#26 - NOVEMBER 2009 by CyberMedia (I) Ltd

VOLUME 3 ISSUE 02

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

/Rs 30

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Government Funding for Technology Startups Knock on the government’s door. You will be surprised by what you ﬁnd

Micro Financing Cycle Rickshaws

A Pivot Irrigator with a Difference

New World of Technical Textiles

Business of Portable Toilets

entrepreneur of the month/

Vijay Bansal, Cantabil Retail

Implementing IFRS investor of the month/

Sumant Mandal, Managing Director

Comics Go Digital columns/

A Tale of Two Feuding Brothers Why Entrepreneurs Turn Reclusive 100 pages including cover

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Vol 3 / Issue 02 / NOV 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

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.

/funding

Government Funding for Technology Startups Knock on the government’s door. You will be surprised by what you ﬁnd

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 MUMBAI Road No 16, D 7/1 MIDC, Andheri (East) Tel: 42082222 DELHI D-74 Panchsheel Enclave Tel: 41751234 PUNE D/4 Sukhwani Park North Main Road, Koregaon Tel: 64004065 SECUNDERABAD #5,6 1st Floor, Srinath Commercial Complex, SD Road. Tel: 27841970 SINGAPORE 1, North Bridge Road, # 14-03 High Street Center Tel: +65-63369142 CORPORATE OFFICE Cyber House, B-35, Sec 32, Gurgaon, NCR Delhi-122001 Tel: 0124-4822222, Fax: 2380694

100 pages including cover

Eight Alternatives to a Public Issue

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NOVEMBER 2009

Content Nov09.indd 4

10/28/2009 1:23:46 AM

DARE.CO.IN

/contents

opportunities/ Now, Plants On Rent, Anyone Game? ............ 48

people/

The Business of Portable Toilets ................... 80

UID: India’s Newest Mantra

strategy/ What makes a professionally managed company? ..................................... 32

The Unique Identification Authority of India (UIDAI) is tasked with giving every resident a unique identification number. Director General and Mission Director, Ram Sewak Sharma talks of what the project entails and the business opportunities it offers.

entrepreneur of the month

IFRS in India................................................. 50

Vijay Bansal

Waste Paper Business .................................. 54

Cantabil Retail

At a time when the world’s top brands have stormed the fashion markets of India, Vijay Bansal, who comes from the small town of Jind in Haryana, created Cantabil – a brand that rose to a presence of 400 plus showrooms across India in about 8 years

blogs/columns Paranjoy Guha Thakurta ..... 16 Anurag Batra...................... 91

sector/ Micro financing cycle rickshaws ................... 18 The New World of Technical Textiles.............. 36 Transition of Comic Books into Digital Format ....................................... 44 society/ The micro-entrepreneurship of a roadside tea vendor............................... 88

Sumant Mandal Managing Director

contest/

Sumant Mandal initiated and is responsible for Clearstone’s investment activities in India. Sumant joined Clearstone Venture Partners in October 2000

Nov’09 Contest ................... 61 Oct’09 Winners ................... 64

based

brand

capital

come

business companies

company

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

investor of the month/

india like

indian industry 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

66 innovation/ A Pivot Irrigator with a Difference Developed by a Pune-based engineer, this eco-friendly machine saves energy and time while irrigating large stretches of land. However, lack of funds is hampering its commercial production

event/ Business Strategy Series: Mumbai ............... 68 Headstart: Startup Saturday........................ 86

NEN/ Money-wise Entrepreneurs ......................... 96

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

Content Nov09.indd 5

10/28/2009 1:23:55 AM

Editor Note Nov 09.indd 6

10/27/2009 3:51:50 PM

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blogs/edit

False dawn or light at the end of the tunnel? Things have started looking up. This is the time for cautious optimism before the full fledged plunge into a growth cycle

he spring, it looks is back in the steps of the economy. Country after country is announcing that the worst is over. Recruitment rates are looking

up and corporate Indiaâ&#x20AC;&#x2122;s result season has more to cheer than be worried about. And the most promising sign of all â&#x20AC;&#x201C; full page advertisements are back in the newspapers. Are the dark days over? Are we back on the growth trajectory? There are two view points out there. The first one states that what you are seeing is a year end burst of activity, a combination of pent up spending needs and festive feel good. Adherents to this view point believe that come January and the gloom will be back in some measure. Holders of the opposite viewpoint truly believe that the worst is over and that the good times are back; that it is time to uncork the bubbly. And like with everything else, the truth is somewhere in between the two. Or in other words, this is the time for cautious optimism. The time to start preparing for the coming growth cycle, but not the time yet to put all of ones eggs in that basket. Hopefully, this time around, we will not commit the same mistakes as the last time around. But, seeing the way things still are, I would not bet on that.

/Krishna Kumar

NOVEMBER 2009 7

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10/27/2009 10:00:44 PM

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am working as a software engineer in Bangalore. I have a aspiration to become an entrepreneur.

I have ideas in the aerospace sector for defense-

PREMIUM

e are a 1.5-year old company working in the solar energy space. The company has

related applications. All my ideas are related to

started generating revenues now. We are looking for

next generation weapon systems. I am looking for

an enthusiastic entrepreneur to drive it aggressively

investors to present my idea and make my dream

to the next level. Here are the required qualities:

venture come true. Please help me on the same.

1. Based out of Bangalore

Guruvishnuvardan M

2. Ability to drive execution by spending full time 3. Electrical (engineering) background and passion in the (solar/wind) energy business 4. Long term and high goal commitment

am successfully running my own pre-school in

5. Ability to contain costs

Pune since the last 13 years. Now I want to start

Raghavendra Ijjada

giving franchisees of the same. I want to know about the process, documentation, support, legal formalities, government approval, etc. Also, please contact if anybody is interested in setting up a franchisee and marketing in and around Pune. Yogita Kulkarni

am an avid reader of DARE from the first issue! I have started a trust in Chennai in 2003. We

work as an NGO for the welfare of women in Tamil Nadu to support their livelihood. We have initiated a program called ‘Vasantham Community Banking Program’ to encourage micro savings among women.

ublished: October 2009

We form them into self help groups (SHG) and link

Dhirendra Pratap Singh has an organization

them with banks for loans. I require a consultant

working for quality education and vocational training in rural India and was looking for potential investors, partners and mentors.

from the development sector to carry us further. I am also looking for association with other MFIs for providing loans to our members. Lakshmanan

Response: October 2009 Could you let me know more about your organization and the plan of execution. Kiran Naidu

ublished: August 2009 Deepak along with his two sisters who are

in the education sector were keen on taking a franchise of a good pre-school in Mumbai.

am currently working on a plan to set up an e-

Response: October 2009

waste management project in Bangalore. If

My friend and I have invested in Mother's

somebody is interested and would like to join

Pride. Although predominantly based in

me, kindly contact me giving brief details of your

NCR/North India, we can explore opportunities

experience and strengths.

in Mumbai. Umang Agarwal

PREMIUM

Akshat Rathee

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

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Advertorial

Funding a startup: the collateral free way For B.K. Singh funding for his startup, Abhyudaya Tele-Infra and Consultants, was turning out to be a nightmare, until he was told about the collateral-free loan from banks under the Credit Guarantee Scheme (CGS) of Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) fter having worked in the telecommunications industry for two years in Delhi, Brijendra Kumar Singh decided to venture out on his own. With over 16 years of experience in industries as diverse as accountancy, cement, structural fabrication and communication backing him up, he knew that setting up a civil construction company that deals in tower foundation, electrification work for towers, base transceiver station (BTS) installation and commissioning, supply and installation of fabricated towers, and providing fabrication teams to structural fabrication units was a step in the right direction. This was how Abhyudaya Tele-Infra and Consultants Pvt. Ltd. was born in May 2007.

need information on profits, sales etc. Being a startup, it’s difficult to meet these requirements,” he says. While Singh was contemplating how best to deal with the situation, a friend of his working with the Uttar Pradesh Financial Corporation (UPFC) in Lucknow told him about the collateral-free loans provided by banks under the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE). A BLESSING “This turned out to be a blessing! Unfortunately, none of the banks I had approached gave me any information about this scheme. I had been trying to get some funding since July/August. Finally, thanks to this scheme, I was able to get funding in late 2008 to the tune of Rs 4,000,000 from Punjab National Bank (Branch: Patparganj Industrial Area, New Delhi) The biggest benefit was, of course, getting a collateral-free loan,” he says.

TEETHING TROUBLE The finances for starting Abhyudaya came from Singh’s own pockets and from relatives. “I used all the money I had invested in the market, in fixed deposits… But this is all capital intensive work, all over India, and funds are always needed for setting up the infrastructure. On one site alone there is an investment to the tune of Rs 10-15 lakh,” says Singh. The work, he says, is largely contractual.

FUTURE PLANS Singh points out again that telecom infrastructure is an extremely capital intensive field. Even the funds that he received from PNB covered only a small percentage. “I need to expand the company a lot. With the loan from PNB we have been able to complete only about 20 to 30 percent of the work. We still need more funds. My company hasn’t reached the maximum limit under the CGTMSE scheme, and I plan to take more loans under that,” he says.

Singh tried to arrange for funds since setting up the company, but to no luck. “Banks, both private and government, don’t give loans to companies that are not older than three years. They

He adds that in this field funding is always a problem, but adds on a positive note, “But I was able to manage funds, and the future seems bright. Thanks to CGTMSE.”

CGTMSE guarantees collateral-free loans to Micro and Small Enterprises upto Rs 1 Cr. per borrower extended by banks and Member Lending Institutions (MLIs)

Website: www.cgtmse.in

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ublished: August 2009 Ramesh Daryapurkar is working in the field of

biogas generation from industrial wastewater and is interested in exploring business opportunities in

e plan to establish a play/pre-school in Jaipur. We are looking for taking a franchise from the

best in this sector of business. Investment is not a problem and we can invest as per the requirement of the project. Please suggest.

biogas storage.

Rajendra Prakkash

Response: October 2009 I am interested in exploring business opportunities in biogas storage. Gaurav Jain

ublished: August 2009 Sumit Agarwal wanted to start a food venture

in Gurgaon/Delhi/NCR and was looking for a good

team and people with similar interest.

ublished: September 2009

Response: October 2009

J.S. Sandha of Jagriti e-seva was planning

to distribute franchisees of his venture ‘SoyFit,’

I think we should meet to start this.

involved in the production of Soya based products,

Banti Gautam

to small entrepreneurs. Response: October 2009 I would like to contact JS Sandha of Jagriti e-seva for getting more details of the project. Rakesh

PREMIUM

ublished: September 2009 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: October 2009

ublished: July 2009 Dr. Sanjay Sharma has a concept in rural

healthcare services and wanted to meet people

I am interested in your products and can join you as I have a good database and associated people from across rural parts of UP.

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

Rakesh Kumar Can you provide me more information about your idea, to help you or join you?

Response: October 2009

Mukesh Kamboj

I would like to know about your concept

I am interested in contacting Sandip.

and partner with you if I like the idea. Dr. Vijay I would like to be a part of your team. Durga Prasad, Chennai

PREMIUM

Venkat Atluri Can you please elaborate your idea as your letter is sketchy? S. Giri Kumar

NOVEMBER 2009

Exchange Nov 09.indd 10

10/28/2009 1:48:19 AM

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ublished: September 2009 Prakash was looking to involve individuals,

private or public limited companies in doing

ublished: September 2009 Santosh Kumar wanted to start a crafts center

in Chennai and eventually expand it to other South Indian cities. For this, he was looking for mentoring

bamboo business on a large scale.

and funding. Response: October 2009

Response: October 2009

As we are already associated with a lot of

What is the amount you are looking for?

bamboo projects here in India, we might

SDS Sandhu

be able to help you. Please let us know what kind of bamboo based products you are looking into for the UK and EP markets. Kunal Bhatia

am writing this on behalf of my son who is a visually challenged person. He runs his own

retail business of cartridge / toner refilling, making compatible cartridges and stationery, including computer consumables in Chennai. He has been

e are running a computer center in

struggling for the last 25 years to make the business

Tiruvannamalai (Tamil Nadu) for the past

financially sound so he can stand on his own. We are

six years. We want to provide computer training for housewives, poor school and college students, students without parents, as well as poor and needy

looking for support in promoting and marketing products and services. Krishna Rao

people. I am looking for funds for the same. S. Kavitha

PREMIUM

want to be an entrepreneur in the solar cell manufacturing field. I am searching for

guidelines from experts in the same field.

ublished: August 2009

Civaraj

Harpreet Singh has an internet startup

based on a gaming/auction model and is looking

for angel investor for his project. Response: October 2009 We are already in the Internet based

ublished: May 2009 Krishna G Setty wanted to set a waste

management project in Banglore and was looking for support for the same.

lottery business. We are ready to fund in Harpreet Singh's project based on the gaming/

In the exchange section of May 2009

auction model. H.Premraj Bamboly

edition of DARE, Krishna Setty showed interest in starting a project in waste management.

Can you contact me with more information?

I am interested in getting in touch with him. Vikas

PREMIUM

Response: October 2009

Umang Agarwal

Exchange Nov 09.indd 11

10/28/2009 1:48:21 AM

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Giving insights for

hours on the computer. This results in

Audit should be treated as

new ventures MAG

health problems and reduced social

something that brings value

I have been reading DARE magazine

interaction. Since the world economy

addition ARTICLE

regularly and it has played a part in

is globalized, many employees have

Adage goes that “auditors are watch-

inspiring me to dare to be an en-

to work between 12-16 hours a day.

dogs’. The question is how effective

trepreneur. I have quit Arzoo.com

Companies need to find ways to pro-

are these watch-dogs? if these were

have

vide them relief, preferably by run-

to be effective, “Satyam” would not

launched Traveltechie.com, a site

ning double shifts. This will help to al-

have occurred. Instead of quarterly,

dedicated to find deals/offers in

leviate the problem of unemployment

monthly reporting should be there

Travel across various Travel suppli-

to some extent.

and the job of audit should be out-

Head

Marketing

and

Mahesh Kapasi

ers in unbiased way. Sameer Patil

sourced to such a body which should be beyond the limits of all “influenc-

Grassroot Level Innovations: An

es”. Alas! This is an Utopian condition

When Co-Founders split ARTICLE

untapped Opportunity BLOG

in Indian circumstance.

Reading

“When

Parthasarathy G.

Co-Founders

Now a days it has became fashion to

split”(DARE October 2009) reminds

talk about grassroot inventions. But in

me that break in family business is

practice, no one bothers about grass-

Why credit cards are not

inevitable. Sooner or later, an individ-

root inventions or inventor. I am talk-

exceedingly popular? BLOG

ual has to stand on his feet. Individual

ing out of my bitter experience. I am

I am a software engineer who

identity and ego breaks a family busi-

a grassroot inventor with dozens of

managed so far (9 years) with *no*

ness. The worst competition comes

ideas. I got 1st prize for an idea about

credit cards.

from siblings having same business.

shrinking the KEYBOARD in a compe-

I had it only once via my previous

The monetary considerations often

tition conducted by the National In-

employer though I had no need of

ruin the relations.

novation Foundation in 2001. For the

them. After seeing inactivity, the cred-

The best relations among siblings

last seven years I am struggling to get

it card company had given Rs. 200/- as

come only if they have separate and

some help. I approached almost all

Pooja bonus and another Rs. 200/- for

independent businesses. This en-

the government and private agencies.

Diwali. So before quitting the compa-

sures that there is no competition

But no one bothered.

ny and leaving the card, I spent for Rs.

in business.

Main problem is: these stalwarts M. Kumar

don’t understand the problems faced

500/- and dropped Rs. 100/- check as credit card payment.

by the grass rooters. They put forward

Now, I make trips abroad at least

From the Blogs BLOG

some forms and ask to fill them. These

once in a year. Now I could feel the

“From the Blogs” every month in

forms are very academic and contains

need for credit cards especially while

DARE is an informative feature. The

so many clauses which are absolute

checking in to hotel who makes

40th anniversary of the Internet is a

Latin to a poor grass rooter. They give

Rs. 0/- authorization, doing the same

matter of joy as life without it today

more importance to form filling than

via debit card would incur some cost.

seems impossible. In all spheres of life,

the invention. Grassroot inventor

When I applied for the credit card

Internet has become a very important

runs to pillar to post and in the proc-

with Axis Bank (where my salary ac-

tool for development and success.

ess loses all the money he had and

count sits), it got rejected saying

The world has been made very small

at the end feels dejected, loses sleep,

that I am living in sub-urban area.

thanks to the Internet. But, of course,

grows beard and becomes a laughing

The bank staff asked me to provide

a coin has two sides—people go out

stock in his village.

the address of some friend in the

much less than before and spend long 12

Sudarshanaa

city. But somehow my application

NOVEMBER 2009

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got rejected even after giving friend’s

as mentors, experiences etc. Any

innovative work. For doing research,

local address.

amount of training etc will not give

IDEA is foundation, and any idea

them similar productivity

may come from any mind, and can

I applied for credit card once via HDFC they said ‘Life time free card’.

PP Das

Agent asked me to sign in some plac-

become example of innovative work. The inventors face much trouble to

es, when I was reading the application

General

commercialize the patent. Example:

I could see some catchy text which

This is my first contact with your

a commercialization of survismeter

I struck off as not obliging (I am not

team.

patent took Herculean task.

able to remember it exactly). Then the

Wish to congratulate your team at

agent scolded me to sign fresh form

DARE for your pro-active approach in

with only the signatures to which I re-

‘entrepreneurizing’ India!

fused. I did not get any card at all from

J. S. Sandha

HDFC bank.

Man Singh General Received a copy of @daretostartup today. Great piece of articles on entre-

I had one more abroad trip, I used

preneurship and challenges for start-

my axis-bank debit card as a credit card while checking in and this time

ups. Nice work team! General

Hemant Kumar

surprisingly I did *not* get any charge

Thanks for providing such a nice

at all. So I do not need credit cards.

platform 'Exchange Query'. I

Kamesh Jayachandran

have received communications

Can we expect customizable cars? BLOG Will it be possible to change the car color

12 businesses that are illegal

from exciting and wonderful personalities. It is really good.

in India ARTICLE Sufficient laws are there but the

Sandip Dasgupta

anytime?—Over

weekend,

changing it to bright color Red/Yellow and on weekdays changing it to light color. Is there a technology for the same?

problems begins at the enforcement

Abhishek Chouhan

level. We, the people are not honest to ourselves and are extremely worried about our safety, pleasure and

What Does Your T-shirt Say? ARTICLE

12 businesses that are illegal

comfort and we go to any extent to

Excellent Review. In time, everything

in India ARTICLE

achieve that by any means. Every one

will be customized. The Indian mar-

Start taxing beggars and we might just

should make up their minds to give-

ket is at an early stage in online cus-

see an end to this social menace. Most

up selfishness. Then only there can be

tomization but has alive tradition of

of them are able-bodied parasites.

a change.

offline customization: shoes, dresses,

They refuse to work because begging

houses, etc., which the western world

is easier—casting aside shame doesn’t

has long lost. It will be interesting to

cost anything. I think the IT depart-

see how it evolves.

ment should constitute a special cell

Parthasarathy G. Recession ccould give you better workforce BLOG

Sivam Krish

to just go after them. There are some who are handicapped and mentally

Right Work force is a rare commodity, ity y, which companies do not un-

Encouraging Development and

ill—such people should be rescued

derstand, since they value every

Commercialization of inventions

but the rest, especially the young

employee in terms of ROI thereby

and innovations: A New Impetus NEWS

women parading with babies at traf-

loosing out on employees who could

Govt.’s initiative is appreciable. In

fic signals should be told to get off the

force-multipliers in the team they be force-mu

fact, govt must encourage every en-

street...or else!

Team mates look upon them work in. Tea

thusiastic individual to go ahead for

Manali Rohinesh

NOVEMBER 2009

Feeback Nov 09.indd 14

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15-EDI-Advertorial ad Nov09.indd15 15

10/28/2009 2:22:54 AM

DARE.CO.IN

blogs/opinion

A Tale of Two Feuding Brothers /Paranjoy Guha Thakurta

resources are to be allocated and

tion

priced. Moreover, the spat between

which

Licensing a

Policy

consortium

under

compris-

the Ambanis has highlighted the

ing RIL and its partner Niko Re-

he Supreme Court of India

infamous nexus between business

sources becomes the success-

is deliberating on a legal

and politics.

ful bidder (or contractor) for

dispute between two of the

The Supreme Court’s verdict

richest men in the country, namely

could set important precedents

the Ambani brothers, Mukesh and

about the respective roles of the

Anil. Over the past three months,

government and private corporate

April 2000: A production shar-

hardly a day has gone by without

entities in extracting a valuable re-

ing contract is signed between the

the sibling rivalry hogging head-

source like natural gas. In addition,

MoPNG and the contractor.

lines in newspapers. The key issue,

the controversy over the apportion-

however, goes beyond the fratri-

ment and valuation of gas from the

July 2002: Mukesh and Anil’s father

cidal conflict. It concerns the man-

Krishna-Godavari (KG) basin has

Dhirubhai Ambani dies.

ner in which the nation’s natural

highlighted the government’s fail-

exploration of block D-6 in the KG basin.

ure in formulating a rational, fair

October 2002: Gas is discovered in

and transparent gas utilization

the KG-D-6 block.

policy. To understand the genesis of the dispute, a brief chronologiourt’s C e m t e n r a p t cal backgrounder is provided on u impor The S t e s the ongoing tussle between Reuld ct co ut the o b a verdi liance Industries Limited (RIL) s dent the f o s prece controlled by elder brother ole tive r ate c v i e r p p s Mukesh Ambani and Relid re nt an e n m i n ance Natural Resources ities gover ce e ent r t u a o r Limited (RNRL) headed s o corp ble re a u l a by his estranged younger av cting l gas a r u sibling Anil Ambani. t extra a like n

June 2004: RIL enters into an agreement with the Uttar Pradesh government to set up the “world’s largest gas-based power plant” with a capacity to generate 3,500 megawatt of electricity at Dadri, near Delhi. November 2004-June 2005: The Ambani brothers fight a bitter battle in public. June 2005: The warring brothers ar-

1999: The Ministry of Pe-

rive at a settlement supervised by

troleum & Natural Gas (MoPNG)

their mother Kokilaben Ambani and

announces

start dividing up the Reliance busi-

the

New

Explora-

NOVEMBER 2009

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blogs/opinion

tions of whether Sibal and his fami-

ness empire—the Mukesh group gets the gas exploration and extraction business while the Anil group acquires control over the power generation business. 2006: RIL and RNRL start squabbling over a gas supply agreement. RIL applies to the MoPNG for approval of a gas price of US$ 2.34 per mBtu (million British ther-

ial cruc e h t ether ver, h e w w o s i H es g t aris a actin h t d e n e o i d t in ques ent is le m n r peop ve o e g h t e f th ian half o ustod c on be a as r as a ntry o u o s c e c e ur of th l reso a n o i yer nat n pla of its a s i t par

ly actually received personal favors. The Supreme Court begins hearing arguments on the dispute. According to energy experts like Dr Surya P Sethi, who has just retired from the government after serving as a Principal Adviser to the Planning Commission for nearly eight years, even if the Ambani siblings “settled” their dis-

mal units) for sale of 28 mscmd (mil-

pute, the crucial issue that would re-

lion standard cubic metres a day)

main unresolved would be the need

to RNRL for a period of 17 years.

to fill up the existing “policy vacuum”

MoPNG refuses to approve the price

August: Fertilizer Secretary Atul

with a set of norms for allocation of

and a legal battle breaks out.

Chaturvedi writes to RS Pandey, his

natural gas that are “credible and

counterpart in the MoPNG saying a

defensible”. He says that he unsuc-

September 2007: An empowered

family settlement should not “over-

cessfully opposed a formula-driven

group of ministers headed by Pranab

ride the sovereign right of the gov-

methodology for pricing natural gas

Mukherejee (then the External Af-

ernment to formulate policies aimed

that is used to price liquefied natural

fairs Minister) approves a gas pric-

at the larger public interest”. Petro-

gas (LNG), which is a separate prod-

ing formula mooted by RIL fixing the

leum Minister Murli Deora contends

uct from natural gas. He adds that a

price of gas at $ 4.21 per mBtu.

that the gas does not belong to either

study conducted by the public sec-

of the two Ambani brothers but to

tor GAIL (formerly Gas Authority of

the government of India.

India Ltd) on policies pursued in as

June 2009: The Bombay High Court

many as 39 countries had indicated

rules in favor of RIL supplying gas to RNRL as per the original terms

September: Anil Ambani issues a

that there was no precedent for for-

of the contract and urges the two

series of front-page advertisements

mula-based pricing of natural gas.

companies headed by the brothers

in newspapers accusing the MoPNG

It is easy for Minister Deora and

to arrive at a “suitable arrangement”

of favoring his brother’s company at

his friends to claim that the natu-

or to turn to their mother Kokilaben

the expense of the exchequer.

ral gas that lies beneath the bed of the Bay of Bengal does not be-

for arbitration. Both companies then file cross appeals in the Su-

October: VK Sibal, Director Gen-

long to either of the Ambani broth-

preme Court.

eral of Hydrocarbons (DGH), seeks

ers but to the Indian government.

government protection as he fears

However, the crucial question that

July: Anil Ambani publicly hits out

a threat to his life from individu-

arises is whether the government is

against his brother and the MoPNG

als connected with the corporate

indeed acting on behalf of the peo-

for pandering to RIL’s “excessive

group controlled by Anil Ambani,

ple of the country as a custodian of

greed,” accusing the company of

who have accused him of receiv-

its national resources or as a parti-

“gold-plating” the gas project (or

ing favors from Mukesh Ambani’s

san player. The Supreme Court will

artificially inflating capital expendi-

group. The Anil Ambani group de-

have to find an answer to this criti-

ture) and the government of obliging

nies the charge, calls it defamatory.

cal question.

RIL at the expense of RNRL as well

The Central Vigilance Commission

as the public sector National Ther-

asks the Central Bureau of Investi-

mal Power Corporation (NTPC).

gation to “discreetly” probe allega-

DAR E

The author is an educator, an economic analyst and a journalist with over 30 years of experience in various media—print, radio, television, Internet and documentary cinema. NOVEMBER 2009 17

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While renting out cycle rickshaws is already a lucrative business, giving micro-loans to pullers for new purchases is an emerging opportunity /Aswathi Muralidharan

micro

sector/transport

hirty-five year old Mohammad Mehtabâ&#x20AC;&#x2122;s day begins at seven in the morning when he sets off from his home peddling a cycle rickshaw to his workplace. His workplace is a cycle rickshaw stand where he has been a regular for the past ten years. With the tring tring of his rickshaw, he tries to attract the attention of potential customers and happily peddles them off to their destination. After a grueling day, which ends at about eight at night, he manages to earn about Rs 200, or Rs 250 if he is lucky, of which he pays Rs 25 as the rent for the cycle rickshaw. At the end of the month, he saves a meager Rs 4,500 with which he

financing cycle rickshaws

looks after his eight member family back home in the Darbhanga district of Bihar. Pulling the cycle rickshaw is not his only job. So while Mehtab pulls rickshaw for eight months a year, the rest of the time he spends working as an agricultural or construction laborer. Mehtab is just one of the multitudes of migrant workers who throng the metros in search of work during the off agricultural season. Due to the lack of skills and identity, they often end up joining the unorganized workforce doing petty jobs like pulling rickshaws, roadside vending or as construction workers. In this story, DARE focuses on the rickshaw business in India that thrives on people like Mehtab.

The Cycle Rickshaw Industry The rickshaw industry in India is highly unorganized. Though no exact market size of the industry is available, a conservative estimate puts the number of cycle rickshaws in India at 10 million, including both the pas-

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sector/transport senger rickshaws as well as the peddle carts used to carry goods. Of this, the capacity utilization at any given point of time is estimated to be around 6570 percent, which means seven million cycle rickshaws are operational at any given point of time in India. Cycle rickshaws are a popular mode of transport not only in smaller towns and cities but also in large metropolitan cities like Chennai and Delhi. Cycle rickshaws as a mode of transport is especially common in ten states in India, including Bihar, UP, MP, Delhi NCR, Chhattisgarh, Orissa, Punjab, some parts of Maharashtra and so on. Most of the rickshaw pullers are migrant workers, of which nearly 70 percent are from Bihar, followed by 30 percent from UP, and the remaining 10 percent are from Bengal, Orissa, Rajasthan and other states. Though it was predicted that the increasing popularity of mall-culture and modernization of the transport system, such as the introduction of the Metro, would ring a death knell for this industry, the

cycle rickshaw business has grown at a healthy rate of 10 percent. “There are several reasons why the rickshaws are gaining popularity as a mode of transport. Cycle rickshaws are eco-friendly and are used for ferrying passengers and goods for short distances. The increase in the number of malls and Metro has increased the mobility of people thus giving a boost to the sector,” explains Irfan Alam, Founder Director of SammaaN Foundation that aims to organize the highly fragmented cycle rickshaw industry. This sector has always been plagued by issues of exploitation of migrant labor. However, some innovations in the recent past could as well be the game changers in this sector. For example, the Center for Rural Development (CRD) introduced a prototype of the solar rickshaw on a pilot basis in the capital last year. Similar researches in terms of bringing new products to the market are ongoing. A few players have also trying to organize the sector by developing a business model around it. For example, SammaaN Foundation uses the mobility factor of the rickshaw and uses it as an outdoor advertisement medium.

The Cycle Rickshaw Business In a typical industry set-up, a rickshaw puller does not own the rickshaw, rather he takes it on rent. The rent is inclusive of the maintenance charge. The rent for the rickshaw differs from city to city and also upon the newness of the rickshaw. For example, the rent for a rickshaw in Chandigarh is approximately Rs 15 per day whereas in Delhi it is somewhere between Rs 25

Rickshaw Economics* Cost of a rickshaw

Rs 6,500 to Rs 8,000

Average rent of a cycle rickshaw (inclusive of the maintenance cost) Average number of days a rickshaw plies Life of a rickshaw

Rs 25 240 days 5 years

Profit per rickshaw per day on a new vehicle

Rs 18

Payback period per rickshaw without interest

362 days

and Rs 50. On the other hand, the peddle carts used to transport goods are less in number and the rent is comparatively higher at Rs 30-50 than the ones used to ferry passengers due to obvious reasons. Manoj Gursahaney, another fleet owner who owns fifty rickshaws, including eight peddle carts, explains, “A consumer looks for peddle carts mostly when he has to shift his house, which is not a daily activity. Or, the demand for such carts goes up if the shopkeepers have to transport goods. They are also used for transporting construction materials.” So how much does a fleet owner earn? There are several cost heads for a fleet owner, such as the maintenance cost of the fleet, cost of employing a mechanic, and the cost of the land or yard for parking the rickshaws. In all, a rickshaw owner makes a profit of approximately Rs 18 on a brand new rickshaw that he rents out for Rs 25, and this profit margin depreciates over a period of time as the rickshaw ages. The profit also depends on the city in which it plies in. The cost of a brand new rickshaw varies between Rs 6,500 to Rs 8,000. “It differs from city to city. For example, in Bihar, the cycle rickshaw would cost you somewhere around Rs 8,000 because the load carrying capacity is more compared to rickshaws in UP, where it costs Rs 6,500, because it uses less wood, the height is low and there are other technical differences,” explains Irfan. Based on these numbers, the payback period of a rickshaw without calculating the interest is 362 days or approximately 1.5 years assuming a rickshaw plies for 240 days a year. Besides this cost, another major cost head is that of licensing. As per the law, all cycle rickshaws should have licenses. Moreover, in some cities it is mandatory for even pullers to have licenses. For example in a city like Delhi, every rickshaw should have valid licenses (both for the rickshaw and the pullers) issued by the respective municipal authorities to ply on the roads.

* metro cities NOVEMBER 2009 19

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sector/transport

For a fleet owner, the cycle rickshaw business is basically a volume game— the more the number of rickshaws, the higher the profit. For most of the small fleet owners, owning a rickshaw fleet is just another means of augmenting their income. Manoj, for example, is a construction contractor by profession. He says, “In the construction business, there are times when there is no work for 3-4 months together. So it was my laborers who insisted on buying some rickshaws. Moreover, the income is not very regular in the construction business, so this helps me in getting liquid money.”

Micro-financing the Rickshaw Industry: A Lucrative Opportunity? Majority of rickshaw pullers are poor migrants and lack the necessary funds to buy a rickshaw. “Currently, roughly estimating, nearly 95 percent of the cycle rickshaw operators hire the rickshaw on a rental basis from fleet owners,” says Dr Pradip Kumar Sarmah of CRD. Since a rickshaw costs between Rs 6,500 and Rs 8,000, this points to a lucrative opportunity in micro-financing for rickshaws. Many of the rickshaw pullers could avail these micro loans and purchase a new vehicle instead of taking one on rent. Currently a handful of people have tapped this segment and with some success. Take the case of CRD, a non-profit organization that has developed a special model of the rickshaw with support from IIT Guwahati. The rickshaw is aero-dynamically designed, making it lighter, more spacious, and thus the assembling cost for the rickshaw is Rs 9,200. The rickshaw is also used as an advertising medium. CRD provides a loan to rickshaw operators for a period of 520 days at an EDI of Rs 25 at an interest rate of approximately 13 percent. At the end of the time period, the rickshaw becomes the property of the operator. The total cost to the puller come to about Rs 13,000, which also includes the cost of insurance, uniform, and license for the two 20

Overview India has 10 million cycle rickshaws, counting passenger rickshaws and peddle carts Capacity utilization is 70%, which translates to 7 million cycle rickshaws. Pullers are mostly migrant workers, 70% are from Bihar, 30% from UP and 10% from West Bengal, Rajasthan, and Orissa. A passenger rickshaw puller in the metros earns Rs 200-250 a day, whereas in smaller cities, he earns Rs 150 a day. A peddle cart puller earns Rs 450-500 per day in metros and Rs 300 per day in smaller cities. years. According to Pradip Sarmah, a total of 5,000 pullers have been benefited by this scheme. The organization also has a scheme for paying back the debt in one year. “Since the EDI is high, operators generally are reluctant for this scheme but some still opt for it,” says Pradip. Another model is of Patna-based SammaaN Foundation. This organization has also developed a special prototype of the rickshaw and provides it under its microfinance scheme. “We have an agreement with a bank, under which we ensure the delivery of the rickshaw and the recovery of the

loan as well. The banks provide loans to the puller at an interest rate of 11 percent per annum. The bank gives us the recovery charges, which is our incentive. Once the rickshaw puller becomes the owner of the rickshaw, we have an agreement under which the vehicle is utilized for advertising. The revenue is shared between him and SammaaN,” informs Irfan. Under this, the rickshaw puller becomes the owner in less than a year, but there are options for longer time period as well. The puller is also allowed to park his rickshaw at the yards provided by the organization. Another organization, Bihar Development Trust (BRD) also provides loans for rickshaw pullers under a slightly different model. Ravi Chandra, the Managing Trustee of BRD, tells us that since women are more reliable audience for providing microfinance, they have made small groups consisting of 5-20 women beneficiaries. Ravi Chandra says, “Under this model, we provide loans to wives of rickshaw pullers at 18 percent interest. The re-payment is collected on a weekly basis for a year.”

Challenges Being highly unorganized in nature, there are several problems faced by this sector as well. The first major issue is the problem of migrant laborers. Explains Gursahaney, “For nearly eight months our capacity is 100 percent full, but for the rest four months it has been around 70-80 percent.” This causes a major disruption in the workflow. Moreover, the laborers who double up as rickshaw pullers do not have any identity papers on them, which makes them easy targets. The municipal corporation therefore, seldom issues licenses to them due to lack of identity. This in turn leads to them plying rickshaws illegally. On the other hand, due to the lack of license, the traffic police also creates problems for the pullers as well as the DAR E fleet owners.

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strategy/funding

Government Funding for Technology Startups Knock on the governmentâ&#x20AC;&#x2122;s door - you will be surprised by what you find /Magesh Nandagopal, Vibhor Jindaland, V. Premnath

technology entrepreneur in India is faced with several challenges (and opportunities) while he sets out to create a technology startup. Apart from identifying the right idea and the right markets and being able to recruit the right team, the most crucial challenge an entrepreneur faces is raising money for the new venture. There are widely known sources of funding for technology startups that one can think of, such as venture capitalists, angels, banks, and friends and family. But, an often-overlooked source of funding, particularly in the early stages of a startup, when private investors hesitate to invest due to the high risk of failure associated at that stage, is government funding. Through an array of programs and initiatives, the government offers funding for technology startups, from early-stage development to full-scale commercialization, which entrepreneurs could take advantage of.

Issues with Technology Start-ups Getting a startup off the ground is strewn with challenges and difficulties. It is more so in the case of a technology startups as there are specific set of challenges associated with them that need to be overcome. There is always a risk of the technology idea on which the start-up is based (technology risk) will fail or not deliver to the desired level. Also, technology startups will need more resources and infrastructure even at the early stage of development. For example, a software solutions company can start product testing or product development with very little investment and infrastructural support, whereas a material 22

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strategy/funding

Stages of Technology Commercialization/New Venture Creation Figure 1 illustrates the five stages of technology commercialization and new venture creation. The first stage is where the entrepreneur recognizes an opportunity that could be exploited by identifying a problem

Figure 1: Technology Commercialization/New Venture Creation Flowchart

Stages of New Venture Creation

Stage 1

Stage 2

Stage 3

Stage 4

Stage 5

Commercial production

Product in use

Problem/Need Technology Idea/ Opportunity

Key proofs of concept and ‘do-ability’

Prototype/ demonstration stage

Solutions Tool Kit

Various Types of Government Funding

science technology startup will need laboratory facilities to even test their idea and for product development, and these facilities are lot more capital intensive and need a much greater upfront investment. Since idea testing and product development is such an involved process in the case of technology startups, it also extends the time-frame in which the first product/products can reach the market. Which means, an investor, who invests at an early stage of a technology venture, has to wait for a much longer period to see the returns materialize. From a private investor’s point of view, all these factors add up to a significant and in many cases an unacceptable level of risk. And hence, funding is that much hard to come by for an earlystage technology startup. So, traditionally, entrepreneurs have turned to their own funds, or to the support of friends and family or to sheer ingenuity and resourcefulness to take their venture ahead. But, there are government funding sources that have been set-up to specifically support and fund technology-based startups that could be exploited. These funds could be used right from idea validation stage to the full-scale commercialization stage. There are various needs at each stage of technology commercialization and new-venture development that need to be understood before one can fully understand and exploit the funding landscape and funding opportunities offered by the government. The following section gives a brief outline of the various stages involved in starting and growing a technology startup.

Technology development funds Funds for patent protection Technology in-licensing Technology scale-up/validation/de-risking fund Market entry funds Expansion funds

and a corresponding solution for that problem. The next step is the idea validation stage, where the do-ability or proof of concept of the technology is studied by experiments and tests. The third stage is the prototyping and demonstrating the technology at a lab scale. The next step is where the process is scaled up to commercial scale, and all the hurdles of setting up a plant etc. is overcome. The fifth and the last stage in the new-venture creation process is commencing commercial production and getting the product to the customer. There are various funding sources in the government that serve to fund the various stages of new venture development. Based on their function and utility, these funding sources

have been broadly categorized into six categories: • Technology Development Funds: Technology development funds are aimed at supporting work on early stage technology idea development, validation, demonstration of proof of concept. These funds come in the form of grants or soft loans, and the funding could range from Rs. 75,000 to Rs. 10 Crore. This stage of venture creation comes with high risk, and typically private players (VCs, Angles) and banks don’t fund startups at this stage. The wide availability of government funding will go a long way in promoting innovation and high-risk (and high-payoff ) ventures. There are several seed funds connected to business incubators that offer fund-

Technology Development Funds Organization

Scheme

Funding Amount

Department of Scientific & Industrial Research (DSIR)

Phase I: Micro Technopreneurship Support (TS)

Rs. 75,000 subject to 90% of approved project cost

Department of Science and Technology (DST)

Instrumentation Development Programme

Up to Rs 35 Lakh sanctioned in recent projects

Department of BioTechnology (DBT)

Small Business Innovation Business Research Initiative (SBIRI) Phase 1

Upto Rs 1 Crore, upto Rs 50 Lakh as grant and rest as soft loan

Department of Bio-Technology (DBT)

Small Business Innovation Business Research Initiative (SBIRI) Phase 2

Soft Loan upto Rs 10 Crores

National Research Development Corporation (NRDC)

Support to Inventors

Rs 2 lakh

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strategy/funding

Funds for Patent Protection/In-licensing Organization

Scheme

Funding Amount

Department of Scientific & Industrial Research (DSIR)

Phase II: Supplementary TePP Fund (STF)

Rs. 7,50,000 subject to 90% of total project cost

Department of Scientific & Industrial Research (DSIR)

Phase II: Seamless Scale-up Support for TePP projects (S3T)

Rs. 45,00,000 subject to 50% of total project cost

Ministry of Micro Small Medium Enterprises (MoMSME)

Support for Entrepreneurial and Management Development of SMEs through Incubator

Rs 6.25 Lakhs

National Innovation Foundation (NIF)

Micro Venture Innovation Fund (MVIF)

up to Rs 10-15 Lakhs

Ministry of Micro Small Medium Enterprises (MoMSME)

Assistance for Grant on Patent/ GI Registration through the National Manufacturing Competitiveness Council (NMCC)

Rs 25,000 for domestic patents and Rs 2 Lakh for foreign patents

Ministry of Communication and Information technology (MIT)

Support International Patent Protection in Electronics and IT (SIP-EIT)

50% or upto Rs 15 Lakh for filling International patent

Council of Scientific & Industrial Research (CSIR)

New Millennium Indian Technology Leadership Initiative (NMITLI)

Grants for Public Institutions and Soft Loan for Private Sector Companies. Few Crore Rs.

ing at this stage, and could offer an alternate source for entrepreneurs. Some examples of such incubatorrelated seed funds are SINE (IIT-B), Center for Innovation and Incubation and Entrepreneurship (IIM-A) and SIDBI Innovation and Incubation Center (IIT-K). • Funds for patent protection and Technology In-licensing: Protecting technology and knowhow from competitors is crucial, particularly if you want to shield yourself from your competitors, and exclude them from practicing your art. Patenting is an expensive process, in India, and more so, if international patents are to be obtained. Sometimes, filing for patents is prohibitively expensive for an entrepreneur (on average, US patent costs over $5,000 to obtain, and additional expenditure to maintain it). Without patents, the start-up venture risks to lose its competitive edge. The funds under this category help entrepreneurs to file for patent protection. Also, in some cases, where additional licenses have to be obtained to run a business, and it is necessary to procure IP from other sources (in-licens24

ing), it is possible using these funds (listed in the accompanying table). • Technology scale-up/validation/ de-risking funds: There are various risks that are associated with any

early-stage technology venture such as technology risk, which is the risk that the technology might fail or might not deliver the desired product with required specifications, market acceptability risk, which is the risk that the products won’t gain acceptability in the market. So, to gain wider acceptance and get funding from other sources like the VCs or angels, it is necessary to de-risk or prove that your technology works and the product is accepted in the market. Various organizations such as DSIR, NRDC, SIDBI provide funding to validate the technology and de-risk the new venture. There are specialized funds that support venture that emphasize new and renewable energy (see table). • Market entry funds: These funds support the technology entrepreneur in performing a range of market entry activities, technology upgradation, infrastructure development etc. This is the stage when the new venture needs to boost its payroll by hiring marketing professionals and a host of other persons to expand the scale

Technology Scale-up/Validation Funds Organization

Scheme

Funding Amount

Department of Scientific & Industrial Research (DSIR)

Phase I: TePP Project Fund (TPF)

Rs. 15,00,000 subject to 90% of total project cost

Department of Scientific & Industrial Research (DSIR)

International Technology Transfer Programme (ITTP)

Up to Rs 1 crore sanctioned in recent projects

Small Industries Development Bank of India (SIDBI)

SME Growth Fund

Rs 2 crore to Rs 25 crore

National Research Development Corporation (NRDC)

Angel Fund

Rs 10 Lakh to Rs 30 Lakh

Department of Information Technology (DIT)

Multiplier Grants Scheme

upto Rs 2 crore or upto Rs 4 crore depending on the industry, R&D lab partnership

National Innovation Foundation (NIF)

Micro Venture Innovation Fund (MVIF)

up to Rs 10-15 Lakhs

Ministry of New and Renewable Energy

Energy Recovery from Urban Wastes

Rs 1.5 crore / MW for setting up power plants/ Other schemes available

Council of Scientific & Industrial Research (CSIR)

New Millennium Indian Technology Grants for Public Institutions Leadership Initiative (NMITLI) and Soft Loan for Private Sector Companies. Few Crore Rs.

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strategy/funding of operations. Typically, at this stage, it shouldnâ&#x20AC;&#x2122;t be difficult to get the attention of VCs and Angles and other investors, as the venture by this stage has significantly de-risked. There are excellent networks of Angel investors in the country (see table) and VCs who could be tapped to provide funding by taking equity in the company. Grassroots innovators should definitely note the role played by National Innovation Foundation (NIF) in funding and promoting ventures in this area. â&#x20AC;˘ Expansion funds: At this stage, major fund infusion is needed for sustaining a new venture. Presumably, at this stage, the technology has been successfully demonstrated and there is a growing need for the product in the market. To quickly achieve economies of scale and serve the growing markets, quick and massive infusions of funds are necessary. The funding sources listed below are the ones to look to at this stage. As can be noted from the table below, these sources offer large amounts to tech-

Expansion Funds Organization

Scheme

Funding Amount

Small Industries Development Bank of India (SIDBI)

SME Growth Fund

Rs 2 crore to Rs 25 crore

Karnataka Information Technology KITVEN Fund -2 Venture Capital Fund (KITVEN)

Rs 1 crore to Rs 2.5 Crore

Kerala Venture Capital Fund

KVCF

Rs 25 Lakh to Rs 1.75 Crore

Ministry of Micro Small Medium Enterprises (MoMSME)

Credit Guarantee Fund Scheme for Micro and Small Enterprises

Collateral Free Credit upto Rs 50 Lakh

Ministry of Micro Small Medium Enterprises (MoMSME)

Credit Linked Capital Subsidy Scheme (CLCSS)

Loans upto Rs 1 crore, upfront capital subsidy upto 15% for technology upgradation

Venture Capitalists

1) Indian Venture Capital Association (IVCA) 2) SEBI List of VCs in India

Rs 5 crore and above

Small Industries Development Bank of India (SIDBI)

Direct Finance

Rs 10 Lakh and above

nology start-ups. The sources range from state government ventures (KITVEN, KVCF) to VCs to central government ministries.

Conclusion Technology

entrepreneurs

could

Market Entry Funds Organization

Scheme

Funding Amount

Ministry of Micro Small Medium Enterprises (MoMSME)

Marketing Assistance Scheme

Up to Rs 5 Lakh support for attending domestic and International exhibitions etc

Department of Bio-Technology (DBT)

Small Business Innovation Business Research Initiative (SBIRI) Phase 1/Phase 2

Upto Rs 1 Crore, upto Rs 50 Lakh as grant and rest as soft loan/ Soft Loan upto Rs 10 Crores

National Research Development Corporation (NRDC)

Angel Fund

Rs 10 Lakh to Rs 30 Lakh

Department of Information Technology (DIT)

R&D Projects Funding

Not mentioned, Industry will get upto 50% of project cost

National Innovation Foundation (NIF)

Micro Venture Innovation Fund (MVIF)

up to Rs 10-15 Lakhs

Karnataka Information Technology KITVEN Fund -2 Venture Capital Fund (KITVEN)

Rs 1 crore to Rs 2.5 Crore

Kerala Venture Capital Fund

KVCF

Rs 25 Lakh to Rs 1.75 Crore

Angel Networks

1) Indian Angel Network 2) Mumbai Angels

Rs 50 Lakh to Rs 5 Crore

Small Industries Development Bank of India (SIDBI)

Direct Finance

Rs 10 Lakh and above

enormously benefit from utilizing the funding opportunities offered by the government to run their new ventures. Government funding sources are particularly useful in the earlystages of a startup, as private investors and VCs and angles will be wary of investing in a venture with high level of built-in risk. It might be difficult to run a new venture based on government grants and loans. But, any entrepreneur who understands the government funding landscape can use the funding sources to augment his funds and stands a much greater chance of success in running his technology venture. Note: Due to space restrictions, only a partial list of the government funding sources is given in this article. A more elaborate list with helpful details and tips for entrepreneurs can be found at http://www.venturecenter.co.in/funding/funding.php D A R E Magesh Nandagopal is Scientist, NCL Innovations, National Chemical Laboratory, Pune email: m.nandagopal@ncl.res.in Vibhor Jindaland is Consultant, Venture Center, NCL Innovations Park, Dr. Homi Babha Road, Pune V. Premnath is Head, NCL Innovations, National Chemical Laboratory, Pune and Founding Director at Venture Center, Pune NOVEMBER 2009 25

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Photo I

Reducing power transmission losses is better than building mega power projects

ndia is the sixth largest energy consumer in the world with an installed electricity generation capacity of 147,000 MW (2009) and annual production of 680 billion KWH (2006). India also has one of the worlds largest transmission losses, at around 30 -40 % against a global average of 15 %. Transmission losses in 2005 was acknowledged to be to the tune of 1,75,535 million units valued at Rs 3,500 cr. Transmission losses include grid losses, efficiency losses and what can be classified as theft. If the last two items can be reduced by even 5%, from 40% to 35%, the savings would be enormous -34 billion KWH a year. And the cost for doing this would probably be far lesser than setting up new projects to generate an equivalent amount. Can you think of a workable technique or equipment that can reduce power losses? You could possibly become a multimillionaire! Photo taken at Naukuchiatal, Uttarakhand State Author: Krishna Kumar

A duck swims in Sukhna Lake L akes play an important role in tourism: local people and visitors both love to spend time at lakes. India got a good share of lakes and water-pools where tourism potential can be exploited. The tourism department or local administration can rope in various sectors like food outlets, fun-based activities, boating, toy-shops, and creative events and gatherings. Lakes also provide shelter to migratory birds where birdwatching and ornithology can be practiced up to a small extent. (Photo taken at Sukhna Lake, Chandigarh) Author: Vivek Kumar

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Blogs

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ndian Railways have their separate budget. They are the second largest rail network of the world and are the largest civilian employer in the world. Every year, Indian government announces a number of new routes and new trains, which have loads of downstream business opportunities. While enjoying the 36-hours-trip from Delhi to Dharmavaram, you get to experience the flavor of lingual change, dress of vendors and locals, change in food menu, and of course entering the Deccan plateau from the plains of North India. This journey could give you considerable time to think and hit upon brilliant business ideas. (Taken somewhere in Madhya Pradesh before entering Maharashtra--KK Express) Author: Vivek Kumar

Indian Railways offering Travel and Business Pleasure Sport fishing equipment S

port fishing or recreational fishing is not a widespread activity in India. Almost every state has one a few locations patronised by aficionados and there are many other streams and rivers frequented by the local population more as a pass time or as they call in local parlance - time pass, than anything else. As a result, access to good sport fishing equipment is limited mostly to a few online vendors on ebay. The rest depend on innovative local solutions like the one pictured here - a length of plastic twine wound around a used plastic bottle, with a steel hook on one side. Atta or wheat dough like used for making chapathis is applied all around the hook to act as bait. On the other hand there are Indian companies that export sport fishing equipment abroad! Is there a small opportunity in propagating low cost sport fishing equipment in the country? (Photo taken at Sattal, Nainital district) Author: Krishna Kumar NOVEMBER 2009 27

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Photo S

Sarva Shiksha Abhiyan got candidates!

arva Shiksha Abhiyan or SSA is Government of Indiaâ&#x20AC;&#x2122;s flagship program for Universalization of Elementary Education (UEE) in a time bound manner. This program is geared towards providing education opportunities to all children even in remote village areas. As per official records, the program is geared towards providing education opportunities to 192 million children in 1.1 million habitations. The program is already in progress and generates tremendous business opportunities for private players in varied industries. Right from books, food and database management, technology hardware and training programs are required to implement the program in its full potential. Do you have a plan to tap the opportunities; are you ready to exploit this chance? (Take in Maharashtra from a moving train) Author: Vivek Kumar

A site for NREGA implementation? I

ndia got a huge population of people living under poverty line. NREGA plan is set to provide employment opportunities to BPL families. To get the updates and latest figures about NREGA, you can log onto this website: http://nrega.nic. in/ From business point of view, there are a lot of opportunities that could be associated to this scheme. Right from micro level, even medium level opportunities are there. Ball is rolling and perhaps in your court--taking a shot at these opportunities could turn out to be of huge potential. (Taken in Maharashtra from a moving train) Author: Vivek Kumar

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iven the huge following that Ayurveda and Homoeopathy have in this country,Organized cultivation of medicinal plants should be a fairly large business opportunity. However data on this industry is scarce and anecdotal evidence seems to indicate that cultivation is confined to government efforts or as part of ayurvedic hospitals. There should definitely be an opportunity for the independent cultivation of medicinal plants. By the way, many every day plants we see around us and do not give a second thought to, are medicinal plants Photo: Vella Manadaram bauhinia Acuminata ( http://en.wikipedia. org/wiki/Bauhinia_acuminata ) Photographed at Sreedhareeyam , Koothattukulam, Kerala Author: Krishna Kumar

Cultivation of medicinal plants

Indian dairy industry - problem within plenty? I

ndia is the top producer of milk in the world. From 17 million tonnes of milk in 1950 all the way to 110 million tonnes, now the Indian diary industry sure has come a long way. Today India is the second largest cow milk producer (42 million tonnes) behind the US (84 million tonnes in 2007) and the largest producer of buffalo milk (52 million tonnes in 2007) followed by Pakistan (21 million tonnes). However, Indian milk productivity is way low compared to international levels (this is true for most agricultural products). A 2003 study by the < before you point it out, I know that the picture is not that of a cow :)> International Farm Comparison Network states â&#x20AC;&#x153;One New Zealand dairy cow produces as much milk as five Indian dairy animals while one dairy cow in the USA produces as much as ten Indian dairy animals. One of the key reasons for this is as much as 70 -75 % of Indian cattle come from local breeds and with poor milk yields. At these production levels, the per capita availability of milk is approx 245 grams. And demand is going up. So India already imports milk products. Question: How do we convert the 70+ % of low milk yielding varieties of cattle to better yielding varieties? We do not necessarily need cows that yield ten times as much. Even cows that yield twice the current levels will make a huge difference. Author: Krishna Kumar

DAR E

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strategy/management

What makes a professionally managed company? Professionally managed is a term that one comes across quite so often. What exactly does that mean? We ask some startup entrepreneurs to share their definition /Vimarsh Bajpai 32

month prior to the start of the current financial year, the board of Asian Paints, the country’s largest paints company, sent a note to the Bombay Stock Exchange informing of a major change at the helm. The company decided to appoint PM Murty, an old hand in Asian Paints, as the managing director and CEO with effect from April 1

this year. The board pointed out that Murty’s appointment would coincide with the end of the terms of the promoters—Ashwin Choksi, chairman, Ashwin Dani, vice-chairman and MD, and Abhay Vakil, MD. The three would take the roles of non-executive directors on the company’s board. The change of guard at Asian Paints, wherein an owner-managed compa-

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strategy/management

“A professionally managed company is one where ownership and management are understood to be distinct; where competence is valued more than loyalty.” — Sanjay Anandaram, JumpStartUp Venture Fund

Conclusion It doesn’t matter who runs the company, as long as it sticks to certain values, follows processes and strives for customer and employee satisfaction.

ny gets a non-promoter CEO, makes one wonder as to whether bringing in a professional in place of an owner makes it a professionally managed company? Or is it that a professionally managed company has got nothing to do with who runs it (owner or a non-owner), but how it is run? For this story, DARE asked a cross section of startup entrepreneurs to define what they think characterize a professionally managed company.

Strives for customer satisfaction While profit making could be a driving force in a business but the focus on the customer should not get lost. A company that works towards ensuring that its customers are satisfied with its services or products goes a long way in building good reputation. “Any organization that strives for customer satisfaction through em-

“In Indian context where promoters continue driving businesses from top, creating right management styles and employing robust processes become critical in order to continue attracting employees, clients and vendors.” — Prashant Bhaskar, plugHR

powered employees is a professional organization,” says Anil Chandhok, Director, Chenab Information Technologies. Customer satisfaction involves actively looking for feedback, suggestions and comments from customers and improving upon your products and services. This comes from making employees aware of the customer needs and actively addressing their issues. “People need to understand the value of a customer, they need to be a part of the organization’s culture and share common values,” says Anshul Gupta, Founder and CEO, SalvageSettlers.

Empowered employees In the recent years, there has been a lot of talk on intrapreneurship, wherein business units are run by some key employees independently. This is to give the freedom to hone their entrepreneurial skills while running the business. Letting the employees a free hand lets even their wildest thoughts turn into fertile grounds for innovation. At the same time, giving intrapreneurs a free hand in running business units equals to quenching their desire of having their own startups. “In the beginning, the company is a perfect reflection of the founder himself. But as the company starts to NOVEMBER 2009 33

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strategy/management

grow, it needs more faces, more intrapreneurs,” says Gupta. “Committed and expert employees—at whatever level—need to be given the independence to perform; to deliver. This can be achieved irrespective of where the CEO comes from,” says Bhupesh Trivedi, Owner and CEO, Chronosphere.

Systems and processes in place A business process is a set of coordinated activities that are to be followed by any organization. These processes play a vital role in improving the products and services, and impacts sales and revenues. “In a professionally managed organization, the processes and procedures in place are followed to the hilt. Hence, successful management in absence,” says Kanwal Sujit, Director, KlimArt. Sujit says that such a company would have a plan or vision in place as laid down by the conceiver(s) of the business, and it is followed consistently and coherently.

Smooth interaction between departments This is an absolute must for a professionally managed company. The departments including production,

“Everyone from top to bottom in the hierarchy is accountable for their assigned responsibilities. There exists a meticulous feedback and monitoring system which takes care of all the discrepancies which take place due to manual errors.” — Pulkit Gaur, Gridbots sales, finance, etc have to work in sync with each other to attain the goals set by the company. In such a company, there would be a proper mechanism to resolve inter-departmental disputes. “No one department should be working in isolation and all departments must know the importance of others when it comes to the success of the organization and achievement of a common goal. For example, the operations people should not be oblivious to the needs and efforts of marketing people and vice versa,” says Gupta.

Characteristics of a professionally managed company 1. Strives for consumer satisfaction 2. Empowers employees 3. Systems and processes are in place 4. Smooth interaction between various departments 5. Competence is valued more than loyalty

Competence valued over loyalty Some of the best owner-managed companies have given precedence to competence than to loyalty of family ties. This always results in better

“A professionally managed company is one which will not be significantly impacted by the absence of any one or few individuals. In such a company, decisions are taken keeping the long-term interests of the company in mind.” — Vivek Subramanian, Partner, Avigo Capital Partners 34

ideas being brought for implementation. “In a professionally managed company, decisions are based on merit and on discussions amongst key managerial personnel,” says Jagannadham T, Equity Head, SMC Capitals. Key managerial personnel are supervised by the board of directors, and even the board of directors is selected on merit and not on dynastic legacy, he adds. “A professionally managed organization is one that operates in an ethical manner with all concerned; its clients, employees, and vendors,” says Nina DAR E Alag Suri, Founder, Nastrac.

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Envisioning the Wired SMEs LEVERAGING TECHNOLOGY, INNOVATION, PARTNERSHIPS AND PROCESSES

TiE Delhi in association with IndiaMart is proud to present a unique platform for SME’s – Envisioning the Wired SME’s on 28th November 2009. The focus of the event is to look at opportunities and challenges faced by SMEs’ and the critical elements which will go into helping SMEs’ achieve the necessary growth and scale. The event will be attended by entrepreneurs, professionals, investors, policy makers, business incubators and SMEs across different sectors. The agenda, driven by marquee entrepreneurs, CXO’s and domain experts would provide insights on the following topics

Challenges & Opportunities for SMEs in today’s market Using Innovation and R & D to accelerate business growth Leveraging technology to achieve scale in a cost effective manner Reaching out to new markets, customers and partners Scaling up – funding, operations, processes

The day long event will emphasize on practical, implementable strategies that SME’s can incorporate in their business.

To register or to explore partnership opportunities, please write to Nitin Agarwal at nitin@tienewdelhi.org

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sector/textile

The New World of Technical Textiles The sector is expected to grow exponentially in the near future, making it a lucrative one to get into /Aswathi Muralidharan

echnical textiles, directly or indirectly, play an important role in making our lives much more comfortable. Right from the time we wake up in the morning to the time we go back to bed, we constantly come across technical textiles in some form or the other. For example, your bedding might be made up of a certain kind of technical textile; these days food items are being packed in a form of technical textile, nearly 15 parts of automobiles contain technical textiles, the stain- free clothes that we wear are also technical textiles—the list is long. With the domestic market size for technical textiles going up from Rs 39,876 crore in 2007-08 to Rs 66,405 crore in 2012-13 and domestic consumption also expected to increase significantly, there are plenty 36

of opportunities for entrepreneurs to tap this growing segment.

What is a technical textile? The National Technology Mission on Technical Textiles (NTMTT) defines technical textiles as “textile materials and products used primarily for their technical performance and functional properties rather than aesthetic value.” They are either used individually or as a component of a product to enhance its functional properties; for example, fire retardant uniform worn by firemen and webbing in a seat belt, respectively. However, these days the definition of technical textiles is changing. Samir Gupta, managing director of Business Co-ordination House (BCH), explains, “These days, with better research and development, technical textiles have been

given an aesthetic appeal as well. So now, it can be said that technical textiles are gaining both functional as well as an aesthetic value. Of late, the industry has been witnessing a good growth, with even the government providing incentives for entrepreneurs to enter the segment. “Technical textile is a pretty new industry in India, in the sense that though it has been there for many years, the potential in terms of its end-use is being explored only now,” explains Samir. Another growth factor for this sector is that technical textiles find use in a number of industries ranging from agriculture to aerospace to even garments and home furnishings. In fact, more than 200 products have been classified as technical textiles so far! And this is expected to grow in the future with

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sector/textile

What is imported and exported? • Products that are imported

• Products that are exported

• Webbings for seat belts

• Tarpaulins

• Diapers

• Jute carpet backing

• Geosynthetics

• Sport goods

• High altitude protective clothing

• Surgical dressing

SOURCE: National Technology Mission on Technical Textile

the ongoing technological innovations and research and development activities happening in India and abroad. Technical textiles find use in a number of industries due to a number of reasons such as- its versatility, strength, functional property, health and safety, and so on. Based on the end-use it has been classified into 12 different industries including agrotech, meditech, hometech, and sportstech, which have been taken up in the later part of the article.

How big is the market? According to the National Technology Mission on technical textile document, the global market for technical textiles was around 19.68 million

tones in terms of volume and US$107 billion in terms of value in 2005. This is expected to grow to 23.77 million tonnes and US$127 billion by 2010. The growth has been mainly attributed to the demand generated by Asian countries especially India and China. On the other hand, the Indian market for technical textiles was estimated to be around Rs 39,876 crore in 200708, and is expected to swell up to Rs 66,405 crore by 2012-13. Of this, while mobiltech, indutech and sportstech dominate the international market; in India, the segments having the maximum share are held by clothtech, packtech and sportstech. Unlike the conventional textile industry, the technical textile industry

is dependent on imports to meet its domestic needs. While some of the products such as adult diapers are entirely imported, a major portion of the demand for some other products such as baby diapers are also met through imports. India also exports some products such as tarpaulin, surgical dressing, sports composites, etc. In 2007-08, India’s total imports were Rs 3,897 crores compared to the total exports worth Rs 2,759 crores. Given these facts, the time is just about ripe for entrepreneurs to tap the segment. Entrepreneurs willing to enter the segment can explore several lines of businesses. They can get into manufacturing of these technical textiles, which is very capital-intensive. Several big multi-national companies as well as Indian companies are already present in this segment. Besides, big manufacturing units, there are several converter units in India as well. These converter units convert these fabrics into finished goods. According to the NTMTT document, there are 3,000 such converting units in the country. These units are mainly operating in the bag- making, stuffed toys, zip fasteners, tarpaulin, and other segments. With a number of foreign companies willing to enter the Indian market, aligning with them could also be a lucrative business opportunity. Samir says, “Another interesting business opportunity could be associating with the foreign companies. A number of foreign companies are planning to enter the Indian market with their products, aligning with them could also prove to be beneficial.”

What are the different segments? As mentioned above, technical textiles find use in a number of industries, and based on its end use they have been broadly classified into 12 different categories. Agrotech: It mainly includes textile products used in agriculture, horticulture, fisheries and forestry; NOVEMBER 2009 37

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sector/textile Technical Textile in a Car

SOURCE: BCH

for example, shade-nets, mulchmats, crop-covers, anti-hail nets, bird protection nets and fishing nets. The market size of agrotech is expected to increase from Rs. 553 crore in 2007-08 to Rs 811 crore in 2012-13, whereas the domestic consumption was expected to grow from Rs 487 crore to Rs 709 crore during the same period. The National Horticulture Mission (NHM) has also been promoting the use of agrotech products such as shade-nets and bird protection nets extensively. Moreover, the XI five-year plan also proposes to provide assistance to hail-prone states to buy nets. Mobiltech: This segment includes products which find application in automobile and automotive components. This can be further classified into two categoriesâ&#x20AC;&#x201D;visible components (e.g. seat cover) and concealed components (e.g. Noise Vibration and Harness (NVH) components). In 2007-08, the market size of this segment was Rs. 3183 crores which was expected to increase to Rs. 5166 crores in 2012-13. The domestic consumption was Rs. 3161 crores in 2007-08 is expected to increase to Rs. 5137 crores by 2012-13. One of the key growth drivers for this segment has been the increase in the number 38

of automobiles especially small cars in India. Meditech: This sector is mainly comprised of hygiene, health and personal care, and surgical applications, for example, diapers, sanitary napkins, surgical dressing, artificial implants, etc. Meditech products are available in woven, knitted and nonwoven forms depending on the area of application. The market size of this segment is expected to increase from Rs 1669 crores in 2007-08 to Rs 2263 crore in 2012-13. The domestic consumption, on the other hand, is expected to grow from Rs 1514 crores in 2007-08 to Rs 2263 in 2012-13. With the government laying emphasis on this segment for promoting rural healthcare, this segment is expected to grow significantly in the future. Packtech: This segment includes textiles used for packing industrial, agricultural, consumer and other goods, for example, Polyolefin woven sacks, jute sacks, tea-bags, etc. In India, this is the largest segment among technical textiles, with the market size estimated to touch Rs 26753 crores in 2012-12 from Rs 14, 630 crores in 2007-08. The domestic consumption is also expected to grow significantly from Rs 14067 crores to Rs 25,913 crores.

Clothtech: This segment consists of all textiles or textile components used in the manufacture of garments. Though earlier, this technical textile was supposed to be largely hidden, for example shoe laces, labels, hooks and loop fasteners; these-days, this trend is witnessing a change. For example, the stain-free clothing that has reached the markets is also a form of technical textile. In India, this is the second largest segment of technical textiles. In 2007-08, it was estimated to be worth Rs 6908 cores and was predicted to grow to Rs 10,225 cores. On the other hand, the domestic consumption was expected to grow from Rs 6,570 crores to Rs 9,665 crores. Sportech: As the name suggests, this segment includes products used in sports and leisure activities, for example, sports composites, parachute fabrics, sports shoes components, swim-wear, etc. The market size of this segment is expected to increase from Rs 2852 crore in 2007-08 to Rs 4761 crore in 2012-13; whereas the domestic consumption is expected to increase from Rs. 2632 crore in 2007-08 to Rs 4358 crores in 2012-13. Buildtech: This segment comprises of textiles or composite materials used in construction of temporary or permanent buildings such as architectural membranes, hoardings and signages, floor and wall covering, etc. The market size of this segment is expected to grow from Rs 2157 in 200708 to Rs 3232 crores in 2012-13. The domestic consumption, on the other hand, is expected to increase from Rs 1726 crores to Rs 2655 crores during the same period. Hometech: This segment comprises of products used in households, made of both natural and synthetic

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sector/textile fibres, for example, carpet-backing cloth, filters, mattress and pillow components, etc. The market size of this segment is expected to increase from Rs 3263 crores to Rs 5392 crores. The domestic consumption of such products is estimated to grow from Rs 3191 crores to Rs 5300 crores. Indutech: This segment includes textile products used in the manufacturing sector, such as conveyor belts, drive belts, filters, etc. This segment is expected to grow from Rs 3088 crores in 2007-08 to Rs. 5273 crores in 2012-13. The domestic consumption of indutech textiles will grow from Rs 2326 crores to Rs 4091 crores during the same period. Protech: This type of technical textile is used to manufacture protective clothing, especially for those working in hazardous environment. It includes garments for protection from chemicals, extreme temperature, low visibility, ballistic protection, etc. The defense segment is one of the largest consumers of protech clothing such as bullet proof jackets, and high altitude clothing. The market size of this segment is expected to grow from Rs 1302 crores in 2007-08 to Rs 2075 crores, whereas the domestic consumption is estimated to grow form Rs 1259 crores to Rs 2021 crores during the same period. Geotech: Also known as geo-textiles, this form of technical textile comprises of textileâ&#x20AC;&#x2122;s geotechnical applications. It is primarily used by the civil engineering industry to provide support, stability, separation and drainage. This is used mainly in the construction of roads, dams, drainage systems, etc. The market size of this segment was estimated to grow from Rs 272 crores in 2007-08 to Rs. 454 crores in 2012-13. Oekotech: These textiles find use in environmental engineering, especially landfill management. The market size of this segment is estimated to increase from Rs 68 crores in 200708 to Rs 160 crores in 2012-13.

Domestic Consumption and Projected Market Size Technical Textile (with examples)

Domestic Consumption (Rs. Crore)

Market Size (Rs. Crore)

2007-08 (E)

2012-13 (P)

487

709

553

811

Meditech: Diapers, surgical dressing, sanitary napkins, medical devices and implants

1514

2263

1669

2263

Mobiltech: Seat belts, 3161 helmets, seat covers

5137

3183

5166

14067

25913

14630

26753

Sportech: Shoe component, sports composites

2632

4358

2851

4761

Buildtech: Scaffolding nets, tarpaulins

1726

2655

2157

3232

Clothtech: Shoe laces, zippers

6570

9665

6908

10225

Hometech: Carpet-backing cloth, blinds

3191

5300

3263

5392

Protech: Fire retardant fabrics, ballistic protective clothing

1259

2021

1302

2075

185

326

272

454

160

2326

4091

3088

5273

62438

39876

66405

Agrotech: Fishing nets, woven and non-woven covers for crops

Packtech : Soft luggage products, food grade jute bags

Geotech: Geo-textiles Oekotech*: Environment control fabrics Indutech: Conveyor belts, hoses, filtration products Total

37118

2007-08 (E) 2012-13 (P)

SOURCE: IMaCS Analysis

*Oekotech's size has already been considered as a part of Geotech

What are the government initiatives?

(technical textiles are pre-dominantly based on these) has been reduced to eight percent from 16percent. The government has also constituted an Expert Committee on Technical Textile (ECTT) to assess the market size and potential of the segment, identify and prepare project profiles as well as formulate an action plan to promote technical textile. Besides, several centers of excellence have also been formed to promote technical textiles in India. Given the increasing demand for technical textiles and government initiatives for boosting this sector, the technical textile segment is expected to boom in the future, making it the right time to enter this segment. D A R E

Realizing its potential, the Indian government is also promoting the segment by providing various incentives. In its national textile policy, it has said that priority would be given to this segment for growth and development considering its growing prospects worldwide. The Ministry of Textiles provides a concession of five percent on customs duty on most of the technical textile machinery. Moreover, technical textiles have also been covered under the Technology Upgradation Fund Scheme (TUFS). Under TUFS, a capital subsidy of ten percent is provided on identified technical textile machinery. The excise duty on man-made fibre/ yarn

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/bio

VIJAY BANSAL, CANTABIL RETAIL At a time when the world’s top brands have stormed the fashion markets of India, Vijay Bansal, who comes from the small town of Jind in Haryana, created Cantabil – a brand that rose to a presence of 400 plus showrooms across India in about 8 years. Bansal speaks to DARE about his entrepreneurial journey, the challenges that he faced in building a brand from the scratch, and much more. 40

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/bio hat inspired you to start this business?

After completing my B.Com in 1979, I got involved in our family business of FMCG distribution in Haryana. In 1989, I got into the business of garment accessories, which again I ran successfully for another 10 years. In 2000, I launched Cantabil. Initially, I had to struggle a lot in the starting phase because fashion clothing was altogether a new line for me, considering my past entrepreneurial ventures. Initially, it took me three years just to understand this business. In fact at one stage I had even a thought whether I had chosen the right business because it was not going as planned. However, I did not give up and slowly things started shaping up in the direction I had wanted. I decided to enter this business because I saw a lot of scope and margin in the garments business. My second business had helped me establish contacts with several local Indian manufacturers. I wanted to start my own manufacturing unit, and garment manufacturing was a line in which a big investment was not required. I had tasted success with my earlier businesses be it

What is the most important thing in creating a brand? In a business, a consumer always looks for quality at a reasonable price. These are the two main things. Another important thing is maintaining the quality. The product has to be value for money. Moreover, since this line deals with fashion, you have to be updated about fashion. One needs to know how is the international market, what does the Indian consumer want and so on. Another important thing is innovation. You have to keep on creating new products.

How do you differentiate yourself from your competitors? We have our own in-house designer team/studio and have employed qualified people in it. It is their responsibility to collect international samples, study the market, and then create a product based on that. In the garment line, leaving a few retailer, other do not have this facility. On the other hand, we do proper planning before creating and marketing a product. Our main focus is on our quality. And in Cantabil, we make sure that the quality of the product is in accordance with the price. It is not that we earn a huge profits on products. The profit is limited

entrepreneur of the month the FMCG distribution business or the garment accessories business. Though initially I had my doubts about this business, but now I think we will leave a mark in this business as well. Though my distribution business did very well, I had always wanted to start a business in which I could do the planning, I could do the distribution, etc, myself. And this business helped me do exactly what I wanted. When I had entered this business, Nirma, T-Series and Pan Parag were the three big businesses which inspired me because they had risen from scratch and that too in a very short time. I had read about them in many magazines and I was enamored by their growth. I used to think if they can make it big then why cannot I?

Did you always want to be an entrepreneur? I come from a business family, so I had never thought about the service sector. Moreover, I got a lot of valuable experience from my FMCG distribution business. I learnt how to distribute products, how to do the marketing and so on. The key things I learnt from this business were accounting and marketing. That experience came into use later. A consumer is clever enough to understand his needs and desires. If you sell him a bad product, he will never buy from you again. The consumer has to be convinced of your product. Having said that, yes, I always wanted to be an entrepreneur.

and we play on the price point. Ultimately, price, quality and fashion â&#x20AC;&#x201C; are the three main things that differentiate your product.

How important is it to have an in-house designer team? An in-house team is very important. There is a taste, and all the designers work towards maintaining it. If the team is outsourced then the company would no longer have any control on them. They may not understand the company values or its consumer needs very well. It is definitely costlier to have an in-house team but in the long run there are several benefits of it as well. My daughter, Swati Gupta, is the Director, Creative of the team. Besides, there are some freshers as well as some are experienced people. This is how we have mixed and matched the team.

Is your manufacturing outsourced? Nearly 50% of our products are manufactured in-house and the rest 50% is outsourced. One of the main reason behind this is, by doing it in-house we get an idea about the costing. So when we outsource it we know about the costs involved and negotiate on that accordingly. Another issue in India is labour problem. It is not easy to handle labor in India. Moreover, outsourcing means we are not dependent on any one source. That is why we have kept this 50:50 breakup. NOVEMBER 2009 41

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/bio

How do you bring new products to the market?

Which sector can a budding businessman enter?

Innovation is dependent on seasons, colors, the international market, etc. After some point of time, a it is natural for a customer to get bored of a particular color, pattern and design. The products in the international market come to India after some time, so we update ourselves on what is happening in Europe and innovate and prepare in advance accordingly. We look forward to trends in both UK and European markets, especially Italy.

It frankly depends on the interest of a person. You should only enter those lines in which you have interest, prior experience, knowledge or education. If one follows it dedicatedly, then nothing can stop him. No line or business is good or bad, and if you follow your dreams dedicatedly then one is sure to find success.

What strategy is followed to maintain as well as increase your market share? Quality, price and brand acceptance are the key things. Earlier, since there were only a few showrooms, our marketing budget was not big. As we expanded, we started to advertise as well. Since the number of showrooms increased, my advertising budget also increased. Actually, as the quality, price, brand image and advertising budget improves it gives a further boost to the business. Earlier when we had fewer number of stores we used to fear taking risks while opening more stores. We used to be cautious. Now the situation is very different and I have 200 stores running in profits so even if one decision is wrong it does not worry me as much now.

How did you tackle the economic slowdown? Though we did not witness any major impact of slowdown in our business, we became cautious about the situation because of various media reports on the world situation. So we negotiated rents on our showrooms, non-profit making showrooms were shut down, we kept only the staff that we required, internal planning was further strengthened, we thought of ways to make our balance sheet, monthly reports more accurate, we reviewed individual store sales on a monthly basis â&#x20AC;&#x201C; in all we made ourselves strong from within. The decisions that we took were after serious deliberation and we rectified our mistakes. The measures that we took then are now giving results. So I would say in a way the recession was a good thing for us!

What was the strategy for expansion? I always used to dream big. I believe only when we think big that we reach anywhere near it. When I was in the FMCG business, I was at the top in Haryana. When I was in the garment accessories business, I was working at the national level. The same was the case with this business. I had always wanted to grow this business to the national level and then to the international level. I have a pan-India presence now but still want to grow it further to have an international presence. 42

What should a budding businessman be careful about? In retail, there are some points that we need to keep in mind. The location has to be in the heart of the market. Then comes the ambiance of the store â&#x20AC;&#x201C; the ambiance has to be modern and good looking. Then there is the product. As I mentioned earlier, it has to be of the best quality and fashionable. Then good staff is also vital. The last is logistics. You supply chain has to be very good. All these things are vary important for retail sector. If even one of this is problematic then it can have a serious impact on your business.

Of these, which is the one in which entrepreneurs should be most careful? Sometimes it happens that, even if the product is good if the supply chain is faulty then it can have an adverse affect on your business. What happens is that even if you product is good but if you are not able to take it to the stores in time, then there is a problem. For rectifying this, one needs to have a good systematic warehouse, best technology, good Enterprise Resource Planning (ERP) system, prior planning of seasons, control over manufacturing, the merchandiser in the store should maintain all the details, if the product is not selling well in one store it should be transferred in time and so on. These are some of the things that he can keep in mind.

Which the most learning point in your business? In the beginning, I started to sell my products through multi-brand outlets, which was not very successful. In those store, sometimes they did not display our products properly or they did not purchase the required quantity and there were many such problems. It was then that I decided to start my own exclusive stores and started tasting success.

What is your day-to-day involvement in your business? Earlier, there was direct involvement in each and every issue but now we have established a professional system. There are several departments and department heads who look after their teams. And my time mainly goes into formulating polices and reporting. Earlier, I used to be involved in work below this level also. However, we have DAR E refined the process over the time.

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Transition of W Comic Books into Digital Format The delivery medium for comics is going digital. Ecomics, mobile comics, animated stories, cartoon channels are upgrading the print version to electronic media. But that does not quite mean that print is dead. Not yet. We analyze the how-and-what of the comic industry in India. /Vivek Kumar

FACTORS CRUCIAL FOR SUCCESS OF COMICS • Value of money—content, graphics and printing • Strong storyline and characters • Indian environment in storyline • Novelty in ideas • Distribution and reach

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hen parents buy books for their children to make them start reading, more often than not, they pick up a picture book. This book may include humorous tales, funny snippets, witty fables, stories based around mythological and historical legends and so on. If you are that lucky child, welcome to the first comic of your life! “One of the major reasons why parents prefer to buy these comics is to make the habit of reading interesting for children,” says Deepak Sehgal, of Central News Agency (CNA), a distributor of magazines and comics. According to S. N. Prabhakar of India Book House (IBH), another distributor, children continue reading comics till their midteen to late teen years. “Though there is no cap on age, the industry usually targets children between six and seventeen.”

What is a comic? A comic is a graphical work in which pictures or images with short narratives and dialogues in callouts are used to tell a story. A cartoon is a much shorter version, while a comic tends to be longer. Cartoon comics tell longer stories than the normal cartoon strips. The narrative could be a tale, story or even a joke. The name comic comes from the Greek word k mikos, meaning “of or pertaining to comedy”. Over the years, Indian comics have covered almost everything from wit and mythology to super heroes. Comics can be broadly classified into four segments—single story, multiple story, graphical novel, and comic digest. Single story comics tell one story per book and usually revolve around a single character—the hero. A good example would be comics by Raj Comics around characters like Nagraj and Super Commando Dhruv. Multiple story comics contain more than one story in the same book, each story around a different group of characters. You could look at them as a compilation of multiple stories. The price of multiple story comic is somewhat similar to single story comic. Graphical novels are different in a way that these contain more text than conventional comics. They are also called comic magazines. These novels often contain mythologiNOVEMBER 2009 45

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On an average, a comic has the potential to sell 20,000-30,000 copies throughout India given a price of Rs 20-25 â&#x20AC;&#x201D; Deepak Sehgal Central News Agency cal and historical stories put simply for children to understand. Moral stories developed around new characters are also served in these novels. Examples would be Krishna, Hanuman, etc. by Amar Chitra Katha. Comic digests resemble multiple story comic books, but are a compilation of stories around the same set of characters, like an Archieâ&#x20AC;&#x2122;s Digest.

The comic market The printed comic went through some tough times during 1997-2003. The general industry consensus is that it is recovering and that the market is stabilizing. A publisher often develops more than one character/title across multiple content genres like action, fantasy, science fiction, modern magic and mythology. Apart from English, comics are also published in other Indian languages like Hindi, Tamil (Muthu comics, Rani comics), Malyalam (Boban and Molly by Tom Cartoons) and so on. Diamond Comics estimates the Indian comic industry to be around $300 million per year. The total publication of all types of comics in India comes to around 125 million copies per year including all regional languages. 46

Apart from periodical comics sold to buyers, there is also a business-to-business (B2B) market for customized comics. This includes comics that are given free with products for promotional activities. Or the medium of comics used as advertisement or promotional material, developed specifically around the product or service in question. Banks, manufacturing industries, FMCG producers, the confectionery industry and stationery brands use comics for their promotional activities. According to Gulshan Rai of Diamond Comics, to compete in the Indian comic market, the price of comics needs to be reasonable and comparable to other players. This is why foreign players have to settle for much smaller sales numbers. For example, a Disney Comic containing 32 pages costs Rs 25. However, a comic from Indian publishers often have 70-90 pages for the same price.

Publication numbers Deepak Sehgal of CNA says that on an average, a comic has the potential to sell 20,000-30,000 copies throughout India given a price of Rs 20-25. At the highest end, established best sellers could do many times that number. Champak, a fortnightly from

Delhi Press in six Indian languages and two versions in English (one with multimedia CD) claims a readership of 4,000,000. Balarama published by Malayala Manorama in Malyalam is a weekly magazine that claims a readership of 250,000 while Tom Cartoons claims sales of around 100,000 copies for their comic Boban and Molly in Malyalam. Archie distributes its comics through Variety Book Depot owned by Om Arora. Om Arora reveals that they import 10,000 copies each of 17 titles of comic digests. Archie has decided to publish its comic digests in Hindi and Malyalam too. Om Arora mentioned that there would be 12 titles and they would be importing 1,000 copies for each title in each language. Amar Chitra Katha differs a bit from conventional comic models in India. Their publication focuses mainly on mythological and historical characters of India. On yearly basis, they claim a readership of around 4,000,000.

Going digital Like with other things print, the electronic media has had a definite impact on the market for comics as well. Many Indian publishers of comics are looking to expand their domain in the electronic format. Amar Chitra Katha signed a deal last February with Vodafone to provide comics on mobile phones. Four months earlier, they had started their services for the iPhone in the US. They have started telecasting Karadi Tales in October 2009. By December, Amar Chitra Katha plans to provide comics through Amazonâ&#x20AC;&#x2122;s Kindle One of their character, Suppandi, is debuting as a 3-D film, which will hit the Indian market in around the last quarter of 2010. Gulshan Rai of Diamond Comics mentioned that they are collaborating with Media Guru Consultants to launch their cartoon channel in the second quarter of next year. They are also foraying into mobile comics, DTH, DAR E and IP TV.

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opportunity/service

Now, Plants On Rent, Anyone Game? This fast growing segment requires a touch of creativity and a love for plants. Hiring the right people and scaling up fast is quite a challenge though /Vimarsh Bajpai

s Dev Gujral steps out of his home every morning, he has plants on his mind. As the owner of Landscape Development, a family-run company that has been around for three decades now, Gujral gives plants on rent to some of the big multi-national companies and PSUs. This is part of the bigger business of landscaping, which is the core activity. He also deals in garden accessories through 600 dealers across the country. Giving plants on rent is a fairly new business, having picked up over the last few years, but it is now growing in a big way. "In the last seven to eight years, I have seen it grow very fast. Instead of buying plants to decorate their premises, many companies now rent plants," says Gujral. The major customers for companies that give plants on rent are corporate 48

houses, event management companies and wedding planners. Gujral boasts of clients such as Dell, NHPC, IBM and E&Y. In Mumbai Ravindra Wadekar, who runs Ujjwal Enterprises, gives plants on rent. A horticulturist himself, dealing with plants is his passion and this "plant library" gives out various varieties to interested customers. "Just like you have a book library, similarly, you have a plant library

Popular Plants for Rent • Aglaonema

• Areca Palm

• Raphis Palm

• Dracaena

• Money Plant

• Singomium

• Aerocaria

• Dieffenbachia

• Philodendron

• Bamboo

• Lucky Bamboo

• Oxipodium

from which you rent out plants," he says. Some plants need to be changed every eight or fifteen days, he adds. It starts from the farms and ends at the client’s site, which could be the office premises, an event or a wedding party. The business involves renting out plants to interested parties. The varieties could vary depending on what the customer wants, the size of the premises, the occasion and the money that the customer would want to spend. “We give green plants. Basically there are eight to ten varieties that do very well,” says Gujral, who grows these plants at his 40-acre farm on the outskirts of Delhi. He claims to have a well-equipped greenhouse; here he can maintain the temperature at 25 degree Celsius even in Delhi’s summers when the temperature touches 45 degree Celsius.

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opportunity/service This is quite a creative business where one has to add to the beauty of the customer’s site. A certain level of personal involvement of the owner and his artistic intuition is put to work. While there is a limitation to the number of plant varieties one would place at the site, the way they are placed makes a big difference. Thus, those in this business have to work closely with the interior designers to ensure that the placement of the plants is such that it adds to the beauty of site location. It’s not the number of plants that matter, it is also how they are placed that makes the difference. Maintenance of the plants is a significant part of this business. Just installing alone won’t work. Plants need regular care, particularly when put at an indoor site where there is limited sunlight. So, you need

skilled people to take care of these plants. In case the plant is getting dry, it needs to be replaced fast. Like any other business, this one too is seeing some innovation. Initially, customers would only want plants to be installed at their premises. Now they demand more. Instead of pots, they now ask for planters, terracotta or metal pots. They are also very particular about the placement and the color of the leaves that would go with the interiors. The recent taste is for a “Lucky Bamboo” on each desk. Some companies seek active involvement of their employees to take care of the plant. Getting new business could be either through direct contact with the company or through an intermediary, which could be a facility management company that serves large

Customers • Corporate houses • Public sector companies • Event management firms • Wedding planners • Business centers

office complexes. The touch point at a company would be someone from the administration or the HR department. A formal contract is signed, which specifies the monthly rent for a certain number of plants. Most contracts are annual, and often go into the details of maintenance and replacement in case of damage or death of the plants. The rent could vary from Rs 25-75 per month per plant. This is a volume business. The more the number of plants you rent out, the more money you make. Usually, large companies take 1000 plants on rent. Rent covers everything from transportation, installation, maintenance and replacement of plants. “A single 14inch potted plant is rented out at Rs 60-80 per month,” says Wadekar. The cost takes into account the labor and transport charges, he adds. Although the number of companies and events taking plants on rent is a fairly new concept, it is growing in a big way. Both private sector and public sector companies are adding to the customer list. It is still a very fragmented business “Homes generally don’t go for plants on rental basis. Such a demand is very rare. Taking plants on rent for a day or two is not very cost-effective,” says Gujral.

• Individuals

The Challenges

What is the business? Plants on rent involve installation, maintenance and replacement of plants at any premises that could be an office, a home or an event venue.

Challenges involve changing plants on a regular basis otherwise the customer would get bored. Given the limited variety of plants that can be placed indoors, keeping them in rotation is quite a challenge. The other challenge is about getting the right people for the job. Two sets of skills are required: one that works on the farms in growing these plants, and the other that would place the plants at the premises and maintain it. “People usually move on once they have learned the skills. So we have to keep them involved and help them upgrade their skills,” says Gujral. The training comes on the job. On a site usually there is a supervisor DAR E and two workers. NOVEMBER 2009 49

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/funding

Implementing IFRS

/CA Krishan Kant Tulshan, Dr. J.L.Gupta

HAT ARE IFRS/IAS?

Statements of International Accounting Standards (IAS) issued by the IASC (1973-2001) are designated as IAS. However, the 1ASB announced in April, 2001 that its Accounting Standards would be designated as ‘International Financial Reporting Standards’ (IFRS). IASB publishes its Standards in a series of pronouncements called International Financial Reporting Standards (IFRS). It also adopted the body of Standards issued by the Board of the International Accounting Stand-

ards Committee. Those pronouncements continue to be designated as “International Accounting Standards” (IAS).

WHO USES IFRS? IFRS are increasingly being recognized as Global Reporting Standards. Currently more than 113 countries require or permit the use of IFRS. These include members of European Union (EU), Australia, New Zealand, Mauritius, Russia, Nepal, etc. Canada has announced its intention to adopt IFRSs from 2011. US has also taken

up convergence projects with IASB with a view to permit filing of IFRS compliant financial statements in the US Stock Exchanges without requiring the presentation of reconciliation statement.

WHAT ARE THE BENEFITS OF ADOPTION OR CONVERGENCE TO IFRS? The use of different accounting frameworks in different countries, which require inconsistent treatment and presentation of the same underlying economic transactions, creates confusion for users of financial state-

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/funding ments. This confusion leads to inefficiency in capital markets across the world. Therefore, increasing complexity of business transactions and globalization of capital markets call for a single set of high quality accounting standards. High standards of financial reporting underpin the trust investors place in financial and non-financial information. Hence, the case for a single set of globally accepted accounting standards.

Has India decided to adopt or converge to IFRS? Keeping in view the benefits of convergence to IFRS, the Council of ICAI has decided to converge with IFRS issued by IASB from the accounting periods commencing on or after 1-4-2011.

WHETHER ALL ENTITIES WILL BE REQUIRED TO FOLLOW IFRS? ICAI is of the view that IFRSs should be adopted for the public interest entities such as listed entities, banks and insurance entities and large-sized entities from the accounting periods beginning on or after 1st April, 2011. The countries which have adopted IFRSs have done so for similar types of entities.

Useful web-links to some Indian Companies who have already published IFRS based financial statements 1. Noida Toll Bridge Co. Ltd. http://www.ntbcl.com/investor.aspx 2. Wipro Ltd. http://www.wipro.com/corporate/investors/index.htm# 3. Deccan Chronicle Holdings Ltd. http://www.deccanchronicle.in/investordesk/htm/financ.htm 4. Dabur India Ltd. http://www.dabur.com/en/Investors1/Annual_reports/2008-09/IFRC.pdf

FROM WHICH DATE IFRSS NEED TO BE FOLLOWED IN INDIA? First set of IFRS Financial statements will need to be presented for the accounting year 2011-12. However, since comparatives will also have to be presented as per IFRS in 201112, what the entities will have to do is that they will also have to prepare their financial statements for 201011 as per IFRS.

WHETHER ALL ENTITIES WILL BE REQUIRED TO FOLLOW IFRS? In the first phase, IFRSs will be adopted for the public interest entities such as listed entities, banks and insurance entities and large-sized entities from the accounting periods beginning on

or after 1st April, 2011. The countries which have adopted IFRSs have done so for similar types of entities. The exact definition of public interest entity is being worked out. In the first phase, IFRS may apply to the following entities: 1. BSE-Sensex 2. NSE-Nifty 3. Companies that have raised debt > $ 50 million abroad 4. Insurance Companies 5. Mutual Funds 6. Commercial banks 7. Companies that are publicly accountable with an aggregate borrowing > Rs. 1,000 crores 8. Indian subsidiaries of foreign companies that have implemented IFRS at the parent company. 9. Companies that do not fall under any of the above categories with capital > $ 50 millions outside India.

WHICH ACCOUNTING STANDARDS WILL BE APPLICABLE FOR SMALL AND MEDIUM SIZED ENTITIES (SMES)? In respect of entities other than public interest entities (termed as â&#x20AC;&#x2DC;small and medium-sized entitiesâ&#x20AC;&#x2122; (SMEs), a separate standard for SMEs may be formulated based on the IFRS for Small and Medium-sized Enterprises. IASB has recently issued a separate IFRS for SMEs. Presently, it is not clear whether the same IFRS will be adopted by India for SMEs). However, compliance with this IFRS for NOVEMBER 2009 51

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/funding background work should commence much in advance. It is quite possible that for the first year no comparatives need to be given. But the question, whether in this case the accounts without comparatives will be IFRS compliant needs to be answered? The authors feel that even if the regulation requiring comparatives in the first year is dispensed with, it is prudent for the management to have comparative for internal MIS and other performance measurement requirements.

What is the road map to IFRS implementation ? SMEs is not necessary to make India IFRS-compliant.

FROM WHICH DATE IFRSS NEED TO BE FOLLOWED IN INDIA? First set of IFRS financial statements will need to be presented for the accounting year 2011-12. However, since comparatives will also have to be presented as per IFRS in 201112, what the entities will have to do is that they will also have to prepare their financial statements for 2010-11 as per IFRS. In other words,

due to the requirement to give IFRS comparatives, effectively IFRS accounts will have to be prepared from 1-4-2010 onwards. Further, since the listed companies need to publish these financials on a quarterly basis, while presenting the financials for April-June 2011 quarter, they are likely to be required to give the IFRS comparatives for April-June 2010. Hence, the industry as well as the accounting professions need to gear up for adoption of IFRS from 1-42010 itself. For meeting this time line

IFRS implementation requires a project approach with commitment from the highest level. It can be divided into the following phases: Phase I : Plan Conversion Phase II : Impact Analysis & Quantification Phase III : Redefine/Redesign Phase IV : Opening balance sheet as per IFRS Phase V : Reporting date – IFRS financial statements D A R E CA Krishan Kant Tulshan is an Executive Director at Cyber Media and Dr. J.L.Gupta is an Associate Professor- Finance at the University of Delhi.

SMS: “DARE <your comments, questions or suggestions>” to 56677 Email: dare@cybermedia.co.in Website: www.dare.co.in Follow us at: http://twitter.com/daretostartup 52

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Waste Paper Business Waste paper is not “waste” after all. It is a flourishing business that is now attracting big players /Aswathi Muralidharan

e it newspapers, magazines, bills, memos, diaries or notebooks, they all land with the scrap dealer after being used. But what happens after that? Well, after that the waste paper changes several hands before reaching the recycling mills. The paper is then de-inked, made into pulp and again into paper, before it reaches the market as recycled paper. In this story, DARE tracks down the route that waste paper takes before reaching the paper recycling mills, which could be a lucrative business opportunity.

The industry landscape The operating capacity of the Indian pulp and paper industry has been estimated to be 8.5 million tons by the Indian Agro and Recycling Pa54

per Mills Association (IARPMA). Paper mills can be broadly divided into three types—wood-pulp-based mills, agro-residue-based mills (non-woodbased segment) and waste-paperbased mills. According to the IARPMA, waste-paper-based mills account for almost one third of the industry at approximately 40 percent, whereas the wood-based mills account for 29 percent and the agro-residue-based mills comprise 31 percent of the total industry pie. Despite the fact that more than one third of the industry is dependent on waste paper, waste paper recovery is very low. In fact, according to available figures, only 2 million tons of the paper finally finds its way to the recycle mills. This means that nearly 6.5 million tons of paper reaches landfills and is lost forever.

It has been estimated that the recovery rate of paper in India is only 26 percent, compared to Thailand’s 45 percent, China’s 38 percent, and Germany’s 80 percent. This is mainly due to low awareness among people as well as the unorganized nature of the business. In India, waste paper collection is mainly done by rag pickers and kabariwallahs (scrap dealers), who collect waste in a crude manner. This makes India highly dependent on waste paper imports from countries like Canada, the USA, the European Union and Middle East. Within India, waste paper is mostly collected from the western region that comprises 39 percent, followed by northern region at 28 percent, southern region at 23 percent and eastern region at just 10 percent.

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The business model As mentioned above, waste paper collection in India is very low compared to other countries, and whatever paper is collected passes through several hands before reaching the paper mill. Briefly, it passes through three middle men—the scrap dealer, the local area dealer and the wholesaler—before it is converted back to reusable paper. Nitin Goel of GreenOBin, an organized player in this sector says, “A street raddiwala cannot directly go and sell to the recycler due to the limitation on the collection amount. Any paper mill based on waste paper as their raw material has got a daily requirements in tons and the street raddiwala cannot cater the same daily.” The cost escalation during this process is twice the amount when compared from a street scrap dealer to the paper recycler. The first link to the chain starts with the scrap dealer, also known as the kabariwallah, who collects waste

from homes. The scrap dealer’s major cost heads are a cycle, a weighing scale and some sacks. This dealer collects all kinds of waste from homes like old newspapers, magazines, loose paper, old bottles, metal waste, and so on. He does a basic level segregation and sells his goods to the local dealer. In terms of paper waste, newspapers are what hold the key to his profits because of large quantity compared to magazines, old books and loose paper. A scrap dealer tells us that these days a number of households generally get at least two papers and moreover, the weight of the newspaper is also more because a number of add-on supplement papers and content. He buys the newspaper at approximately Rs 5.50 per kg from the households and sells it to the local dealer at Rs 7, whereas magazines go at approximately a rupee less because of the glossy paper used. Ultimately, his profits depend on his negotiating skills—the better his negotiating power the more profit he earns. After collecting all the waste, the scrap dealer sells his goods to the local area dealer. The major cost heads

of this local area dealer is space to store different kinds of waste, a weighing scale, and manpower to segregate the waste. This local dealer has several scrap dealers working for him. For example, Mohammad Irfan, a local area scrap dealer in Delhi, has 25 scrap dealers working for him. These scrap dealers sell all their waste, be it paper, bottles, or metal, at the end of each day. After collecting the waste from the dealers, another level of basic segregation happens at this level. In case of newspaper waste, each newspaper has to be straightened, sorted and bundled neatly before it can be sold further. These dealers work with different wholesalers—there are separate wholesalers for different kinds of waste. In the case of newspaper waste, he buys it from the scrap dealer at Rs 7 (the current rate) and sells it to the wholesaler at approximately Rs 7.20 (a ballpark figure). This is when the transportation is taken care of by the wholesaler. This price fluctuates and depends on the demand and supply of paper in the market. The wholesaler, on the other hand, is a larger player who has

AVAILABILITY OF WASTE PAPER BY GEOGRAPHY

Source: Indian Agro and Recycling Paper Mills Association

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• Generally sell once in two months

• Goes to the home on a cycle and collects all the waste, including newspaper, magazines, old books, loose sheets of paper, old bottle, metal waste • Sells to the dealer at ~ Rs 7 per kg of newspaper

• Collects and segregates the waste and sells it to the respective wholesaler • Sells to the newspaper wholesaler at ~ Rs 7.20 per kg*

WASTE PAPER WHOLESALER

SCRAP DEALER (KABARIWALLAH)

• Sells to the scrap dealer (Kabariwallah) ~ Rs 5.50 per kg newspaper

LOCAL AREA DEALER

HOME

THE WASTEPAPER CHAIN*

• Collects the waste from various dealers and generally spends on the transportation (the price depends on the transportation) • Sells to the paper recycling mill at ~ Rs 8 per kg*

PAPER RECYCLING MILL *NOTE: An approximate indication, as the price of the waste paper depends on a number of things like the price at which waste paper is imported, the demand for paper, etc.

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/sector several dealers working under him. Transportation from the dealer to the godown as well as from the godown to the paper recycling mills is generally his responsibility. The mill price at which he sells to the paper mills is also highly fluctuating. As the quantity of paper re-collected is fairly low, a major part of their waste paper supply comes from imports. The price at which paper is imported, which in turn is dependent on paper availability at that point of time, has a direct impact on the price of waste paper in the domestic market. Since this link or segment of waste paper chain is highly dependent on transportation, another major factor impacting this trade is the price of oil. Roughly estimating, this price comes out to be approximately Rs 8 per kg (a ballpark figure). These wholesalers are also directly in touch with several media companies, publishing houses, printing presses, etc, whose paper waste is considered to be good in quality compared to the others that passes through several hands. This waste fetches a higher price for these wholesalers in the market. For example, Cybermedia, which sells its paper waste twice or thrice a year, sells approximately 6,000-7,000 kg of waste in a singly deal. So, for these wholesalers this kind of a deal becomes much more profitable.

Organized waste paper collection Given the huge demand for waste paper in India, several companies have started to enter this space. Business conglomerate ITC was one of the first to tap this segment with its Wealth out of Waste (WOW) program. Under the program, ITC collects waste from households, segregates waste paper and sends it to its paper mills for recycling. For this purpose, ITC provides households with two paper bags— one for wet waste and the other for dry waste. Jogarao Bhamidipati, Vice President, Commercial of ITC’s Paperboards & Specialty Papers Division

(PSPD) explains, “Waste paper bought from households and commercial areas at Rs 4 per kg, would reach the sorting facility, where it gets sorted into different grades and gets baled. Here the costs could be Rs 1.5 to 2 per kg. Baled material gets sold to mills at an average price of Rs 8 per kg.” According to market sources, ITC collects 400 tons of dry waste per month and is expected to hit 2,000 tons a month in the next six months. There are several other companies mushrooming in this sector— one such being GreenOBin, which was started in 2009. The organization classifies their clients in three different ways—small company (50-

OPPORTUNITIES WORTH EXPLORING • Organized paper collection from homes and offices • Scientific collection and grading centers

200 employees), medium company (200-500 employees) and large company (500 & above employees). Nitin explains, “We offer three different categories of membership to which different services are attached accordingly. Major services that GreenOBin provides are waste pickup, waste audit, training and awareness programs, security shredding and source segregation bins.” After collecting the cash, the company offers recycled paper office stationery products to the corporate instead of paying them back in cash.

Challenges In India, as there is no proper mechanism for segregating paper waste as

there are several challenges faced by the paper industry, thus making it highly dependent on waste paper imports. The collection of waste paper is not done in a scientific manner, therefore, all the different kinds of paper waste get mixed and go to the paper mill, which may have a lower capacity of paper production. Explains Narayana Moorty, Secretary General of Indian Paper Mills Association (IPMA), “Abroad, all the paper is scientifically collected and segregated according to different grades. This does not happen here and all types of paper are mixed with each other. Paper has got 2000+ varieties, but in India a layman calls it all paper.” Moreover, a paper can be recycled only for a fixed number of times as the paper fiber becomes shorter and hence looses strength. However, in India, there is no mechanism to determine it in terms of usage. Unless a paper is graded and segregated in terms of what has been the first usage of paper, the secondary fiber all becomes mixed. This becomes a problem because after the quality of the paper depreciates with subsequent recycling—the paper becomes brittle and yellow—thus affecting the final paper quality. Explains Moorthy, “In other countries, there are dedicated collection centers where the grading takes place properly, if it comes out of a book it is of a different variety, if it comes from the packaging it is different, if it comes from a magazine it is different. There is a grading system, so when the paper is graded, bailed and made ready for sale, it is priced accordingly. This does not happen here.” Therefore, the larger paper mills, which are quality conscious, import paper in large quantities for their use. Besides these, there are other issues such as habits of people, lack of infrastructure, lack of legislation and penalty for non-source segregation of recyclables, and lack of awareness on enDAR E vironment-related issues. NOVEMBER 2009 57

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people/uid

The UID will essentially seek to address the issue of authentication of information related to an individual by ensuring the existence of a person and the uniqueness of his identity.

hy do we need another identity number?

UID: MODERN INDIAâ&#x20AC;&#x2122;S NEWEST SECURITY MANTRA How it will work 58

There are two lines of thought that have led to this scheme being envisaged. The first says that national security is of paramount concern and the other talks of developmental schemes getting due importance. The development view says that we need targeted subsidies so that they reach deserving citizens. Across the subsidy system, whether it is the public distribution system (PDS) or schemes to subsidize people below the poverty line, there is massive duplication and lots of fake names that are a part of the database, something which leads to mis-targeting. The UID will essentially seek to address the issue of authentication of information related to an individual by ensuring the existence of a person and the uniqueness of his identity. This essentially means that the UID will make sure that there is only one real person behind an identity.

How would you seek to ensure the uniqueness of an identity of a real individual? How would the process of authentication be carried out? Would you collate

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The recently constituted Unique IdentiďŹ cation Authority of India (UIDAI) is the nodal body that has been tasked with the ambitious project of giving every resident of India, a unique identiďŹ cation number in the next few years. DARE caught up with the Director General and Mission Director, Ram Sewak Sharma, to get an idea of what the project entails and the business opportunities it offers. all the existing data and streamline the same? We will use biometric tools to ensure the identity. Biometric technologies involve techniques that recognize the face, finger prints, iris, etc of a person, which are unique to every individual. We will match the data collected, pertaining to an individual with the existing data and match the two. At the same time, the biometric data collected for every individual will be added to the said database to ensure its validity and uniqueness and generate a new ID for the person concerned. Our method of biometrics is a means to end the duplication. A committee under the chief of the National Informatics Center (NIC) is working on devising the exact process of biometrics. Another important point deals with what information to collect. Thus far, we have decided to collect only demographic details of a person. This means we will have his name, date of birth, gender, parentsâ&#x20AC;&#x2122; names, permanent address, current address, biometrics, etc and no information on religion, caste, ethnicity, etc will be a part of the UID. The number thus generated, will be random and will not have any intelligence built into itself, like a pin code does. The process of verification is also being worked on by a committee un-

der N Vittal, former Chief Vigilance Commissioner, and we will have a clear-cut idea in the due course of time. The possibility of mixing and merging the existing data streams was considered. But again, the lack of biometric authentication and contamination of the same limits this possibility. So, such databases may be used for the process of verification, but not for primary collation of data. The census department is carrying out a national population registration exercise. They will also be a major source of data for the UID.

Considering the fact that there is a multiplicity of databases already in existence, why could you not make the passport number or election ID card number as the UID and make the possession of such an ID compulsory? There are two problems with such an approach. First, none of these systems cover the entire population. Secondly, these systems are already infected with a lot of duplication and with fakes. Moreover, the focus of this project is inclusive. We want to provide IDs to people who are marginalized and poor and do not as yet have a proof of identity. Also, we wanted a mechanism that would authenticate the identity online, say, via a mobile phone or any hand-

held portable device, which might allow for biometric authentication. So, we are coming up with a way in which you do not need to carry any physical document and yet can be authenticated very cheaply.

Would the UID be integrated with the National ID card project that is currently on a pilot basis? We are not looking into the issue of nationality or citizenship. We are basically issuing these numbers to the residents of India. Non-citizen residents in India will also be eligible for a UID. The UID will per se not be a proof of nationality. It, therefore, does not confer you any right or title of any kind nor does it make you automatically eligible for any government scheme.

Would it therefore be similar to the Social Security Number (SSN) of the United States? In the sense that any resident person can get it, certainly there is a parallel with the SSN. But it is different from the SSN because the SSN does not have biometric authentication.

Where all would the UID essentially be used? Would it eventually be mandated for every resident Indian? For us, it is a demand-driven situation and as far as we are concerned, NOVEMBER 2009 59

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The authentication will essentially be a ‘yes’ and ‘no’ process. That is to say that a private agency will come to us with a UID and the details of the person, and all we will tell them is whether the data is correct or not. So, there will be no transfer or sale of data to a private agency.

devices, but that per se is not within the purview of the UIAI. So, a major part of the contracting will be done by a partnering institution, like the Life Insurance Corporation of India (LIC), which will collect its clients’ data.

Since you will be partnering with private companies, how would you ensure data security? Would countervailing clauses be built into the service level agreements to ensure that? we are not mandating it. Right at the outset, we cannot obviously exclude anyone. Having said that, domain agencies like banks, insurance companies, gas companies, etc might eventually mandate it over time.

What is the total scale of business generation that you see happening out of this project? When does the process of tendering contracts out to private companies begin? I cannot talk of figures at this stage, but I can see that this will tremendously save costs, as cost of verification will come down drastically. Further, it will expedite and accelerate business processes where personal verification of data is required. LPG 60

connections that are black-marketed cost the exchequer a whopping Rs 1,600 crore a year; those costs can be saved. As for tendering, only one major procurement will take place, which is setting up the data center, but that process will be worked out at a later date. We will have the main data center at New Delhi and there will be a disaster recovery center, probably at Bangalore. This center will be a repository of all the data collected, as that is the only way we can ensure online real-time authentication. Apart from that, processes related to collection and processing of data will generate business opportunities say for manufacturers of biometric

As I mentioned, we have not worked out such details. The data of course will be kept very secure and will not be shared with any external agency. The authentication will essentially be a ‘yes’ and ‘no’ process. That is to say that a private agency will come to us with a UID and the details of the person, and all we will tell them is whether the data is correct or not. So, there will be no transfer or sale of data to a private agency. Even during the process of authentication, no data will be downloaded anywhere outside our data center.

When do you start rolling the first numbers out? The first numbers should start rolling out in 12 to 18 months starting DAR E August 15, 2009.

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/contest

Write a business idea around this picture at http://www.dare.co.in/contest/nov09 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: November 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.

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Dye to Die for Written by Vivek Bansal, October 21, 2009 The myriad hues in the photograph makes one wonder if there is scope for a professional dyeing company. A company where the quality of colors and the consistency in matching them can be assured to the customer. Can a common problem of washing all the clothes in one go in a washing machine without the fear of discoloration due to a fading garment be overcome? I see a business idea there. To start a company for serving the dyeing needs of our country. A company for dye to die for.

3 D Reality Movie Theater Written by Dakshinamurthy , Chennai, October 20, 2009 Imagine a theater with 3D sound effects, 3D visual image and mobile theater seating arrangements like angle movements and vibrations, etc. A lot of fun and lot of real film viewing experience.

Hanging Ads Written by Virupakshan K, October 19, 2009 Business Idea: Manufacture low cost hangers (which looks like wooden hangers) with a provision for advertisement. The advertiser will pay around Rs.5 per hanger (Rs.2 for hanger manufacturing expenses, Rs.2 for overhead expenses and Re.1 for profit per hanger i.e. 20% margin) Expenses: 1)

Hangar Manufacturing cost

Overhead expenses (Marketing, Transportation, etc)

Income: 1)

Advertisement revenue on each hanger

In a high-end segment shop, a customer can be charged along with the hanging apparel

Opportunities: 1)

In all apparel shops around the world.

Threats: 1)Easy to duplicate the idea. 2) Cut-throat competition may happen

T-Shirt Folding Machine Written by Sumit Goswami, October 19, 2009 Most of the manpower in garment shops are engaged in folding the shirts and T-shirts, which is a routine, tiring, boring and time consuming job. We can design a T shirt folding machine that can fold T-shirts opened up by customers and repack it for delivery. A T-shirt folding machine will have a good demand in all such shops displayed in the photograph. The detailed design, components and the working of the machine can be chalked out.

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Weight Loss Fashion Boutique Written by Nimish Adani, October 16, 2009 At the weight loss fashion boutique, members can come and buy a whole set of clothes and also join a rigorous diet and exercise program. As they keep losing weight and their clothes become loose, they can replace it with the same design but one size smaller. That ways they can shed weight without worrying about the wardrobe costs.

CELEB-WEAR Written by akshay maheshwari, October 21, 2009 Everybody in this world wants to look good, wear unique clothes and be popular. In short, every one wants to be a celeb. The celeb-wear store gives you an opportunity to buy clothes that were worn by celebs. These clothes were could be worn by the celeb during movie, photoshoots, parties, or appearances. Each celebâ&#x20AC;&#x2122;s collection is given a different space in the store.

SHORTCUT TO STARDOM Written by Vijay Kumar (PVC Consulting), October 20, 2009 Here is a shortcut to stardom. Come and visit our store and buy apparel worth more than Rs. 10,000/-. You shall get a FREE photo shoot done (wearing our apparel) from an ace professional fashion photographer and we shall circulate the shoot to the top modeling agencies. We do not guarantee but we are confident that success is just on your way.

Why Compromise? Written by Shivanshu Makkar, October 21, 2009 Imagine a shop where one can get the clothes exactly as one wants them to be. Why compromise on size, color or design? A shop that transforms clothes from a functional industry to an emotional industry. The customers design their clothes not with the help of salesmen who do not know much about clothing but with the help of fashion graduates. STEP 1: Fashion graduates will help the customer to select the color that will suit their skin color and requirement. STEP 2 : They get to try on different cloth material and chose the best and most comfortable one for themselves (silk, cotton, synthetic, etc) STEP 3: Once the material and color are decided they select from a range of designs or even a give their own design (a particular theme, photo, etc) which can be printed on the garment STEP 4: Add any embroidery or accessories they want with the garment STEP 5: Give their exact measurements so that they do not have to compromise with prefixed sizes that never fit perfectly Thus the customer has a unique outfit, and loves every part of it. He does not have to chose between different garments having perfect size or favorite color or nice design. He/she can get all this in one garment. In addition to this he/she gets assistance from fashion graduates which will help them chose better. Moreover they do not have to worry about another person having the same garment as all garments would be unique. One can even get clothes made for special occasions with specific themes (a garment with a design specially for a party). This plan aims at making buying easier and better by eliminating the problem of compromising.

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WINNERS LAST MONTH'S BUSINESS IDEA CONTEST

Marketplace for budding fashion designers Venkatraman There are sites like iPhone App store, Nokia Ovi Store where developers can market their mobile products. Similarly, we can have an online and offline store for all the fashion designers to market their designs where end user can purchase the dress. USP: * The user who purchases can shop offline and/or online. * Online shopping [delivery throughout the world] which will be done by TV channels and website ADVANTAGE: * Budding fashion designers can easily market their designs through out the world. * Purchasers will get new designs and also variety of designs for cheaper price. * Big corporates [like Nike, Adidas] can recruit people from this site.

T&M™ Gracelyne Fernando Looking for fun, original twin clothing? Need a unique twin gift? Take a look at some cool designs on an assortment of clothing for twins and multiples at T&M™! Twin & Multiples Trends™ (T&M™) boutique is one-of-a-kind designer boutique, wherein our in-house designers, make more than one copy of the unique dress models. So this boutique addresses the fashion needs of people like twins or triplets or other multiples. However, it is not only twins who could be interested in the T&M™ trends. Girls looking forward for purchasing same clothes, people looking out for same designs for wearing on special occasions, pretty flower-girl dresses, bridesmaids designs etc. could be potential customers too. We specialize in unique clothing and gifts for twins, irrespective of gender. We also offer personalization on some specific products, such as adding a word, name or Swarovski crystals or adding appliqués, for an added fee. They are permanently applied to our products for a truly custom look with lots of detail. This could be offered on demand or on select designs. We can sell some of our twin designs in sets, but most of them can be ordered separately for proper sizing. There would be different style options too which increases the chances of finding the right match for twins and otherwise. Apart from dress designs we also offer designer accessories to choose from footwear, socks, scarves, totes, pins, jewelry, belts, bags, and hat-beanies!

CONGRATULATIONS! Please allow 30 days for dispatch of prizes.

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INNOVATION

A Pivot Irrigator with a Difference Developed by a Pune-based engineer, this eco-friendly machine saves energy and time while irrigating large stretches of land. However, lack of funds is hampering its commercial production /Vimarsh Bajpai

“THE COST OF MANUFACTURING WILL GO DOWN IF WE GET INTO VOLUME PRODUCTION. I AM ALSO EYEING THE EXPORT MARKET. THERE ARE SOME ENQUIRIES FROM AFRICAN NATIONS.” — PADMAKAR KELKAR, INNOVATOR

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INNOVATION FEATURES & BENEFITS Can be operated for eight hours at a stretch everyday. Battery capacity can be increased when needed Optimal water conservation and productivity augmentation The investment cost of the system is less than that of the drip system The operating cost of the pivot system is 25 percent less than that of a sprinkler system Water application can be easily adjusted to meet the soil and crop requirements

hen rains failed all of a sudden last year after having started on a promising note in June, the researchers at the National Research Centre for Onion and Garlic in Rajgurunagar went into a tizzy. The soy bean crop that had been planted in 4.5 acres of land at the center was at risk of failure. What came to their rescue was a solar-powered pivot irrigator, developed by Pune-based Padmakar Kelkar, an engineer by profession and an entrepreneur by choice. Kelkar’s innovation saved the entire soy bean crop that was almost on the verge of getting wiped out.

In a country like India where agriculture is heavily dependent on rains, the solar-powered pivot irrigator could go a long way in solving the problems of inclement weather. It can also help increase yield while reducing water consumption. Its solar panels help save electricity and the pivot can be used for various types of crops.

The idea It all started in the year 2000 when Kelkar, who in the early 1970s left a job at the coveted Tata Institute of Fundamental Research (TIFR) to become an entrepreneur, visited some of his friends in the US. His friends were in the business of importing pivot parts from China for sale in the US. While pondering over the products, Kelkar thought of developing a complete pivot irrigator that would run on solar power. “So the next time I went to the US, I took the solar controller and ran my machine on solar power. When I had completed almost 80-85 percent of the job, it so happened that the US firm changed hands and the project got halted,” says Kelkar. Undeterred by the incident, Kelkar thought the pivot irrigator could work well in Indian conditions; given the unpredictable weather and unforgiving droughts, like the one this year. That’s when Kelkar started working on his dream machine.

Features and benefits The pivot irrigator is a mounted structure with a controller, a special motor, a battery and five solar panels. The machine has a central piviot with number of spans or towers revolving around it. There can be three to seven towers of 90-130 feet long, depending on the size and shape of the farm. The solar panels charge the battery, and this in turn runs the machine when there is no sun. “We have run the machine 19 hours continuously without solar energy at all,” says Kelkar. The use of solar panels

could be a boon for farmers in those states that get ample sunlight but not enough electricity. Other advantages include water savings of about 30-50 percent over other pivots, zero land erosion, 3050 percent more yield, higher return on investment, and minimum labor requirements. Compared to the drip irrigation, Kelkar’s pivot is more costeffective. “Drip irrigation may cost around Rs 35,000 an acre, whereas my machine costs around Rs 45,000 an acre. But the cost in case of drip irrigation includes laying it out in the field every time and taking it out once it gets damaged, and you may have to spend another 15 percent every year. On a long-term basis, the cost of my machine comes out to be much less,” he adds. Kelkar claims that water application can be easily adjusted to meet the soil and crop requirements. “It also has greater management flexibility than other sprinkler systems. The system can be managed according to the crop requirement either in small frequent doses or in one single application. Some models are computerized and therefore offer additional flexibility and versatility,” he adds.

The Market Kelkar is looking for funds to start commercial production of the machine. He says his machine could find customers in government and corporate houses in the agriculture sector. “Whatever money I had I have already put in. Fortunately for me, my other business was able to sustain my expenditures. I have spent Rs 20-25 lakh for this product,” says Kelkar. To finance his project, Kelkar is looking for venture funding or raise resources through the Technopreneur Promotion Program (TePP). “The cost of manufacturing will go down if we get into volume production. I am also eyeing the export market. There are some enquiries from DAR E African nations,” he adds. NOVEMBER 2009 67

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ndia is one of the few countries that is growing at a healthy pace despite the ongoing global economic crises. Since, a significant proportion of all Indian businesses fall under the small and medium enterprises (SME) segment, the

Indian economy will grow further only when these emerging enterprises flourish. Keeping these facts in mind, DARE and IDC along with its partners embarked on a journey named EnVision’09, to address the key challenges faced by SMEs in India. The second event in the series was concluded at Hyatt Regency, Mumbai on October 23, 2009 in association with IBM, Cisco and HP. The day long session were attended by the Chief Executive Officers, Managing Directors and Directors of companies from across verticals and saw an attendance of more than 100 delegates. The event format consisted of two tracks. Track A highlighted the “Business & Finance” challenges and Track B addressed the “Technology” needs of SMEs. The keynote address was delivered by Kapil Dev Singh, Senior VP & Country Manager, IDC India which was followed by a talk from Paranjoy Guha Thakurta, Eminent Economist & Journalist on Macro-economic Scenario and Roadmap of Success for SMEs. Before the tea break Manu Vinod, Product Manager of HP India and Patrick Mathias, Vice President - Mid Market & SMB, Cisco spoke on HP’s offering on storage virtulization and using IT in a recession for competitive advantage. This was followed by a short tele-film named “Ek nayi Bhasha” that was produced by DARE for Cisco. Post tea break, the audience were divided into two groups for Track A and B on a predefined criteria. Track A was addressed by Paul P Maria, Senior Consultant, Supply Chain Consulting, IBM India, Sanjay Sharma, Senior Director, Deloitte and Siva Hota, Global Financing Country Executive, IBM India on topics ranging from procurement to International Financial Reporting Standards (IFRS) to IBM’s zero percent financing for SMEs. Track-B witnessed talks on technology adoption, rewriting the rule of IT and reduce complexity from various eminent speakers. The event came to a close with a panel discussion in which the audience suggested that the presentations from various speakers need to be more fine

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strategy/funding

Eight Alternatives to a Public Issue /Aman Malik

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strategy/funding

hese are interesting times for emerging economies like India. For one, the combined effects of a controlled and cautious fiscal policy and a robust demand-driven domestic market have together ensured that the country has largely been able to ward the global meltdown off and that the growth trajectory, from a longterm perspective at least, has not been dented. The Indian markets did balk under the twin effects of FII outflows (following the sub-prime havoc unleashed in the US) and fears of a slackening domestic and global demand, but like almost all other markets, they have come back smartly and are trading at levels that have the highs of January 2008 well within sight. While analysts are divided on whether the markets are overpriced and if a 10-15 percent correction is imminent from the current 1600017000 BSE levels, there is unanimity on the view that substantial amounts of foreign and domestic money is waiting in the wings looking to get into and tap the market. That said, what cannot be overlooked is the fact that the markets do remain volatile and the upsurge in the market and steps like bonus issues notwithstanding, most companies that have listed in the recent past have been trading at a discount. So, if you are a business looking to raise cash, should you consider tapping the open market through the IPO route? How well do the costs of raising money from, say, an IPO or a follow-on-offer, really match up with the alternatives like strategic partnering, debt financing or reverse mergers? DARE gives you some alternate routes to follow:

Why tap the primary market? The fundamental premise behind raising cash is that you want to expand your business either in terms of diversifying or enhancing capacities or capabilities. The IPO route is not taken just with these ends in mind. Often, an IPO is also a way to unlock

AN IPO COMES WITH ITS SHARE OF REGULATORY AND STATUTORY REQUIREMENTS THAT REQUIRE CONSIDERABLE AMOUNT OF EFFORT AND TIME BEFORE YOU CAN ACTUALLY APPROACH THE MARKET. IN TIMES LIKE THESE, WHEN MARKETS ARE VOLATILE, THINGS MAY NOT RUN ACCORDING TO THE SCRIPT YOU HAD IN MIND AT THE TIME OF DECIDING AN IPO, AT ACTUAL LISTING AND BEYOND. value, particularly for the promoter. That is, the promoter sells a part of his stake in the open market to realize in part the result of his efforts in building up the business. This article looks at alternatives to an IPO, purely from the viewpoint of raising finances to scale the business. In a stable market, where stocks are valued fairly (or overvalued), it bodes well for a company to sell equity and raise cash by a primary issue of shares in the open market or a follow-on offer or a rights issue to existing shareholders. An IPO comes with its share of regulatory and statutory requirements that require considerable amount of effort and time before you can actually approach the market. In times like these, when markets are volatile, things may not run according to the script you had in mind at the time of deciding an IPO, at actual listing and beyond. Recently, stocks have even been listed on a discounted price and do not regain the allotment price for a sustained period of time after the IPO. This invariably hurts the investor confidence. Other than this, for a closely held private limited company, the IPO route might present some inherent limitations; one of which is that equity dilution into the open market can often become a one-way ticket and it may become difficult for a company to delist at a later date, if it achieves a certain scale and valuation by then.

Alternatives to tapping the open market STRATEGIC PARTNERSHIPS This is a circuitous route to raising money, but may be the best option for an unlisted company if it wishes to avoid (unnecessary) public scrutiny. This typically involves partnering with one or more companies who are more than mere investors and have a long term interest in the entity. Such partnering institutions would be expected to infuse more than just cash. Often such institutions have core competencies that complement the core business of the entity they are investing into. Therefore such investors are typically not on the lookout for immediate returns on their investments and stay on with the investee for the long haul. Since this is typically a private arrangement entered into by two or more entities among themselves, there are no specific minimum provisions, such companies need to fulfill.

QUALIFIED INSTITUTIONAL PLACEMENT (QIP) This mechanism, open only to listed companies, was introduced by the market regulator Securities and Exchange Board of India (SEBI) in 2006, primarily as a means of dissuading Indian companies from accessing foreign funds from the American Depository Receipt (ADR) route, as it was seen as an avoidable export of domestic equity. Companies ofNOVEMBER 2009 71

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DARE.CO.IN ten find it easier to access foreign funds as over-regulation makes accessing the primary market for follow-on issue or rights issue tedious. Listed companies do not need any pre-placement clearances from the SEBI for the QIP; whereas the company is mandated to issue at least ten percent of the securities issued, with mutual funds. If the issue size is up to Rs 250 crores, it is mandatory to have at least two allottees and at least five allottees for issue sizes of over Rs 250 crores respectively. Under the QIP route, securities can be issued only to Qualified Institutional Buyers (QIBs), which are mandated as such by SEBI. Since its introduction, the QIP route has become the most preferred avenue for raising money in India (see table).

PRIVATE PLACEMENT OF STOCK AND BONDS This involves selling of securities or bonds to institutional investors like banks, hedge funds, insurance companies, etc. It does not require SEBI clearance as long as the transfer of equity is purely for investment and not for a resale thereafter, something that is usually specified in the investment agreement. The world over, this largely unregulated and faster route has become very popular for diluting equity to raise money without the need for accessing the primary market, which requires lengthy procedures and is much costlier as compared to private placement. Technically, this route is open to small investors as well, but the lack of regulation has largely kept them out. Often, smaller investing institutions and individuals do not have proper

strategy/funding procedures in place for carrying out due diligence. This raises the risk of fraud occurring on account of omissions in disclosures and violations of terms of contract, something the small player is wary of. In both these cases, the state can step in to provide due protection by mandating public disclosure of information about private placements and by ensuring that the terms of contract are not violated by either party. Further, defaults on commercial paper issued by companies dent the creditworthiness of the overall corporate bond market.

PLEDGING OF STOCK Often, to raise funds for the company or for personal needs, promoters pledge a part of the company's stock held by them as collateral against loans from banks or non-banking financial institutions. This can be a risky proposition, especially in a bear market situation, when the price of the pledged stock goes below that at which it was pledged, which will provoke lenders to cover margins in cash or stock. If the promoter is unable to do so, the lender may resort to selling the stock in the open market, which will further depress its market value, thus aggravating the pain for an already beleaguered company and its shareholders. Hence, in the shareholder interest, the promoters should refrain from pledging stock.

DEBT FINANCING a) Corporate Bonds These are long-term debt instruments and can be secured (collateralized) or unsecured, with maturity periods usually over a year. Bonds

COMPANIES OFTEN FIND IT EASIER TO ACCESS FOREIGN FUNDS AS OVER-REGULATION MAKES ACCESSING THE PRIMARY MARKET FOR FOLLOW-ON ISSUE OR RIGHTS ISSUE TEDIOUS. 72

of shorter duration are called 'commercial paper' in business parlance. These bonds are mostly traded over the counter in dealer-based markets. Often, corporate bonds come with a call option which allows early maturity at a reduced yield or are convertible into equity, upon maturity. Further innovative offerings like floating rate instruments, convertible bonds and step-redemption bonds have made the corporate bond market vibrant. Traditionally, in a developing market, the equity segment grows much faster than the debt segment. Whereas nearly half the global corporate bond market is US-based; in India, the corporate bond market is less than one percent of the total GDP. b) Convertible and NonConvertible Debentures Debentures are debt instruments that obligate the borrowing company to pay back a certain maturity amount and are freely transferable. Debentures are often issued by well capitalized public limited companies that need to raise funds and can be converted to equity upon maturity. Such convertible debentures are often issued by companies to existing shareholders, while the non-convertible ones can be issued to non-shareholders as well. c) Corporate Fixed Deposits To meet short term requirement of funds, corporate houses can issue unsecured fixed deposits, which offer rates of higher returns than bank fixed deposits, for companies with lower creditworthiness offering higher rates. Usually, interest rates offered do not change during the period of deposit. d) Loans Loans are still the most preferred methods of raising funds. The rates of interest for secured loans are usually lower as compared to the unsecured sort. The rates however depend on

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strategy/funding the prevailing market situation and the interest rate regime in vogue at any given point of time.

REVERSE MERGERS Also called a "reverse IPO," it is the acquisition of a publicly listed company by a privately held company, in a bid to avoid the hassles of launching an IPO. This is done by reorganizing the capitalization of the privately held company. In other words, the privately held company invests into the publicly held company (which, in most cases is just a shell company), to such an extent, that the former effectively becomes the owner of the latter. The private company incorporates itself within or under the shell company and therefore, by default, becomes a listed entity, saving on the cost and procedural hassles of going public. A company can thus go public without raising additional capital and also hope to command a good price for a follow-on-offer in future. Moreover, market conditions per se have a minimal effect on the resulting entities, unlike in the case of IPOs. Also, since no underwriting institution is involved in the process, there is no risk of an underwriter pulling out of the process citing bad market conditions. One downside of this process can be that some shell companies might come with some 'historical baggage' in the form of disgruntled shareholders, who would however be in a minuscule minority. Their power will be further dumped down by the fact that consequent to a reverse stock split, their shareholding would be reduced.

INNOVATIVE OFFERINGS LIKE FLOATING RATE INSTRUMENTS, CONVERTIBLE BONDS AND STEPREDEMPTION BONDS HAVE MADE THE CORPORATE BOND MARKET VIBRANT PRIVATE EQUITY In this, a private equity (PE) firm buys out a majority stake in an existing privately held company. What differentiates 'private equity investments' from 'venture capital' is that while in the former, a PE firm typically invests in a mature company, in the latter, the PE firm invests in a new or emerging business and does not usually take a majority stake. Typically, when a company does not desire a change in its ownership, a private equity fund steps in to help it with funds enough to facilitate its expansion plans by taking a minority stake in the company. Growth capital is also used to reduce the leverage (or debt) a company has on its balance sheets. A private equity firm could also invest in a company facing financial difficulty with a view to eventually buy it out or turn it around. Private equity investments are done either through the leveraged buyout (LBO) route or through mezzanine capital. Other strategies include growth capital infusion and infusion of funds during distressed situations. a) Leveraged Buyout (LBO) In this, a financial leverage is used to buy out a business. Typically a private equity fund (which acts as a financial

sponsor) raises a non-recourse debt (i.e. a debt collateralized against the physical assets of the company in which a controlling stake is being acquired) from a financial institution such as an investment bank and thereby hedges its risk. Only mature companies that generate operating profits are usually bought out using the LBO route. The amount used as a percentage of the total buyout price is a function of several factors that include the financial health of the buyout target, market conditions, interest costs and the ability of the company to cover the same and of course the willingness of the lenders to extend credit. b) Mezzanine capital It is often used to reduce the amount of equity capital needed to finance a leveraged buyout (LBO). This is high risk money typically given to smaller companies that cannot access the high-yield market.

SALE OF SURPLUS CAPITAL ASSETS Often companies have excess physical assets (especially real estate) that they can part ways with without affecting their operations. In this way, liquidating real estate becomes an excellent way to unlock value and DAR E generate working capital.

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 NOVEMBER 2009 73

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Photo I

Does this farmer invite you for mechanization? I

ndian air carriers seem to have be differently affected by the recession. Many of them suffered losses while SpiceJet and JetLite registered some profit in the first quarter of FY10. There are a lot of issues that seem to be bothering aviation industry players, including aviation fuel prices and the tax levied on this fuel. The occupancy rate seems to be one of the major problems for some of the carriers. Given the potential of this market and the increase in the number of air-passengers, could there be a way out of problems for air carriers? Could there be a marketing model that could help achieve results? What are your thoughts and analysis? (Taken at IGI Airport, New Delhi from a moving car)

ndian agriculture industry involves different geographical conditions for types of crops. Different climactic conditions, availability of irrigation and implementation of farm equipments vary. The financial background and landholding of Indian farmers also vary to great extent. Farm equipments have revolutionized Indian agriculture but a huge market remains untapped because of financial constraints, custom needs, and lack of awareness of the usage of these equipments. Large number of small-scale farmers depend on live-stock for various functions like tilling, ploughing, etc. Farm equipments like tractors, threshers, harvesters, mechanized ploughers, etc. help in removing drudgery and better cultivation of crops. Is there a solution that can stretch the farm equipments to small-scale farmers giving value against money? (Taken in Maharashtra from a moving train) Author: Vivek Kumar

Indian aviation industryâ&#x20AC;&#x201D; sustaining tough times

Author: Vivek Kumar

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he retail sector, which faced the heat of the economic slowdown as consumers curtailed spending, is now looking up. The share of the retail sector in the countryâ&#x20AC;&#x2122;s GDP was 8â&#x20AC;&#x201C;10% in 2007. According to an estimate, it is likely to touch 22% by 2010. Author: Vimarsh Bajpai

Make-shift outlets throng the lobby of a mall in New Delhi DAR E

Website:

www.dare.co.in

w w / / : Email:

il B

p t t h

dare@cybermedia.co.in SMS: 56677 (SMS Instruction: Type 'DARE <comments, questions, suggestions'> and send it to 56677) NOVEMBER 2009 75

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bio/investor

Sumant Mandal Managing Director, Clearstone Venture Partners

Sumant Mandal initiated and is responsible for Clearstoneâ&#x20AC;&#x2122;s investment activities in India. Sumant joined Clearstone Venture Partners in October 2000. He represents Clearstone on the boards of DiVitas, Mimosa Systems, Kazeon Systems, BillDesk (India), DiGibee Microsystems (India) and ThisNext. DARE speaks to Sumant to find out about the companyâ&#x20AC;&#x2122;s strategies and its future plans. 76

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ould you take us through how the talks develop between the investor and the company seeking funds? There are two parts to the process. The first part is to get a general understanding of what the business is and where is it going. So if there is a common understanding, which means that if both the investor and the promoter think of the business in the same way and if there is enough interest and passion in the business, then you tend to take the next step, which is discussing the dynamics of the actual investments—how do you negotiate the price, how do you negotiate the ownership, deal terms, governance, etc. But if the first part is not done well, then you cannot convince yourself to invest. A promoter must always remember that you cannot convince an investor to invest. The investor does the due diligence to convince them that they are making the right decision and not doing anything irrational. But if there is no common belief between the promoter and the investor—if they do not think of the company’s future in the same way—then there is no way that you can convince them to invest. What is the role of intermediaries in VC funding? It depends. We have never worked through an intermedi-

DARE.CO.IN Do you invest in early stage companies? The company need not be a startup or a late stage firm but we do zero in on companies who need the expertise that we have to offer or an industry where we are comfortable. What is the minimum ticket size of your investment? The smallest investment that we have made is $3 million, i.e. between Rs 12-15 crore. In the US, we have made investments that are slightly smaller than that also. Our first investment in India was BillDesk. Has there been any recapitalization in view of the slowdown in any of the companies that you have invested in? No. The companies have done very well, despite the slowdown. They have grown; their businesses have also grown quite dramatically. How closely are you involved with your investee companies? Very closely. As an example, the CEO of Games2Win was in Los Angeles this week and I have have met him thrice already. We have also arranged a lot of meetings for him so that he can take his business to the next level. I speak to all the companies once a week at least, if not more.

investor of the month ary as a firm. Whoever we have worked with, it has taken us a while to know those people. But a lot of intermediaries add value and take the companies to the right people, thus shortening the cycle of fund raising. There is always a sense that investors try to call the shots when they come in. How do you allay such fears? That normally happens when things are not going well. The truth of the matter is that there is a risk of that happening when you take outside capital. If things are going well, then we have no desire of interfering in the companies. To allay such fears, companies should talk to other corporations who have done VC funding and take tips from their experiences; which, usually is quite a common phenomenon. For us, active funding is like being in a marriage. Divorce is very ugly. How has your investment strategy changed in view of the economic slowdown? It hasn’t changed all that much. It has definitely slowed down, as we have a lot more opportunities and a lot more to work on our current portfolio. We are still looking at companies that have a growth potential and can create returns that are better than the markets. That hasn’t changed too much.

So you get a board seat in all the companies? We generally do not invest without a board seat. What kind of handholding do these companies need? The job of a CEO is a very lonely job. Most CEOs do not have anybody in the company they can speak to. So you become their defacto guidance, counselor or whatever you would like to call them. So you end up talking to him about the decisions to help the company in great detail. Second most important thing I think is hiring. At every senior level when the company hires, we interview them, give our opinion and also help guide talents to the company. The third is because we are not involved with the dayto-day operations of the company, we can actually help the company in pattern matching with the other companies that we are involved in, understanding where the markets are moving, understanding what the other companies are doing. So you help strategically guide the companies in their decision-making. At the end of the day, we are not running the company. It is the promoters or the management that run the company; where they help them make the right decision and question the decision if and when required. We are not prescriptive; we just help them get a view of all sides of the decision, when they are going to make one. The most important thing is making NOVEMBER 2009 77

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A lot of times when investors and entrepreneurs have disagreements, it is because either or both sides have chosen the wrong kind of partners. Be very careful about the partner you choose to work with. sure that we can help them with their financial needs and guide them to the right source of capital as they raise more capital down the road. What kind of returns do you look at? What kind of returns we expect and what kind of returns we get are two different things. What we try and do is invest in companies where we can get returns of a minimum of three to five times of our money. Some companies give us much more than that while others don’t. There have been companies from which we got 50 times our money back and there have been companies in which we have lost all our money. On an average, venture funds try to get 20-25 percent of the ROI number. But you are obviously in for higher. What leads to failures despite the fact that a company has the best team, and there is a lot of interaction between the investor and investee companies? Most companies fail because they run out of money. Eventually you mis-time the market, you are either too early or too late in the product reaching the market, or you have execution issues, which means you just cannot execute on your business plan. More often than not, people cannot pull together in the right direction and because of that companies fall apart. Being an investor, you keep a tab on the company. Do you look for a change in terms of people who are running the show, if they fail to deliver? Yes, that is when people say you interfere too much! But that is part of the job. What is the exit strategy for an investor in general? The best exit, where you make the most money, is when you can take the company public. You get a much better return on your capital when you do that. There are three exit strategies – an IPO, an M&A or failure. You cannot sit down and think about an exit strategy when you invest. We always hope to invest in companies that have the potential to be public companies. We have taken more than a dozen companies public as a fund. How long do you stay invested? On an average it is about five to six years. Some companies tend to see the exits earlier, say between three to five years. We have also stayed invested in companies for over 78

nine to ten years. So we are very patient investors with companies that are doing well. What are some of your challenges as an investor? Part of the challenge is to find the right people to work with. Investing in a company driven by a wrong person can be a grave mistake. We spend a lot of time making sure we invest in the right person. The other challenge is in making sure we can give every company the attention it deserves. How long does it usually take for you to close the deal? It takes anywhere between 60 to 90 days. It takes time to know the business, some diligence and then some legal process. But we have also closed deals in two weeks and we have also closed deals in six months. How have your investee companies performed in the last one year? They have performed quite well. In some sectors, especially in the online space, they have done very well. I think there is a disconnect between operating results and valuations in the market, that is soon to be corrected. It has already corrected quite a bit. How upbeat are you about India’s growth story? I think it is very good. It’s not an easy story to navigate. You have to know the market very well to navigate. I think there are a lot of pitfalls. There are a lot of companies that don’t deserve to be invested in. I think the exit market in the next one year is going to look better than it has in the last two years. The IPO market has definitely opened up. I think the financial markets have matured, and there is money coming into the public markets, etc, that creates for us the right opportunity to see exits. What is your advice to entrepreneurs out there who are trying to raise funds? I think there are different types of investors for different types of companies. A lot of times when investors and entrepreneurs have disagreements, it is because either or both sides have chosen the wrong kind of partners. Be very careful about the partner you choose to work with. Don’t get enamored by higher prices, or easy money, because down the road it comes back and bites you. Make sure you get investment from people who appreciate what you are trying to build. DAR E

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DARE.CO.IN

Micro-level opportunity around Sanskrit? Posted by: Vivek Kumar in On the Website on Oct 21, 2009 Tagged in: translation, tattoo, sanskrit, linguistics, language, business

he apathy towards Sanskrit language (Samskrit, if taken originally) often, Sanskrit is limited to India, further to Hinduism. I thought about writing on this subject because I like this language; I find its sound aspect one of the finest one from linguistic point of view; it helped

me understand some aspects of psycholinguistics; and I do a micro-level business based on this language. The online trend towards Sanskrit is changing as there is a good interest in Sanskrit for users in foreign countries. There is an active group of Sanskrit enthusiasts on Orkut, Facebook and there is a website of post-graduate students from various universities of America that involves blogging in Sanskrit. There are online dictionaries that provide some sort of translation. So, we can estimate that at least there is a curiosity among people of foreign countries. Some interesting facts about Sanskrit: 1. It is the fittest language to be used in computers due to its perfect and smallest syntax 2. Scientists f r o m NASA have found that Sanskrit is the only unambiguous language spoken on the planet 3. Vedic chantingâ&#x20AC;&#x201D;an integral part of Sanskrit has been declared an intangible heritage of humanity by the United Nations Educational, Scientific and Cultural Organization (UNESCO). This was declared in a meeting of jury

members on November 7, 2003 at Paris. Given the potential that this language got from application and usage angels, it remains to be seen how this â&#x20AC;&#x153;refined languageâ&#x20AC;? receives the due deference from the modern world, and generations that had almost negligible exposure to its vastness. Some areas of business around Sanskrit (given negligence towards this language in India, all these opportunities cater to the foreign clients on a large scale): 1. I personally provide tattoo translation services from English to Sanskrit. This business is growing at a good scale in foreign countries where people love to have body tattoos. Clients would include direct customers and designers who provide tattoo-designing services for body-art and for t-shirts also 2. Second business model is to publish and print books of Sanskrit literature. E-books of Sanskrit literature also draw some sort of attention 3. Audio and video related to Sanskrit hymns are in good demand 4. Encoding Sanskrit text for online use and providing software support is another opportunity. Font development is another activity that can be explored up to certain extent 5. Some sundry business opportunities revolving around astrology, Vedic research could also DAR E be explored NOVEMBER 2009 79

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opportunity/sanitation

n August 2008, Sintex Industries joined hands with the British firm Poly John International, to produce 3000 portable toilets for the Beijing Olympics event. This set a milestone—Indian-made portable toilets were being used outside India for the first time. So why is it that we do not hear of this business as an industry with huge potential? There are several reasons. The stigma attached with this unglamorous segment is one of the obvious ones. Then there are policies, lack of public awareness, and so on. However, there is a demand for portable toilets all throughout the year at various sites and occasions.

What is a portable toilet? A portable toilet is a self-contained outhouse unit that is easy to maintain and is mainly used for occasions and site-based requirements such as weddings, events, and festivals etc. The build and weight is such that it does not take more than two persons to transport and fix it. Portable toilets can withstand harsh climatic conditions and are usually made out of high density polyethylene, fiber reinforced plastic and steel. These units are typically freestanding structures, and their stability is augmented by the weight of the waste tank. This waste tank contains an empty liquid disinfectant, dispens-

er and deodorizer. Usually, these units are made for singular function: either with a toilet seat or with a urinal. But some manufacturers combine toilet and urinals based on requirement of their clients. At least 100 people can use it at a stretch before the tank needs to be vacuumed.

The scope of business Portable toilets provide a very good solution for sanitation problems, especially for the construction and infrastructure industry. In these industries, labor health regulations and adhering to environmental norms are of major concern. Some sites of construction where portable toilets can

The Business of Portable Toilets It sure has a social stigma attached to it, but this seemingly unattractive business is vastly unexplored

QUICK FACTS • 85-100 kilos is what a single unit often weighs • 175-300 liters is the capacity of the waste tank • 6-8 feet x 3 feet is the typical dimension of a unit • 75-150 persons can use the unit before the waste tank needs clean-up • Rs 3,000-4,000 is the typical rent charged per day • Rs 50,000-1.5 lakh is what a single unit is usually priced between

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Types of Portable Toilets Single-seat toileturinals Multiple-urinals Combined toilet-urinals Mobile vans with multiple units of toilets/urinals NOVEMBER 2009 81

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Potential Installation Sites Construction sites

Festivals and fairs

Weddings

Crowded market places

Event industry

Sports events

Tourism industry

Urban slums

Camping and retreats

Natural disaster struck areas

be useful are general construction, highway construction, housing, pipelines and excavation sites. Also, given the fact that India is engaged in large number of projects, a good amount of demand in other areas such as mining, remodeling, military, energy projects and dams is also there. The scope for portable toilets spreads into several other areas as well. Take massive festivals like Ganesh Utsav and Durga Puja for instance. The portable units can be put to good use in the vicinity of the pandals for the thousands of devotees. Other events such as weddings, receptions, fairs, sports events, etc could also be target areas for installation of these units. The other sectors in which there lies a huge potential for this business are tourism and events.

Existing business models While talking to manufacturers and dealers of portable toilets in Delhi, Gurgaon and Pune, there is a common observation that we made. Portable toilets as a business is not something that is looked up on as a glamorous industry. Because of the nature of work and the social stigma attached to it, not many get attracted to this line of business. Ashok Bhutani of Bhutani International mentioned that since there is a very low percentage of Indian population who has heard of the concept of portable toilets, not many get interested in manufacturing these units. Also, the finished product price of a single unit falls in the expensive range of Rs 50,000 to Rs 150,000. While there are some manufacturers of portable toilets in India, there are many who 82

simply prefer importing the units from abroad. The most accepted business model that has emerged from this stagnated condition is a ‘for-hire’ or ‘on-rent’ model. Some manufacturers and most of the dealers provide renting services of portable toilets. While renting these portable toilets, they invariably have to provide installation, cleaning and maintenance services. Customers do not like to rent these units and handle them on their own. A single unit of portable toilet is rented for Rs 3000-4000 per day. There are extra charges for services provided for cleaning and maintenance, which could be around Rs 3000 per clean-up. As per one manufacturer of these units, the investment money put into the manufacturing of these units can be earned back in one season—a season like festival and the wedding season. Usually, Indianmade portable toilets can be used for six to ten years at a stretch, while imported units work only for four to five years, which means that apart from labor and maintenance costs, there is scope for pure profit in renting the portable toilets. Some of the players have adopted the franchising model, which can be an area to explore for other players.

In the next 10 years, there will be significant growth in the demand of portable toilets for sale (as compared to the current demand in for-rent model).

– Ashok Bhutani Bhutani International

Evolution of the Portable Toilets Historically speaking, the portable toilet industry began in the 1940s in the ship building yards of the USA. The construction industry was the first one to exploit the benefits of this new unit that could be transported at various sites. In the early 1970s, fiberglass was introduced as a material for portable toilets, but then in mid-1970s polyethylene was introduced and is still used for manufacturing. High density polyethylene (HDPE) is the most popular material for portable toilets today. During the late 1990s, this concept was introduced in India by Shramik Sanitation System. However, as quoted by Bhutani, “As the awareness spreads, the sale of these units should see a jump in the next ten years.”

Hurdles The major challenge is educating people about benefits and usage of portable toilets. Spreading awareness about sanitation linked with health benefits would result in improved demand of portable toilets. There is a potentially huge market out there, but it looks like it will take some more time for someone to actually create it. The other challenge that people in this line of business face is that of bringing down cost price on both business models— sale and rental. Other than this, there are miscellaneous issues that one has to deal with. Some players, who did not want to get quoted, informed us of one such issue, “While transporting these units to clients, traffic rules pose an unsolvable problem. The height and space taken by multiple units while transporting is beyond what is allowed on Indian roads and therefore many dealers end up paying fines for breaking traffic rules.” Though the toilet industry has to follow the waste management guidelines of the government, this is one problem that many of the dealers DAR E are finding hard to solve.

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Opportunities in disposable medical supplies Posted by: Vimarsh Bajpai in Ideas on Oct 06, 2009 Tagged in: opportunities, medical supplies, healthcare sector, Freedonia, Ernst&Young

ndia’s healthcare sector is growing at a fast pace, and in its stride, offers a host of opportunities for entrepreneurs. According to estimates, the healthcare industry is a whopping $35 billion behemoth, and is pegged to touch $75 billion by 2012. With the rise in population and several lifestyle diseases, this sector is all set to boom further. While setting up hospitals and dispensaries is a good business, other areas are medical devices, medical insurance, am-

DARE POLL

bulances, etc. One big area is that of medical supplies. Although no exact data is available on the India market, the clue from the US market could drop some hints. The US demand for disposable medical supplies will rise 4.6 percent annually through 2013, according to the market research firm Freedonia. “The best opportunities are expected in intermittent urinary catheters; dry powder inhalers, prefillable syringes and transdermal patches; blood glucose test strips;

polymer and biological wound closures; and daily contact lenses,” says the firm in its recent study. According to FICCI-Ernst and Young (E&Y) report, medical infrastructure forms the largest portion of the healthcare pie. Beds in excess of one million need to be added to reach a ratio of 1.85 per thousand at an investment of US$ 77.9 billion, it says. The medical equipment industry is pegged at $ 2.17 billion and is growing at 15 percent per annum.

My most important learning from the slowdown is..

DAR E

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very time I read DARE, I can feel a gush of adrenalin to charge me up. I have been for long contemplating an idea-

-in fact to some extent I have experimented with its practicality through a few beta versions. Now I am looking for a mentor and

am a post graduate and was working as an HR head for an IT

firm in Pune. I have left my job just to do something on my own. I am

fellow thinker to build it up together. In brief, this is about Crop Health Management. In essence,

planning to take up a franchise of a

crop health and human or animal health management principles

daycare and pre school. I am looking

are the same, but unfortunately in case of crop health, we are still following a primitive and largely misguided approach. So farmers primarily depend on the advice of its peers and

for an affordable option to start with. Please advise. Payal Agarwal

pesticide of fertilizer sellers for solving its problem. On the contrary, India has a fairly advanced, agriculture science resource base and lot of money has been and are

and more countries are now becoming sensitive about the

pesticide residue and other health hazard issues concerning

a business based on importing solar

agro-commodities.

products from China and was looking

being pored into this sector. Commercially, contract farming is slowly but steadily catching up too. Internationally, more

So my idea is to develop Crop Health Management in the same lines as human health management. In the center of

ublished: October 2009 Balraj Bharadwaj wanted to start

for guidance.

it would be a progressive farmer or a rural youth who will be

Response: October 2009

trained in basic agronomy and crop management to act as

I am interested in getting in

the first point of contact from farmers, in the same fashion

touch with you as maybe we

of a primary health worker. This crop health worker would be supported by a network of scientists, agronomists, laboratories,

can help each other.

agro-input manufacturers, agro machinery manufacturers, Anil Bajaj

etc. The crop health worker would also be connected real time through mobile telephone network (there have been some development in this recently like Reuters’’ Market Light etc) to and fro with the farmers and with the advisors and suppliers. The economic viability would be coming in the similar way a human health professional start his/her practice. So we can think that the crop health advisor would initially collect some

am located in UP at Bareilly. Can anyone help me in setting up a

small to medium fish farming pond? Sanjiv

fee from farmers for advice, field visit, lab test etc and then slowly s/he would scale up by selling fertilizers, pesticides etc. The Government can also use them for communication and implementation of rural development projects, while the private sector can use them to promote their products. They can be the facilitator for large scale contract farming, organic farming etc.

e are interested in setting up a bicycle unit and are looking

forward to meet consultants and

If anybody finds interest in this concept and shares the same passion to be the harbinger of Green Revolution, please get in touch with me for further brainstorming. Sharbendu Banerjee

international players to start a joint venture company. Saurabh

NOVEMBER 2009

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Exchange DARE.CO.IN

Submit exchange requests at: website: www.dare.co.in OR

• partners • mentoring • funding • guidance • advice • ideas...

email: dare@cybermedia.co.in OR SMS ‘DARE <your msg>’ to 56677

PREMIUM

ublished: August 2009 1. Sharbendu started a organic agriculture

commodity business and was looking for investors to launch the business on a commercial scale.

ublished: September 2009 Deepak was looking for funds for a project

that could break even in the first year itself. Response: October 2009

2. Sandith developed a business proposal and

I would like to contact Deepak.

wanted funds to scale up the idea after being launched as a prototype.

Prasant Misra I am a serial entrepreneur, and also have a small VC

3. Harpreet started an online business on gaming/

fund called Diamonds in the Rough. Please send us

auction model and was looking for funds to scale

your proposal. Please make it short and include

up the idea.

numbers/assumptions. The 50L to 1Cr is for what percent of the company?

Published: September 20009

Akshat Rathee

4. Deepak Bijaya Padhi had a business idea that could break even in the first year for which he was

What is the business location?

looking for funding.

Manoj

5. Lalit Ranjan Manik wanted to start a tele-health

I am from Bangalore. I would like to know more

business and was looking for investors.

about your project as I am interested in investing some money. Please let me know what is the

6. Santosh was looking for funds for his crafts center

minimum investment, what is the plan and more

in Chennai, which he was eventually planning to

such details.

extend to other southern cities.

Srivathsa

Response: October 2009

I have raised funds for my own company in the US

Abhijeet Bhandari had written into DARE

and have successfully exited a business in the US.

seeking the contact details of the above

If you like, I can help you raise the funds.

mentioned people.

PREMIUM

Anil Gupte

SMS: “DARE <your comments, questions or suggestions>” to 56677 Email: dare@cybermedia.co.in Website: www.dare.co.in Follow us at: http://twitter.com/daretostartup NOVEMBER 2009 85

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event/headstart

Headstart

Startup Saturday The October edition of Startup Saturday was a four-city event held in Bangalore, Delhi, Mumbai and Kolkata

he second Saturday of October witnessed the coming together of entrepreneurs in four cities of Delhi, Bangalore, Mumbai and Kolkata for the Headstart Startup Saturday—a platform that provides entrepreneurs a forum to share their views and experience as well as network. In Bangalore, two companies, Flipkart and Picsquare, gave their demonstration. Picsquare provides online photo services where one can upload, view, share and order online high quality prints of digital photographs. It can also be used to create customized products like t-shirts, mugs, calendar, and greeting cards. Recently the company also introduced a sys86

tem of having chocolates with edible pictures on them. Picsquare has now been acquired by InfiBeam. The next speaker was Shivku, Vice President of Flipkart, defined as the “Amazon of India,” who also gave a presentation during the event. At the ‘Lightning Pitches’ session, Attribo (an upcoming cloud management software and solutions company), First 10 (a social media marketing organization), don’tspendjustsend.com (a company that encourages people to send greeting cards with little or no costs) and blumblum.com (a site that facilitates creation of online wedding invitations for free) presented their demo. Lightning Pitches is a platform where entrepreneurs are given two minutes

to give a demonstration of their business, which is followed by a three minute question and answer session. In Delhi, the Startup Saturday was held at the American Center, with three entrepreneurs Bipin Singh, CEO of MobiKwik, Manish Rathi from GlobalLogic and Rajeev Kumar CEO of Rocke Talk sharing their experiences. Bipin, started the afternoon with an introduction of MobiKwik, a company working in the online mobile recharge space launched two months ago. Manish Rathi talked about the opportunities in the healthcare space in India. Finally, Rajeev Kumar gave a presentation of Rocke Talk that has brought voice-based ‘chat rooms’ to smaller cities, towns, sub-urban and

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rural parts of India. It has done so by developing a small downloadable application that allows people not connected to the Internet to use their mobile handsets to communicate with others, using voice and GPRS. In Mumbai, the hot topic of the month was the retail market. Successful retail entrepreneurs including Dheeraj Gupta of Jumbo King fame and Mohit Nalawde, a serial CEO handling profiles such as Gitanjali, Dâ&#x20AC;&#x2122;damas, The Bombay Stores, etc, discussed the present retail scenario in India. Dheeraj Gupta, who started his business with as low as Rs two lakh, discussed about hurdles he faced and how he could overcome them. He also shared a few business mantras for a successful business with the audience. On the other hand, Mohit Nalawde, who started as early as in the tenth grade, discussed his interesting journey from a school boy who dealt with converters to grabbing the first project in his first semester of B.Tech to forming a company. Mohit then went on to speak about retail. The Kolkata Startup Saturday was a small event with a strong audience of 13 people. D A R E

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people/street business

Thanks to a lot of customers who donâ&#x20AC;&#x2122;t pay their huge dues, Bhola Nath - a tea-stall owner, also for scrap metal to make up for the loss. 88 scavenges NOVEMBER 2009

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people/street business

The microentrepreneurship of a roadside tea vendor The dynamics of how chai-walas manage this small-scale but extremely popular business, which is omnipresent in India

ea (Chai, Chaya) is undoubtedly the singular most consumed beverage in all Indian households. India is the one of the largest producers of tea in the world. According to the statistics available on Indian Tea Boardâ&#x20AC;&#x2122;s website, India produced 972.77 million kilogram of tea in 2008-09. Out of this, about 20 percent, i.e. 203.12 million kilogram, was exported. This means, about 80 percent of the total produce was consumed domestically. Having said that, it is not surprising that there are millions of

micro-entrepreneurs who thrive on the business of vending tea. It is not far-fetched to say that chaiwalas, as they are fondly called, can be found in every nook and corner of the countryâ&#x20AC;&#x201D;from busy urban street corners to remote villages, at bus stands, railway platforms, footpaths, outside corporate houses, marketplaces, and many more such places. Ever wondered what are the business dynamics that these microentrepreneurs operate in? We spoke to several such tea-vendors to understand it better.

/Vivek Kumar Microeconomics of the business Most chai-walas have a push-cart or a makeshift kiosk or simply a small wooden stand that is used as a basic business setup. On an average, a single push-cart would cost him Rs 2,000 to Rs 4,000 to buy; where as it would take as much as Rs 10,000 to Rs 15,000 to install a kiosk. Besides these, there are several other elements that he needs, such as utensils, tumblers, stove or gas-burner, and cylinders. All of these assets are mostly owned by the chai-wala himself. The business hours that a chaiwala operates in are largely dependent on the location of his unit. The profile of customers he gets is a mix of laborers, daily-wage workers, wandering ascetics to the common householders, young students, professionals, and employees of corporate companiesâ&#x20AC;&#x201D;this again is dependent on where his shop is located. In smaller cities, chai-walas use oil-fed stoves, but in bigger cities, where consumption is more and requirement is extremely fast, they use LPG cylinders. We spoke to several chai-walas in Gurgaon. As it turns out, on an average these tea-vendors produce 250-300 cups of tea every day. This means that on an average day, a chai-wala needs the following amount of ingredients: 5 liters of milk, 2.5 kilograms of sugar, and 250 NOVEMBER 2009 89

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people/street business

DID YOU KNOW? The National Policy on Urban Street Vendors, 2009 recognizes street vendors, hawkers, pheriwallas, rehri-patri wallas, footpath vendors, sidewalk traders, etc, as an integral and legitimate part of the urban retail trade and distribution system. You can download the complete policy document at http://bit.ly/2ZaSkV

Rajesh Kumar and his brothers manage the tea-stall in rotation - while one manages the stall in Gurgaon, the others stay in Bihar to manage their farmland and look after their parents.

USP OF A CHAI-WALA Quick service

grams of tea-powder. The quantity of ginger and cardamom varies according to the demand. A quick calculation reveals that for a cup of tea that he prices at Rs 4 to Rs 5, the actual cost that he incurs is Rs 1.5 to Rs 2. This means, he is making a straight 60 percent profit on each cup of tea consumed. Typically, a single LPG cylinder will last him for about 15-20 days. And of course, tea is not the only item that one would find at a chaiwala’s. The miscellaneous other products that he sells include cigarettes, candies, cookies, crackers, chips, etc. The profit margin on these might not be as good as tea, but it helps to keep these available in the shop to ensure that interested customers can fully enjoy their tea. While talking to many of these chai-walas, we found out that the family members of many of these micro-entrepreneurs are actively involved in this business. This saves on the cost of employing the service of a 90

chottu or a helper, who cleans the table, washes the cups and plates, etc. Many of these chai-walas located in big cities are migrants, who do not have permanent home address and therefore can’t get government gas cylinder connection. For such chaiwalas, LPG can be one major cost factor as they depend on gray market for supply; and they end up paying as much as Rs 800 for each refill.

Challenges faced by these micro-entrepreneurs One of the biggest challenges faced in this line of business is recovery of money from regular customers, who consume a lot of tea and other products from a chai-wala’s shop on a credit basis. These ‘bad-debts’ are especially huge for vendors supplying tea to corporate houses and shopping complexes. Since most of these vendors have a small space to run their business in, the scope of expansion in the same area is fairly limited. During mon-

Customized tea flavor and type Ease on the pocket Availability of miscellaneous eatables Availability of space to hangout, gossip, smoke, etc soons, the vendors who do not have a head-shelter made for their shop lose out on a good amount of business. Among other problems, dealing with authorities such as the municipality and police can get menacing. One would think that in the days of modernized food outlets and hangouts, why would anyone want to go to this chai-wala? Especially when one can sit in an air-conditioned room and sip on tea and coffee at reasonable rates. What we could figure from the customers who are regulars at the chai-walas is that there is a sense of socializing and attachment that happens out there at the makeshift kiosks that makes it a place to frequent. Of course, the taste and smell of the tea beckons all those who have had it once! D A R E

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DARE.CO.IN

blogs/opinion

Why Entrepreneurs Turn Recluse? “A certain recluse, I know not who, once said that no bonds attached him to this life, and the only thing he would regret leaving was the sky” /Anurag Batra

et me give you the Oxford dictionary meaning of a recluse — A person who avoids others and lives a solitary life. Let me also give you the Oxford Dictionary meaning of an entrepreneur — A person who sets up a business or businesses. A recluse entrepreneur is, by definition, an oxymoronish phenomenon! Contrast it to the Richard Branson, Vijay Mallya phenomenon. I am everywhere and I am visible. Being visible as an individual is part of the brand persona of the brand and the entrepreneur. In fact being reclusive can be a carefully thought out business and personal strategy. Sometimes an individual’s personality is more suited to not being visible. The entrepreneur drives his persona from not being accessible, approachable and making sure he or she is not answerable, accountable and hence never under attack and accountable. It also makes the entrepreneur’s occasional appearance powerful and creates a charisma

around the business and the entrepreneur. In India, especially in the media business, Samir Jain of Bennett, Coleman & Co can really be an example of a recluse entrepreneur. Questions that one must try answering while talking of reclusive entrepreneurs are: 1. When did he or she in his/her journey become recluse? (The assumption is that at the start, the entrepreneur wasn’t a recluse). 2. Does it apply to a secondgeneration entrepreneur because he or she can afford to be a recluse? 3. Is being recluse a good or a bad thing for an entrepreneur? 4. What about businesses where entrepreneurs need to be in the forefront doing deals, meeting decision makers and leveraging opportunities? I guess the answers to all these vary from entrepreneur to entrepreneur and the reasons for being reclusive could be irrational, emotional and very personal. Finding a recluse entrepreneur in today’s 24 by 7 news media

cycle is a rare phenomenon and I mean it quite literally in every sense of it. My explanation for an entrepreneur being a recluse is that he or she wants to avoid public scrutiny, sometimes an aggressive media is what one is avoiding, and last but not the least the entrepreneur wants his/her CEO to be accountable and engaged to and with the outside world. As I said, it works for some and some do not believe in it. I was recently in Kuala Lumpur and was told about the reclusive Malaysian entrepreneur who owns many multi-billion dollar businesses and his being recluse is what triggered the thought in me and I started asking why so? At the end of this article it would be apt to say “The writer is either a practicing recluse or a delinquent, guilt-ridden one; or both. Usually both.” 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. NOVEMBER 2009 91

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Organizations DARE.CO.IN

covered in this issue, in alphabetic order; first appearance

Amar Chitra Katha ................................................. 46

Gitanjali.................................................................. 87

National Informatics Center ................................... 59

Amazon ................................................................. 96

GlobalLogic............................................................ 86

American Center.................................................... 86

National Research Centre for Onion and Garlic .............................................................. 67

Google Inc. ............................................................ 96

Archies................................................................... 46

GreenOBin............................................................. 55

National Technology Mission on Technical Textiles .............................................. 36

Asian Paints ........................................................... 32

Gridbots ................................................................. 34

National Thermal Power Corporation ................... 17

Avigo Capital.......................................................... 34

HP India ................................................................. 68

Naukri.com ............................................................ 96

Bharat Petroleum Corporation Limited .................. 97

Hyatt Regency ....................................................... 68

NextGen PMS Pvt. Ltd........................................... 97

Bhutani International ............................................. 82

IBM ........................................................................ 48

NHPC .................................................................... 48

Bihar Development Trust ....................................... 20

ICICI Bank ............................................................. 97

Noida Toll Bridge Co. Ltd. ...................................... 51

BillDesk............................................................ 76, 77

IDC ........................................................................ 68

Nutrolics................................................................. 96

BITS....................................................................... 97

IDC India................................................................ 68

NxT ........................................................................ 97

Bombay Stock Exchange....................................... 32

IIM, Bangalore ....................................................... 97

Picsquare............................................................... 86

Business Co-ordination House .............................. 36

IIT Kharagpur......................................................... 97

plugHR................................................................... 33

Cantabil Retail ....................................................... 40

IIT Roorkee. ........................................................... 97

Poly John International .......................................... 80

Center for Rural Development ............................... 19

India Book House (IBH) ......................................... 45

Raj Comics ............................................................ 45

Central News Agency (CNA) ................................. 45

Indian Agro and Recycling Paper Mills Association.......................................... 54

Rani comics ........................................................... 46

Indian Paper Mills Association ............................... 57

Reliance Natural Resources Limited ..................... 16

Indian Tea Board.................................................... 89

Rocke Talk ............................................................. 86

Infosys ................................................................... 97

SalvageSettlers ..................................................... 33

CyberMedia ........................................................... 57

ITC ......................................................................... 57

Shramik Sanitation System ................................... 82

Dabur India Ltd. ..................................................... 51

Jumbo King............................................................ 87

SIDBI ..................................................................... 24

Deccan Chronicle Holdings Ltd. ............................ 51

jumpStartUp .......................................................... 33

Sintex Industries .................................................... 80

Delhi Press ............................................................ 46

Kazeon Systems.................................................... 76

SMC Capitals......................................................... 34

Dell ........................................................................ 48

Klimart ................................................................... 34

Deloitte .................................................................. 68

Landscape Development ....................................... 48

Symbiosis Centre for Management and Human Resource Development ......................................... 96

Diamond Comics ................................................... 46

Life Insurance Corporation of India ....................... 60

DiGibee Microsystems........................................... 76

Malayala Manorama ............................................. 46

Disney Comic ........................................................ 46

Media Guru Consultants ........................................ 46

DiVitas ................................................................... 76

Mimosa Systems ................................................... 76

Dot Now ................................................................. 97

Mindtree................................................................. 97

Ernst and Young .................................................... 83

Ministry of Petroleum & Natural Gas .................... 16

FICCI ..................................................................... 83

Ministry of Renewable Energy ............................... 97

United Nations Educational, Scientific and Cultural Organization .......................................................... 79

Flipkart................................................................... 86

Ministry of Textiles ................................................. 39

Variety Book Depot ................................................ 46

Freedonia............................................................... 83

MobiKwik ............................................................... 86

Vodafone................................................................ 46

Games2Win ........................................................... 77

Muthu comics ........................................................ 46

Wipro Ltd. .............................................................. 51

Gas Authority of India Ltd ...................................... 17

Nastrac .................................................................. 34

World Wildlife Fund................................................ 97

Chenab Technologies ............................................ 33 Chronosphere ........................................................ 34 Cisco...................................................................... 68 Clearstone Venture Partners ................................. 76

Reliance Industries Limited .................................. 16

Tata Institute of Fundamental Research ............... 67 The Bombay Stores ............................................... 87 ThisNext ................................................................ 76 Tom Cartoons ........................................................ 46 Ujjwal Enterprises.................................................. 48 Unique Identification Authority of India .................. 59

NOVEMBER 2009

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People DARE.CO.IN

covered in this issue, in alphabetic order; first appearance

Abhay Vakil ...................................... 32

Mohit Nalawde ................................. 87

Abhishek Humbad ........................... 97

Mukesh Ambani ............................... 16

Anil Ambani...................................... 16

Murli Deora ...................................... 17

Anil Chandhok ................................. 33

N Vittal ............................................. 59

Anshul Gupta ................................... 33

Nina Alag Suri.................................. 34

Ashok Bhutani ................................. 82

Nitin Goel ......................................... 55

Ashwin Choksi ................................. 32 Ashwin Dani..................................... 32 Atul Chaturvedi ............................... 17 Bhupesh Trivedi ............................... 34 Bipin Singh ...................................... 86

Om Arora ......................................... 46 Paranjoy Guha Thakurta.................. 68 Patrick Mathias ................................ 68 Paul P Maria .................................... 68

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

PM Murty ......................................... 32 Pranab Mukherejee ......................... 17

Deepak Sehgal ................................ 45 R.S. Pandey ..................................... 17 Dev Gujral ....................................... 48 Rajeev Kumar .................................. 86 Dheeraj Gupta ................................ 87 Ram Sewak Sharma........................ 59 Dhirubhai Ambani ............................ 16 Ravindra Wadekar ........................... 48 Dr Pradip Kumar Sarmah ................ 20 Richard Branson .............................. 91 Dr Surya P. Sethi.............................. 17

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.

S. N. Prabhakar ............................... 45 Gaurav Gupta .................................. 97 Samir Gupta .................................... 36 Gulshan Rai ..................................... 46 Samir Jain........................................ 91 Irfan Alam ........................................ 19 Jagannadham T ............................... 34 Jogarao Bhamidipati ........................ 57 Kanwal Sujit ..................................... 34 Kapil Dev Singh ............................... 68

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

SammaaN Foundation .................... 19 Sanjay Sharma ................................ 68 Sanjeev Bhikchandani ..................... 96 Siva Hota ......................................... 68 Snehil Taparia ................................. 97

Kokilaben Ambani ........................... 16

V. K. Sibal......................................... 17

Koustabh R ...................................... 96

V. Premnath ..................................... 22

Manish Rathi.................................... 86

Venkata Sashank............................. 97

Manoj Gursahaney .......................... 19

Vibhor Jindaland .............................. 22

Manu Vinod...................................... 68

Vijay Bansal ..................................... 40

Mohammad Mehtab......................... 18

Vijay Mallya...................................... 91

SMS â&#x20AC;&#x153;DARE <your comments, questions or suggestions>â&#x20AC;? to

56677 dare@cybermedia.co.in

NOVEMBER 2009 95

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DARE.CO.IN

Money-wise Entrepreneurs Emerging entrepreneurs from the NEN community are working on smart strategies to get their first capital in—and they do not include wooing a VC

n the mid-1990s, Google Inc. started with $100,000 and Amazon with $40,000. At around the same time, Sanjeev Bhikchandani founded Naukri.com, India’s top job portal, working out of his family’s garage, paying Rs 800 every month to his father. Inspiring startup stories—yes, but are these exceptions, belonging to another time and age? Today, would you need a lot of money to launch your business? Is it wise to put your ideas on hold until you get venture capital? Should you consider if your startup is of a kind that venture capitalists would be interested in? Stories emerging from the NEN community reflect interesting ways in which new entrepreneurs are tackling these very questions. A new graduate sells herbal juices because the venture has low operating cost; a team of engineers tackle new opportunities with minimal investment and another refuses an investor because his startup is not mature enough to receive funding. Here are their stories.

Nutrolics: Koustabh R Koustabh’s company ‘Nutrolics’ delivers fresh herbal drinks at the doorstep. Two months ago, he started with 60 customers. Today he has 250 clients, eight employees and Rs 50,000 in monthly revenue. 96

Koustabh R What did Koustabh do to get funds? Took up the job he got through campus placement, organized white water river rafting expeditions, and conducted salsa classes. Within three months of working in a company in Kolkota, he had savings of Rs 1.7 lakh, the amount he had estimated for his seedfund. That’s when he quit his job, returned to Pune and launched his company. “I have seen many new entrepreneurs go wrong in their financials and 70 percent of the time, it is their miscalculation that leads to their startups going kaput. I tried to learn as much as I could about financial

planning through the workshops and entrepreneurial talks we conducted at our campus E-Cell. Thanks to that knowledge, I reverse calculated my finances before taking the plunge,” shares Koustabh, an ex-E Cell coordinator at Symbiosis Centre for Management and Human Resource Development, Pune. He expects to plough back Nutrolics’ revenue to expand and automate production processes in the coming months. And when he enters the final phase of his plan, which will focus on research, he hopes to secure private equity.

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DARE.CO.IN Is he looking for a VC? “To get funds from a VC at this stage of my startup is like getting struck by lightening in the bottom of a swimming pool. I’d rather focus on my customers,” he adds with a laugh.

NextGen PMS Pvt. Ltd.: Abhishek Humbad, Snehil Taparia and Gaurav Gupta Abhishek, Snehil and Gaurav, members of Birla Institute of Technology, and Sciences-Pilani’s Entrepreneurship Cell ‘Centre for Entrepreneurial Learning’ (CEL) founded NextGen, an energy and environment consulting firm, in December 2007. Their initial plan was not this. They had aimed to enter the renewable sector by setting up biogas plants. But they soon realized that they didn’t fit the VC mould. So did they give up? Not at all. They developed an entirely new approach to tackle the opportunity in cleantech energy, by moving into consulting—a good business with very low capital requirements. They started by taking part in B -plan competitions at several institutes and won Rs 1 lakh in hard cash. That was their first capital. They conducted carbon footprint reports

for BITS campuses in Pilani and Goa, IIT Kharagpur and IIT Roorkee. While their services were free, it was a worthwhile investment in other ways. It increased their learning and built their credentials. Abhishek followed this up with an internship at YES Bank, which, in February 2008, became their first paying customer. The team attended conferences and transformed them into marketing opportunities. This is how they got their second customer, Intel India, in October 2008. Since then, the company’s client list has grown to include ICICI Bank, Ministry of Renewable Energy, Bharat Petroleum Corporation Limited, World Wildlife Fund, Infosys, Wipro and Mindtree. They have managed to keep their operational costs low by working out of an incubation center first at BITSPilani, and later at IIM-Bangalore. The result: Net revenue in the last 10 months has touched Rs 25 lakh.

NxT: Venkata Sashank Sometimes, even when the money is on the table, it might be a smart idea not to take it. This is what Venkata Sashank did when an investor came to him with a lucrative offer, in less

Abhishek Humbad, Snehil Taparia and Gaurav Gupta

Venkata Sashank than a month after he founded NxT —a startup that builds business models for SMEs. Four months later, in May this year, Venkata faced his biggest financial crunch. He had appointments with federal officials in the US, but a key client defaulted and Venkata was left broke with no money to even buy his flight tickets. He borrowed from his family and friends—a debt he is still paying. He co-founded another company Dot Now, that provides social media strategies to SMEs, to complement NxT’s offerings. But he didn’t call back the investor. “I was shocked and scared. I didn’t need that much money to start my company, but more importantly, I had no intention of selling my idea or letting anyone else have a majority stake. I want to continue building my startup my way, even if it means I have to struggle—for the valuation of my company will be many times bigger than this offer in a few years,” says Venkata. “As long as I believe I can deliver, I will win—even when the money runs DAR E low,” Venkata adds. More articles on www.nenonline.org. Content provided by NEN NOVEMBER 2009 97

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Government Funding for Technology Startups Knock on the government’s door. You will be surprised by what you ﬁnd

Micro Financing Cycle Rickshaws

A Pivot Irrigator with a Difference

New World of Technical Textiles

Business of Portable Toilets

entrepreneur of the month/

Vijay Bansal, Cantabil Retail

Implementing IFRS investor of the month/

Sumant Mandal, Managing Director

Comics Go Digital columns/

A Tale of Two Feuding Brothers Why Entrepreneurs Turn Reclusive 100 pages including cover