American market. Taking the Colombian route was not a coincidence, because the country has indeed worked extensively over the past decade to improve the business environment. IT major Tata Consultancy Services (TCS) began operations in Colombia in 2006 and now caters to the banking, telecom and transport sector as well as the government. The coming year could see some more Indian companies entering Colombia. Representatives of nine Indian companies from diverse sectors such as biofuels, IT, mining, and others visited Colombia in June last year to explore opportunities for investments.

Why Colombia? The World Bank Doing Business Report has ranked Colombia as the best country to do business in Latin America. Over the last five years, its economy has grown by four percent per year. The government is making huge

DARE/opportunity areas • IT & BPO • Biofuels • Pharmaceuticals • Petrochemicals • Mining • Coal • Hospitality OCTOBER 2009 43

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DARE.CO.IN What makes Colombia a hot destination for investors? Firstly, the Colombian government’s commitment to help investors and secondly, the rich human resource. Colombia is also very cost-effective for investors. The country’s location in the heart of America is important. We are six hours away from New York, Toronto, Buenos Aires, and Santiago. According to World Bank’s Doing Business Report, Colombia is now the best country to do business in Latin America. The government has brought in several reforms in the tax regime and other areas of doing business. We are the first country in Latin America that now has laws relating to investor protection. We want to build the best business climate in the region. Colombia is a very stable country, both politically and economically. Hyperinflation never touched us. Since 1999, we have had one-digit inflation. Between 2002 and 2007, our GDP has grown at over five percent. This year we are expecting very modest growth. The manpower in Colombia is very well trained. The number of professionals is nearly 82,000 every year. That number is the third largest after Brazil and Mexico. We are most cost-competitive in terms of labor cost. Do you see the possibility of Colombia becoming a hub to reach out to other destinations in the region? Absolutely. Colombia is an open economy. It promotes free trade agreements (FTAs). It has FTAs with Canada, Chile, Andean countries, and Central American countries. An FTA with the US is being negotiated. We are waiting for Congress approval. We have a commercial agreement, that allows tax rebates on goods exported from Colombia to the US. We have three world-class ports in the Atlantic. We have one port in the Pacific. Colombia is rich in certain commodities. We are self-sufficient in petroleum. Last year, we exported nearly $9 billion worth of petroleum. The second is coal energy. Others are coffee and nickel. Manufacturing goods form 50 percent of our exports. Last year, we exported nearly $37 billion worth of exports. We were the fifth largest exporter after Brazil, Mexico, Chile and Venezuela. Our export basket is more diversified than many other countries’ 44

strategy/going global is energy coal. The opportunity is in the coking coal segment. We have reserves in emerald and gold and finally, the hospitality sector. The government of Colombia has developed very attractive incentives for investment. One is the Single Enterprise Free Trade Zone.

Alejandro Pelaez First Secretary (Commercial) Embassy of Colombia in the region. We export wheat, coal, pharmaceuticals, textiles, garment, processed food, etc. What are those sectors where Indian businesses can invest in Colombia? There are six sectors. IT and BPO is one sector where India is a leader worldwide. Biofuels is a sector that could be lucrative for Indian businesses, as India is looking for alternative energy sources. The third is pharmaceuticals. Right now we are importing nearly $200 million worth of pharmaceutical products from India. Some of the large Indian pharmaceutical companies are in Colombia but mainly into distribution. We think that an Indian company can have a greenfield investment or an M&A. Colombia has a number of good pharmaceutical companies that are looking for new markets. The other sectors are petrochemicals, mining and there is opportunity in oil refineries sector as well. Even though we are the fifth largest coal exporter but that

Could you throw some light on Colombia’s journey in the last decade? Ten years ago, Colombia was facing tough days in terms of security, recession, etc. After 2002, the government put security on top of the agenda. Now we have three pillars to safeguard investors. One is democratic security, which works very hard against the anti-social elements. Its efforts are showing results. The number of kidnappings and murders reduced drastically. It is now a much safer country to live in. The other pillar is investor trust and social distribution of wealth. We used to receive less than $2 billion worth of investments. Last year we received $10 billion worth of foreign investments, not only in natural resources but also in retail, hotels, etc. We now have investors in Spain and Chile coming into Colombia. Indian and Chinese investors are also looking at opportunities in Colombia. Is your country pitching itself as a major tourist destination in Latin America? Before 2002, we received nearly five hundred thousand visitors. Last year, we received 1.4 million people. The rise in tourist inflows shows that we need more rooms in order to accommodate those tourists. Colombia is becoming a big center for holding conventions and events. We think there is an opportunity in that. In the health sector, there is an opportunity too. Patients from Latin America and the US could come into Colombia for treatment. How easy is it to start a company in Colombia? According to the World Bank’s Doing Business Report, it takes 20 days to start a business and nine procedures. A foreign company does not require a local partner to start a business in Colombia. We have a skilled team in Colombia that can help Indian entrepreneurs to set up shop here.

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strategy/going global We also have a legal team that helps investors and also gives advice on labor resource, etc. What opportunities exist for Indian importers and exporters? In terms of exports, opportunities exist in auto components. In terms of imports from Colombia, there are opportunities in refined sugar, coking coal, emeralds, even though India has a very high import duty. The others are coffee, natural cosmetics, etc. In the next six months to one year, can we hear of some announcements of Indian companies investing into Colombia? We are expecting it in the next one year. We could see around four announcements, although we cannot disclose names. We are working on the details. What are the language-related issues that the investors face? Language is not a barrier. English is taught in schools as the second language. The first language is Spanish. The third language that is becoming popular is Portuguese because a lot of Brazilian companies are coming into Colombia.

DARE/doing business Ease of….

2010 Rank

2009 Rank

Change in Rank

India

Doing Business

133

Starting a Business

169

Dealing in Construction Permits

175

Employing Workers

-4

104

Registering Property

Getting Credit

-2

Protecting Investors

Paying Taxes

115

143

169

Trading Across Borders

-1

Enforcing Contracts

152

149

-3

182

Closing a Business

138

Source: World Bank Doing Business 2009 Report

investments in infrastructure to make it world-class. Besides that, the young population now speaks both Spanish and English to cater to the needs of the multinational companies operating out of Colombia. The country has a number of freetrade zones that make it lucrative to do business in Colombia. Its permanent free-trade zones offer tax re-

bates and other benefits. “Colombia is an open economy. It promotes free trade agreements (FTAs). It has FTAs with Canada, Chile, Andean countries, and Central American countries. An FTA with the US is being negotiated. We are waiting for Congress approval.” informs Alejandro Pelaez, First Secretary (Commercial) Embassy DAR E of Colombia.

Imports from Colombia

INDIACOLOMBIA TRADE Exports to Colombia

NOTE: Values in US$ Million, Source: Ministry of Commerce, Government of India OCTOBER 2009 45

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Photo

hird party cleaning services using sophisticated equipment both for homes and commercial spaces - seems to be on the upswing. Many municipalities have also started experimenting with automated road cleaning equipment. At this time, all equipment used by this sector is imported. Time for local players to step up? Photo at Bangalore Airport Author: Krishna Kumar

Opportunities in cleaning equipment on the upswing 25 plus business T ideas around ďŹ&#x201A;owers he business of... Seeds, Cut flowers, Plants for sale, Plants on rent, Flower delivery, Flower paintings, Flower essence, Flower shows, Flower arrangements, Dried flowers, Flower exports, Flower imports, Floral supplies and accessories, Artificial flowers, Flower arranging classes, Flower farming, Flower markets, Flower shops, Green house equipment, Drip irrigation equipment, Insecticides, fungicides etc. for gardens, Organic manure and compost, Hydrophonics equipment, Landscape design, Garden maintenance services, Garden furniture, Books, Plant breeding and seed development Author: Krishna Kumar 46

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ndia is rich in water bodies - we have almost 2 lakh kilometers of rivers and canals alone. Some attempts have been made to look at the transportation potential of these waterways (and most such mega projects have failed or not taken off ). But almost no serious attempt has been made to harness these water bodies for their recreational potential. I am talking about water skying, motor boats, shallow diving, the works. We are talking about a huge local opportunity here. Every town could have two and every city could have three!

Recreational prospects from water bodies rivers, canals, tanks Step Farming in Himachal Pradesh

Picture taken at Quilon, Kerala Author: Krishna Kumar

griculture contributes 30% of Himachal Pradesh's domestic product, and provides employment to around 71% of the population. A number of schemes have been initiated by the state government to attract investment in the agri sector. Author: Vimarsh Bajpai

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Over 1500 entrepreneurs on the cover of DARE All in a day's work!

ctober 2009 issue happens to be the 2nd Anniversary issue of DARE. I still remember the flutter we had created at Tie Entrepreneurial Summit in December 2007. DARE was only three issues old, and we had to make sure that we are known to our audience. What better platform could have been than TES 2007 for this purpose? DARE's Editor, Krishna Kumar, came up with this rather ingenious idea. With a team of 2 photographers, 3 designers, and a lot of running around – we managed to put more than 1,500 entrepreneurs on the cover of DARE on that one day – complete with their portrait photo, name and a punch line. Covers that they took back homes and offices – and of course, a recall of the magazine called DARE. Who says marketing has to be expensive? It is only a matter of doing the right thing for the right set of audience on the right platform.

Author: Binesh Kutty

hile the print media in the US is struggling for survival, India is seeing a steady launch of new titles. The ripple effect of the global recession has pushed down advertising revenues for print media to an all-time low, as advertisers switch to online ads for visibility. However, the overall media and entertainment business, which grew 12.3% to Rs 58,400 crore in 2008, will grow 7% in 2009 and 10% in 2010, says a report prepared jointly by FICCI and KPMG. Good time to tap opportunities in this sector?

Author: Vimarsh Bajpai

A boy sell sells magazines at a busy junc junction in New Delhi 48

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workers dead. 50 workers trapped. All this due to a chimney that collapsed at a power plant of Bharat Aluminium Company Ltd at Raipur ( Source: http:// bit.ly/DVDY0 ) We had done a story on Industrial Safety & the business opportunities that lie in the segment viz. Manufacturing Safety Equipment & Consultancy to educate the workers of safety measures. But the challenge, as KG Gupta, Director General of National Security Council of India says is â&#x20AC;&#x201C; Compliance. According to him, once compliance comes into play the demand for businesses in Industrial Safety segment will see a huge 10 times surge in demand. Read the full story here: http://bit. ly/m0ozq

Industrial safety beckons

Author: Binesh Kutty

Zillions of reďŹ&#x201A;ectors! R

ecession has hit the auto industry strongly, but that has not deterred Indian Auto Manufacturers as well International Auto Makers from launching new models in India. Going by a quick Google search, India will have seen as many as 50 new models rolled out by year end. That is about the four-wheelers segment. Then you have Mahindra & Mahindra venturing into the two-wheeler segment. Then you have the heavy vehicles, bi-cycles, etc. Clearly, the vehicles market is nowhere close to slowing down. Now, muse about this one. Could getting into the market of manufacturing or distributing reflectors be a lucrative business opportunity? Author: Binesh Kutty

DAR E

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/opportunity

Kite making and kite flying are hugely fragmented micro industries with immense potential /Vivek Kumar

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survey conducted in 2007 by Gujarat Industrial and Technical Consultancy Organization (GITCO) , gave an interesting insight into the micro and fragmented business of kite making in Gujarat. The report estimated that Gujarat has a Rs 100 crore kite industry that runs mostly as co-operatives. Other areas in India like Delhi, Mumbai, Kolkata, Lukhnow, Bareily, Jaipur, and Jodhpur are also major hubs of kite making. Given the low levels of skills required and the virtual lack of automation plus the seasonality of the trade, the business is hugely fragmented with low profit margins. However potential does exist in the form of kite festivals, competitions, new material, designs and so on. In Ahmedabad alone, the kite making industry is estimated to a Rs. 40 crore business, which involves around 30,000 artisans and around 20,000 seasonal workers. 70% of the work force involved are women. The production of kites goes around for 10 months a year starting from March to January and artisans in Khambhat, Gujarat, alone produce around 1.5 crore kites in one year. Meanwhile in Jaipur, the kite

INTERNATIONAL KITE FESTIVALS Weifand International Kite Festival, China Bristol International Kite Festival, UK Borneo International Kite Festival, Malaysia International Kite Festival, France Cape Town International Festival, South Africa Washington State International Kite Festival, US industry touches the 65 crore mark. Bareilly (Uttar Pradesh) is popular for its bamboo kites and cutting-edge threads (known as reel or line). It is estimated that there are around 30,000 artisans in Bareilly just producing the thread for kite flying. While the usage is extremely seasonal, the production is almost round the year.

Process and materials Indian kites are predominantly fighter kites of the diamond shape and traditionally are heavily dependent on paper and bamboo. Fighter kites are kites that are made not to stay up for ages or pull weights, but to cut down other kites or rather the threads of oth-

er kites. So, the emphasis is on a light, easily maneuverable kite on a thread specially coated with abrasive material, traditionally grounded glass. Thematic and occasion-specific kites are also made from cloth. These could be having varied sizes, shapes and messages. This is one area which has a huge potential for international market but has not been concentrated upon too much because of the focus on fighter kites. Show flying is only slowly catching up in the country. Art kites, show kites and power kites (where multiple lines of kites are flown to generate power large enough to pull along other objects including passengers) are virtually unheard of in the country.

Kites depicting the Indian tri-colour are not approved since after getting torn or damaged they are left lying on the ground. â&#x20AC;&#x201D; Ajay Prakash Founder, Nomad Travels OCTOBER 2009 51

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/opportunity TYPES OF KITES Single-line Kites Dual-line Kites Fighter Kites Multi line Kites Stunt Kites Sport Kites Kite Trains

Bamboo spars are indispensable for this industry. In fact, the major process and cost of kite making come from making bamboo spars. Then comes paper. Today a variety of material mostly reused plastic sheets are taking over the role of paper. Now, up to 60% of the kites made are plastic kites, replacing the traditional paper kites. Plastic kites are easy to manufacture and are cheap. To wind the threads and keep them safe and usable, spools - often made

The major hurdle for this industry would be availability of artisans at various places. â&#x20AC;&#x201D; Balbir Gupta Kite Merchant, Delhi 52

of wood - are used. Plastic and metal spools are also in the market but wooden spools still have major market share.

The tourism angle The Indian kite industry received a shot in the arm from the tourism activities promoted by various NGOs and state governments. The International Kite Festival is one such event that attract a large number of foreigners demonstrating their kite flying skills. Maharaja Gaj Singh of Jodhpur and Ajay Prakash, founder of Nomad Travels, organized the first International Kite Festival in 1997. A similar festival is also held in Ahmedabad on the occasion of Makar Sankranti. These are also an opportunity for local artisans and manufacturers to showcase their products and skills. At these kite festivals, participants from many countries come to showcase their products and skills. Kite makers from Britain, Belgium, France, Germany, Holland, Japan, Malaysia, Singapore, South Africa and the US, come and participate in these festivals. The state governments of Rajasthan, Gujarat and Goa are looking to boost this activity to increase tourism and also to provide support to kite manufacturers in those areas.

The international scene In the US and Canada, kite industry is estimated to be around $150 million. Countries like China, Korea, Philip-

Kite festivals has given major boost to this industry throughout India. â&#x20AC;&#x201D; Babu Khan Expert kite maker and kite-train flier pines, Japan, Malaysia, Hong Kong, Singapore, Indonesia, Nepal, Pakistan, Afghanistan, Cambodia, US, Canada, France, Germany, UK, Brazil, Mexico, Chile, and New Zealand also have sizDAR E able markets for kites

Kite Patents The diamond-shaped kite was designed by a US accountant and journalist, William Abner Eddy. After many experiments Eddy filed for a patent for his design of kites on August 1, 1898 and on March 27, 1900, he was granted Patent No. 646375 by US Patent Office. The Eddy diamond remains the most recognizable kite shape in the world. Interestingly, barely 5 weeks after Eddy was granted his patent, on 1 May 1990, William Totten Woglom was granted a patent for his parakite. Both designs are similar. Maxwell Eden in his book, 'The Magnificient Book of Kites' guesses that both designs drew inspiration from the two-stick bow Malay or Javanse kite that was flown for centuries

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/strategy

All You Need to Know about Mergers and Acquisitions A patient approach, an attractive target, a sensible intermediary and a proper due diligence could help you close a lucrative deal. /Vimarsh Bajpai

DARE/quick points

s Tenon, a major player in the facilities management business, got into talks to acquire Rotopower’s business arm earlier this year, the latter’s CEO Vaibhav Dayal sat patiently through the process closely analyzing the pros and cons of the impending deal. While the talks slowed down, broke down and then picked up over the period of six months before the deal was finalized in June this year, Dayal wasn’t perturbed. “It is a patient game. It is more of a mind game rather than anything else,” says Dayal, who has retained his role in the company post-acquisition by Tenon, the AIMlisted firm that now has over 20,000 people on its rolls. “Typically these

• In case of a merger, two firms come together to form a new company. The operations of both entities merge as a single operation • In the case of acquisition, one company takes the ownership of another company after paying the price for it to the owners or shareholders of that company. The acquired company becomes the subsidiary of the buyer company • The Indian M&A (including PE) market witnessed a 14 percent decrease in volume in 2008 vis-a-vis 2007 with 863 deals, as against 1001 deals in 2007 • The first quarter of 2009 has seen a 63 percent dip in volume over Q1 of 2008 • The decision on an M&A should not be taken in haste. There should compelling reasons to support it • Communication between both parties should be as transparent as possible • Going in for distressed assets is not a good idea. The buyer could end up burning his fingers • Final valuations are arrived at after due negotiations between the two parties • The role of an intermediary in an M&A is very important. It can make or break a good deal OCTOBER 2009 53

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SOURCE: KPMG

things work better when you don’t rush into it. The moment you rush it, you take a knock,” he adds. India’s M&A scene has witnessed big action till the end of the 2007 but dampened slowly in 2008 and so far in 2009. This has been due to the global recession and it ripple effect on the Indian market. According to a KPMG report, the Indian M&A (including PE) market witnessed a 14 percent decrease in volume in 2008 vis-a-vis 2007 with 863 deals, as against 1001 deals in 2007. In volume terms, it means a 41 percent dip from $71.7 billion in 2007 to $42.2 billion in 2008. The first quarter of 2009, the report says, has seen a 63 percent dip in volume over Q1 of 2008. With markets now picking up, there could be renewed interest in M&As and some cross-border deals could be in the offing.

Merger Vs Acquisition In case of a merger, two firms come together to form a new company. The operations of both entities merge as a single operation. Besides this, the customer and employee base also unify, as in the case of Arcelor-Mittal, the world’s largest steel manufacturer. The company was formed in 2006 after the merger of Arcelor with Mittal Steel. In the case of acquisition, one company takes the ownership of another company after paying the price for it to the owners or shareholders of that company. The acquired company be54

comes the subsidiary of the buyer company. Thus the company that acquires, gains complete control of the firm it buys. “In case of an acquisition, you are a big company and you are acquiring a small company. For instance, if A buys B, then A will remain, B will vanish. Take the case of HDFC purchasing Centurion Bank of Punjab,” says Jagannadham Thunuguntla, Equity Head, SMC Capitals.

Assessing your readiness for M&A Every company aspires to grow both organically and inorganically. The M&A is considered by many as a quick way to expand by adding new customers and more revenues and profits. It could also emanate from the desire to enter newer geographies that are more promising. It is important to have compelling reasons to go in for

Having an intermediary is fairly important to the success of M&A. The intermediary should understand the business of both parties. — Vaibhav Dayal CEO, Rotopower Engineers

an M&A and that it would meet the desired results. Sometimes, a poor performance by a company could make its promoters feel that an M&A could help them rake in profits. This would be one of the worst reasons to acquire or merge with another entity. Sometimes just to take on the competition, one might want to go in for M&A. This strategy might work but only if it is supported by other good reasons such as a significant value addition to the current business. “One should not do an acquisition only for the sake of doing it. Every M&A should mean something. It should either bring in new technology or new customers or footprints into new geographies, a new market or a better team,” says Thunuguntla of SMC Capitals. “Most M&A (98 percent of them) globally have failed,” he adds. This is because most of them are done in haste and without assessing proper synergies, he adds.

Identifying a target The first step should be to shortlist the target companies that would be well suited for an M&A. This would require a thorough research on the companies in the sector, their products, customers, revenues, employee base, etc. Once the list is ready, it would be easier to zero in on the potential targets. Networking comes in handy as some key employees could use their contacts to get some crucial

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/strategy information on potential targets. The other way could be to outsource the work to investment banks who would do the job at a cost. But you cannot buy or merge unless someone is ready to do so. Just like you have compelling reasons to buy or seek merger, the other party should also have good reasons to get acquired. This could be as varied as persistent losses, or loss of good customers or simply the promoter’s desire to sell off. “An acquirer should not look at buying distressed asset,” says Thunuguntla. “What he should be looking to buy is good assets but from the distressed seller. For e.g.: if he is under loan obligation, etc, which means he is selling a good asset at a distressed sale price. Ideal combination is to buy a good business from a distressed seller at a distressed sale price,” he adds.

Reaching out Once you have zeroed in on the target, you got to send feelers to the promoters of the target companies. In some cases, the company that wishes to get acquired or wants to merge itself with your firm could approach you. This communication is best done

The Deal Process Shortlisting the target ç Zeroing in on the target ç Sending feelers through an intermediary ç Due Diligence ç Valuations ç Negotiating on the value and other aspects of business ç Raising money to fund the deal ç Discussions on payment schedule ç Finalizing the terms of the deal ç Signing of the agreement ç Closing of the deal through an intermediary. “If the acquirer himself approaches the target companies, his negotiable power will go down. So there is no point approaching directly. The ideal way is to approach through the investment banker,” says Thunuguntla. “Having an intermediary is fairly important to the success of the M&A. He needs to understand what business the two firms are in. He also needs to be clear why the acquirer wants to acquire, and why the other wants to get acquired,” says Dayal. The intermediary must also be able to generate confidence in both the parties. Depending on the size and nature of the transaction, the intermediary could be paid

In case of an acquisition, don’t buy distressed asset. Instead buy a good business from a distressed seller at a distressed sale price — Jagannadham Thunuguntla Equity Head, SMC Capitals

anywhere between one to five percent. If the transaction is larger (Rs 1000 crore or above), then it could be less than one percent. “The fee is paid by the party that engages the intermediary. In several cases it is the buyer,” says Dayal.

Due Diligence and Valuations The due diligence process involves the assessment of every aspect of the company to be acquired. It involves assessment of accounts, markets (customers), HR processes, legal aspects and production prospects. “It has to be done by the detached party and not by the attached party,” says Dayal. The cost of due diligence varies on the size of the material. “Due diligence of any size would not cost anything less than Rs 10-15 lakh,” he adds. Once the due diligence process is over, the deal price comes into discussion—the valuation of the target. Although there are several formulae that are used to arrive at a figure, it is all theoretical, says Thunuguntla. “It is based on your top line, bottom line, etc. The spade work is you do the valuation and the real work is that you agree on it,” says Dayal. A good acquirer would have a fair idea as to what value he would be willing to pay. Thus, even though a figure is assigned by a third party, the final negotiations could end up quite far from the quoted price. “This is the time when other things come into play. Things which are off balance sheet — the softer aspects of the business — what value you assign to the human resource, what value you assign to relationships, what value you assign to customer stickiness, etc,” says Dayal.

The final deal Once the value of the deal is agreed upon, the two parties would work towards closing the deal. It would significantly involve the role of the lawyers to work on the terms and conditions of the deal. It would be penned down in black and white. The agreement would talk of the terms of payments, and integration of staff, technology, customDAR E ers, policies, etc. OCTOBER 2009 55

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event/tie

TiEcon Delhi 2009 Smart Entrepreneurship in Challenging Times

iEcon Delhi, the ninth annual flagship event of The Indus Entrepreneurs (TiE) hosted an impressive lineup of speakers, participants, enthusiasts and observers. For two days, 18-19th September, the event underscoring the themeâ&#x20AC;&#x201D;Smart Entrepreneurship in Challenging Timesâ&#x20AC;&#x201D;showcased parallel sessions on mentoring, networking, company showcase and deal flow meetings alongside regular and specific discussions on number of issues related to entrepreneurs. Apart from covering the overall gamut of entrepreneurial ecosystem, there were sector-specific panel discussions on what is the right time for start-ups, and opportunities during economic recession. Among the eminent speakers were P. Chidambaram, Home Minister, Ministry of Home Affairs; Sir Richard Stagg, British High Commissioner; Pramod Bhasin, President & CEO, Genpact; Vikram Bakshi, Chairman-Ascot Hotels & Resorts & Managing Director & JV Partner, Connaught Plaza Restaurants; Naveen Munjal, Managing Director, Hero Electric; Deep Kalra, Founder and CEO MakeMyTrip.com; Varun Sahni, Country Head Acumen Fund; Amir Alexander Hasson, Founder and CEO United Villages.

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The Home Minister, inaugurating the conference, said: â&#x20AC;&#x153;Entrepreneurship is a difficult word to define, an entrepreneur has a difficult path to choose and a difficult path to tread. Many succeed and many fail. An entrepreneur who trips and falls down once; if he is a true entrepreneur will pick himself up and walk the same path or a different path with greater determination. An entrepreneur chases a dream, pursues an idea, and seeks a goal. So I think there is much to be said about entrepreneurship and any organization which promotes entrepreneurship rather than simple businesses.â&#x20AC;? The speakers talked on many issues but suggested that economic recession has opened up lots of options for small enterprises. Day 1 was power packed with discussions and panel meetings focusing on opportunities during the challenging times that are thrown by economic downturn. Smart innovation focusing on grass-root innovation was another area that got good attention and alternative energy sector received good amount of discussion time. Day 2 saw some specific topics dealt with start from policy, scaling up, and how to manage cash and costs. What kind of opportunities are lying untapped in security sector and how leadership can make it happen. DAR E

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Ice Cream

Industry in India Though India has a low per capita ice cream consumption of 300 ml per annum, the trend is slowly changing due to a number of reasons. DARE explores the dynamics of the business. /Aswathi Muralidharan

ndian summers are synonymous with ice creams. Come summers, and you will see a number of colorful pushcarts selling the choicest of ice creams in numerous flavors from the traditional vanilla and chocolate to unusual varieties like Mother Diary’s Shahi Nazrana. If that doesn’t baffle you then the ice cream range definitely would, for example the ice cream range for the children would be entirely different from that for the teenagers or for that matter adults. Or,

for those who like to have ice cream in peace, there are a number of ice cream parlors that are opening shop. But did you know that a 100 ml scoop of your favorite ice cream that you ordered may contain upto 50% air! This makes the business a highly profitable venture to get into – sometimes, the profits can go upto 100%! However, there are several challenges to this business as well. In this story, DARE attempts to find out the dynamics of the business.

The Ice Cream Industry: An Overview Looking at some industry facts first. In 2007, the global market of ice creams was pegged at $61.6 billion in terms of retail value or 15 billion liters in terms of volume. Of this, the Asia-Pacific ice cream market was worth $13 billion in terms of retail value and 5,128 million liters in terms of volume. Coming to India, the Indian ice cream industry is currently estimated to be worth Rs. 2,000 crores, growing at a rate of approximately 12%. RS Sodhi, Chief Gen-

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/opportunity eral Manager of Gujarat Co-operative Milk Marketing (GCMMF), the makers of ‘Amul,’ explains, “The ice cream market in India can be divided into: the branded market and the grey market. The branded market at present is 100 million liters per annum valued at Rs. 800 crores. The grey market consists of small local players and cottage industry players.” In 2008-09, in the branded ice cream market, Amul held the number one spot, with a market share or 38%, followed by Kwality Walls at 14%, Vadilal at 12% and Mother Diary at 8%. Despite a decent growth rate, the ice cream industry faces the challenge of low per capita consumption. The per capita consumption of ice creams in India is just 300 ml per annum, compared to 22 liters in the US, 18 liters in Australia, 14 liters in Sweden. India is a way too far behind even in terms of the world average per capita ice cream consumption of 2.3 liters per annum. This when India is a country with hot climate with a young population. Pankaj Chaturvedi, Executive Director of Baskin Robins, explains

INDUSTRY AT A GLANCE The ice cream industry in India is worth Rs. 2,000 crores The industry can be divided into the branded market and the unbranded market. The branded market at present is 100 million liters per annum valued at Rs. 800 crores In 2008-09, in the branded ice cream market, Amul held the number one spot, with a market share or 38%, followed by Kwality Walls at 14%, Vadilal at 12% and Mother Diary at 8% The per capita consumption of ice cream in India is approximately 300 ml, as against the world average of 2.3 liters per annum Vanilla, Strawberry and Chocolate together constitute approximately 60% of the market. “Indian cuisine has a huge range of desserts in its mix. Ice cream always competes against these for attention.”

2008-09 Production by Organised Players (mn ltrs)

SOURCE: Gujarat Cooperative Milk Marketing Federation Ltd., (GCMMF)

Besides desserts, ice cream also vies for attention with other like foods for example in summers with cold drinks, coffee, juice, etc. Another trend that is witnessing a change is the seasonal nature of the industry. Having said that, the peak season for ice cream still remains the summer months of April-June and dips in the months of November-February. According to the industry players, this trend especially holds true for the North and the Western parts of India. According to Pankaj Chaturvedi, “The variation in sales for Baskin Robins can range from 15–30% from season to off season depending on geography and brand.

The Ice Cream Business The ice cream industry has traditionally grown at a healthy rate of 12% year-on-year. “The growth in Ice cream industry has been primarily due to strengthening of distribution network and cold chain infrastructure. Channels such as Mobile Vending Units have been increasing year on year to reach out to a larger set of consumers. Besides, consumers also have the choice of trying out varied product offerings from different brands to keep them excited,” Paul Thachil, CEO – Dairy & Foods, Mother Dairy Fruit & Vegetable. What exactly is defined as ‘ice cream’ under the guidelines? The Prevention of Food Adulteration (PFA) Rules, 1955 define ice cream as “a frozen product that contains not less than 10% milk fat, 3.5% protein, 36.0% total solids, and 0.5% permitted stabilizer and emulsifier.” Players who deviate from these norms tactfully call their product "frozen dessert.” However, it is illegal to sell “ice cream” which have contents below these specified standards. The basic steps in the manufacturing of ice cream are generally first blending the ingredients, pasteurization, homogenization, aging the mix, freezing, and hardening. Now, during the hardening process, the ice cream mixture is incorporated with air. This is done to make the product ‘light’ and OCTOBER 2009 59

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DARE.CO.IN ‘creamy’. This is necessary as without air, ice cream would be like frozen ice. Now the ice cream can contain a considerable quantity of air, even up to half of its volume. This perhaps makes ice cream a business with high profit margin. Manish Vithalani of Space Dotz informs, “A ice cream mix (consisting of milk, emulsifier, sugar and so on) costs about Rs. 60-65 a liter. And in one liter you can add up to one litre of air. Therefore, per liter the mix would cost you approximately Rs 32. If you take an 150 ml cup, you can make 13 cups of ice cream from one liter of mixture. Calculating on that basis, the per cup costing comes to about Rs 5. Now add to that Rs 5 worth of packaging cost, electricity, labor, transportation, advertisement cost etc. It comes to approximately Rs 10 per cup.” Depending on the variety, the profit margin therefore can go up to even 100%. While for bigger players, the distribution and advertising costs eats into the profit margins, for smaller players, it is the volumes that matter. Besides selling their products through kiosks, parlors and push carts, a significant part of the revenue comes from corporate sales. Says Pankaj Chaturvedi, “About 55% of our business is contributed by exclusive ice cream parlors and kiosks while 30% is from corporate or food service (as we categorize it) sales. The rest comes in from retail and exports.” A chef at a prominent five star Delhi hotel tells us their banquet section itself buys 6 gallons of ice cream from manufacturers on a daily basis. The demand, he informs, goes up to 10 gallons during peak season. What is the cost of setting up a small scale ice cream manufacturing unit? Manish Vithalani says, “The cost for setting up a small scale ice cream plant could come to approximately Rs. 10 lakh, including the cost of a ice cream plant, labor (3-4), storage freezers, and so on. This price is not including the land cost.” Of late, a number of players who have entered the segment are playing on innovative aspects, for example, natural flavors made from 60

/opportunity fruits. Some players like Mumbaibased Space Dotz are also coming up with newer technology. According to Dilip Jagad of Space Dotz, “Unlike the normal ice cream, our product comes in the form of balls. Besides, the product has no air content and uses cryogenic technology, used in rocket science.” Another noteworthy innovation was the pro-biotic and low fat ice cream bought into the market by Amul.

The Challenges There are several challenges that affect the industry adversely. As mentioned earlier, the industry players not only face competition from their competitors, but also from other like foods.

The ice cream industry growth has been primarily due to strengthening of distribution network and cold chain infrastructure. Channels such as mobile vending units have been increasing year-on-year – Paul Thachil CEO – Dairy & Foods, Mother Dairy Fruit & Vegetable

Though changing, consumers still consider ice cream as a dessert and a side item. Sharing his experience, Sidharth Jaiswal of Joos, a juice bar chain, says, “We had introduced ice creams on an experimental basis in our juice outlets in Ahmadabad. We observed that consumers ordered ice creams as a side item or only when they were accompanied by children. We eventually decided not to move ahead with it.” Moreover, of the ice cream consumption in India, nearly 60% is accounted to by three flavors of vanilla, strawberry and chocolate. And to be on the safer side, major players tend play around these flavors only. For big players, regional competition from smaller players is another major issue. Another major problem faced by the industry players, especially while expansion, is poor infrastructure such lack of cold storage and in case of rural penetration, even erratic power supply becomes an issue. This is especially true for big players. Manish Vithalani says, “Besides the presence of other players, another hurdle is the the high rent charged for floor space, especially in malls. This also becomes a problem DAR E when we try to expand.”

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/http://www.dare.co.in/blogs.htm from the

Mobile Flour Mill Posted by: Vivek Kumar in Ideas on September, 22, 2009 Tagged in: wheat, machine, innovation, idea, flour mill was going through the database of Sristi. org when I came around this simple but very innovative idea of mobile flour mill. This machine is developed by Hariram Yadav of Ooncha Jamalpur (Rewari district, Haryana). Hariram came to Delhi with his family and was looking to make some money in his business of cattle; however, he faced lots of problems due to shortage of electricity in South Delhi.

Hariram went back to his village, fetched his tractor and devised this mobile flour mill that could help him in grinding the flour for his cattle-stock. But a person having such an innovative mind can simply be given a chance to be proactive: he noticed that the machine

DARE.CO.IN Some Issues:

manufacture the laptop with a promise not to

1. There could be issues with the quality

do reverse engineering of the product

of material used for construction of this machine.

In India, there are several such remarkable innovations that could as well be the game

2. Hygiene issues could also be there.

changers for some industries. However, the

3. Efficiency in terms of flour loss could also

problem with them is that there are often no

be there.

takers. Lack of awareness of these products

Given the idea, it seems a workable

is another problem, and so is their inability to

prospect. Addressing the above-mentioned

reach markets as they have not been proven

issues and making it a more attractive from

yet. Now, this trend is slowly witnessing a

business point of view could really give a

change thanks to the efforts of some incubation

business opportunity on a very small scale,

centers that are working towards increasing

which can later be exploited on large scale.

the business potential of such grass root level innovations. If entrepreneurship is all about risk

Grasroot Level Innovations: An Untapped Opprtunity Posted by: Aswathi Muralidharan in the news on September 22, 2009 Tagged in: TieCon Delhi, Prof Anil Gupta, opportunity, innovation

taking, then I think this is a risk worth taking!

What is in a Re? Posted by: Aswathi Muralidharan in the news on Sep 01, 2009 Tagged in: Untagged

3. Lots of traffic issues are also solved

presentersâ&#x20AC;&#x2122; screen to get a clue of what was

because householders do not have to go

going on. Now, with this simple innovation the

his incident happened while I was traveling back to Delhi from Chandigarh a fortnight ago. Since I and my friend reached the station just on time, we did not get time to buy water from the station. As soon as the train started on its journey towards Delhi, a number of uniformed vendors started selling their goods, especially water and other refreshments. We stopped one vendor, and asked him for water (Rs. 12), a packet of chips (Rs. 10) and biscuits (Rs. 10). We gave him a Rs 50 note and the vendor cooly gave us back Rs. 10 saying that the total was Rs 40. Then there ensued a big fight, after which the vendor started pleading (when he say fellow passengers pitching in) that there is hardly any money left if he sells at the MRP. We then returned the products back to him, took back our money and let him go.

to market.

presenter could view his presentation from

This made me and my friend do a quick

4. The flour is not hot, which means that

his side and the others from the other screen

calculation among ourselves. If a vendor

nutrient value of flour is more intact than

without any discomfort. If you thought such

covers 10 trains daily and manages to sell his

usual grind-mills (needs to be commented

innovations would have had ready takers, then

products to 30 people per train (we assume

upon by some experts).

you are probably wrong, because the innovator

an average number of passengers per train:

5. Storing issues of ground flour can be solved

had to run pillar to post with the innovation to

1000), this means he sells his products to 300

to a large extent because of availability of

get it to the market. Finally help came but from

people. If he sells his products for atleast Re

flour mills in the locality.

a company based abroad, which agreed to

1 more than the MRP he earns Rs 300 X 30

itself lay free and useless for much of time. He has hit upon an idea that could work like a small business. He started going out to streets and offering services for grinding the flour charging a nominal fee of around 80 Paise per Kg of wheat. This idea is simple but effective in many ways:

uring TieCon Delhi 2009 Conference, held at Taj Palace in New Delhi, I once again had the opportunity to meet Professor Anil Gupta. He was a panelist at one of the discussions at the conference on grassroot level innovations in India. And as expected he surprised the audience by showing a very remarkable innovation!

1. It saves a lot time for householders who

The innovation was a laptop, made by an

prefer to take wheat to flour mills and get it

Indian doctor, which had two screens one at the

ground.

front and one at the back! During presentations,

2. There is lot of work involved, which can be

especially informal ones consisting of three

considerably reduced due to the machine

or more people, one often had to face the

coming to doorsteps.

discomfort of peeping onto the presentation

OCTOBER 2009 61

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/http://www.dare.co.in/blogs.htm from the

DARE.CO.IN = Rs. 9000 extra per month! This is assuming

done the traditional model when times

that he charges just Re 1 extra per product

were good.

(which is often not the case). Moreover, he

2. Problems the creators did not provide

also earns a profit of an average of Rs. 2 per

for- SAAS is good for standardised stuff.

product given to him by the distributor.

Very few SAAS products have a rich

Read related DARE story on Profitable

plugin environment that extends the basic

Businesses with Products under Re 1 and

functionality provided. Even then, if you

blog on Most low-profile work earns Rs.20,000

have a very specific requirement, it is

a month.

often impossible or very costly and time consuming to implement a work around.

4 issues with using Software as a service (SAAS)

3. When things go wrong, you may find that there is no human you can talk to. Typically, you do not speak to anyone to get a SAAS account. Most likely, you signed up at their web site and paid with a

Posted by: Krishna Kumar in Ideas on Sep 20, 2009 Tagged in: support, Software as a service, software, SaaS, IT, economy, bankrupt

credit card. Possibly there are a few email

any, including yours truly have written reams about the advantages of using software as a service instead of software installed just for you, at your premises. But none have dwelt upon the problems you can face as you go along. And rest assured, there are enough problems with SAAS.

to sort things out. And I realized too late

that went back and forth. This is good as long as things work. It is when things go wrong that you need to speak to some one

that there is atleast one SAAS provider out there who does not provide a contact telephone number! 4. When the service provider goes belly up - Blame it on the economy but SAAS providers too go bankrupt. And when they

Before we jump into the problem areas,

do, they often do not give you enough

let us for the record summarize the plus points

notice. And when they do, they not only take

of SAAS.

the service, but also your data with them.

1. It takes away the pain of installing and

And you are not sure whether to scramble

maintaining the software and of having the

to replace the now defunct service or to go

people required to do it

after the data that is lost for ever.

2. It converts a capital expense into an operating expense 3. The operating expense itself is made up of a stream of smaller monthly, quarterly or similar payments rather than a one time payment, easing your cashflow 4. It is easily scalable. You can add more users or more capacity as and when you need them. And now, the flip side; what can go wrong 1. When your own cash flows get tough, as many experienced during the current economic woes, SAAS commitments can really be heart wrenching. I know of many who wished at least once that they had 62

Brains and Business can Tango Posted by: Vivek Kumar in the news on Sep 17, 2009 Tagged in: venture capital, scientists, researchers, funding, business s it true that all the research ideas having business potential do not realize their destiny? Is it true that innovation does happen but do not fructify for business community in full-scale? Is it true that a lot could have happened but it has not? Why? Some basic instinctive issues could be the bottlenecks.

Brain and business can tango to a tune that has lasting effect on the audience consisting venture capitals and consumers. Technical solutions and innovations are often dormant in their research lab where the boffins struggle to bring them as a successful business idea that could hit the market successfully. The main problem for a researcher or a scientist to market their idea stems out from the uneasiness they face in dealing with an unfamiliar world of business. There is no trouble in making a business work but scientists are not necessarily supposed to spend their time learning the nuisances of business world, and how they could get funding for their ventures into the entrepreneurial world. Writing a business plan in the start itself becomes a cumbersome and sometimes repelling activity. The idea got the brain and the potential to tap the market; but the lingo or expected procedure might fail it before it could see the light of a business-day. This is where innovation and entrepreneurship oriented institutes and help-organizations can make a significant difference. Helping them write business plans, securing venture funds and sustaining the blows of initial working period are some crucial areas where such centers could play a significant and pivotal role. More often than not, researchers shows a level of reluctance to mix science and commerce; when actually, their ideas or findings could have a very successful business product or service in its lap. When a functional product or service loses its researchers, it loses its future. Products and services based on scientific research and advancement lose their sheen if they do not receive continuous improvement and enhancing inputs from scientific community. Some scientists who want to venture in entrepreneurial world maintain that it is the ‘who you know’ factor that is instrumental in realizing the goals of getting funds. A budding entrepreneur is supposed to have “what he knows” factor. However, venture capitalists

OCTOBER 2009

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believe that a good business plan and

it will take to resolution. They want to know if

effective management team could secure

there is an alternative that is possible. They

the goals for them. The effectiveness of

want to know that their problem is clearly

management team could deliver the message

understood. They also want to know who is

of a highly-technical idea that could otherwise

handling their problem.

What are the customer’s expectations

tarmac! When the airport authorities objected

when they ask for help or when they face a

to passengers loitering on the tarmac, they

So far so good. The passengers were generally willing to give the airline a lot of leeway. Finally in about two hours, the aircraft was repaired and then came the bombshell the captain just left the aircraft (A passenger reported hearing the captain say that it was his birthday the next day and he did not want to be late!). And so began the search for a new captain (atleast that is what the ground crew told us). Finally the flight took off three hours delayed. Meanwhile they served us a lemon drink a small sandwich and made a quick announcement of a discount coupon which I am sure most passengers did not hear. We landed in Coimbatore near midnight. General consensus amongst passengers at journey’s end- they were angry, they were hungry and they were tired. Fast forward to Air India to Patna. We saw a repair crew come in, but no one told us any thing. There were no announcements. When the aircraft started heating up, a ground pre-conditioned air unit drew up and started pumping cool air into the aircraft. We saw a bus draw up and saw the air hostesses leave. Many passengers actually cursed their in-sensitiveness! After about half an hour, we saw buses drawing up and the Captain announced that we are changing aircraft. When we disembarked, we saw that the checked in luggage was already loaded on to trolleys for transferring to the new aircraft! The air hostesses who had left earlier were at the new aircraft and what was supposed to be a mid morning snack was replaced with a full lunch To cut the story short, we arrived in Patna, one hour late. General consensus amongst the passengers at journey’s end - Air India handled it well. It could have been a lot worse. Very clearly, there was a reversal of passenger feelings towards the airline in both cases at the end of the journey. Very clearly, Air India did a better job of managing the problem, but started off with the passengers

problem? Obviously, they want resolution.

brought a couple of airconditioned buses and

being angry and confused. Why? Again very

That is not all. They want to know how long

made us board them.

be un-understandable for venture capitalists.

Along with the resolution, they also want to

Venture capitalists often find it irresistible to

know, to be kept in the loop so that they are

fund a good business plan. So, while in the

reassured that the problem is being worked

business world, adhering to its expectations

up and also so that they can rearrange their

could be significant.

schedules, budgets etc. if necessary.

The nostrum would be the conglomeration

Like any one else out there, I have had

of researchers, guides, and management team

my fair share of brush-ins with customer

that could wow the venture capitalists. Brain

service. But two similar recent experiences

would find business through proper channel

and how the brands involved handled them,

that has a guiding to the flow of ideas.

set me thinking.

What is good customer support? the tale of how two airlines handled it

I was flying Delhi - Coimbatore. We were on

The first experience was with Spicejet.

Posted by: Krishna Kumar in On the Website on Sep 16, 2009 Tagged in: support, SpiceJet, Patna, delhi, customer support, customer, Communication, Coimbatore, airline, Airindia hat is customer support? Customer support is something that kicks in when customers are in trouble or otherwise need help with your product or service. If everything works well, there would be no need for customer support!

But they don’t, and then we look up to

board and the aircraft engines had started when the pilot announced that there was a technical problem and the plane needed to be repaired. The second one was more recent, with Air India. This time, I was flying Delhi - Patna. Again we had boarded and the aircraft was actually taxiing towards the runway when the pilot announced a technical fault and took the plane back to the parking bay. How the two airlines handled the similar situations is a good study in customer service. And before you jump to conclusions, both have their highs and lows. Both did some things well and could do better in others. And to let the cat out of the bag, Air India actually came out better in the final reckoning!

customer support. The customer has a set of

Spicejet first. They immediately brought

expectations when she calls for support. So,

in a set of engineers who started working on

the basic role of customer support is to meet

the aircraft. A team of ground personnel also

those expectations. Good customer support is

moved in who kept the passengers informed

one that meets or betters these expectations.

about what was happening. Or at least they

Given that customer expectations can go

tried to, given that most of the information

wild, it also becomes the duty of customer

was sketchy and was mutually contradictory!

support to set and manage the expectations

Meanwhile the aircraft was getting too hot for

in the first place.

comfort and all passengers moved on to the

FROM THE BLOGS

CONTD. ON PG 80 ç OCTOBER 2009 63

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/startups

Internal Controls: A Primer For Small Businesses /Anil Panwar

n entrepreneur starts his business from scratch and builds it over a period of time. In the beginning, all business activities are managed and controlled by him. He takes all decisions. As the business grows, the level of activities and transactions start multiplying. He keeps struggling with himself to cope up with the incremental activity and reaches a flash point when it becomes humanly impossible to manage the business alone. At this point, he has to decide whether his limitation should become the limitation of the organization or should he delegate the authority to others. If he does delegate, then the next question is to whom and how much can he trust the people 64

he delegates to, so that business objectives are met and assets protected.

Defining internal control We all exercise internal controls consciously or unconsciously in our daily life. For example, a) We do not leave the keys of a car in the car itself. b) We give a limited amount of pocket money to our children so that they do not get spoilt in early age c) We do not share passwords of our computer with anyone. There are numerous daily small actions and processes we follow to ensure the safety of our assets and the optimum utilization of the resources we have.

Internal control is the process and the system that ensures the optimum utilization of resources to meet goals and objectives, as well as safeguard assets. Internal control is not merely an accounting function, rather it links with the whole organization. Internal control: a) Promotes operational efficiency and effective utilization b) Provides reliable and relevant information c) Safeguards assets and records d) Ensures adherence to laid out policies and e) Ensures compliance with statutory requirements. An organizationâ&#x20AC;&#x2122;s goals are not

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/startups and forms. Its effectiveness, to a large extent, depends on top management philosophy and operating style. Everyone in the organization has a part in the internal control system. The role of each individual depends upon the level of responsibility and nature of involvement. Managers and supervisors are responsible for establishing, implementing and ensuring the success of an internal control system. Reviewing the effectiveness of internal control is an important responsibility of the Board of Directors of a company, which it may delegate to the Audit Committee. Management of a company is accountable to the Board for establishment, operating and monitoring of internal control. A statutory auditor, in a case of a company, is required to comment on efficacy of internal control system commensurate with the size and nature of its business—does it have a satisfactory system of safeguarding its assets (physical verification of stocks etc), adequacy of internal audit function etc. Further, a statutory auditor relies on internal auditors’ reports to the management to form a view on internal control environment in a company.

Corporate governance

achieved only by having internal control processes and systems in place. Internal control helps in achieving the same by protecting an organization’s assets and records, adhering to compliance requirements—statutory or otherwise and effective utilization of resources. It helps in detecting mistakes and internal frauds. Further, it minimizes the risk of an error or a fraud. There are innumerous examples of organizations that failed because they did not have adequate internal controls.

Responsibility Internal control is affected by people. It is not merely policy manuals

Corporate governance is defined in a number of ways: - The system by which companies are directed and controlled - The process and structure to direct and manage the business and affairs of the corporation with the objective of increasing shareholder value - A set of relationships between a company’s management, its board, its shareholders and stakeholders. Internal control is also a set of systems and processes to ensure optimum utilization of an organization’s resources to achieve its objectives and safeguard its assets. Corporate governance, in addition to internal controls objectives, encompasses the relationship between the company management and its stakeholders including owners/shareholders.

Internal control is a subset of corporate governance.

Steps for designing The implementation of internal control consists of studying and analyzing the activities of an organization to assess the risks it faces, devising systems and processes to mitigate the risks, periodical review of the business/environment to update/modify the systems/processes to protect against changed risks, if any. The management analyzes the risks in the business of the organization. Risks are categorized as • strategic risks, • financial risks, • regulatory risks, • reputation risks and • operational risks. Risks keep changing over a period of time e.g. change in people, addition or stoppage of an activity, new technologies etc. Therefore, it is important to periodically review the efficacy of internal controls to ensure effectiveness. Internal control consists of: i. Segregation of duties ii. Authorization iii. Validation of processes iv. Review v. Physical control vi. Approval vii. Reporting It is important to assess the risk of failure and potential impact on the business while designing an internal control system. This should be compared with the cost of system/control. While control is costly and counter-productive, too little control has undue risks. The cost and benefit of control must be carefully considered before implementation. Internal control does not guarantee, but provides reasonable assurance to shareholders that affairs of business are being conducted in a defined manner to meet its objectives efficiently and effectively to protect its assets and DAR E ensure compliances. CA Anil Panwar is Chief Strategy Ofﬁcer with RHC Pvt Ltd. He has earlier been CFO & President Finance at Fortis Heatlthcare Ltd. OCTOBER 2009 65

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bio/investor

ou made two qualifiers there – early stage and companies that leverage technology. What exactly does that mean? Early stage means companies that are just six months to three years old. They not be fully established yet. By leveraging technology, we mean that these companies are not necessarily developing new technology but are using technology to differentiate themselves in the market. If you look at our investee companies - Telibrahma, Redbus, InstaHealth and ViVu, you will understand what I mean.

Are entrepreneurs open to selling their companies so early? Today, entrepreneurs are open to selling their companies than they were before. They also understand that they have the option of staying on with the new company to grow their product further. They could also move on to their next passion. Indian entrepreneurs are changing fast. I don’t think that they are looking forward to their grandchildren inheriting the company one day. They are interested in unlocking values much faster.

An offside question, if you will. How much time does Kanwal Rekhi actually spend with Inventus investees? Kanwal spends quite a lot of time with investee companies. He does it whenever he is visiting India, which is quite often or over video conferences and telephone calls. He is also available whenever an investee company has a specific need for his advice.

What do you look for in a potential investee? The team.

You invest in companies as young as six months old. Does that mean that you will fund a great idea? Ideally, no. We come in when a product prototype is ready and there is at least one customer. For a services company we definitely want to see at least one customer. That does not mean that we will not fund a great idea at the idea stage itself. Only, that is very unlikely.

That is what all VCs say. Given the team, what are the other deciding factors? We look for four factors in a investment opportunity. Given the team, the other three are exit opportunity, market served in terms of size, growth, competitive intensity and finally the differentiators - technology, business model, etc. that the project is seeking to leverage. Going back, what do we look for in the team? Actually we look for passion and commitment. We look for a team that can pull through hard times and disagreements. That said, we look for a balanced team when it comes to

investor of the month Are you currently looking for investments? We are hungry for investments right now. During the life of our current fund, we expect to invest in about 15 companies. Out of that, we have done four so far. So, you can comfortably say that we are hungry for good opportunities right now. What is your investment time frame? Ours is a ten year fund. But given that investments happened over the years, we are looking at staying invested for about four to six years. And the size of investments? Typically we are the first venture investors in a company. You may have had angel investors or your own funds deployed before we come in. Our ticket size is anywhere from one to two million dollars initially. Depending on the companies performance and needs, we could go on to invest as much as ten million dollars. What is your preferred exit route? Like all other VC’s we would love to exit through an IPO. But as early stage investors, we understand that our may not be ready for an IPO at the time of our exit. So M&A (mergers and acquisitions) becomes the next preferred option. 66

skill sets. If all the core team members are developers or all of them are business development guys then that team will score less than say a team that has developers and sales people and finance guys. What do you look for in a business plan that comes to you? We look to the business plan to answer six questions. They are a) Who am I? (Team related) b) What problem am I solving? (product / service offered) c) Who am I solving the problem for? (target customer, size of the opportunity, etc.) d) Who else is solving this problem? (competitors) e) How am I different? (Differentiators / value propositions) f ) What do I need to realize my goals? (resources - money, people, etc.) We hear that VC s get a lot of business plans from unknown entrepreneurs that they just ignore. Will you look at a business plan that lands from an unknown entity in your inbox? Actually we do look at every business plan that lands up in our inbox. Like I said earlier we are hungry right now and

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Samir Kumar

Managing Director, Inventus Capital partners Inventus is an early stage investor in companies that leverage technology to deliver products and services. There are four partners â&#x20AC;&#x201D; Samir Kumar and Parag Dhol in India, and Kanwal Rekhi and John Dougery in the US OCTOBER 2009 67

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bio/investor

We look for a team that can pull through hard times and disagreements. That said, we look for a balanced team when it comes to skill sets are looking for good investments. So we look at every plan that reach us. Do you accept proposals from deal makers, like investment consultants? Yes we do. We look at all proposals that come to us. If you decide to fun a proposal that came through a consultant, who pays their fees? The fees is paid by the entrepreneur. But ultimately that gets built into the investment itself and so we end up funding that indirectly, but as part of the equity. So, if the actual requirement is one hundred rupees and the deal makers fees is two rupees, then you end up funding Rs. 102? Something like that Does familiarity with you help in clinching an investment? In theory we are dispassionate, but in reality we are human. So, familiarity does help. If not direct familiarity, then being introduced by some one who is familiar helps. I remember your once mentioning that you are not in favor of the entrepreneur taking a handsome salary â&#x20AC;&#x2DC;Handsomeâ&#x20AC;&#x2122; is a relative word. Relative to the market value of the entrepreneur as an employee, that is. We would definitely want him to take a salary less than his market value. We are investing into the future of the company. We get our value when the company grows big. We would want the entrepreneur to share the same objective â&#x20AC;&#x201C; to get value when the company grows big. So, we would like to see the entrepreneur taking salaries lower than his market values. That does not mean that we want him to spend his time worrying about how to pay bills at home. He should make a reasonably comfortable living while building the value of the company. Assuming that an entrepreneur does not have access to some one who can introduce him to a VC, how does he build familiarity? He can do it in many ways. It could start with a be a brief meeting at a conference like TieCon or BBNWalk the talk where cards are exchanged to an interesting idea is talked about. Subsequently, when you meet a VC with a business plan, if there is something that jogs the memory, it definitely helps. 68

If you reject an investment proposal once? Does it make sense for an entrepreneur to approach you again later? If a project does not fit our investment area, we clearly tell them that. In such cases, it does not make sense to approach us again. If it fits, but we decide not to invest for other reasons, we always tell the entrepreneur to keep in touch if there are changes that make the project interesting. Is the keep in touch message just for solace or is it for real? It is very much for real. We have a portfolio company (that we have invested in) where we declined at at first meeting. But when the entrepreneur came back to us after some time with some changes in the business, we actually went ahead and invested. Given that you invest in early stage companies, is it safe to assume that their books may not be properly presented. What should the entrepreneur do in such a case? We are not a large team. We are just the four of us. Once we see a potentially interesting business plan, we talk to the entrepreneur, we talk to customers, potential customers, etc. we run the numbers. Finally an investment decision is a consensus decision. All four of us have to agree to invest in a company. Is it wise for an early stage company to get multiple VC s to invest in them? In fact we advice entrepreneurs coming to us to get at least one more like minded VC on board. That gives him access to a larger network and more sounding boards if nothing else. Are you hedging your risks by recommending that? That too. And our returns also get hedged. You talked about mentoring being one of your key differentiators. How does that play out in real life? Most of it plays out during regular board meetings. Some times the entrepreneur comes to us for help in specific areas where our previous operational experience helps. For example, recently one of our investee companies had an interesting dilemma. He had the option of tying up with a large firm as their exclusive partner. The opportunity was huge, but he had to forgo tying up with any other similar partner. Or he could tie up for a small part of their business as non exclusive partner. He talked over the pros and cons of the decision with us, including a call with Kanwal. Finally he took a decision. The decision was his, but we mentored him through previously uncharted territory. DAR E

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/contest

Write a business idea around this picture at http://www.dare.co.in/contest/oct09 The idea can be as crazy as you wish, but should somehow link to the picture. Detailed business plan is not required. Last date for submission: October 21, 2009.

Two winners chosen by the Editor. The prize will be shipped only within India. Winners of the last contest is announced on the following pages. OCTOBER 2009 69

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/contest

THE WINNING ENTRIES OF SEPTEMBER ‘09

BUSINESS IDEA CONTEST

Mother Earth’s Multi-stream Business Opportunities Comment by D. Charles Raj, September 21, 2009 Multi-stream Business Opportunities arising literally from the womb of our Mother Earth. Hence the products are Natural, eco-friendly, pollution-free, chemicals and contaminants-free, bio-degradable, economical, harmless, and user-friendly. Cookware and Domestic: Earthen-ware pots, pans, frying and cooking ware like idly-stands, paniyaramstands, puttu-stands, steaming-pots, basins, casseroles, jugs, mugs, jars, ladles, stirring handles, cooking ovens, hearths, disposables like curd/yoghurt pots, mutka pots for tea and coffee and lassi, serving dishes for sweets, payasams, badamkeer, firni, rasmalai etc. in weddings and at home functions. Water cooler jars (very famous porous water jars from Delhi which will cool water to very low temperatures popular during the forties and fifties and carried by train and air travellors from Delhi like the later date Nutan Stoves). Musical items Like Ghatams. Try to innovate musical-chimes and music pillars and xylophones. Pooja items like divas, pooja lamps, lampstands, kuthu-vilakku, bells, pots and pooja utensils, thulsi stands and pots, incense stick stands, candle stands, incense burners. Art & Artifacts: Lamps, table lamps, lamp shades. portico lamps, decorative hangings, decorative pots, vases, statues, statuettes, horse, elephants, cows, lions and tigers, and other figures and figurines, wall hangings, bassreliefs, table-top items like stands, toys, busts, etc. Try to innovate on photoframes, wall-clock frames, and other utility item covers and frames, gift boxes, jewelery boxes decorated with stones, beads, glass inserts and with inlay and embedded work, and other fancy articles. Industrial Items: In the early 30’s and 40’s we had a lot of decorated and plain floor and Wall tiles as also the popular roof tiles both inner and outer and the terrace tiles. These kept our ancestral homes cool in Summer and warm in Winter. We can get back to these lower cost, low-power consuming building materials which will also make our buildings green and smart. We can try and innovate on wire-reinforced and/or composite material using the base earth soil for lighter duty building materials like grills and meshes, earthen ware outer covers for radios, stereos, clocks, computer monitors, table tops, kitchen tops, baby chairs, baby-comodes (toilets) fancy decorative and utility items around the house. Also various retorts and chambers used in SMBs (and also homes) can be manufactured with the new composites and nano materials with the base earthenware after detailed prototyping and trials. A lot of innovation and experimentation has to be started immediately in these areas. In fact there is no end to the items that one can think of. All these products can be marketed both in India and all over the World as the world starts to look at going green and returning to Mother Nature. This is the right time to cash-in on this big Business opportunity, which will also give employment to our large rural population. All the SHGs and NGOs can look at innovating and marketing tie ups with MNCs and organisations abroad.

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/contest Gary Kasparov’s Chess Den! Comment by Gaurav Bansal, September 20, 2009

It is an ideal location for the chess den of the maestro Gary Kasparov. The expansive lawns provide an ideal space and view for the live size chess board and the mud pieces can be molded and made into chess pieces. Electric Rollers shall be placed on the chess board to enable the pieces to move, and that too by remote control. What fun to play LIVE CHESS, KING SIZE!

Earthen-Ware Tourism Comment by Pramod, September 15, 2009 Imagine if you could create a designer earthen pot while on a rejuvenating stay at our resort. An ideal weekend getaway in our state of the art “Earthen Owen resort”! Participate in a learn and sell earthenware while relaxing with our various mud therapies for your stress. The following is the three day program: 1) Day one - welcome and introduction. You also get a free mud therapy on day one. 2) Day two - hands on - let your creativity go!! Brief introduction on “how to” by experts and help to create your own designer earthen-ware 3) Day three – Earthen-ware Mela (the image) the entire group’s work will be showcased in an exhibition cum sale. The proceedings after the sale will go to the underprivileged people. The idea is to set up a resort which is basically on the learn-create-sell mode. You get to de-stress with a sense of learning and achievement. The image depicts some of the works of our students (participants/visitors) in one of our Earthen-ware Mela. Basically we have nature tourism, adventure tourism and other stuffs similar. My Idea is to bring in a new concept called Earthen Tourism.

CONGRATULATIONS, WINNERS! Please allow 30 days for dispatch of prizes.

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/opportunity

Business of western musical instruments

Lucrative opportunities in manufacturing, export and import beckon entrepreneurs in this fast-growing segment. /Vivek Kumar

usion groups, rock bands, corporate bands, and mall culture have pepped up the popularity of western musical instruments especially in metros and big cities. The opportunity for traders dealing in import and export of western musical instruments is unfolding in a big way. Industry players believe that India can have a significant share in the international market in the next ten years. Western musical instruments are becoming popular in the domestic market, thanks to the keen interest among children and young adults. With increase in demand, several stores that sell Indian musical instruments now also sell western instruments. Apart from this, exclusive western musical instrument stores are also opening up.

Indian Sceneâ&#x20AC;&#x201D;Western Outlook Meerut, Uttar Pradesh, is quite popular for producing brass metal musical instruments that make an integral part of the western orchestra. There 72

are a large number of manufacturers facturers at this stage; and later indein Meerut who produce and export pendently tap the market. Some well known international French horn, saxophone, clarinet, oboe, trumpet, euphonium, sousa- brands are already looking to expand phone, althorn, cornet, flute, and bag- their retail segments in India: Yamaha, Hohner, Casio, Ibanez, and Wittner to pipe, etc. There is a huge demand of elec- name a few. The market is opening tronic instruments that are part of up nicely and it is time for the Indian western style of music and India can manufacturers and retailers to take really make the most of this, given the lead. its prowess in electronics. While talking to Import of Musical Instruments from China (Rs. Lacs.) some musical instruHS Code 2007-08 2008-09 (Apr.-Dec.) ment manufacturers in Delhi and Mumbai, a 9201 246.76 193.72 common thought came 9202 474.07 581.55 into fore: Indian manu9205 302.43 989.05 facturers can make it 9206 1482.03 1156.03 big in the international market for western mu9207 18.88 6.77 sical instruments if they 9208 376.86 327.75 focus on precision and 9209 18.88 6.77 quality. Collaborating 920210 35.28 67.3 with good international Total 2955.19 3328.94 brands would be the ideal choice for manu- SOURCE: Ministry of Commerce and Industry, Department of Commerce, www.commerce.nic.in

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/opportunity International Music Trade Fairs There are two major trade fairs in the world that provide the launch pad for musical instrument manufacturers, importers and exporters. One of them is held in Frankfurt, Germany, named Frankfurt Musikmesse; and the second one is held in China, called the China International Musical Instruments Expo. In the last show held at Frankfurt, around 1,558 exhibitors showcased their instruments, music software, sheet music and accessories. The Chinese expo saw a record number of visitors in 2009, including 8152 foreign visitors, which clearly marks the growth in popularity and appeal of musical instruments across the globe. These trade fairs provide ample opportunities for traders to make contacts, choose suppliers, test their instruments and start business procedures across the globe. In India, largescale traders cater to the need of musical instruments export/import rather than individual musical instrument stores or small-scale manufacturers. Musical instrument manufacturers in India are yet to exploit the potential that this segment holds.

Import/Export International trade of musical instruments has been a bit unsteady in the last couple of years. The figures

If Indian manufacturers were to start standardizing their manufacturing processes, they can think to compete China in 10-15 years â&#x20AC;&#x201D; J P Singh Bina Musical Stores and statistics available from official sources indicate that import of musical instruments has increased during the last fiscal year while the export of musical instruments is trying to keep the value. Total exports have been worth Rs 36 crore in 2008-09 (till December) while import was worth Rs 79 crore during the period under review. The first table

clearly shows that the export of musical instrument in the financial year 2007-08 and 2008-09 (till December) has been almost consistent. Electronically amplified instruments like guitars and accordions have seen some downward trend. String instruments played with a bow have also lost some trade. Almost all the other segments have maintained their export value or somehow improved it. From the import section of the table, it is decipherable that import of almost all the segments has increased in the year 2008-09 (till December). The statistics will improve further if we project the figures of the last quarter of the last financial year. So, the import of musical instruments has increased during the recession period while export remained stable. The numbers, at least, indicate that the musical instruments industry is weathering the recession clouds quite efficiently. The increase in the import figures of these instruments also indicates that the domestic market for western music is on an upsurge. China is the major player in the musical instruments market throughout the world. In 2008, the export of musical instruments from China clocked the figure of $1.521 billion, which means an increase of 24.39 percent compared with the same period

Segment Wise Export and Import HS Code Segment

Export in 2007-08 (Rs. Lacs.)

Export in 2008-09 (Apr.-Dec.) (Rs. Lacs.)

Import in 2007-08 (Rs. Lacs.)

Import in 2008-09 (Apr.-Dec.) (Rs. Lacs.)

54.22

121.42

569.83

625.82

9201

Pianos including automatic pianos harpsichords

9202

Other string musical instruments e.g. guitars, violins, harps

214.46

197.65

610.28

695.81

9205

Other wind musical instruments clarinets, trumpets, bagpipes

180.81

374.09

102.58

126.76

9206

Percussion musical instruments

503.73

391.54

610.18

1260.68

9207

Musical instruments, the sound of which is produced, amplified electrically e.g. guitars, accordions

334.34

101.77

2513.06

2895.94

9208

Music boxes, air ground organs and other musical instruments

120.35

195.47

55.95

1534.25

9209

Parts (for example mechanisms for musical boxes) & accessories (for example, chords etc) of musical instruments, metronomes, etc. of all kinds

2892.57

2290.76

644.29

725.17

920210

String musical instruments played with a bow

27.9

41.89

68.6

4328.38

3681.7

5148.06

7933.03

Total SOURCE: Ministry of Commerce and Industry, Department of Commerce, www.commerce.nic.in

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/opportunity Is there any policy by the government to increase export of musical instruments? Musical instruments are one of the projects covered under handicrafts and this product is covered under miscellaneous handicrafts. There is no specific government policy to increase exports of musical instruments as a product of handicraft.

What are the issues that the musical instrument industry is facing? Musical instruments are treated as a luxury industry since long and no major investment initiative has been taken. Further, there are few companies in India which are trying to innovate and survive and as such there are few companies which are exposing the products in the international market. There are quality and production problems as there is no input Rakesh Kumar on training of the workers for innovations Executive Director, in this sector. There is also the problem Export Promotion Council for Handicraft of the availability of raw material in the country as about 75 percent quality material needs to be imported to produce good quality, well finished and well done products to meet international standards, because local producers of raw material and consumables, due to the small size of the industry, do not cooperate on quality supplies and reasonable prices. There are problems of shipment logistics as Indian classical instruments are bulky and need extensive packing for protection by sea shipment. The transport and packing costs are high which makes the price for end-consumers very expensive. Production infrastructure is small and cannot deliver large orders in time with consistent quality assurance. There are no training schools for skill upgradation and standardization. Good quality instruments are not produced in bulk and low-scale production for small workshops is very expensive. Incentive package from the government to attract investment is needed and removal of incidence of excise on the total spectrum of musical instruments is also needed. How do you see the future of musical instruments industry? The future of musical instrument industry is very bright in the world market due to following: a) Exposure of musical instruments during early childhood makes them better and intelligent children b) Musical instruments are being promoted by almost all the governments world over c) Governments of USA, UK and Australia have taken special initiatives to promote production and use of musical instrument as these governments are providing large fund and support to schools involving children in music. d) Large numbers of MNCs are promoting music circles in their companies to improve the working group interaction and well being e) Almost all NRI families intend to own at least one Indian musical instrument in their house if they can buy the same at reasonable prices f) Bollywood success is also a great contributor towards great prospects for musical instrument industry from and within India g) Good quality musical instrument training institutes are required to be established with international level certification last year. The import also hit the figure of $0.196 billion, which means an increase of 19.28 percent over 2007. This clearly shows that China is a reliable source of musical instruments for the 74

world and also a good market for instrument manufacturers.

Hurdles for this industry Even if we do not venture into the thick

of things, some glaring hurdles are indeed evident: 1. Raw material needed for production is not readily available. A major chunk is imported 2. The manufacturing units are not standardized for international requirements 3. There is lack of skilled labor and the training programs are few 4. The infrastructure is inadequate for large-scale production 5. Government incentives are lacking These issues seem to contribute stiff challenges for companies to manufacture good quality musical instruments that have international appeal.

Future of export/import During the recession period, the import of various segments of musical instruments from China increased. The total import from China alone is worth Rs 33 crore in 2008-09 (till December). It is interesting to note that China also gets the biggest pie when it comes to producing musical instruments at an international level. The opportunity for Indian companies might lie hereâ&#x20AC;&#x201D;if traders can match China in quality, business strategies and precision-based manufacturing practices, they will be able to tap the markets on a wider scale.

The way the industry is headed Despite the hurdles, a lot can be explored in terms of standardizing the manufacturing process and complying it with international demands. Labor training programs and workshops and creating adequate infrastructure to facilitate production are some areas that need serious input. The fundamental requirement to tap the potential of this segment is to build good manufacturing platform, a business model that works according to the global requirements, and a marketing approach that could diffuse through already established image of the global brands. Even if players want to focus on western instruments and avoid manufacturing Indian classical music instruments, there could be a huge potential DAR E market for it.

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blogs/opinion

/Anurag Batra

n my column in DARE in the last 24 months, I have written about personal experiences as an entrepreneur and only once from a country’s standpoint from my impressions of entrepreneurial energy in Israel. It is fascinating how countries and entrepreneurs in various countries are dealing with and benefiting from entrepreneurship. I now look at how an advanced country like Japan can grow on the engine of entrepreneurship. Japan is an iconic nation in terms of innovation, quality and culture. Japan today is a nation that is grappling with crippled growth and lack of entrepreneurship. With the change of guard, entrepreneurship is being looked as savior to Japan’s growth woes. With an internal focused leadership the fears that growth is a four letter word in Japan have gained currency and the death bell for entrepreneurship has been sounded. Recently, on the sidelines of a conference in Tokyo, I quizzed the vice chairman on the board of a large Japanese company on how Japan can grow faster? He with his 60 wise years behind him shared that Japan today has a GDP that it had 13 years back in 1993 and the panacea for growth was entrepreneurial energy

Land of the Rising Sun: It's time to wake up and look outside the window and having entrepreneurial icons. Japan needed to grow. He felt that growth had literally become nonexistent in the vocabulary of policy makers and industrialists in Japan. He said Japanese needed to take risks as corporations and entrepreneurs. Japanese companies had become too large and successful to do that. Japan needs entrepreneurial icons like Akio Morita of Sony, who can inspire the current generation. Rekindled interest in entrepreneurship is the panacea to Japan’s stagnant but satisfied economy. I was particularly impressed by a incubation initiative taken up and it had startups that could be the Google of tomorrow. EGG Japan (Entrepreneurs Group for Growing Japan) is a top class facility at the best location in Japan run by Mitsubishi Estate. This includes incubation offices and a business club

Japan needs entrepreneurial icons like Akio Morita of Sony, who can inspire the current generation.

called Tokyo 21 Century Club. Among its 600 members, the club counts some of Japan’s leading industrialists, along with young entrepreneurs and students. In this sense the club creates a very unique interactive environment in Japan where the top elite class mingles with the entrepreneurs and students very closely. Japanese entrepreneurs know that risk creates reward and hence they are creating incubation centers now and de-risking their existing businesses from failure. In my view, they know that dependence on just Japanese market or consumers would not be the best bet and focusing on China is important but India with whom Japan has had business ties for many years is probably the key to unlock growth. Japanese entrepreneurs also know that they have to plough for the future through entrepreneurial initiatives. As the domestic market in Japan stays stagnant in most categories, Japanese companies have to start looking outside their country and that too beyond trading. They have started becoming local transnationals. D A R E 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 founder and editor-in-chief of exchange4media group which includes exchange4media.com.

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DARE.CO.IN ç PROFIT FROM A PASSION

/INSEAD CONTD. FROM PG 23

My entry into a creative line such as photography is a bit of a freak situation. Soon after school, I zeroed into career options by giving a thought to all that I did NOT want: a 9 to 5 job, a boss and a role that needed an academic bent of mind

— Avinash Gowariker Fashion Photographer

Getting over the ‘sales taboo’ early on as an artist, leveraging relationships to sell his creative talent, Avinash is convinced that, “From day 1, I have tried to turn my art into a business”. And he has. The success of this 37-year old creative entrepreneur is based entirely on his professionalised offerings. He has adhered to deadlines, built relationships with his clients and honoured commitments to such an extent, it is almost surprising to find this professional behind the camera in a loose-hanging kurta-churidar and not a business suit! Before flying out to London for a shoot of John Abraham, Avinash explains, “Every shoot is a kaleidoscope 76

with several permutations and combinations. Based on the brief, I decide on the creative calls I would have to take. Some are fairly straightforward and need a basic sense of framing. But technique apart, I have always been a fairly easy person to work with. I have no creative airs about me and that has made a range of people from producers to film stars comfortable about working with me.” Finally, which are the attributes of brand Avinash Gowariker? In response, he shares a blog written by Big B himself after experiencing Avinash at a shoot. “In his blog, Amitabh Bachhan has described me in three simple words-Fast, friendly and efficient”.

While Avinash’s career has been a practical approach to his creativity, Dr. Anjali Raju’s career as a practicing homoeopath and a professional Bharatnatyam dancer, has been a fine balance between the creative and the practical side. This 32-year old had a choice-to make a livelihood from homeopathy and restrict her passion for dance to weekends. But from an early age, she chose not to make that distinction. “I agree that it has been a bit of a stretch. But dance is therapeutic in many ways-it has helped me focus on studies and deal with stressful situations in life”, accepts Anjali. She completed her arrangetram (a stage, qualifying a dancer to perform on stage) at the age of 16. Anjali’s strong will, coupled with family support made her pursue the art form with fervour, “I was able to sustain my interest in dance and not give in to home-work pressure during school days largely because of my mother’s encouragement and handson approach of accompanying me to my dance classes”, recounts Anjali. While studying medicine and dance simultaneously, she recalls an almost insurmountable situation, “On

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/INSEAD

But dance is therapeutic in many ways-it has helped me focus on studies and deal with stressful situations in life

— Dr. Anjali Raju A practicing homoeopath and a Bharatnatyam dancer

Dr. Anjali Raju with a few students Students of Samarchana School of Dance perform

the last day of my medicine exam, I had a big dance performance- of the Dashavataar ballet- along with seven other dancers. We had to have plan B in place given this clash. A senior dancer and partner at Samarchana, Uma Ghotge agreed to take on my role additionally in case I didn’t reach the auditorium in time for the makeup! But fortunately, my exam got over in time and I didn’t have to forgo the dance performance”.

We asked this doctor and mother of two how she has made the time to run Samarchana School of Dance as one of its founders post 2000. “Our guruji Meenakshi Venkatraman had an acute attack of arthritis and, suddenly bedridden, she was considering winding up her class of 60-80 students. So five senior students including me offered to help her by teaching dance to her students under her guidance. This continued for over seven years until

more teachers amongst these students were ready to hold fort. With our guruji’s counsel, four of us decided to start Samarchana school of dance. Thanks to two of our founders, we were fortunate to have adequate space to operate Samarchana from”. When asked if art or business came first, Anjali admits, “At Samarchana unlike many dance schools we don’t have a very commercial approach to dance so it isn’t exactly a roaring business as such. But we have been very popular amongst children and that is our ‘profit’.” Finally, on Samarchana’s value proposition, “We don’t conduct our dance training as a course with a curriculum. We would like this art form to nurture a holistic development. Along with dance, we train our students in yoga, familiarise them with some dance theory and a music teacher even teaches them the basics of Karnatik sangeet ”, shares Anjali. ‘Profit from a passion’ is the mantra of each of these five creative entrepreneurs. By living their passion –be it film making, music, architecture, photography and dance- they have either creatively etched a path towards entrepreneurship or grown their creativity as a viable means of livelihood. D A R E With her rich media background, Irawati Gowariker has led strategic communications for the IT arm of HSBC and ANZ in India. Irawati now ‘dares’ to go beyond large multinationals to tell the story of some Indian entrepreneurs. Philip Anderson is INSEAD Alumni Fund Professor of Entrepreneurship, Director, Rudolf and Valeria Maag International Centre for Entrepreneurship and Director, 3i Venturelab OCTOBER 2009 77

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event/headstart

Headstart: Startup Saturday The recent Startup Saturdays, organized in New Delhi and Hyderabad, saw an overwhelming response from enterprising individuals who converged to discuss new ideas about the travel domain

tarting with Hyderabad, the event saw about 70-80 attendees, including new startups that participated in this Startup Saturday. The theme for this event, part of the BootCamp series, was the travel domain. The occasion saw Ramu Kothapalli, CEO of TravelSpice.com making a business-cum-experiences presentation, which was followed by a presentation by Nazeer, a CA, helping startups at the IIIT-H Center for Innovation & Entrepreneurship, who discussed employing the services of a charted accountant (CA) in small startups. There were two idea presentations: one introducing a mint-fresh startupâ&#x20AC;&#x201D;TripNaksha.com. A budding entrepreneur, Ajay Reddy, demonstrated his idea about a social portal for eco-tourism. The second one by Upendra was about building a break-journey portal for alternate train options, both of which received good inputs.

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/event This was followed by a panel discussion moderated by Chaitanya (ISB alumnus) who runs a startup called PeopleToWorkWith.com (P2W2.com). The panel also saw inputs from the founder of SwanSuites, Ranjana, who was shortlisted for HS Mumbai and also ISBâ&#x20AC;&#x2122;s women entrepreneur program, Chandrani, founder SIPZ (a health drinks startup, incubated at ISB), Deepesh Agarwal, founder of RideInSync.com, a car pooling portal, and Ajay Reddy and Ramu. They discussed their journey so far and also talked about how they handled accounting. A wrap-up session was held by Kavita (COIE, IIIT-H) on the planned student idea tournament. New Delhiâ&#x20AC;&#x2122;s Startup Saturday was very well received this time around, with 50-60 people attending it. The event kicked off with a presentation by Sumeet from GrowIndia, who shared his ideas and experiences about bringing people to India for a variety of reasons and helping them stay here. Next up was Aloke Bajpai, the co-founder of Ixigo who spoke about the organic growth, the patterns followed by Ixigo and also how the power of ideas, wordof-mouth publicity and the impact that constrained-yet-targeted social media marketing can have on a business. Finally, Damayanti from OkTataByeBye presented the website as a source of business as well as information. She also highlighted the apprehensions faced on being the child concern of a big travel portal (MakeMyTrip), and the difficulties of carving a niche in this competitive business. This was followed by a networking session that lasted around 45 minutes and was very DAR E well received.

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/http://www.dare.co.in/blogs.htm from the

DARE.CO.IN ç FROM THE BLOGS

CONTD. FROM PG 63

clearly a lack of communication. If only Air

This could especially be lucrative thanks to the

8. Uniform and other article proposed

upcomming Commonwealth Games 2010.

to be given free to students (can vary

India had announced that the air hostesses were leaving to prepare an alternate aircraft! If only Spicejet could organise an alternate aircraft or an alternate Captain fast enough! Problems happen. They are part of the process of doing business. And it is not just how fast or how well you resolve them that defines a good brand. It is also how well you communicate with the customer during the problem resolution. Setting customer expectations right and keeping him in the loop during resolution is as important as resolving it well and on time.

Why cannot we have night food streets in India?

state-wise).

Does SSA say something to you Posted by: Vivek Kumar in Ideas on Sep 11, 2009 Tagged in: SSA, sarva shiksha abhiyan, india, education arva Shiksha Abhiyan (SSA) is one-ofits-kind program mandated in the 86th amendment of the Constitution of India. Its purpose is to achieve the objective of Universalization of Elementary Education (UEE) in a time bound manner. The central government has partnered with state governments to achieve targets in respective states. The main aim of the program is to open new schools in areas

ood makes everybody happy, a wise guy had once said. I couldn’t agree more after being an ardent fan of Delhi’s street food. But there is one problem that continues to haunt foodies not only in Delhi but maybe the entire country. Venture late in the night, and you would find practically nothing to eat. And even if you manage to find some food outlet, it would either burn a hole in your pocket or you would have to compromise on quality (if not taste and price) of food at the roadside eateries.

and adding different techniques of teaching

Could night food streets be a solution to

1. Strengthening understanding of subjects—

school infrastructure through provision of additional class rooms, toilets, drinking water, to achieve educational targets. When it comes to the talk of achieving targets of elementary education in India, there are whole lot of activities that are initiated in SSA. This is where business opportunities spring out like little buds that can bloom into fragrant flowers. Some objectives of SSA that have business opportunities include: English, Science, and Mathematics.

could be an issue with the Government. For this,

2. TV/DVD players for schools.

we can take cue from Singapore. In Singapore,

3. Mobile Service Vans.

a road that is busy by the day transforms into a food street by the night. In India, one such night food street model was started in Chandigarh. Unfortunately, the street became more of a nuisance than a revenue spinner due to the law and order problem it created. If

(ECCE) activities. 11. Integrated Education for Disabled (IED). 12. Computer Aided Learning in Elementary Schools (CALiES). 13. Human resources to meet the demand of work-flow in areas like finance etc. All the above-mentioned objectives vary from state to state in terms of intensity of interest and range. Business opportunities also vary accordingly. The program works on simple rules of asking for tenders to be filed for various demands that it has. The business opportunities vary state-wise in terms of budget they want to spare. The cash in-flow and funding for SSA is

where schooling facilities are poor. It also includes the act of strengthening existing

this problem? Space for creating such a street

infrastructure and training for teachers. 10. Early Childhood Care and Education

Posted by: Aswathi Muralidharan in the news on Sep 13, 2009 Tagged in: Untagged

9. Computer hardware, maintenance,

4. Construction of Special Residential Camps and other buildings within the school premises including classrooms, toilets, and labs. 5. EDUSAT program set-up.

on good scale and there appears substantial chances of getting good business for small and medium scale enterprises to take the initiatives.

Hotel projects for the Commonwealth Games 2010 Posted by: Aswathi Muralidharan in the news on Sep 08, 2009 Tagged in: Tourism Ministry , opportunities , Hotel industry , Commonwealth Games t is a known fact that the hospitality industry will receive a much needed shot in the arm after the devastating slowdown thanks to Commonwealth Games 2010. But is the NCR prepared for handling all the action? Here is an update.

It has been estimated that an additional 30,000 rooms in Delhi NCR region would be required for catering to the tourist inflow during the games. According to a press release by the Tourism Ministry, another 11,000 rooms

this issue is taken care of, it could be a good

6. Mid-day meal.

would be made available from the approved

business opportunity for food entrepreneurs.

7. Printing of books.

guest houses. Apart from these, the ministry

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/http://www.dare.co.in/blogs.htm from the

DARE.CO.IN

also expects another 3,000 rooms to be made

according to a recent analysis of the LCD panel

While talking about this new research in

available under the Bed & Breakfast scheme.

market by Frost & Sullivan. "During the same

cement industry, we need to understand that

However, in a in a review meeting, the Union

period, the total addressable market for LCD

Indian cement companies are always looking

Secretary of Tourism Sujit Banerjee found that

TV and mobile phones is expected to grow at

to employ new technologies in the production

as against the 9,597 rooms in the definitive

a CAGR of 57.8% and 17.9% respectively. The

process. The benefit of this research gives an

category, only 3,952 rooms (or 41%) have

Total Addressable Market (TAM), represents

edge to manufacturers: it can be manipulated to

been completed so far. Hence, he has directed

local production of these products. Higher

increase concrete strength and environmental

all the on-going projects under the 2, 3 and

local manufacturing of products that deploy

qualities. Mechanical properties and durability

4-star category, to be commissioned and

LCD panels portends strong demands and

of concrete can be substantially improved

classified by March 31, 2010 to avail the 5

appreciable growth for the LCD panels market

through its chemical composition. Cement

year Tax Holiday. Keeping these facts in mind

in India," it says.

production constitutes to 5% of worldâ&#x20AC;&#x2122;s carbon

and also the additional demand the Games

The analysis says that local demand,

dioxide emission. Overall, cracking the code

would create, there is an huge opportunity for

export prospects, government initiatives, wide

of structure for the material can prove to be a

entrepreneurs, both big and small, to tap into

applications, and low set-up costs during

major breakthrough for this issue also.

the potential.

the economic slowdown favor LCD panel

Cement is believed to be a multi-billion

manufacturers, making it an ideal time for the

dollar industry in the world and India happens

LCD panel manufacturing in India.

to be the second largest producer of cement

Is the time ripe to get into LCD panel business? Cement Industry of India Posted by: Vimarsh Bajpai in Ideas on Sep 09, 2009 Tagged in: LCD Panel, LCD, Frost & Sullivan hanks to a number of its unique features such as lightweight, the liquid crystal display (LCD) is now being used widely in monitors for TVs, instruments, computer monitors etc. This has opened a huge market for LCD panels, that has seen the upsurge despite the slowdown.

The total market for LCD TVs and mobile phones is likely to grow at a CAGR of 51% and 18.4% respectively from 2008 to 2010,

Posted by: Vivek Kumar in the news on Sep 10, 2009 Tagged in: india, chemical, cement he atomic structure of cement has eluded researchers and scientists. Though the cement hydrate is used extensively in construction purpose, its atomic structure was never decoded and was believed to be crystalline. In a recent research, scientists at MIT found out that it is more of a hybrid nature and not simply crystalline. There are many amorphous properties in its structure, which actually help in imparting the strength to this material.

in the world after China. There are 130 major and 300 minor plants that produce cement in the country that cater to the total capacity of 165 million tonne of cement. As per some reports, the market is expected to grow by 20% in 2009-10 as compared to 2007-08. There appears a fairly huge scope of merger and FDI in this industry. With the newly gained control over the structure of cement, companies can really exploit the properties of this material. The demand of cement for consumers and for government is huge in India with lots of development projects coming. Making the cement more durable and strengthened, the chances of replacement by some other materials are scant.

DAR E

SMS: â&#x20AC;&#x153;DARE <your comments, questions or suggestions>â&#x20AC;? to 56677 Email: dare@cybermedia.co.in Website: www.dare.co.in Follow us at: http://twitter.com/daretostartup OCTOBER 2009 81

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An evergreen

campaign NEN E Week lasts for a week; but its spirit stays on. NEN member institutes continue to strengthen the ‘Go Green’ drive for sustainable eco-preneurship.

or one week in February this year, lakhs of young students across the country came together to take part in a week-long awareness campaign ‘NEN Entrepreneurship Week - India’ to showcase opportunities in today’s India. Run by the non-profit National Entrepreneurship Network, NEN 'E Week' 09 aimed to focus public attention on sustainable development through its theme, ‘Go Green - The World is our Business’. Its idea was not to promote

tree-hugging, but to expose students to the billions of dollars worth of opportunities in the clean-tech sector. It was a resounding success. Over 3,000 events held across 350 institutes engaged nearly 350,000 students, transforming 'E Week' into a true national movement. Events included massive awareness campaigns, expert panel discussions on commercializing clean technologies, competitions for identifying

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DARE.CO.IN green opportunities, movie screenings and exhibitions on ideas and ventures of students, and much more. And now, with E Week ’10 just 3 months away, it’s time to ask the big question: Is 'E Week' just a 7-day phenomenon? Or is it a movement whose impact is felt through the year? Going by the stories coming out of NEN, the latter seems true.

Institutes go green • The scorching sun promises to bring in revenue – Rs 66,000 a day – at Management Institute of Durgapur. A discussion on the Kyoto Protocol during an E Week seminar made the MID-NEN E Cell members look at their rooftop in a completely new way. They noticed that hardly anyone ventured into their 3,00,000 square feet large rooftop because of the hot sun. That gave them an idea – why not develop a non-conventional energy production hub that could generate solar power? Principal Dr Anup Ghosh saw the business opportunity right away. “As per the Kyoto Protocol, every country should produce 20% of their power through non-conventional sources by 2020. India is lagging far behind at a mere 0.2%. There is huge opportunity in this space, especially for public-private partnerships,” shares Dr Ghosh. The planned rooftop solar energy hub has the capacity to generate 4 MW of solar energy, and Dr Ghosh is in final round of talks with West Bengal Renewable Energy Development Agency for supply of power at Rs 11 per Watt (that is Rs 7 more than what the Government pays for conventional power sources). Thanks to the E Cell’s innovative thinking, MID may soon earn Rs 11,000 an hour on a sunny day! • Heightened awareness about green opportunities has made Delhi College of Engineering take on a unique project – make their institute the first carbon-free campus in the country. Under the guidance of NEN Faculty Leader Dr A B Bhattacharya, five members of the DCE-NEN E Cell are currently conducting an energy audit. “The idea originated

during a seminar we held on Carbon Credit Rating System during E Week. It opened up the possibility of not only making the campus carbon free, but also selling carbon credits to US companies if we reach 10,000 credits (at 12 Euros per credit per year for 10 yrs.)” says Sushant, NEN E Leader spearheading the project. • PSG Institute of Technology at Coimbatore is also turning energy efficient following an intense Go Green campaign by the PSG-NEN E Cell. E Cell member G Ramachandran who runs his own year-old startup Lamperz, is providing five solar street lamps at Rs 25,000 per lamp for the institute’s parking lot. “Lamperz’ business has boomed after I showcased the product during E Week. Earlier, only my relatives bought my solar emergency lamps. Post 'E Week', the awareness about solar products has increased dramatically in campus and my institute is motivating me to expand to other products,” he says. Ramachandran is now building a solar-powered mobile battery charger. • The campus company at Chennai’s Saveetha Engineering College is now employing worms to generate revenue. The SEC-NEN E Cell has started its own high margin small business – a vermicomposting unit. With a free supply of garden waste from campus and cement debris for construction, their investment is almost nil. They plan to sell manure to its institute and nurseries at Rs 10/ kg, from October. “We developed the idea after we took a field trip during E Week to Exnora Homes, an ecofriendly housing project, which runs a similar unit,” shares Saranya Buddhi of SEC.

Tapping green opportunities • Pune’s Hiraben Nanavati Institute of Management and Research (HNIMR) College plans to use rainwater to end water shortage woes in over 200 institutes under Pune University. The project is spearheaded by Rucha Sharma, member of the NEN E Cell at HNIMR who runs her own small rainwater harvesting startup

Rucha Sharma at her drought-prone hometown Jalgaon. A year ago, she had only one customer. Thanks to the visibility she received during E Week, Rucha is now thinking much bigger. • After running E Week activities in his college Career Institute of Technology and Management in Delhi, NEN E Cell member Varun Dasgupta is now experimenting with a green venture of his own. He is establishing a startup that converts agri-waste into ‘eco-friendly coal’. The price of Varun’s briquette is one-third cheaper than conventional coal. "It’s a business opportunity I identified during E Week. Sugarcane waste comes for cheap, and I easily found my first customer as my coal is eco-friendly," Varun says. Evidently, clean technology has cut across institutes and disciplines, capturing the imagination of entrepreneurial students. In ways big and small, from research to student upstarts to campus companies, E Week has enabled a new wave of ecopreneurship – one that promises to drive India toDAR E wards a sustainable future. More articles on www.nenonline.org. Content provided by NEN OCTOBER 2009 83

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Organizations DARE.CO.IN

covered in this issue, in alphabetic order; first appearance

Amul ...................................................................................................................... 59

NABARD................................................................................................................ 25

Baskin Robins........................................................................................................ 59

National Geographic .............................................................................................. 21

BBNWalk ............................................................................................................... 68

NEN ....................................................................................................................... 82

Bina Musical Stores ............................................................................................... 73

OkTataByeBye ....................................................................................................... 79

Chaugule Sant & Associates ................................................................................. 22

PeopleToWorkWith.com ....................................................................................... 79

Cisco...................................................................................................................... 40

PepsiCo ................................................................................................................. 18

Claas Industries ..................................................................................................... 24

Preet Combines ..................................................................................................... 26

Deshmesh Combines ............................................................................................ 26

Redbus .................................................................................................................. 66

Dirt Track Productions............................................................................................ 20

RHC Pvt Ltd........................................................................................................... 65

Evofarms ............................................................................................................... 43

RideInSync.com .................................................................................................... 79

Fortis Heatlthcare Ltd ............................................................................................ 65

Rotopower Engineers ............................................................................................ 54

GITCO ................................................................................................................... 51

Samsung ............................................................................................................... 21

GrowIndia .............................................................................................................. 79

SIPZ....................................................................................................................... 79

Gujarat Cooperative Milk Marketing Federation .................................................... 59

SMC Capitals......................................................................................................... 55

IIIT-H Center for Innovation & Entrepreneurship .................................................... 78

Space Dotz ............................................................................................................ 60

InstaHealth ............................................................................................................ 66

Standard Combines ............................................................................................... 26

Ixigo ....................................................................................................................... 79

SwanSuites............................................................................................................ 79

Joos ....................................................................................................................... 60

Tata Consultancy Services .................................................................................... 43

Kamdhenu Ispat .................................................................................................... 37

Telibrahma ............................................................................................................. 66

Kartar Combines ................................................................................................... 26

The Studioworks .................................................................................................... 23

Kubota ................................................................................................................... 24

TieCon ................................................................................................................... 68

Kwality Walls .......................................................................................................... 59

TravelSpice.com .................................................................................................... 78

Lamperz................................................................................................................. 83

TripNaksha.com ..................................................................................................... 78

MakeMyTrip ........................................................................................................... 79

United Phosphorus ................................................................................................ 43

MID ........................................................................................................................ 83

ViVu ....................................................................................................................... 66

Mother Diary .......................................................................................................... 59

West Bengal Renewable Energy Development Agency ........................................ 83

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People DARE.CO.IN

covered in this issue, in alphabetic order; first appearance

A B Bhattacharya................................83

Manish Vithalani .................................60

Abhishek Manu Singhvi ......................34

Manisha Joshi ....................................20

Ajay Prakash ......................................52

Manoj Tiwari .......................................40

Ajay Reddy .........................................78

Meenakshi Venkatraman ....................77

Alejandro Pelaez.................................45

Milind Joshi .........................................21

Aloke Bajpai........................................79 Amitabh Bachhan ...............................76 Anil Panwar.........................................65 Anup Ghosh........................................83 Arun Jaitley .........................................34 Arvind Kejriwal ....................................32

Nazeer ................................................78 Nirmalya Pal .......................................40 Nusli Wadia.........................................34 Pankaj Chaturvedi ..............................59 Paul Thachil ........................................59 Rajendra Jadhav.................................22

DARE is not an acronym. It represents the daring spirit of the entrepreneur.

Rakesh Kumar ....................................74 Ashutosh Gowariker ...........................23 Ram Gopal Verma ..............................21 Avinash Gowariker..............................23 Ramu Kothapalli .................................78 Chaitanya ...........................................79 Ranjana ..............................................79 Chandrani ...........................................79 RS Sodhi ............................................58 Damayanti...........................................79 Rucha Sharma ...................................83 Deepesh Agarwal ...............................79 Saadi Hassan .....................................22 Devaki Pandit ......................................21 Saranya Buddhi ..................................83

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.

Dilip Jagad ..........................................60 Satish Kumar Agarwal ........................37 Dr. Anjali Raju .....................................76 Sidharth Jaiswal .................................60 G Ramachandran ...............................83 Gaurav Jani .......................................20 Gopi Choudhury .................................40 Gyanendra Singh................................26 J P Singh ............................................73 Jagannadham Thunuguntla ................55

Sumeet ...............................................79

The entrepreneur dares to do things. (S)he dares to do things differently

Sushant ..............................................83 Swaraj.................................................26 Uma Ghotge .......................................77 Upendra ..............................................78 Vaibhav Dayal .....................................53

Jaswant Singh ....................................34

Varun Dasgupta ..................................83

Jaswinder Singh Sangha ....................17

Vincent Van Gogh ...............................20

John Abraham ....................................76

Vinita Ram ..........................................22

John Dougery .....................................67

Virender Kumar ..................................18

Kanwal Rekhi......................................67

Wajahat Habibullah.............................32

Krishna Kumar ....................................40

William Abner Eddy ............................52

Maharaja Gaj Singh ............................52

William Totten Woglom .......................52

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56677 dare@cybermedia.co.in OCTOBER 2009 87

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Hanging by a thread The puppetry business, once lucrative, is now sobbing on the fringes. However, some artists are still trying hard to keep the art alive while making ends meet /Aswathi Muralidharan

he spiraling and dingy lanes of Katputli Colony, a slum cluster in New Delhi, are inhabited by nearly 12,000 artists—puppeteers, acrobats, magicians, and singers to name a few. The dismal living conditions have failed to make a dent in the enthusiasm of these artists who work round the year to make ends meet. Perhaps passion is one string that connects them to entrepreneurship. Thirty-year-old Ramesh Bhat, a puppeteer, is one such artist who not only holds puppetry shows but also teaches the young lot to keep the art alive. “We are traditional puppeteers and this art form has come down to us from our forefathers. I learnt this

art from my father when I was just ten years old. Since then, I have been in this profession,” says Bhat. However, things are changing now. The demand for puppet shows is slowly dwindling in India due to the onset of media like TV, radio and cinema, he says. “Earlier, when we used to perform, people from the neighboring areas also used to come especially to watch our shows. Now, it is more of an amusement than entertainment and we survive by mostly holding shows at schools and haats.”

The Business A colorful string puppet is an image that appears in our memory when we

think of Rajasthan. Traditionally, these puppeteers were gypsy clans who used to move about in small groups performing shows. Today the case is different and so is their audience base. In India, artists such as Bhat have now been restricted to exhibitions and haats. He adds, “Now-a-days, people do not have time to watch puppet shows. It is mostly children who are attracted to our shows.” Hearing this, one cannot help but wonder how artists make their ends meet. When quizzed about his profession, he says, “I make a living by selling puppets at haats and exhibitions, holding shows and training people interested in learning more about this art form.”

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Now-a-days, people do not have the time to watch puppet shows. It is mostly children who are attracted to our shows. — Ramesh Bhat Rajastani Puppeteer

Bhat and his four-member troupe produce and perform shows all by themselves, with little or no help from outside. There has been a drastic change in content of these shows as well. He says, “The government or the NGOs now mostly approach us to make content for spreading social awareness. We are associated with the government through some NGOs and work with them on a two-year contract basis. Whenever there is some outbreak of diseases or they have to spread messages on preventing AIDS, family planning, polio, sanitation, etc in villages, we help them through our shows.” But what about puppet shows based on folklores and stories of valiant heroes? He says, “We still do shows narrating the heroic tales of Amar Singh Rathore, Akbar Badshah, etc. but these shows happen maybe once or twice in a year.” And how much does he charge per show? He says, “It takes us at least four to five days to prepare for a show. We charge anywhere from Rs 2000 to 5000 for performing at private shows depending on the content.” Bhat also imparts training to people interested in learning the craft.

According to him, it is mostly children who come to him to learn the art. He charges anywhere between Rs 8000 to Rs 9000 for such training sessions. Puppeteers like Ramesh also sell puppets at various exhibitions and trade shows. It takes almost one day to make a wooden puppet. He explains, “The puppet is made from a single piece of wood. The wood is hand carved in the shape of a face and then painted. The rest of the body is made of cloth and rags. Though the price depends upon a number of things, the average price of making a puppet is somewhere around Rs 100.” The price goes upwards depending on the intricacy of the work and the place of sale.

The Brighter Side However, all is not so glum for these artists, who have been receiving attention from a different quarter. For example, Bhat has traveled to many countries abroad, where people have taken notice of his work. Ask him about his trips to foreign countries and he excitedly says, “I have been to a number of countries.” Counting on his finger tips, he says, “I have been to Dubai, France,

South Africa, and three times to Russia for giving performances. The audience there is more captive and our work has been appreciated a lot.” Bhat, like other artists, has registered himself with the Indian Council of Cultural Research (ICCR) and submitted CDs of their performances to them. Based on that, the ICCR calls them for giving performances abroad on a rotational basis. Besides these, NGOs and industry associations also approach them for holding shows. How much does he earn from these shows? He says, “We do not earn much as the payments mostly get delayed and is just enough to meet our expenses.” Hearing this, one cannot help but wonder at the contrast his life presents. When on one hand, Bhat lives in a small one-room house, on the other, he is busy preparing for his next trip abroad next month. A major problem they face is that there are no fixed shows they do per month, therefore there is no fixed income. He explains, “It often happens that sometimes we do 10-15 shows in a month and sometimes there are no shows at all for long DAR E stretches.” Point taken. OCTOBER 2009 89

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