Vol 3 / Issue 05 / Feb 10
/Rs 30
Subscriber copy. Not for sale
A new model for early-stage venture capital investments
Scaling up your business Help with business plans Why you can no longer kill competition The links of the supply chain Mumbai as the world's financial capital? M&As in times of financial crisis Business of foreign language schools
entrepreneur of the month/ Dr Krishna M Ella, Bharat Biotech investor of the month/ Harshal Shah, Reliance Technology Ventures columns/ No room for comfort Role of chaos in an entrepreneur’s life Rethinking the Indian strategy Insights from a visit to the auto expo’10 100 pages including cover
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th year of Indian Republic? Where are you in 60th
and
initiative to help emerging Indian businesses become world class players
Envision is a 360 degree, immersive experience for the participants The challenges that Indian emerging businesses face are manifold. They start with lack of information and go on to larger issues like funding, marketing skills, talent management and so on. Unless these challenges are identified and addressed well and in time, these emerging business will remain just that – emerging and will never be able to realize their full potential and promise. While each one of these is well worth a full term course at the best of management schools, EnVision will attempt to get them started with basic concepts and tools along with contacts and networking opportunities. It includes: • A one-day seminar with two tracks, one for directors and CEOs and the other for other C-Level executives • Group mentoring clinics on specified topics • One on one mentoring sessions with experts • A DVD with seminar videos, presentations and tools that the participants can refer back to • A website that can carry forward the discussions and deliberations • A services exchange online that the participants can use to exchange services amongst themselves • Book with articles and research documents that can help in their business
For more information please visit: www.dare.co.in/envision or contact Vinod Singh Email: vsingh@idcindia.com Phone: +91-9899893331
WHY TO ATTEND Industry and product/technology experts from the sponsor organisation would be able to present the Envision viewpoint on how to empower SMB organizations to effectively manage their workforce and how to enable enterprises to reduce costs, increase productivity, improve employee satisfaction, and ultimately enhance the level of service they provide to their customers Delegates would have an opportunity to interact Face-to-face with sponsor vendor experts and gain insights into the different business aspects like Funding, Branding, Quality and process, Talent management, tapping the global market and their likely benefits in terms of cost savings, easier manageability and better RoI Delegates would be able to participate in-group mentoring on specified topics with market Gurus and exchanges notes as well as discuss issues of common interest with the peers.
WHY TO SPONSOR Envision would directly target 70-75 unique organizations. A great opportunity to directly target senior business and technology decision makers such as CEOs, CFOs, CMOs, COOs, CIOs/VPs/GMs and Heads of IT and Directors/Heads/ VPs/GMs from emerging user enterprises across important industry verticals Presentation by Group Editor from DARE who will provide a perspective on the opportunities, tools and best practices to exploit new business areas and how to grow in the downturn economy. An opportunity for Partner to leverage on a neutral platform created by DARE and IDC to strengthen its relationships with emerging enterprises from key industry verticals. Online Mentoring: Post-event Service Exchange for better connectivity with delegates. Post-event capsule in DARE Magazine (February 2010 & March 2010 Edition)
BOARD OF ADVISORS C K Prahalad
University of Michigan
N R Narayanamurthy
Chief Mentor, Infosys
Kanwal Rekhi
58 Cover Story
Chairman, TiE
Romesh Wadhwani Chairman & President, Wadhwani Foundation Gururaj ‘Desh’ Deshpande
A new model for early-stage venture capital investments
Chairman, Sycamore Networks
Saurabh Srivastava Chairman, Indian Venture Capital Association Kiran Mazumdar Shaw R Gopalakrishnan
Chairman & MD, Biocon Executive Director, Tata Sons
Philip Anderson
Professor of Entrepreneurship, INSEAD
Shyam Malhotra Editor-in-Chief Abraham Mathew President Krishna Kumar Group Editor ANALYSTS Abhishek Chanda Aman Malik Binesh Kutty Nimesh Sharma Shivani Singh Vimarsh Bajpai Vivek Kumar
We need a system that can quickly identify and invest smaller amounts in a very large number of ideas and prepare them for growth stage investments
OPERATIONS Ajay Dhoundiyal Product Manager Prasanna Srivastava Product Manager VIjay Rana Design Anil John Photography SALES & MA Jaideep Mario Gabriel Ankur Kalia Abhinav Trivedi Baijau Abraham Kingshuk Sircar
MARKETING Associate VP West North North South South-East Asia
PRINT & CIRCULATION SERVICES Rachna Garga VP T Srirengan GM, Print Services Sudhir Arora Senior Manager Circulation Pooja Bharadwaj Assistant Manager, Subscriptions Sarita Shridhar Assistant Manager, Reader Service Printed and published by Pradeep Gupta. Owner, CyberMedia (India) Ltd. Printed at International Print-O-Pack Limited, B-204-206, Okhla Industrial Area, Phase 1, New Delhi-20 Published from D-74, Panchsheel Enclave, New Delhi-17. Editor: Krishna Kumar. Distributors in India: Mirchandani & Co., Mumbai. All rights reserved. No part of this publication may be reproduced by any means without prior written permission. BANGALORE 205, 2nd Floor, # 73, Shree Complex, St.Johns Road, Tel: 43412333 CHENNAI 5B, 6th Floor, Gemini Parsn Apts, 599 Mount Road, Tel: 28221712
40 strategy Scaling up your business Taking your business to the next level requires judicious deployment of capital and human resources.
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 Flat No. 9, F Block, Popular Heights 3 Koregaon Park Tel: 65000996 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 4
FEBRUARY 2010 | CONTENTS | DARE.CO.IN
contest 84 Write a business idea The idea can be as crazy as you wish, but should somehow link to the picture
DARE.CO.IN
strategy
54 investor of the month
The links of the supply chain 17
Harshal Shah
Mumbai as the world's ďŹ nancial capital? 34
Reliance Technology Ventures
M&As in times of ďŹ nancial crisis 70 Help with business plans 87
from the blogs
Shah shares his insights into the world of funding.
Of entrepreneurship and bandhs 25 Why you can no longer kill competition 26
blogs/columns 14 opportunities
Paranjoy Guha Thakurta 17
Foreign Language Schools
Anurag Batra 28
With a number of people keen on learning foreign languages, the demand for training institutes is on the rise.
events
Vijay Anand 64 Rupin Jayal 85
SME Knowledge Forum 44 Startup Saturday 68 Tata Jagriti Yatri 76
opportunities Business of Balloons 46
30 entrepreneur of the month
Dr Krishna M Ella society
Bharat Biotech
A conversation with an ordinary farmer 96
others Exchange 8 Feedback 12
He speaks to us about his entrepreneurial journey, and share his insights on the biotech space. DARE.CO.IN | CONTENTS | FEBRUARY 2010 5
6
NOVEMBER 2009 | COLOMN | DARE.CO.IN
blogs/edit
The best form of marketing
T
he best form of marketing they say, is when your customers speak up on your behalf. Unfortunately, for most, customers tend to speak up only when they have a problem or a complaint to make. On the other end of the spectrum is Apple. As I am writing this, the whole world is buzzing about the soon to be launched Apple tablet device. Apple has been able to generate so much of buzz by the simple process of keeping quiet about it, barring a well planted leak or two. Somewhere in between these two extremes are user groups. There are user groups actively created and mentored by companies and then there are user groups that are formed by users themselves. A user group is not just an extended marketing arm for a company, but also works as an excellent feedback mechanism as well as a committed beta testing ground for new products and services. Amazingly, it does not take too much effort or expense to create a user group. Simple online tools like Yahoo Groups, Twitter and Facebook are excellent online platforms you can use to get started at virtually no cost. You could then extend it both online and offline through web conferences, invitations to product previews. How cool would it be for them to bring a friend along to show off their access to the company and you get one more person rooting for you in return? All these are easy to do, but unfortunately, they remain easily said than done even while companies of all sizes and shapes bemoan that they do not have enough marketing budgets. Part of the problem is that while these things are easy to do and do not take direct investments, they require one investment that many do not think of making – manpower and time. The big fish can get over this problem by outsourcing the job to an agency, if they are interested. For the rest of us, since we have neither the money nor the manpower, we tend to ignore our best form of marketing anyway.
/Krishna Kumar DARE.CO.IN | BLOGS | FEBRUARY 2010 7
Exchange Submit exchange requests at: website: http://www.dare.co.in/ marketplace.htm OR email: dare@cybermedia. co.in or SMS ‘DARE <your msg>’ to 56677
M
ohini is a part of a startup and was hoping to check if there are any recruitment agencies that specialize in providing access to staff meant for luxury/premium outlets.
Response We are an executive recruitment firm, please contact me to discuss further. Jagdish Tadasad
M
urli is the owner of an Indiabased electric vehicle portal and is interested in online startups. He was looking to make an e-portal for knowledge seekers. Response I am an electrical engineer by profession and work in the automation sector. I am interested in joining your project. Could you send me some more details? My father is also an electrical engineer working with Tata motors and would be interested in the electrical vehicles portal. Nimish Deo
R
avi was interested in the mango kernel extraction business and would like to have more details on the same. Response What kind of partnership are you looking for? Are you looking for a buyer or supplier or management team? I am actively looking to set up the same. Also which location are you interested in? Ravi Kumar
A
rvind from Anveshan Biotech is into plant tissue culturing. He was looking for people or company who would like to market their G9 Banana plants. Response We are interested in marketing your G9 Banana plants. Please send me all the details. Satyaswaroop Das
I
have a concept on Remote Healthcare Services—an end-toend healthcare delivery system for 8
FEBRUARY 2010 | EXCHANGE | DARE.CO.IN
the developing world. I am looking for people who want to be a part of the core team and also angel funding to kick off the pilot project. Srinivas Kaja
I
would like to connect with entrepreneurs who share a passion for creating a gen-next serviced apartment accommodation and possess incumbent relations with market decision-makers. Vijay Singh
W
e manufacture bamboo flooring in India and are pioneers in this field; we had to face various problems in the process of manufacturing. Now we are making international quality bamboo flooring using sophisticated European machines. As we have to compete with Chinese bamboo flooring products in the market, we cannot afford to sell ours through normal marketing channels [wholesaler, retailer, etc]. The product is sold through agents in various cities and towns. We are looking forward to appoint educated, unemployed people to market our product. Investment is minimum [as security deposit], no stock is required to be maintained. If someone has a show room, it is okay otherwise one can do direct marketing [like Aquaguard Water Purifier]. Gautam Kothar
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e are in the process of starting a low cost 120-bedd hospital chain along with nursing colleges in South India. We are in the design phase of the first project at present. We are looking at energy efficient green buildings and plan to plug the shortage of quality, affordable healthcare facilities in various district headquarter towns with clear emphasis on gynaecology, pediatrics, cardiology, urology, neurology and emergency medicines. We are looking at project partners for funding and other related consultancy. Zahir Ali
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e are looking for a young entrepreneur to start our MNC FMCG distribution in western Orissa. Interested parties with financial and infrastructural capacity can contact for business worth Rs1.6 crore. R. Ganeshraj
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e are an NGO working in rural sanitation and a technical training program for the rural youth. We are looking for financial support in this project for BPL families. Thasra Agro Consumers Sanstha
M
y name is Vineet Singh and I have been running a social initiative named United Arts Society (UAS) since last three years. We as an organization initiated our journey in Bangalore and made some substantial shift in the domain of primary education of various art forms for school-going students and also art awareness amongst various age groups in all layers of society. UAS has been registered as a Charitable Trust in Aug 2007, but till date we have followed the path of social entrepreneurship for functioning. To expand the reach of the initiative to newer soils and for more learnings, I decided to move to Delhi and start a Delhi chapter of UAS. A substantial strong team was taking care of Bangalore operations with my guidance and feedbacks. It’s been six months that I have relocated to Delhi. UAS team in Bangalore is currently running two centers for Young World Forum which is the main initiative of UAS. Apart from
Exchange 10
FEBRUARY 2010 | EXCHANGE | DARE.CO.IN
that, conducting various themebased art camps, first touch event and researching on project of holistic education through arts and creative medium in schools. I have been doing the same projects here in Delhi and Gurgaon. Two of the leading team members of UAS Bangalore have decided to formally leave us because of their personal commitments and situations in their life. This may lead to immediate close down of UAS initiative in Bangalore. Bangalore Chapter of UAS means a lot to me and to the initiative as a whole. I need to relocate back to Bangalore latest by January end to handle things and revamp the system again. I would like to seek your support and guidance for smooth relocation back to Bangalore. Some form of support whether financial or reference to find a job to pay my monthly bills (Rs. 30,000) would be a great help. My detailed profiler describes my skills and experiences. Vineet Singh
W
e are the regional coordinators of C-DAC GIST PACE, a multilingual computer training program of the Scientific Society of Ministry of Communications & Information Technology, Government of India. We are looking for expansion through franchisee model called “Authorized Training Centers” across India. C-DAC GIST PACE has always been at the forefront of the multilingual revolution in IT education. GIST PACE Multilingual training programs have carved deep inroads into this niche area. The C-DAC multilingual software is being used by a large number of government institutions as well as organizations. Multilingual computing offers exciting career opportunities in the field of desk top publishing, programming, web publishing, office automation and so on. We provide complete support to start ups viz. town/area/location selection, site selection, training, etc. Interested entrepreneurs can
contact us for this lucrative business opportunity. We are working in the rural areas since 1997. Now we are going for medicinal tree plantation in hilly areas with linkage rural SHG. Please send us information for APCF, JCF, JFM or any other scheme fund/ donation for plantation projects for anti-global warming and the rural poor women’s economic development; project funds to support this; limit for project fund and repayment schedule or grant if any; minimum/maximum project area for plantation; format for project report and documents, etc. Ashok Todakar
i
Web Technology Solutions Pvt. Ltd. is an innovative webbased platform technology (PaaS) company providing on-premise and SaaS solutions to the underserved small and medium-sized enterprise segment and e-governance solutions for the public and NGO sectors. We seek immediate growth funding to take us to the next level. Akshay Shah
I
have recently got into the real estate business and we are dealing with good projects. We are looking for partners and skilled members who have not only keen interest, but also have love and passion towards the business so that we can together take our business to much higher levels. Chunduru VSN Pavan Manoj
W
e supply activity worksheets for preschools and kindergartens which are made especially for the young minds. Those who are running playschool and preschools and for those who are planning to start a new school, these worksheets will be very useful. Contact us for sample and for more details. Prasanna
I
am looking for a software market for my company which I have recently started. My team is proficient in dealing with all kinds of
databases like ERP products, normal accounting or GRP based, inventory control, etc. Kiran Kumar
I
am an entrepreneur involved in the business of manufacturing three wheelers. We are looking for venture capital funding to the tune around Rs 25 crores for expansion. We are also looking for mentors in the auto sector to advise us on our business plan. Nitesh Gupta
W
e are a firm in the telecom services industry and we are looking for rapid growth avenues in the telecom segment. The initial details of this company are: 1. Started by a group of people who are into I.T. and telecom business for more than two decades 2. Successfully started and disinvested a telecom services company in mid 2007, generating more than 50 times returns to the investors and stake holders within a period of seven years 3. Started a new company in 2004. First year turnover around Rs 12 crores(US$ 2.5 million) 5. Planning a major infusion of around two million dollars with an aim of reaching turnover of Rs.100 crores(US$ 25 million) in the next three to four years Reasons for investment; - Promoters with proven expertise and track record of SI and telecom services business - We have had good start/launch of operations - Opportunity size is truly enormous in both SI and services area of the telecom sector - There is distinct possibility to build a leading organization, not only covering India, but entire Middle East and Africa, where unprecedented expansion of telecom networks is going to happen in the next three to four years - Overall opportunity for investors to get into the core industry
where growth prospects are immense We are a company with strong fundamentals and immense opportunity for investors. In case you or anyone around you has any inclination to explore the great investment opportunities then please feel free to contact us. We have verifiable data in support of our business plan and are looking for investment contribution of US$ 4 million spread over one year with performance linked tranches. In case of any reference, we shall be organizing a meeting with our merchant bankers, issue managers and there could be referral incentives also in the process. Amit Dhingra
I
’m interested in starting a day care facility in Chennai. I am also interested in knowing the details, startup costs, legal, and other requirements. Help in regards to this will be appreciated. Kindly contact me. Cheryl
I
f anyone is willing or thinking of starting a preschool business in or around NCR preferably North Delhi, please contact me. I am currently outside India and willing to start a venture with someone with same mindset and goals. Abhilesh Loomba
I
am an Indian Oil retail outlet dealer located in Jhansi, Uttar Pradesh. I want to know from where I can procure these handheld printers. Please let me know the names and addresses of Kanpur, Lucknow or New Delhi-based dealers as these places are nearby. Manish Newalkar
teaching point of view, we would like to join hands and carry out courses for students or with schools/ coaching classes(part time/full time) for training at our office address, where we have a space of 1000 sq ft. If anyone/institute is interested in our proposal (having worked or taken part in teaching/coaching or holding part-time practical courses, we would be interested to discuss with them. Anoop Lalwani
I
have a Matriculation high school in Tamil Nadu where more than 1100 children are studying. The school enjoys excellent reputation and adopts one of the best teaching methodologies. I am searching for a partner to expand it further. Sanathkumar CD
N
orthwestern University Alumni (USA) offers costeffective “new age” marketing, PR and communications consultancy to SMEs, startups and entrepreneurs within the realm of microfinance, retail finance, cards/payments, online and mobile banking, education, media and publishing, non-profit, and hospitality services. Pushpendra Mehta
A
n ICWA /MBA with 12 years experience in the banking industry across sectors like depository operations, product management retail assets, sales retail assets; I am planning to take a plunge into consulting, initially starting part time and then will consider the future prospects as it progresses. Saurabh R Pradhaan
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e, at Sai Enterprises, Lamington Road, Mumbai are into consultancy/supply of solarbased items/panels, robot kits/ITS solutions as well as power problem solutions. As these fields have good scope in the future, even from
Exchange DARE.CO.IN | EXCHANGE | FEBRUARY 2010 11
FEBRUARY 2010 | FEEDBACK | DARE.CO.IN
responsibility of my family I know these are all reasons I have and also since I am at an early phase of the startup, I am bound to get these problems. In spite of all odds, I am a winner. I would like to quote a line from a song which I like very much. ‘I got knocked down, but I got up again and nobody can get me down’ I have got my answer from your article— is being recluse a good or a bad thing for an entrepreneur? BAD I agree, with Manali Rohinesh, not every one is an entrepreneur. Heartfelt thanks to both Anurag and Manali, bless you guys. Arun Kumar magazine
The pain of scaling up I head an industry expanding from a small scale unit into a medium scale one. I am undergoing that same painful route of reengineering processes and systems within management. Sometimes I wish I had a guiding hand in the form of a management consultant who could take me through this process. Like Amit says, taking away your focus from immediate business needs is a gut wrenching experience. Vikram K Balaraman magazine
The pain of scaling up It’s a big challenge to SSI and startup units. I totally agree with the views here. Most of the times many startups get neglected for their real growth and scales in big countries with respect to promotions, lack of resource availability as well as poor finance. Gautam Jape Inflation: The enemy within The inflation rate has risen to a 13year high, which has a direct bearing on the prices of essential commodities and affects the aam admi. One reason for inflation is too much money with middle class yuppies and high margins earned by all those in the chain of selling products — right from the stage of production to the retailer. Hope the UPA government can bring the inflation rate down, as its own survival depends on it. Mahesh Kumar
magazine
magazine
Why Entrepreneurs Turn Recluse? Anurag Batra, you have penned down all the things from the heart. I really liked your article. I am myself a recluse entrepreneur, which is quite opposite from my nature. And the reasons for that are (let me be candid and honest here); 1. I have still not got success in my startup 2. I am facing sever cash burn 3. There is a drop in my lifestyle 4. Relatives and wife goes in constant comparison mode 5. Inability to shoulder complete magazine
www.dare.co.in | email: dare@cybermedia.co.in | SMS ‘DARE <your msg>’ to 56677
feedback 12
Why Entrepreneurs Turn Recluse? Exclusivity as a strategy might work out for some who have other people to do the work for them. In this article, Samir Jain was mentioned. He can afford this attitude...can’t he? He’s inherited a business and his brother is making enough noise for two anyway! I don’t know why some people get mentioned as ‘entrepreneurs’ when they were just lucky to be born with a silver spoon in their mouth? Vikram Chatwal being a very good example of this kind of travesty of that word. His is a story of a rich NRI gone astray because of his drug abuse habits and every time even this personal seedy aspect crops up, the fact played up is that he’s an entrepreneur worth Rs 2,100 cr. Really? How much of that money did he make himself and how much of it has he already snorted away? He seems to have only got out of bed to party, play bit parts in Hindi movies and get married (and now divorced) lavishly. Everyone who reads up a little about him will see that his parents are his bankers. With such financial support in place, it’s easy to get a head start in life. It’s what you do with it matters. So Ratan Tata, Anand Mahindra, Adi Godrej, Kumarmangalam Birla are good examples of pedigreed entrepreneurs. Don’t confuse the top notch with the mediocre and don’t abuse the definition of the word ‘entrepreneur’ by putting anyone and everyone in that category. Not everyone makes the cut, either in spirit or by definition. Manali Rohinesh
EOM: Ranjan Chopra, Team Computers I have read the article thoroughly and it is a good story of success. I am also a part of Team since almost two years and this is really a nice experience to be with this organization and I want to continue with it. Really nice, I like that. Praveen Kumar Patidar
blog
The Taj Mahal: A 16.8 crore rupee opportunity for India Post The biggest gain for tourism promotion for the Taj Mahal is through these picture postcards. A small suggestion: a drop box should be kept closer to the exit to enable the visitors to express their feelings after their visit. O P Goel
magazine magazine
Solar Photovoltaic Cells: A Growing Industry Solar energy projects in India have been much discussed and less delivered. Despite government’s efforts and initiatives, lack of proper dissemination of information and absentia of implemented projects have pushed solar energy projects southward on investment priority. These projects can be divided into two broad categories viz. PV Crystalline Technology and Thermal/Solar Concentrator Technology. Both have their pros and cons. But PV Technology has its advantages over Concentrator Technology.
Government Funding for Technology Startups What are the technology startups that need to be supported by the governmagazine
magazine
How to become a Sachin Tendulkar of your business The word “Sachin” in the title of this article/coverage caught my attention. All the “Sachins” have a common thread which is passion, commitment and perseverance through good and bad times, and finally enjoying what you do.
Greetings and a very happy enterprising year ahead. It was a chance that I had an opportunity to grab the last four issues of DARE from my brother’s drawer. After fourteen years of serving companies like TOI and IMRB International, I finally decided to quit and start a market research enterprise called Rainbow Research. A peek at all the pages of your magazine convinced me that I had taken the right decision. Magazines like DARE would be the torchbearers for startups like mine. Unlike my predecessors, I am lucky to have DARE by my side as a Dronacharya to Eklavyas like me. Atul Gupta
ment is the all important question in this context. Every innovator has to protect his innovation while trying to get it funded. We can therefore form an independent commission which can arrange to evaluate technologies by pooling together relevant experts and get technologies evaluated in camera with due non-disclosure agreements in place. Most of the time those who evaluate technologies on behalf of VCs or government agencies are management or financial experts who have no idea of the commercial potential of new technologies. Also most technology evaluations are done mainly from a short term financial perspective. A country that wishes to promote innovation must first learn to evaluate technologies from the technology perspective. This is where our promotional schemes are woefully inadequate. While someone claiming to produce petrol out of water might get overnight publicity, there is no place where a genuine innovator can get his technology claims independently evaluated. M A J Jeyaseelan magazine
Medical and Wellness Tourism in India If we study the case studies in the leading medical tourism countries like Thailand, Philippines, and Singapore, India has a much greater potential but it's unattended. There is a definite strategy to loop in the government and private players which can create a great fusion for the benefit of foreign as well as Indian patients. Let’s come together for a cause... Khushal Bhargava
blog
magazine
Six reasons why you can no longer kill the competition Supposedly, competition breeds ingenuity, innovation and improvement. The advent of the Internet has made the concept of a free market closer to what it actually means. Yet, when I was doing research on a new business idea, I discovered that the level of ignorance in the consumer segments still remains high. This gives an opportunity for competition to thrive. If the consumer is not aware of the entire set of choices available in the market, then it means that a single company does not reach everyone. And those who are not reached by this “killer” company are served by a competition. Even if this competition is bad, this actually is a good thing for someone wanting to enter an already crowded market. Shailendra
magazine
Status of print media in digital times Print media changes in this decade; in spite of recession there is media boom! On each and every subject there is a magazine be it fashion, computers, mobile, electronic gadgets, health, women, sports, art, interior designs, etc. The big question is how much time do they survive? In fact more than 50 percent of newly launched magazines die their natural death. Similarly there are a number of TV news channels and more are forthcoming. Till when will survive is another question? Watching so many news channels is also tiresome. It is best to read one newspaper in full detail and rest, just scan them! Similarly, watch a particular TV news channel for its entire length of news bulletin. Or for complete news, listen to the radio! Mahesh Kapasi
DARE.CO.IN | FEEDBACK | FEBRUARY 2010 13
Business of Foreign Language Schools With a number of students, working professionals and business executives keen on learning foreign languages, the demand for training institutes is on the rise /Vivek Kumar
D
ifferent states in India have different languages. But English has precedence because of its international appeal and its use as the language of business. However, globalization has also opened doors for new languages. Due to historic and cultural reasons, we have always been exposed to English, French, Spanish, Persian, Turkish and Arabic. Indians had particular interest in German due to its linguistic closeness to Sanskrit. During the 1930s, the golden period of modern physics, the Indian scientific community was attracted to German because
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most discoveries were being compiled in that language. A number of languages are now driving the interest in foreign languages. Apart from government universities, embassy schools and institutes promoted by individual countries, there is a growing demand of language schools that can impart quality training and proďŹ ciency. In this article, we try to focus our discussion on the needs, market and system of foreign language schools.
The need for foreign languages According to Purnima Garg, Director of The Chinese Language Institute,
FEBRUARY 2010 | OPPORTUNITY/EDUCATION | DARE.CO.IN
Delhi, the economies of the world are integrating, which has increased leisure and business travel. This increased need demands the learning of foreign languages. Rachna Aggarwal, a Japanese interpreter, says tour operators have a speciďŹ c demand for professionals who can cater to the needs of visitors coming from non-English countries, especially from Japan, China, and other East Asian countries. Pushpa Sharma, Director-PR of Instituto Hispania, mentions that learning foreign language increases chances of getting admission to foreign universities, helps in mak-
apt in German. The academic background is not considered because these companies are open to provide training and fit these professionals in some jobs. Compiling the inputs from these people, it is clear that the demand of foreign languages is growing and setting up a foreign language school could be a good idea.
Market for language schools
Popular foreign languages 1. Spanish
2. German
3. French
4. Arabic
5. Chinese
6. Japanese
7. Korean
8. Italian
ing travel more feasible, in gaining a broad outlook of international culture and music, and sharpens cognitive skills. Translation, interpretation, teaching opportunities, and demand in BPO/KPO and IT industry are some areas where the need of foreign languages is tremendous. Vaishali Karmarkar, head of marketing, intercultural and corporate courses trainer in Goethe Institute Mumbai, says that companies approach her from Germany, Austria, Switzerland and Liechtenstein to provide them professionals who are
European languages like Spanish, French and German top the list with the Indian crowd. At the same time, East Asian languages like MandarinChinese, Japanese and Korean are also picking up fast. Talking about Middle East and its importance to the business world, Arabic language finds a good number of prospective students and professionals. Students, professionals, corporate houses, and professional degreecolleges seek services of foreign language schools on a regular and project basis. Pushpa Sharma says that their institute has worked with Infosys, Wipro and professional colleges like IMT, Ghaziabad. Purnima Garg says that the market for foreign languages is huge with ever-increasing trade and a boom in the travel industry. Young aspiring job seekers, hotel & tourism industry employees and executives involved in foreign businesses are direct market points.
Setting up a foreign language school The process involved in setting up a foreign language school is based on the scale an entrepreneur wants to achieve. On a very small scale, teaching one foreign language can be started with one-two rented rooms involving a cost of around Rs 1 lakh. However, if somebody wants to do it on a larger scale and impart multiple languages, more infrastructure, equipments, human resources, marketing methods, and certifications would be needed.
Apart from European languages, there has been a major shift towards East Asian languages in the last five to ten years.
— Purnima Garg Director, The Chinese Language Institute (CLI)
Apart from rooms and seating arrangement, IT tools, audiovisual equipments, the need of a good trainer/teacher is important. Interestingly, when talking to people involved in this business, two different views came out. One that native Indian teachers who have achieved foreign language proficiency connect better with the students; and another that students prefer teaching faculty to be native speakers of the taught language. The analysis results in a way out—it is better to have native Indian teachers for basic learning courses in foreign languages because students feel comfortable to ask questions in their native languages. As the level of understanding and proficiency progresses, it is better to have native teachers of the taught language. Language schools offer regular and customized courses. However, the industry players mentioned that they prefer a course to last for eight
DARE.CO.IN | OPPORTUNITY/EDUCATION | FEBRUARY 2010 15
What is the need of foreign languages? Foreign languages are finding good demand to increase global understanding, native language ability, to sharpen cognitive and life skills, improve chances of entry into college or graduate school, appreciate international literature, music and film, and make travel more feasible and enjoyable. What are the challenges faced? Pushpa Sharma Awareness among the Director – PR, Instituto Hispania masses is the most important part of the job to be done and to run a language school. Newspaper ads, articles in popular magazines related to education and business directories to spread information and the importance of learning language are needed. Next, the need of native language trainers is also an important issue. What is the scope of expansion? Awareness is the most important part for expansion, although our institute has six centers across the country, and to expand operations in multiple cities, funding is the most important issue. Then comes the faculty part: we need to have the best teachers. weeks per level. To achieve employability, six such levels should be gone through. On a general basis, courses are divided into beginner, elementary, intermediate and advance categories. To impart these courses various types of activities are involved. Reading, writing, listening, and speaking drills; role plays; karoake singing; festival celebrations to give a more cultural feel; word games and dialogue writing etc. are involved. For beginners, self-learning CDs for correcting the pronunciation are also used. For Chinese, Purnima Garg says that there are two ways to impart training—the English alphabet and pictorial. She mentioned that 16
the pictorial method is a bit difficult for students to pick up, and they prefer to learn through the English alphabet. To ensure employability and to cater to professional needs, stress on pronunciation, inter-cultural knowledge, listening comprehension, and grammar is given.
Challenges As such, there are no huge challenges faced in starting a foreign language scale. Because the demand is increasing, there is a good chance of making good business. However, there are small issues that one should take care of. Vaishali Karmarkar explains that Indian students have a different learning
FEBRUARY 2010 | OPPORTUNITY/EDUCATION | DARE.CO.IN
biology. Students are often trained in passing an examination and not thinking on their own while learning a subject. So, an institute should make sure that they evolve activities that open up the minds of students; otherwise, the proficiency of language is not achieved and the employability appeal of students does not come out, which actually mars the popularity of a language school. At the same time, getting native teachers of taught language can become difficult sometimes because they usually come to India for shorter periods of time. Retaining Indian teachers is also a challenge because they find bigger perks as translators/interpreters or in the tourism industry. Marketing issues and awareness among the masses are some other areas where a school will need to work on.
Scope of expansion and collaboration The trend of expansion in the form of franchisees and opening branches in smaller towns is not popular yet with the foreign language schools. The main reason for this is the scale that a school wants to achieve. However, there are many foreign language schools supported by cultural wings of different countries and embassies that have branches in major cities of India. Some individuals running foreign language schools believe that the quality of the training could suffer if they go for expansion. So, keeping it small but high quality is their motto. Getting good quality teachers is another major issue that hinders the expansion of language schools. At the same time, collaborating with a certified body or foreign institute is believed to be a good option because it increases the credibility of the school and also open more opportunities for the students getting that certificate. R
blogs/opinion
No Room for Comfort With much of the world’s economies yet to recover from the ill-effects of recession, it will be a long time before we see ourselves in comfort zone. /Paranjoy Guha Thakurta
On January 26, the International Labour Organization (ILO) stated that the number of jobless worldwide reached nearly 212 million in 2009, the highest level on record, following an unprecedented increase of 34 million jobless compared to 2007 on the eve of the global crisis.
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.
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s the worst of the recession over? Are the green shoots of recovery real? Will world trade revive soon? Following the stimulus packages that have placed the financial sector on an even keel, will good tidings start spreading to the real economy? Will 2008 and 2009 be remembered as a nightmare that can be put behind us? Can you tell your grandchildren that you survived climate change and the Great Depression that concluded the first decade of the new millennium? One wishes the answer to each of the questions is a resounding “yes”. However, realism has to take precedence over optimism. The real estate bubble burst in Dubai and it had to be rescued from financial disaster by its oil-rich neighbour Abu Dhabi. We now have it straight from the horse’s mouth, namely, the managing director of the International Monetary Fund (IMF). Having failed miserably in predicting the intensity of the crisis in 2008, IMF bosses currently claim the economic recovery will not just be slow but that the recovery graph would not be ‘V’ shaped but could resemble another letter of the alphabet, that is, ‘W’. On January 26, the International Labour Organization (ILO) stated that the number of jobless worldwide reached nearly 212 million in
2009, the highest level on record, following an unprecedented increase of 34 million jobless compared to 2007 on the eve of the global crisis. Based on IMF economic forecasts, the ILO estimates that global unemployment is likely to remain high through 2010. In the developed economies and the European Union, unemployment is projected to increase by an additional 3 million people in 2010, while it will stabilize at present levels, or decline only slightly, in other regions. According to the ILO, the share of workers in vulnerable employment worldwide is estimated to reach over 1.5 billion, equivalent to half the world’s labour force. It also says that 633 million workers and their families were living on less than US$ 1.25 per day in 2008, with as many as 215 million additional workers living on the margin and at risk of falling into poverty. We in India can consider ourselves singularly fortunate that this country has been spared the worst ravages of the ongoing international economic crisis. But with much of the world’s economies (with the exception of those of China, Australia and a few Latin American countries) yet to pick up and with food prices at home skyrocketing, there is no room for comfort. R DARE.CO.IN | COLUMN | FEBRUARY 2010 17
The links of the supply chain Have you wondered how the same soft drink and potato wafer is available even in the remote corner of a village? /Abhishek Chanda
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itting in the comforts of a state capital, the urge to munch on a packet of Lays along with some Coke can be met by stepping out and walking across the street to the next door panwalla or a grocery store. The story isn’t much different when you are driving down the national highway or when you decide to get a bit adventurous and take a detour through a narrow road running through lush sarson ke khet (mustard fields) basking in the afternoon sun. The only difference here is that you might have to travel an extra few kilometers to find a local dhaba or a kirana shop. This floats the question, how does a Coca-Cola, Frito Lay or even a CenterFresh (some of the most commonly found branded products) manage to identify and supply goods to these remote retailers and how the retailers in turn 18
maintain and replenish stocks as compared to their more organized cosmopolitan compatriots.
What, when and how much to buy? For almost all the formats of retail stores, the decision of what to buy and when, lie on the basic premise of consumer demand and availability of stocks. “We depend on the consumer the most to figure out demand. In case we do not have knowledge about the product, we rely on the company salesman or the distributor to get educated,” says, Rajnish, a 24 year old who runs a kirana store in Farooqnagar, a quasi-city of sorts – not too big to be called a city yet better equipped than a village – in rural Haryana. When it comes to estimating stocks such stores consider the physical volumes of the product available and place their orders accordingly.
FEBRUARY 2010 | STRATEGY/DISTRIBUTION | DARE.CO.IN
They have fixed days like a Tuesday or a Saturday when the company salesman visits them with new stock automatically. The periodicity of the visit generally varies from product to product – while some are bought on a daily basis others may require a bi-weekly, weekly or fortnightly visit to get replenished. Apart from the regular customers, such local grocery stores which also double up as wholesalers also rely on people from nearby villages who come to buy in bulk from them. One such person is 30 year old Manoj Yadav, who runs a dhaba called Janta hotel, on a road in Sultanpur village of Haryana. For him the biggest disadvantage is that his hotel is in the middle of nowhere. Yet he manages to earn a living out of selling cooked food as well as sundry items like soft drinks and potato chips. He says,
“Other than the odd customer, we also thrive on passers-by and school kids who generally wait near the bus stand with their elders and come here to buy candies, chips and cold drinks.” Yet another person who runs a small grocery store nearby maintains that he is in luck as demand for soft drinks and chips are quite high in his shop, thanks to a couple of alcohol shops or thekas that sandwich his store. Cut back to the metros and we have the modern retail outfit like a swank Spencers Hyper nicely nestled in between huge malls, catering to customers within the SEC A to B bracket. For such a huge outfit boasting of entire aisles full of different categories of products, the decision of what to buy and when is a tad complex. After considering the demand for a particular product the process of estimation of stocks is dependent on the frequency of delivery that the company offers. Explains Amit Mukherjee, Vice president, Supply chain and IT, Spencers Retail – a group that is based out of Calcutta, “We consider certain criteria like past sales, seasonality, safety stock and frequency of sales among others to make estimations.” This is to make simple a complex string of calculations and equations that are taken care by computers as not much manual intervention is required.
Procuring stocks Once the retailer has decided on what to buy, the next step deals with procuring the particular amount of stocks. Again if we take into consideration certain commonly available goods like soft drinks, potato wafers or chewing gums, amongst the different types of retailers, the process of procuring these goods are quite different across the levels. For a dhabawalla like Yadav, it’s quite a job to go about replenishing stocks. Given the remote location of his store, he isn’t paid visits by the company salesman. So much so, when we enquired whether he is aware of any company visits, he was of the view that he has never seen one and has no idea how the goods reach the market wholesaler or other big general stores. These sellers, also known as Parchoonwallas are the main source of supply for people like Yadav. When it comes to buying and negotiating, there isn’t one particular parchoonwalla that they rely on but rather they choose the one that gives them the lowest rate as they buy in bulk. A top official from the sales department of a FMCG brand candidly admits that it doesn’t pay much to reach out to every pocket of rural India as quite frankly demand isn’t that high. He isn’t that surprised to know that some of these people are not even aware of company salesmen visiting stores and says
These people buy directly from the company and often the company officials are instrumental in striking deals at a cheaper rate with them than us, the dealers. — Rajkumar of Farooqnagar, a dealer for a major soft drink brand
that the claims of penetration that most companies make often end up as myths. Yet another option of replenishing stocks available with this format of retailers is that of a ‘mystery salesman’. Why we call him a mystery is because nobody quite knows much about where he comes from and what is his way of business. Says, Sachin Kaushik, owner of a ramshackle grocery store in Dhankot village – yet another village close to the Sultanpur Bird Sanctuary in Haryana – “We
DARE.CO.IN | STRATEGY/DISTRIBUTION | FEBRUARY 2010 19
We consider certain criteria like past sales, seasonality, safety stock and frequency of sales among others to make estimations. — Amit Mukherjee, Vice-president Supply chain and IT, Spencers Retail don’t have any company people coming to us. We have these jugaroo people coming in a tempo or Tata 407 trucks. They come from nearby cities. They might be visiting a Lays or a Coke go-down and they keep picking up stocks from these places. Then they keep distributing goods store by store along the road.” These local onthe-go suppliers do not belong to any particular company neither do they have branded vehicles. They generally have a radius that they serve and operate in multiple numbers. The store owners maintain that they opt for the supplier who reaches them first when they are in need and offer the cheapest rate. In a manner, the store owners end up saving time and effort required to visit the city or the nearby town wholesalers for buying stock. However, Rajkumar of Farooqnagar, a dealer for a major soft drink brand laments that such local sellers are quite harmful for the system. He says, “These people buy directly from the company and often the
The claims of penetration that most companies make often end up as myths. – A top sales official from a FMCG company 20
company officials are instrumental in striking deals at a cheaper rate with them than us, the dealers. As a result, the company distributor ends up pocketing some cash, while the on-the-go seller ends up selling goods at a cheaper rate than us, especially since he doesn’t have to pay taxes or incur other official expenses.” Again for a modern retail chain, the process of replenishing stocks is quite mechanized and orderly. Mostly such chains have long term national level terms of trade contracts with the Hindustan Unilevers or Pepsicos of the world. FMCG companies typically make their products available to the last point of the company or a distribution center. Taking the Spencer example Mukherjee maintains that if the format in question is a small store then the stocks are collected from the distribution center and if it is a Hyper mart with huge volumes of sales, the company vehicles directly deliver the goods. Purchase orders for various products get generated every night or for some products every week after computing the end of day sales. Based on this further purchases are ordered and deals negotiated by the merchandising officers. Again different products have different periodicities of ordering. Apart from selling products these retail chains also run promotions and sell visibility, wherein a brand is allotted a specific space for better visibility on a rent basis.
FEBRUARY 2010 | STRATEGY/DISTRIBUTION | DARE.CO.IN
On the company’s part, there are different layers of teams that look after the supply and distribution of their products. Says, Chironmoy Chatterjee, Head, Sales, Perfetti Van Melle India, “For modern trade outlets we have separate teams who maintain relations, supplies and engage into promotions. For the grocery store level Perfetti has distributors who in turn have distributor salesmen. These people visit the shops 3 times a week to enquire about stocks and build relations. These stores may include chemist shops (in the city) to panwallas to kiranas (at the small town level). As for the dhabawallas, there are a set of people called super stockists who mostly help in penetrating the rural interiors where they might be located.” Putting aside the modern retail outfits which have an orderly system of supply and distribution, the rural counterparts also end up following the textbook company to distributor to retailer model, the only exceptions being of the plug ins or middlemen involved in the chain for them and the manual estimation of stocks and inventories done at the eye-level. But what is fascinating is that even after the barriers of inaccessibility and lack of distribution and supply comforts enjoyed by their metropolitan counterparts, products still manage to reach them and in turn we keep on enjoying our favourite brands (if not all) on our trips to the hinterland. R
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photoblogsp ogsp India’s upcoming water crisis
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icture: Dry canal at Koeldeo Ghana Bird Sanctuary, Bharatpur, December 2009. I have recently been traveling across the country, right from the southern end to Rajasthan, UP and Delhi. Everywhere I have been to, I see one thing in common—the scarcity of water. Be it in the summer or immediately after the rains, the story is the same. Once mighty rivers like the Bharatpuzha, down south and the Yamuna, up north, they have all become pale shadows of their former selves. Worse still, whatever little water is left has become dirty, chemicalladen and unusable. If this trend continues, and I see nothing indicating that it will not, then soon enough, we will have our biggest crisis on our hands. It’s high time that we worked on ways to avoid it. Author: Krishna Kumar
Advertising at recreational spots
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f you have visited Kodaikanal in Tamil Nadu, you should have noticed the attractive boating activity going on there. Similar is the case at Chandigarh’s Sukhna Lake which is famous for boating among the visitors and even locals. It would be a heinous crime if I don’t mention the Dal Lake in Srinagar, famous for its Shikaras, offering delightful journey on the aquatic dimensions. This picture shows an opportunity amply tapped by Vodafone. Advertising at recreational spots is a unique concept. There are a number of lakes around the country where people like to spend time for fun and enjoyment. Apart from lakes, gardens, picnic spots, sanctuaries, historic sites, zoological parks, and theme parks also offer space for advertising. Tapping this opportunity in an aesthetic way could give way to better publicity opportunities. (Photo taken at the Old Fort, New Delhi) Author: Vivek Kumar
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FEBRUARY 2010 | PHOTO BLOGS | DARE.CO.IN
sp sphotoblogs A defaced wall inside Charminar in Hyderabad
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oes this show how proud we are of our historical monuments? A number of such heritage sites are in urgent need of renovation. A story in the December issue of DARE talks at length of the opportunities for private players in the preservation of historical buildings. Author: Vimarsh Bajpai
Indian Dental care and dental appliance market
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ndian dental care services attract a lot of foreign visitors who come to India for medical tourism. According to a report, the Indian dental care services market in 2005 was US$ 446 million. At the same time, the dental equipments and appliances market was US$ 66 million. On a global scale, the dental care market was estimated to be about US$ 16 billion in 2005. Given the liberalization provided by the Indian government to import medical equipments and appliances, there seems a good opportunity of trade. The photo shows a computer output of a scan. Computer technology has enhanced the use of equipments in dentistry. Dentists are looking to incorporate these equipments even in small clinics. There is an estimation of availability of one dentist for every 10,000 persons in urban areas and one for about 250,000 persons in rural areas in India. There is clearly a good opportunity for growth in this sector. Do your teeth have the strength to crack a hard nut? (Photo taken at Expodent 09, Pragati Maidan, Delhi) Author: Vivek Kumar DARE.CO.IN | PHOTO BLOGS | FEBRUARY 2010 23
photoblogsp LEDs can have a broader market
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ave you replaced the incandescent bulbs in your house or workplace with CFLs? There is something more on this brighter side of technology—LEDs. They consume lesser power and are higher in efficiency. According to a report by BCC Research titled “Light Emitting Diodes for Lighting Applications”, the high-brightness LED and substrate materials market will grow to Rs 49,374.80 crore ($10.6 billion) by 2011. I recently visited an Expo in Pragati Maidan, New Delhi showcasing various types of LED products ranging from electronic signs, lighting systems, lamps and even light curtains. With the increase in the demand for LEDs, the business area throws good opportunities. Does it light a lamp in your entrepreneurial brain? (Photo taken at the LED Expo, Pragati Maidan, New Delhi) Author: Vivek Kumar
Bangles for sale at a shop in Hyderabad
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yderabad’s historic Lad Bazar is one of the biggest bangle markets in the country. However, glass bangles are mostly produced in Firozabad, the most prominent glass cluster in India. It employs around two million people and does business worth Rs 800 crore every year. Author: Vimarsh Bajpai
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FEBRUARY 2010 | PHOTO BLOGS | DARE.CO.IN
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Of entrepreneurship, job creation and bandhs Posted by: Vimarsh Bajpai in Ideas on Jan 04, 2010 Tagged in: Y.S. Rajasekhara Reddy, wealth, TRS, Telangana, Ramoji Rao, Ramoji Film City, jobs, Hyderabad, entrepreneurs, Chilkur Balaji
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t couldn’t have been more puzzling for Lingam, the auto driver, to locate Machilipatnam in Hyderabad. He looked bewildered when I asked him to drop me there. “Machilipatnam or Mehdipatnam?” he asked in dismay. Oh, I realized what a folly. Despite revising the name of the place several times, I had still ended up making the mistake. I had to visit the Chilkur Balaji temple on the outskirts of Hyderabad city, and had been advised to take a direct bus to the temple from Mehdipatnam. “My auto doesn’t go to Machilipatnam,” said Lingam with a big laughter and I smiled in unison. On our way to the Balaji temple, we chit-chatted about the traffic in Hyderabad, the new infrastructure such as India’s longest flyover that connects the city with the airport, and the likes. Hyderabad looks like a city with a heart. Moderatepaced, calm, historic, culturally rich and famous for more than just the biryani. However, the calm in the city had broken twice recently. First in September, by the sudden death of Y.S. Rajasekhara Reddy, one of Andhra Pradesh’s most popular chief minister, and then last month when K. Chandrashekar Rao (KCR), the president of Telangana Rashtra Samithi (TRS), went on fast unto death demanding concrete steps by the government towards carving out the separate state of Telangana. A lot has happened since then. Although the Centre succeeded in getting KCR to end his fast by promising to move quickly on the Telangana issue, it soon started dilly-dallying, probably realizing it had acted in haste. Nevertheless, the state now remains divided between those who want Telangana as a separate state and those who stand for unified Andhra. This has led to almost regular violence and calls for bandh in parts of Andhra including Hyderabad. The day before I set out for the Balaji temple, there had been a bandh in Hyderabad. The shops were closed, buses weren’t plying and only a few autos could be seen on the streets. I couldn’t help asking Lingam if he would want to see Andhra divided into two, and if bandhs were of any good at all. Much to surprise, Lingam was more an economist than a politician. “Bandhs rob us off our livelihood,” he said in a terse voice. He went on to explain the logic behind the uselessness of bandhs and the ensuing violence. “It is eventually the poor who suffer. When they (political activists) break public property, the government recovers money by raising taxes and raising fares and prices and eventually it all comes on the public to pay,” he added. “During normal days, tourists like you come and we earn some good money,” Lingam added. It makes me uneasy to think that the simple logic that the auto driver could think of never goes across the minds of our politicians who give overt calls for bandhs and covert calls for violence. Like Lingam, millions of people depend on tourism to earn money. Political violence makes life tough for the poor and the middle class while those who give calls for such bandhs live in ivory towers and can’t hear the pain of daily wagers. Lingam was so right. A day after, the US and the UK issued travel advisories asking their citizens against traveling to Andhra Pradesh in the wake of the ongoing violence. Now move to another tourist hotspot in Hyderabad, Ramoji Film City—the world’s largest film studio complex. The film city is the brainchild of Cherukuri Ramoji Rao, film producer and media entrepreneur. With everything from film production facilities to hotels, adventure sports and restaurants, the complex offers a lot of recreation activities for tourists. With a ticket of Rs. 400, you could hop on to a bus that would take you inside the main compound that passes through the greens with small hills visible at a distance. On my first trip to Ramoji Film City, a day after I boarded Lingam’s auto, I was amazed at the sheer number of tourists that had made a beeline to enter the complex. It all translates into business and jobs, and eventually money for those who own the film city and those who work inside it. The sheer number of people who work inside the film city is humongous. There are bus drivers, guides, toy-train operators, ticket checkers, machine operators, cleaners, chefs, swing-operators and many more. They all are employed today because an entrepreneur’s idea took shape in the form of an enterprise. That’s what entrepreneurs do. They create value, wealth and jobs. Now compare this with the political upheaval that leads to bandhs, strikes, violence that takes place at the behest of our political leaders. It leads to loss of property and jobs and livelihood for so many people whose lives would still be the same, the daily grind to make ends meet. DARE.CO.IN | FROM THE BLOGS | FEBRUARY 2010 25
6 reasons why you can no longer kill the competition Posted by: Krishna Kumar in Ideas on Jan 02, 2010 Tagged in: uninor, telecom, Tata Docomo, Symphony, strategy, star office, softmaker office, product variant, organized retail, opportunity, Open office, Nokia, MTS, Mobell, Microsoft office, Micromax, markets, mall, Lotus, law, Kingsoft, Karbon, iwork, investments, industry, IBM, Gurgaon, Gnome office, dual SIM, customers, customer preference, competition, chairman, Apple
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n the nineties and early twenty hundreds, it was common for corporate strategists to consider options of “killing the competition”. I remember sitting in the strategy meeting of one of India’s leading business houses. On the first day no recording or note taking was allowed, so I am repeating from memory. The chairman, a leading light of his industry ended his opening session by exhorting his senior-most team to “kill off the competition”. Fast forward to today, the company in question has multiplied its turnover and profits many times and is still the leading light in its industry. But what about the competition? Have they been killed off? There are more competitors today than there were then. And many of them are in a similar position to the company in question—their turnover and profits too have improved manifold. Did the company not attempt to kill off its competition? Did they fail? I am sure that they did attempt to kill the competition. They tried every trick in the book and then some more. But still the competition survived and thrived. Why? Because it is no longer possible to kill off all competition. And here are the reasons why this is so: 1. Markets have become too large There was a time when markets were small and as a natural corollary, there was space for only so much. In such a situation, it was possible for one player to muscle others off the field. Today, the reverse is true. There is enough volume in the markets for a large numbers of players to take a position and to sustain themselves there. While it is possible for one player to build up a monopoly position, it is impossible to muscle others out of their niches. There is always space for multiple players. Take for example, the office suite market. Microsoft Office has an estimated 95 percent revenue share of this market. Does this drive the others out? No way. KingSoft Office, OpenOffice.org, IBM Lotus Symphony, Apple iWork, KOffice, Gnome Office, SoftMaker Office, Star Office and many more (not to count the many online office suites) have found their own niches out of which Microsoft will find it difficult to “kill them off”. 2. Customers want more choice Together with the fact that markets have become large is the truth that these markets want more choices. The one color fits all mantra of Henry Ford no longer suits a world where everyone is looking for “mera wala pink”—a Hindi advertising line that translates as “my personal shade of pink.” It is impossible for one player to cater to all shades of demand, or as a corollary, a player can always find a niche need in the market that the others are not catering to and make a play there. Let us take up the market for cell phones as an example. How many cell phone models are there in the market at this moment? According to this post, Nokia itself has 79 models ranging in price from Rs. 1,270 to Rs 32,500! And how many such brands are there in the market? You may not have heard of Karbon or Micromax or Mobell, but someone out there is buying those phones right now. If one of the players attempts to kill of the competition, someone else will just take their place! 3. There is enough and more money waiting to be invested A (new) player needs investments to make a market play. The good news is that there are enough and more investors willing to put in their money into a supposedly hot areas, in spite of the tough economy. So, what if everyone knows that not more than three or four companies will not sustain in the telecom market? You have more and more players—MTS, Tata Docomo, Uninor—doing national roll outs every day even as more are waiting in the wings. And none of them are facing a problem of money, right? In many cases, profitability is not the criteria driving investments. The criteria could be anything like valuation, strategic fit, strategic opportunity, available opportunity and so on. And as long as these different criteria exist for determining whether investments will be made or not, there will be no dearth of money... 4. Everyone and their pet dog will rush into a new opportunity Just ten years back, Gurgaon was a sleepy stretch of sugar cane farms outside Delhi, through which you could drive through without seeing any living being except a few buffaloes. Then came a few offices that moved out of Delhi, and then someone had the great idea that Gurgaon is ideal for a few malls. When the first few did good business, there was a virtual stampede to build malls in the city. On last count there were 60+ malls planned. So what if most of those built were not fully occupied? What if the multiplexes were running empty on most days? The malls were still being built till the slowdown and the virtual crash of the real estate market brought all construction to a standstill last year. 26
FEBRUARY 2010 | FROM THE BLOGS | DARE.CO.IN
Or look at organized retail. How many have burnt their fingers on this hot opportunity? Don’t we still hear of new plans for organized retail? All that you need is for some study or some survey to declare an opportunity to be hot for everyone to rush headlong into it? In such a scenario how can you kill the competition off? 5. Customers have shorter preference cycles There was a time when a car or a fridge lasted a lifetime. Now even houses are being rebuilt, if not remodeled every three years, if not sooner. Notebooks are supposed to have a life of less than three years and cell phones are changed every nine months! With fast consumer cycles and equally fast-changing preferences, there will always be new players emerging, virtually out of the woodwork, offering new products and variants that did not exist before. Things that you thought were dead and gone will make a sudden reappearance, much like dual SIM cell phones are back in fashion today. In other words, today’s customer’ psyche easy entry points for new players and new variants into the market. That being the case, how can any business strategist reasonably expect to kill off the competition? 6. The law Finally, there is the law. Most countries have fairly tough competition laws that seek not just to ensure that anticompetitive practices are reigned in, but even go to the extent of ensuring that competition is kept alive. And considering that most brands will have international footprints or aspirations to international footprints, the law in some country or the other will always be there to keep competition alive.
Fresh Guidelines on Corporate Governance: Will Anyone Follow? Posted by: Vimarsh Bajpai in Ideas on Dec 24, 2009 Tagged in: Satyam, Ramalinga Raju, Ministry of Corporate Affairs, Mahindra Satyam, Mahindra & Mahindra, independent directors, corporate governance
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am sure none of us would have forgotten the heated debate on corporate governance and the role of independent directors after the Satyam fiasco last year. The IT company was left in shambles by its founder Ramalinga Raju as a result of an accounting fraud. The role of independent directors on the Satyam board came in under severe criticism from all sides leading the government, industry and accounting bodies to look at the corporate governance norms afresh. The three musketeers—Kiran Karnik, Deepak Parekh and C. Achuthan—who revived the embattled Satyam, recently shared an award for the Best Business Leader given by a prominent TV channel. The team surely deserved appreciation for picking up the pieces to stitch together the firm that was once the cynosure of all eyes. The trio were brought in to put the Satyam house in order after Raju told the world that he and his associates cooked up accounting books and fraudulently siphoned off money. The company has finally been taken over by Tech Mahindra, the IT arm of Mahindra & Mahindra. Fresh Guidelines A set of fresh guidelines on corporate governance have been issued by industry association CII. Prepared by a task force chaired by Naresh Chandra, the report has made recommendations regarding the appointment of independent directors and non-executive directors, their duties, liabilities and remuneration, the separation of the office of a company’s chairman and the CEO, among others. The task force has also talked of the role of auditors, who allegedly worked hands in glove with Raju to commit fraud. One of its recommendations is that the partners handling the audit assignments of a listed company should be rotated after every six years. It has also talked of a cooling-off period of three years before a partner can resume the same audit assignment. One of the prominent recommendations is regarding the safeguard of whistle blowers. It has asked for the setting up of a proper mechanism for employees to report concerns about unethical behavior, actual or suspended fraud or violation of company’s code of conduct or ethics policy. Will anyone follow? These are only guidelines and not mandatory so far. The Union Ministry of Corporate Affairs would now seek comments, questions and suggestions from the general public before considering making all or some of these recommendations binding. The big question here is that will the companies implement these far-reaching recommendations. For instance, the one on providing safeguards to whistle blowers within an organization. If the senior and top management indulge in misgovernance, the employee who points that out should not be threatened. Similarly, on independent directors attending meetings. Remember that in Satyam’s case, many of the directors said they were not present during crucial board meetings. The task force has said that if a director wants to be present in board meetings. but cannot physically be present at the meeting, then “a minuted and signed proceedings of a tele-conference or video-conference should constitute proof of his/her participation. Do you think corporate India will follow these guidelines? DARE.CO.IN | FROM THE BLOGS | FEBRUARY 2010 27
blogs/opinion
The Role of Chaos in the life of an entrepreneur
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/Anurag Batra
Every person wants excitement in his or her life. At the same time, given today’s rat race, one also wants peace and tranquility.
Anurag Batra is real life, first-generation entrepreneur who is Much Below Average (MBA) from the prestigious Management Development Institute, MDI. When he is not busy writing such columns, he can be reached at anuragbatrayo@gmail.com. Anurag is the founder and editor-in-chief of exchange4media group which includes exchange4media.com.
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emember the title of the book Tom Peters wrote around 15 years ago “Thriving on Chaos.” Carl Jung had said that “In all chaos there is a cosmos, in all disorder a secret order.” Do entrepreneurs thrive on chaos? Do they create chaos? Is chaos healthy? How much chaos works positively? When does it get dysfunctional? How do you define chaos? Can chaos be calibrated? How does the entrepreneurial manager handle it vis-a-vis the entrepreneur? How are their approaches towards chaos different? Are they different in the first place or are there more similarities? Does chaos create stress, which is ultimately not healthy? Have chaotic environments produced innovation? What kind of companies and at what stage of a company’s lifecycle does chaos create value and add to the enterprise? Can chaos be institutionalized? If yes, how? Is there a Chaotic Theory of Entrepreneurship? What actually creates and constitutes chaos? I am sure by raising so many questions I have already made your mind chaotic. Let me tell you that neither do I have the answers to all the above questions nor am I pretending to have them in future. My job as a columnist is to raise the right questions and you will probably find the answers as we go along the chaotic route of learning by your own mistakes. Isn't that what makes you an entrepreneur? Every person wants excitement in his or her life. At the same time, given today’s rat race, one also wants peace and tranquility. It’s really an oxymoronic life as far as an entrepreneur is considered. An entrepreneur wants to create systems, especially when the enterprise has grown to a certain level, so that he can minimize the chaos and bring orderliness and a certain amount of steadiness
and system-oriented approach to a growing enterprise. So creating chaos would be in some way being detrimental to his or her own goals. Chaos is something that I define as when things happen when not planned, there are no expectations of the event happening and it happens, where people are part of that chaotic event and there is a flux and things are all mixed up. Clear answers and solutions are difficult to come by. It is a fusion that creates something special. Normal is anyway boring. Let me take the example from the telecom sector. All telecom companies and their executives and entrepreneurs struggle to increase average revenue per user (ARPU) as well as deal with increased competition and decreased margins. For this they have to probably resort to an engineered chaos to create and stumble upon the next big breakthrough yet simple idea. So am I talking of a stimulated game of chaos at a training session? No, I am talking of chaos in regular day-to-day work. It can manifest itself in both positive and negative ways. It is akin to the samudra manthan that the devs and suras did in the olden days. Chaos is in some ways churning of ideas and people. Let me now take the industry that I come from—media and internet. Again, we don’t need to try hard to be chaotic. We are inherently and intrinsically chaotic. Does that work for us? I do not know. Maybe it does to an extent. Someone wise had said many years ago “Chaos is the score on which reality is written.” Entrepreneurs are always trying to dream and create reality from their dreams, and chaos is what makes this connection and bridge between dreams and reality. I hope it does this harmoniously for you. R
entrepreneur of the month
The company founded in 1996 by Dr. Ella & Mrs. Suchitra K. Ella. It has since grown to become one of the largest manufacturers of Recombinant, Viral, Bacterial, Combination Vaccines and Bio Pharmaceuticals in India today. Dr Ella speaks to us about his entrepreneurial journey, and share his insights on the biotech space.
Dr Krishna M Ella Bharat Biotech
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You are being foolish, if you’re looking at this segment for short term revenue. Never enter this business thinking that you are going to make money in less than 10 years.
enesis of Bharat Biotech I was in the US where I was working as a faculty at Medical University of South California (U.S). My mother and wife wanted me to come back to India. I still remember my mother convincing me by telling, “Finally, you have nine inches of stomach to feed. No matter how much you earn, you cannot eat more than this capacity. I assure you, I will not let you starve for a single day; come back to India, do whatever you like to do, take all the risks possible.” That is how they got me back to India. I then had the options of either doing a job or do something of my own. I tried doing a job; but soon enough found out that the company was setup for reasons that were against my principle – so I quit the job. My background back then was yeast molecular biology. When I just started Bharat Biotech, we had a clear focus that we have to address the problems of this continent and work on areas neglected by multinational companies. We always believed our competitors are the infectious diseases, not any company or country.
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Scientist to an entrepreneur – the difficulties faced? I think I’m one of the first scientists to become an entrepreneur. When a scientist becomes an entrepreneur, he suddenly makes three-four enemies. First enemy is the academicians, who always feel that their innovations and ideas should be above yours. The second is the Financial Institutions. And if you are US returned, they think that you have lost a job there. And then there are the people in regulatory body generally think that scientists cannot do business after coming back from the States.
What part of the business do you spend most of your time on? I just practice control where my strength is - biological knowledge. I spend 90 percent of time R&D and problem solving. Every day I get one idea and I can’t sleep without exploring those ideas; that’s my weakness. The second priority is product development. I always ask people not to follow the multinational companies. If somebody is producing by ‘x’ method, do not limit your mind by blindly following the ‘x’ method. Being a new company we could always take high risk & we can always develop alternatives, better strategies, more efficient, and more innovative products. As for day to day issues and business operations, I don’t get into that. I have people for that. What is the overall business outlook in the biotech space in today’s condition? Like in every other space, in today’s condition, the fellow who wants and deserves funding doesn’t get money while the fellow who doesn’t deserve gets the money. However, when it comes to Department of Biotechnology, you should appreciate Dr Paul. He has tremendously shifted the focus from academic thinking to also thinking about it as a part of the industry. Earlier all the academic institutes thought research is their domain and their focus, and not of industries’ interest. Today I think Dr Paul has shifted the game. Both eyes are important in this country - private sector and public sector. That brings now pressure to the industry to bring up the research level / capability to highest standard. For people like us, being honest, our competitions are not people from
institutes like IIT. They are not our competitors because for me there are some focused areas which academies institutes cannot do research upon. They just can’t do it. How easy or difficult is it to bring out products in an ecosystem that involves the government, academicians, researchers, etc? It is difficult. Earlier we had only one drug control department and only two companies, Bharat Biotech and Shanta Biotech, operating in this space. This single window soon became multi windows and in the process of the transformation, we created more windows. After drug controller came in 3-4 committees, that started controlling bio-technology which was not required. Everybody wants power, and wants to control and regulate which is not good. Rather than that they should look at it holistically - what is right for the country and what eco system is right for the country. That intellectual debate is not happening. We are a multi product company now. Delays in things are ok since we can take them back. But my worry is if a new entrepreneur is starting, he is going to suffer. That is what bothers me. What is the level of patience that is required in getting the ROI? I would say if your blood pressure does not up after two years, it would mean that you are in trouble. Your blood pressure will indicate whether you are going to succeed or not. If it goes up it means you are getting paranoid and you are trying to make it happen. That’s patience. You need to have high patience and you have to have increased blood pressure to achieve things. DARE.CO.IN | BIO | FEBRUARY 2010 31
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Can Indian companies make innovative molecules that can be launched globally? I think we can. If you want to stand out finally, let us tighten the belt and do something in this regard.
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Your blood pressure will indicate whether you are going to succeed or not. If it goes up it means you are getting paranoid and you are trying to make it happen.
Is there a gap between what is being done in the country and what should be done? The model we want to follow in biotechnology is a big gap. If we follow the biogeneric model, then I think we will be following the footsteps of the generic model of pharma. Soon enough, companies are going to be sick in this country and companies will be acquired. Today a lot of pharma companies are facing the problem of being in a space where companies are killing each other through the predatory prices and other ways. Besides this, in a biogeneric model, we have competition from China, Argentina, Korea, Cuba and a lot of countries who are ahead of us in this model. Biogeneric model will be wiped out after 5 years. There’s a model where many countries believe in exporting to U.S. & European markets. For them India is not at all important. Exporting level is zero just like pharma model. For me exporting to U.S. & Europe is not important. For me, what’s important is, can I solve the problem of this continent? For instance, 2 lakh children die in this country every year because of Rotavirus, as compared to a H1N1 which was the cause of the death of about 1000 people. In today’s world, where couples prefer to have a single child, this can be very disturbing. Do any political parties or the media make a fuss about this? We got into Rotavirus Vaccine Programme when the product was being sold from the U.S. market. The reason I got into it; I said this is the problem of this continent and not a U.S. problem. Two lakh children is a big number. If I can achieve something to solve this and save about 2 lakh lives per year, I’ve achieved my mission as being the citizen of this country.
The solution is actually a question: Can Indian companies make innovative molecules that can be launched globally? I think we can. If you want to stand out finally, let us tighten the belt and do something in this regards. Your biggest success I think the success was the when we produced Hepatitis B vaccine. The vaccine which was then sold at Rs. 800 a dose, today is not even for Rs. 20 a dose. It’s just because of competition & innovation that the price has gone down. And I think the competition brings innovation also. The second important thing we did was the Rotavirus Vaccine Programme. We are now bringing the global attention to the Foundation. It is for the first time that an Indian company is bringing the vaccine to phase three trials. The next big thing in the biotech space The biogeneric manufacturers will become contract manufacturers & contract manufacturers will kill all innovation. No contract manufacturing has become innovative anywhere in the world. On the other hand, our new generation entrepreneur will take risks and innovate - for them sustainability is going to be a big task; and whoever can sustain, will win the major race. So these two things will happen in parallel in the future of this biotechnology of this country. One thing that aspiring entrepreneurs should avoid… You are being foolish, if you’re looking at this segment for short term revenue. Never enter into this line of business thinking that you are going to make money in less than 10 years. R
Can Mumbai be the next financial capital of the world Does India’s financial capital, Mumbai have the wherewithal to be the next Singapore or Dubai or London? Can the Indian financial sector replicate the success of the software industry or the BPO sector or the automobile industry? Can an existing Indian metropolis, bursting at the seams, be ‘expanded’ or ‘refurbished’ to make it a global financial powerhouse? DARE attempts to analyze some of these questions /Aman Malik
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he Second World War was a watershed in global history. While on the one hand it signaled the end of imperialism, on the other, many countries (most relatively smaller than India) or cities, including city-states like Singapore), that were little more than fishing villages in the pre-war era, emerged, in the post-war era, as some of the greatest financial centers of our times. While the decolonization that followed the second world war was a trigger that ushered in an era of
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economic rise in various parts of the world, it was by no means the only or even the predominant reason for such developments. In the pre-war era, the financial capitals of the world were either capitals of empires or cities (mostly port towns or those on the banks of major rivers and therefore close to centers of food production), that were on the crossroads of maritime or over-land trade routes, or both. London, the largest city in the world in the 19th century, was the capital of the British empire, which ruled over a third of humanity before its imminent collapse that began with India’s independence in 1947. Yet, despite losing its status of being the predominant global political power, London’s position also owes much to its openness in attracting international businesses and, therefore, external economies of scale, such as the symbiotic advantages achieved from the concentration of a multitude of financial firms in one location. London continues to the premier financial nerve center, with as many as 481 international banks operating out of the city. New York—which had traditionally been an important political center during the American War for Independence-came into its own during and immediately after the Great Depression of the 1930s and the second world war that followed it. Yet, New York’s rise to its present position as the world’s financial capital, was by no means sudden or unexpected. In fact, New York of the early twentieth century, was predominantly industrial, with markets in finance, clothing, publishing, entertainment, and commerce. The fact that the United Nations and several other bodies of international significance were set up in the city after the Second World War, only gave impetus to its magnetic ability to attract the best talent from all over the world.
Similarly, if one were to trace the emergence of several other regional business and financial capitals in the world, including Mumbai, it would become clear that they gained prominence over time, largely on account of favorable circumstances coupled with the ingenuity of their people, and it took them at least half a century or more to become dominant trading or financial centers in their respective regions. But must you wait that long to see your city becoming a dominant global financial center? Well, not really. Now, consider Singapore, Hong Kong, Shanghai and Dubai. Till the end of the Second World War, most of these cities were either fishing villages or traditional trading towns with rudimentary infrastructure. Circa 2010, aberrations notwithstanding, they are at the forefront of the global financial markets. To say the least, their rise has been meteoric, something to which figures and historical evidence attest. Singapore, which gained independence as late as 1965 (when it ejected from the Malaysian federation), is today the fifth wealthiest country in the world in terms of per capita GDP(PPP). In 2009, the Economist Intelligence Unit ranked the city-state of Singapore the tenth most expensive city in the world in which to live—the third in Asia, after Tokyo and Osaka. Hong Kong, a relatively unpopulated territory at the head of the 1800s, has grown to become one of the premier international financial centers in the world. It also underwent a rapid and successful process of industrialization from the 1950s. Hong Kong became a regional center for financial and commercial services, the economy being linked to commercial activity, dominated by shipping, banking and merchant companies. Gradually though, the economy diversified to services and retail outlets Hong Kong was vital
to the international economic links that Communist China continued in order to pursue industrialization and support grain imports. Low taxes, lax employment laws, absence of government debt, and free trade characterize the Hong Kong experience of economic development. Shanghai, originally a fishing and textiles town, became important in the 19th century due to its port and flourished as a center of commerce and a multinational hub of finance and business by the 1930s. Shanghai’s prosperity was interrupted after the 1949 Communist revolution and the subsequent drying up of foreign investment. After 1990, the reforms ushered in an era of intense re-development and financing in Shanghai, and in 2005 Shanghai became the world’s largest cargo port. Today Shanghai is a hub for finance, banking, and a major destination for corporate headquarters, something that demands a highly educated and modernized workforce, and is the largest economic and transportation center in China. Dubai has attracted global attention primarily through its construction projects and sports events which have made it emerge as a global business hub. Dubai’s geographical proximity to Iran made it an important port of call. Dubai was famous for its pearl exports in the first half of the 20th century, which was damaged by the First World War and then by the Great Depression. In 1971, Dubai, together with Abu Dhabi and five other emirates, formed the United Arab Emirates and later joined the other emirates to adopt a uniform currency. In the 1970s, Dubai continued to grow from revenues generated from oil and trade. In the 1990s, many foreign trading communities moved their businesses to Dubai. Large increases in oil prices after the Persian Gulf War encouraged Dubai to continue to focus on free trade and tourism and Dubai emerged as a DARE.CO.IN | ANALYSIS | FEBRUARY 2010 35
world-class international center serving the region. Just how did these cities gain so much traction, as business and financial centers, in such a short period of time? Are there any common strands running through their stories of unparalleled success? And, most importantly, can a regional business and financial center like Mumbai or any other Indian city become a global financial nerve center in the foreseeable future? Before we begin to answer these questions it would be pertinent to take at least a cursory look at the economic history of India. If you have read your history lessons well, you would know that Mughal India of the 1500s was the second largest economy in the world (a close shave behind Ming China), accounting for nearly a fourth of the global GDP. By 1700 AD, subcontinent-wide political unity allowed Mughal India to emerge as the largest economy in the world, at over a fourth of the world GDP. The India of 2010, in comparison, is a far shadow of its economically prosperous past. Today, India barely produces over a percent of the global output, with an “ambitious” target of doubling it by 2020. Does India’s financial capital, Mumbai or any other Indian city with a vibrant business culture, therefore, have the wherewithal to be the next international financial center? While it would not be possible to form any sweeping prescriptive generalizations about how Indian cities can become international financial centers, one can certainly attempt to list a few common factors that go into making a city a magnet for attracting financial institutions: Ease of starting and closing a business: Singapore perhaps tops the list of all international financial centers when it comes to this. Hong Kong, Dubai, Zurich and Luxembourg are not far behind. Depending on the country, the ease of doing
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business is either a country-specific or a city-specific phenomenon. India, which has more-or-less uniform laws across states when it comes to the ease of starting, transacting or closing down a business (especially one that requires regulatory approvals from government agencies monitoring financial institutions), as a whole ranks fairly low on the Ease of Doing Business Index prepared annually by the World Bank (India’s 2010 ranking was 133, lower even than Malawi). Whereas individual Indian cities cannot by themselves do much to improve this situation, state governments can readily step in by expediting several regulatory and governmental processes that come under their domain and by lobbying with the central government to make financial regulation simpler and less time consuming. Taxation and general monetary policy: Comparable tax sops and other incentives are the key to attracting the best merchant and commercial banks, hedge funds, brokerages etc to a destination. If the place concerned has a sovereign wealth fund of its own, it goes a long way in boosting investor confidence, as in the case of Dubai and Singapore. While these cities and several others across the world have a near total control over how they tax businesses and individuals operating out of their territories, the Indian scenario is quite different. Whereas in the case of brick and mortar industries, a significant portion of the taxes form a part
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a, the financial In the pre-war er er world were eith capitals of the ly s or cities (most ire p em f o ls ita cap ks ose on the ban port towns or th ose and therefore cl of major rivers that od production), to centers of fo e roads of maritim ss o cr e th n o e wer . e routes, or both or over-land trad
of the ‘State List’ controlled by individual states, when it comes to financial institutions, the ‘Union List’, under the central government’s jurisdiction, actually regulates almost all the taxes they pay. Therefore, Indian cities individually do not have any direct control over taxation, hence taxation as it is, ceases to be much of a differentiator when it comes to individual Indian cities. Politics: Political stability becomes a pertinent factor in the case of the financial sector, as hot money can flow in and out of a place in no time. Whereas cities like Mumbai and Hyderabad have historically been relatively peaceful (barring the odd communal incident), in recent times regional and linguistic issues have threatened to disturb their delicate social fabric and could be detrimental to the long term business interests and inflows that these cities attract. Other smaller and ‘newer’ cities like Gurgaon and Chandigarh that are ‘more’ urbane, with greater concentrations of middle-class and upper-middle-class population, mostly immigrant from near and far, do not have such political issues, a fact that might help greater investment into such centers. Society: International business has an idiom of its own and any destination hoping to attract the best financial institution has to adhere to that idiom. As almost all finance jobs are white collar and high-paying, the financial sector affords a great deal of mobility to those that work in it. All financial centers, without exception have a heady mix of people coming in from practically every corner in the world to work there for good or for short-term environments, thus giving these places a cosmopolitan environment. Such places need to have a more ‘open’ and less ‘rigid’ social milieu. One major reason why Dubai, and not Riyadh, is the main financial and business hub of the Middle East, is that Riyadh follows a
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strict Islamic code, while Dubai does not. Most cities in India that are traditionally business-friendly have by now developed a cosmopolitan culture, at least in pockets within the city, if not all pervasive across it. Education: The city that successfully promotes a ‘knowledge economy’ and has the wherewithal to support such an economy will have a distinct advantage over others. Every international financial center mentioned in this piece boasts of some of the best known schools of higher learning, especially B-Schools of repute. While the same largely holds good for cities like Mumbai, Ahmedabad, Bangalore and Hyderabad having technical and management institutes of the level of the IITs, NITs, IIMs and ISB, located either in those cities or in their vicinity, much cannot be said about the rest of India. Geography and infrastructure: A networked world has enabled businesses that are not brick and mortar, to operate from just about anywhere as long as robust information technology and communication systems are in place. Having said that, founding such a utopian new age city out of nowhere and then hoping it would become a major financial and business center, is well, wishful thinking. Sure, Singapore, Hong Kong and Dubai all sprang up as ‘new’ cities for all practical purposes, but they did not spring out of nowhere; they were extensions of existing cities, had a definite history to boast of and a historically advantageous geographical position. In the Indian context, Mumbai certainly has a geographical advantage, which has made it the predominant financial center in South Asia; indeed, several top financial institutions do operate out of Mumbai and satellite townships of Navi Mumbai and Powai. Yet, cities like Bangalore and Hyderabad and townships like Mohali, which do
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d e Second Worl Till the end of th , Hong Kong, War Singapore ubai were either Shanghai and D or traditional fishing villages ith rudimentary trading towns w irca 2010, infrastructure. C ithstanding, they tw o n s n tio ra er ab ont of the global are at the forefr ts. financial marke
not have any particular geographical advantages have become significant information technology hubs, primarily because local governments have been investment-friendly and have managed to put in top quality infrastructure and attract the best talent pool from India and outside. Since these cities already have working ‘new age’ economies, establishing financial institutions at a large scale should be an extension of businesses already operating from there and geography per se would neither be a constraint nor be a differentiator. Global clout of host country: London, Chicago and New York are prime examples of traditional international financial centers that gained dominance because their countries were politically dominant. Even in the post-Second World War scenario, Shanghai, Hong Kong and Tokyo were helped a great deal by the fact that over time, both China and Japan became relatively dominant global players. However, political domination is not in itself a predominant reason as in the case of countries like Switzerland, Singapore, the UAE and Luxembourg, which are themselves not politically dominant; yet are either aligned to powerful international blocks or are politically neutral by design or default. India is already a dominant political, military and economic player regionally and the effects of such dominance are
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evident. Yet, even if India’s political impact and military prowess in the decades to follow, do not achieve greater momentum, it will not adversely impact her cities’ prospects in becoming international financial centers. Diversification: Diversification of businesses so as to avoid over-dependence on one or few sectors. The best example of this is Dubai, which, despite not being as oil rich as the other emirates that make up the United Arab Emirates, has become an international financial center. It has successfully managed to diversify its business interests into sectors as diverse as hospitality & tourism, information technology, real estate, education and banking. The same holds good for cities like Singapore and Hong Kong. Out of all the existing business centers in India, Mumbai is perhaps the most diversified of all in terms of the range of sectors that operate their key operations out of that city; Hyderabad and Bangalore follow closely. While this fact, in itself does not constrict their prospects of becoming international financial centers, diversification undoubtedly gives a city a stronger backbone and greater flexibility to ride out periods of financial crises, internal and external. Stock market: Every international financial center invariably has a robust stock market. In India, only Mumbai has stock exchanges—the Bombay Stock Exchange and the National Stock Exchange—that are nationally significant. Stock exchanges operating out of other Indian cities are relatively less significant in terms of how much they are impacted by or have a bearing on the national economy, a fact that can be an impediment in cities like Hyderabad, Bangalore, Ahmedabad and Chandigarh in becoming international financial centers. R
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magazine
Dinesh Puri: MediVed Innovations in medical devices Congratulations to Dinesh Puri for his contribution in making medical devises affordable for all. I hope some more people get motivated by reading this article and join the medical innovation field. Vinesh Thakkar magazine
The Opportunity in Healthcare And with booming medical tourism, the prices of surgical procedures are shooting up as demand for quality doctors pick up with international patients. We have a huge problem and huge opportunity in the healthcare sector. Roshan Shah magazine
Not your typical e-commerce opportunity Wonderful ideas, but please give me the details of the market availability and the minimum investment required. Shivendra Prakash Ranwal The Business of Artificial Leather An initial investment of about Rs1.5 crores to Rs 2 crores is needed in the plant and machinery investment for artificial leather. There are several varieties of artificial leather available and because of many advanced technologies in this field, artificial leather with wax surfacing that give hair-like finish have also hit the market. Companies around the world are successful in making artificial leather
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which is also breathable. But these technologies are also patented. Large illegal imports of artificial leather from eastern parts of China are the biggest concern for the industry. Persons with limited capital can start an importing business of artificial leather with an investment as low as one to two lakh rupees. Artificial leather is used in various segments like shoes, bags, home furnishings, stationery items, and photo frames, etc. Increased awareness among the end-user about the technologies and their benefits would drive the demand in the next decade. Chetan Mal Government Funding for Technology Startups I applied for the TePP phase-1 funding, back in April 2009 for my project and I was told that it might happen within 4-6 months. It was approved within a month or so and I was asked to submit a few more documents. After submitting those documents I was told that it would take a month or so to process my application. After a month when I followed up, I was told to get quotations for every budget item I had put in the proposal (It was already August!). Then I was told that it would take another month before I get the first installment. So I followed up again in September and I was told that my file is with the finance deptt. and it would take two more months now for the funds to reach me. It’s now January and there is no sign of any funding. Although DSIR is an institution run by scientists but there is still no logical process through which my application has gone through. I am a young engineer without much of savings for building my prototype. I had quit my job last year to pursue my entrepreneurial dream. Much of my savings have been spent on marketing studies for my venture and my parents are taking care of my expenses now. I would like to ask the DARE magazine to put some more research before they actually write something about any such govt funding. Abhinav
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Nine ways to reduce cost of doing business online I have been running few sites and I believe your tips have a practical meaning, Krishna. Thank you for sharing. Devang Vibhakar
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Only the Gujarat government has the Solar Power Policy in place; with defined Buy Back Rates per kWh Unit generated by either PV or Thermal Technology. NRE and CERC are yet to declare the Buy Back Rates per unit generation. Central government’s Solar Policy is yet to come out with their Buy Back Rates, rest everything is on paper and principally agreed. Vihar Pancholi
Scaling up your business 40
FEBRUARY 2010 | STRATEGY/SCALING UP | DARE.CO.IN
Taking your business to the next level requires judicious deployment of capital and human resources even as putting systems and processes in place is a must. /Vimarsh Bajpai
WHILE THINKING OF SCALING UP YOUR BUSINESS, ASK YOURSELF Is my business scalable? If yes, to what extent do I want to grow? Will I be able to manage that growth? Will I grow by expanding into newer geographies or by launching new product lines? Will I grow faster by acquiring a small player or partnering with a big one? How will I strategize on growth finance, human resources, systems and processes?
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resuming that you are now ready to celebrate three years of your start-up and have a proven business model supported by regular cash-flows and stable revenue cycles, it could be time to take your business to the next level. Often, during the first three years of your journey as an entrepreneur, you might have felt tempted to grow fast in terms of revenue, acquire more customers and hire more people. These are scaling up pangs when you think that you can do more than what you are already doing. Just like you worked on your idea to give it a shape before starting up, you have got to similarly sit down and plan as to how you would grow your business. Scaling up is all about entering the new league, where your competition could be bigger and tougher in the form of businesses that are well established, have well-known brands, and have deeper pockets to spend on marketing. It would also mean that you are ready to bid for that big order from your prospective customer and yet deliver within the given time-frame and with better quality. You could aspire to take your company public eventually and make that mark as a large corporate organization in the world of business. Scaling up means a lot of responsibilities, yet decentralization of power, as you bring in trained professionals to run your enterprise and give them charge to function and deliver fairly independently. This also involves putting in place systems and processes that would work despite your presence.
No business can scale smoothly and swiftly in the absence of set processes. For instance, say, you run a soap manufacturing unit, and want to grow your distribution network to Chennai. It would involve keeping track of the inventory. You would want to use a system to be able to keep track that would inform you well in advance if the inventory is nearing its finish. Thus you have got to plan well in advance so that your supply chain is well in order and complements your desire to scale. As an entrepreneur, you must ponder on some quick questions: Is my business scalable? If yes, to what extent do I want to grow my business; what will be the roadmap for that growth; and will I be able to manage that growth.
Limitations to scale It is great that you want to take your business to the next level, but it is important to assess if your business is scalable at all, and even if it is, what is it that comes in the way of your growth strategy. “There are certain businesses that won’t be scalable by definition,” says Kartik Varma, Co-founder, iTrust, a financial advisory firm. He cites the example of a heart surgeon. “Can he scale? No. Because it is a one-man shop. He cannot perform more than two or five surgeries a day,” he adds. But a hospital where he operates can perform 100 procedures a day. So there are certain businesses that would not scale, no matter what. Similarly, if one has a very niche idea, there is a chance of limitation to which it can scale as a business
SCALING UP IS ALL ABOUT ENTERING THE NEW LEAGUE, WHERE YOUR COMPETITION COULD BE BIGGER AND TOUGHER IN THE FORM OF BUSINESSES THAT ARE WELL ESTABLISHED, HAVE WELL-KNOWN BRANDS, AND HAVE DEEPER POCKETS TO SPEND ON MARKETING. DARE.CO.IN | STRATEGY/SCALING UP | FEBRUARY 2010 41
How to scale up?
While depending only on internally generated funds can limit the extent of scaling by tying it to the funds available, raising capital from external sources will impact the ‘freedom’ of the entrepreneur in some way or the other.
— K Kumar Professor, IIM-Bangalore proposition. “But if you have got an idea that can get mass adoption, then it can scale to whatever extent. Is the market for ultra-high luxury homes scalable or the low-cost homes?” So the concept has to be scalable, he adds. Sometimes going alone is not a great idea when you are thinking of taking your business to the next level. You may have to piggyback on a bigger player to extend your reach. For instance, if you are into the publishing business but don’t have the circulation numbers, you may want to tie-up with a bigger player to get a reach. This way you are able to slowly increase your subscribers and convince the advertisers that your magazine has a greater reach. “Certain businesses are more scalable when you plug them into the existing portfolio of businesses.” 42
A number of questions will automatically start popping up in your mind at the time you start thinking of scaling up your business. These would vary from where to expand, in your own city, state or region or country or whether to go global. The other question would be about the products or service offerings: should you increase the services that are on offer or should you try and innovate on the existing products or services portfolio. Either way, you will have to device a strategy that would stand the test of time. Some entrepreneurs believe that growing inorganically by acquiring a smaller business or the one with a matching product line would be a quick way of reaching to the next level. That would require due diligence in terms of assessing the target and then roping in investment bankers to broker the deal. A bad acquisition could push you back by many years. But nonetheless, acquiring a company would require capital that could come from internal accruals or as a loan. In many cases, tying up with a bigger player can make things easy. It could be in the form of a joint venture agreement or a merger. If you merge with a larger player, it would involve losing your control over your company to some extent, but you would still see it grow. In some cases, you would be giving up a part of the equity in your company to an investor, such as a venture capitalist or a private equity to get in the much-needed growth capital. While you run your company and
take it on a growth path, the investor would give inputs when you need to grow big. After about 5-7 years, the investor would exit. Whatever the case may be, scaling up requires capital, human resources and systems and processes in place to help you take the big leap. Here we look at the three aspects:
Capital Scaling up increases the demand for more money to be infused into the business. This money is needed to build in new capacities or launch new services and also to utilize and maintain fresh capacities. “The quantum of investments required to create capacity will be determined by the nature of the capacity-building process—whether it is incremental or in quantum lumps. This will also be influenced by the mode of capacity addition—whether organic, through a green field initiative, or inorganic, by acquiring an existing capacity from the market,” says K Kumar, Professor, IIM-Bangalore. “There are certain businesses where you have to put in new capacities every time to scale,” says Varma. “For instance, a steel plant. If you have to manufacture more steel, you have to set up a new plant,” he adds. Similarly, in the case of a restaurant, if you want to scale, you will have to open a new branch to be able to accommodate new customers. “The requirement of working capital will be influenced by whether the capacity creation leads market demand (in which case it
SCALING UP INCREASES THE DEMAND FOR MORE MONEY TO BE INFUSED INTO THE BUSINESS. THIS MONEY IS NEEDED TO BUILD IN NEW CAPACITIES OR LAUNCH NEW SERVICES AND ALSO TO UTILIZE AND MAINTAIN FRESH CAPACITIES.
FEBRUARY 2010 | STRATEGY/SCALING UP | DARE.CO.IN
will be more due to the longer lead time involved in demand maturing) or lags it (in which case it will be less as there will be pent up demand waiting to be satisfied),” adds Kumar. Depending upon the requirement of this capital, you would want to tap into the available sources of funding. The capital does not necessarily have to come from a single source. For instance, you may request your friends and family to lend some, while for a bigger chunk of money you may approach a bank. “The capital can also come from various sources—internal generation, outside equity—either from public or private sources—or debt,” says Kumar. But each of these sources has advantages and disadvantages. “While depending only on internally generated funds can limit the extent of scaling by tying it to the funds available, raising capital from external sources will impact the ‘freedom’ of the entrepreneur in some way or the other,” adds Kumar. Thus one has to clearly understand the implications of raising capital for various sources. For instance, banks would give growth capital at a certain interest rate but would demand collateral, while a venture capital firm would seek equity into the company while lending money.
People Not matter how great an idea, it is the people who make it or break it. People within an organization are the most important when it comes to scaling. It is eventually people who would drive the growth or share the failure. Thus while planning to scale up your business, try and get the right people in the organization. Even if you manage to scale you would not be not be able to sustain it for too long if you don’t have the right people at the helm of affairs. It becomes necessary to focus on the right skills and experience.
“Getting people per se may not be real challenge—often the excitement of growth can be skillfully projected to attract the right talent,” says Kumar. Agrees Jay Desai, Founder, Universal Consulting. “For a services company, the big issue is that of people. The difficulty is not in finding the right people but taking them up the learning curve, delegating responsibilities to them and giving them the skills to manage different tasks that contribute to the growth of the business,” he says. “The essence of the people related challenge lies in the entrepreneur developing the ability to let go—delegate—and redefine their own role in the company as a leader rather than (continuing to be) a foot soldier. Related to this challenge is that of integrating the new team with the old, without getting blinded by emotional and non-business considerations,” adds Kumar.
Organization No matter how much amount of money you put into the business and how bright the people you hire, if you do not put the right systems and processes in place, your effort to scale up will go waste. Therefore,
For a professional services firm, the issues are more relating to people and finance. The problem is not that you cannot find good people, it is more to do with training them to take on responsibilities to grow the firm. — Jay Desai Founder, Universal Consulting
Sometimes to scale you might have to just sell out to bigger company because you cannot build that kind of network or reach that scale. Certain businesses are more scalable when you plug them into the existing portfolio of businesses. — Kartik Varma Co-founder, iTrust
the organizational structure and processes should be in sync with your strategy to grow. It is quite a challenge but also the most interesting part of doing business. After all, it is your business and you would want to see it on the fast track. “Delegation without a supporting organizational structure and processes can be suicidal, and here lies the biggest challenge for the entrepreneur as she tries to scale up,” says Kumar. Processes reduce the chances of confusion, and would help the employees work as a team towards the desired goals. Processes are aimed at perfection, be it about the quality of the products or services, or the training of employees or customer handling. This has to be a top-down approach within an organization. The values and ethics that flow from the top determine how other employees would perform. “Paradoxical as it may sound, the same factors that foster the need for formalized organizational structure and systems will not allow the entrepreneur to take time off to build them,” says Kumar. The entrepreneur has to build the organization even as she is scaling up, he adds. R
DARE.CO.IN | STRATEGY/SCALING UP | FEBRUARY 2010 43
Recovering from the jolt of the economic slowdown, the small and medium enterprises across various sectors are ready to walk the growth path again.
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Bharat Sharma, ICICI Bank
here couldn’t have been a more opportune time to discuss the issues of finance and technology with respect to small and medium enterprises (SMEs). With the economic slowdown, now almost a thing of the past, the SMEs are all set to explore new opportunities in various sectors. They are gearing up to offer innovative products and services and to reach out to new customers. With this in view, DARE organized SME Knowledge Forum in association with ICICI Bank, TCS and Cisco. As part of the event, which was held in Vadodara, Mumbai and Jamshedpur, SMEs from engineering and pharmaceutical clusters brainstormed on various issues. The event in Vadodara, held on January 8, 2009 saw the promoters of engineering units in the city discuss the availability of finance when it comes to exports, M&As and expansion. Pravin Patel, President, Federation of Small Scale Industries talked at length on how the enterprising business community in Vadodara was looking to avail growth finance that will help them manufacture more innovative products to take on the competition from other countries. Vadodara has over 1,400 engineering units. Bharat Sharma, zonal head – retail banking, ICICI Bank talked of the bank’s willingness to partner with SMEs in providing finance, from working capital loans to term loans. Similar thoughts were echoed by Sanjay Jha, Assistant General Manager, ICICI Bank. Many SMEs at the Vadodara event talked of using technology as an enabler to market their products better. Venguswamy Ramaswamy, Global Head – SMB, TCS focused on the use of technology to turn around orders fast. He talked on tailor-made IT solutions for SMEs. Cisco’s Raghu Krishnan and TCS’ Satyajit Dutta said that SMEs will have to stop seeing IT as a cost but focus on the benefits.
Pravin Patel, Federation of Small Scale Industries
Venguswamy Ramaswamy, TCS
Raghuram Krishnan, Cisco 44
FEBRUARY 2010 | EVENT/SME CLUSTER | DARE.CO.IN
In Mumbai, the SMEs in the pharmaceutical cluster are willing to do more of R&D work to develop new molecules themselves and also take up projects outsourced from abroad. Sanjeev Saxena, Co-founder and CEO of Actis Biologics talked of the big problems that the biotech industry can solve by developing cures and not diseases. He also stressed on the need for the pharmaceutical industry to focus on the benefits it can provide to mankind. Praveen Trivedi, Deputy General Manager, ICICI Bank talked of the consultancy that the bank can provide to pharmaceutical SMEs when it comes to acquiring smaller players. He also talked of breaking the language barrier to reach out to new customers. Patrick Mathias, Vice President – Sales, Cisco talked of how a range of networking solutions can make life easy for SMEs and at the same time save money. TCS’ T K Cherian focused on the big role that technology can play today to help reach the market faster and the edge that comes with it. The Jamshedpur event was all about smaller engineering units to understand that technology can play a key role in growing one’s business. The SMEs in Jamshedpur are mostly vendors for automotive manufacturers, particularly Tata Motors. Mohit Tiwari, Territory Manager, Cisco talked of how cloud computing is making it easy to take what you need and pay accordingly. He said the needs of various SMEs vary and thus one can get an assessment done as to what solutions one needs and within a certain budget. R Ganesh of ICICI talked of the qualities of a good borrower and how the credit rating of a borrower would impact his chances of getting a business loan. He also talked of the help that SMEs can get with regard to line of credit when it comes to opportunities in exports.
Pranab Dutta, Progressive Engineering
V K Mehta, Eastern Tar
Sanjay Jha, ICICI Bank
Sanjeev Saxena, Actis Biologics
Manoj Tiwari, Cisco
Satyajit Dutt, TCS
T K Cherian, TCS
Ganesh R, ICICI Bank DARE.CO.IN | EVENT/SME CLUSTER | FEBRUARY 2010 45
The Business of Balloons Hiding behind those colorful balloons are a number of business opportunities that range from manufacturing to decoration /Vivek Kumar
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bdul Rehman sells his balloons on a bicycle. He migrated to Punjab from Bihar around 45 years back and had been selling balloons since then. He goes around villages and towns selling balloons filled with hydrogen gas. He says he has raised his four sons by only doing the business of balloons. A typical balloon seller on the street may not grab your attention but the product he sells has more than just air. Balloons are used for decoration, in advertisements and for adventure sports, and this has led to a booming business of this product that was once only for children.
The Business There are multiple types of balloons available in the market for different purposes. Celebration balloons, toy and novelty balloons, decoration balloons, and advertisement balloons are some of the categories in which manufacturers enlist them. 46
Naresh Kumar, a decorator and party supplier in Gurgaon, says traditional balloons made in India perform poorly for long-term use. The balloons that he uses for decoration are imported from Malaysia. When a shopping mall or some shopkeepers asks him for decoration, he guarantees the time for which those balloons would work. If some of the balloons get deflated, he has to provide their replacement. Balloons are used for decoration at weddings, showrooms, shopping malls, road shows, festivals, discotheques, parties, product launches and corporate events. Water balloons are a favorite among children. They are thin and small rubber balloons, filled with water. These balloons are intended to be easily broken and extensively used on Holi—the festival of colors. Fahim Maniar of Raj Trading in Mumbai says he manufactures balloons of 4, 6, 8 and 12 ft diameter.
FEBRUARY 2010 | OPPORTUNITY/BALLOONS | DARE.CO.IN
Bigger balloons can be made on order. These balloons are filled with helium or hydrogen gas to make them go high up in the sky. He says advertisement through balloons is becoming popular and also comes cheap. He says that an advertisement balloon put up in the marketplace of a big city like Delhi or Mumbai would ensure that 100,000 people notice the brand name in a day. This could go up to one million views per day. Giant-size sky balloons for outdoor advertising, publicity and public awareness campaigns, sky blimps for maximum visibility, lifesize portable floor display balloons for product launches, and product and package replicas are some of the versions of these balloons. There are new types of balloons that are made of foil and sold in events, fairs, shopping malls and festivals. These balloons are filled with helium gas. This helps the bal-
loon to rise higher in the air but it increases the price of these balloons. Sanjeev Bali of Whaleman Advertising says they use foil balloons made by US companies because the quality of these balloons is superior to the balloons imported from China. These balloons come in the shape of animals, birds, cartoons toys, hearts, helicopter etc. Toy or novelty balloons give a lot of space for innovation and new ideas. Missile toy balloons—rocket balloons that fly with a whistling sound—are manufactured under this category. There are colorchanging balloons that are called magic balloons. Balloons in fluorescent, metallic, crystal colors and custom message printed balloons are some other variations. Naresh Kumar mentioned that with the help of sticks and foils, they prepare ‘car balloons’ for birthday parties, which is large enough to accommodate the ‘birthday child’ and its
An advertisement balloon put up in the marketplace of a big city like Delhi or Mumbai would ensure that 100,000 people notice the brand name in a day. — Fahim Maniar Raj Trading
DARE.CO.IN | OPPORTUNITY/BALLOONS | FEBRUARY 2010 47
thread instead of tapes, because tapes spoil the paints of walls. Fahim Maniar, a manufacturer and vendor of balloons, says the business dynamics works on demand. An advertising balloon could cost between Rs 6,000 to Rs 30,000. However, a balloon could cost around Rs 120,000 also given that helium gas is used—it inflates the price hugely and therefore, sometimes, customers prefer to have hydrogen gas which is cheaper.
Giant-size sky balloons for outdoor advertising, publicity and public awareness campaigns, sky blimps for maximum visibility, life-size portable floor display balloons for product launches, and product and package replicas are some of the versions of these balloons.
Challenges
parents. This single balloon costs around Rs 5,000. He says like this, they can work on more thematic ideas for parties.
How it works? Naresh Kumar takes order for decoration from various customers including shopkeepers, shopping malls, companies, and for parties. The price of one decoration balloon filled with air is Rs 2.5 and he takes a minimum order of Rs 250 with Rs 150 as labor charges. He says he has
worked with almost all shopping malls of Gurgaon. These shopping malls order for decoration in the month of December due to Christmas and New Year celebrations. At one time, an order could range from Rs 30,000 to Rs 50,000. The decoration is monitored by a person every alternate day to make sure no balloon is deflated—the guarantee is taken for one month. Talking about how they manage to fix those balloons on the walls, Naresh Kumar says he prefers using
Kumar says there are no huge barriers to entry and to succeed in this business. Good management and quality assurance would ensure that you have greater market appeal. He says that getting skilled labor sometimes becomes challenging because it takes at least two months for a new person to get fully skilled in managing the work of decoration. At the same time, Maniar says that excise duty and rise in the prices of raw rubber from Kerela pose some challenges for manufacturers because their investment cost goes quite high. He says that lack of awareness among the companies and corporate houses to use balloons for advertisement limits the market. R
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 48
FEBRUARY 2010 | OPPORTUNITY/BALLOONS | DARE.CO.IN
Announcing www.smashup.in ! Watch the web cast of the first edition of SmashUP! held at IIT Delhi on 23rd Jan 2010 • Sessions on startup marketing, legal issues while setting up your business, funding and managing talent • SmashUP! Showcase featuring 6 innovative startups • Media coverage on Smashup, exclusive bytes, feedback & comments
TiE Delhi Entrepreneurship Nurturing Program (ENP) Kickoff 26th Feb, India Habitat Centre
The Entrepreneurship Nurturing Program (ENP) was initiated with the objective of mentoring & guiding entrepreneurs. Under the aegis of the ENP program activities were undertaken to bridge the last mile by taking entrepreneurs to the next level via:Mentorship and guidance from experienced entrepreneurs, professionals and investors. Structured Mentoring Program customized to the participating entrepreneurs mentoring need, domain space, experience and background. Bringing together, crucial participants in the entrepreneurial ecosystem VCs, investors, mentors, incubators and service providers to accelerate the development of participating entrepreneurs at large. This helps in bridging the last mile. To attend the ENP Kickoff session on 26th Feb, write to Ianinta at ianinta@tienewdelhi.org TiE Delhi, C-25 Second Floor, Sector-8, Noida 201 301, Tel: +91 120 4066500, Fax: +91 120 4066523, Email: info@tienewdelhi.org
photoblogsp ogsp Thematic balloons and how they can cheer you
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alloons are one of the most desired objects by children. As a child notices a balloon, he wants to grab it. Balloons are usually sold by hawkers and street vendors who roam around the city on foot or driving a bicycle. Festivals, celebrations, fairs and corporate occasions demand a good supply of different types of balloons. The festival of colors—Holi—is one of the most famous festivals that opens the market in the form of water balloons. Like kites, the market for balloons is fairly fragmented among micro and cottage industry players. However, innovative concepts, better material selection and attractive designs could throw better opportunities. Are you looking to fill your balloon with air and let it fly? (Photo taken at International Children Festival ‘09, Pragati Maidan, Delhi) Author: Vivek Kumar
Power Generation and Electricity Sector
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ndia is the sixth largest consumer of energy. In the last couple of decades, the consumption of energy has increased due to India’s economic rise. Power generation in India is distributed among thermal power plants (75 percent generation), hydroelectric power plants (21 percent generation), nuclear power plants (4 percent generation), and some other renewable sources of power generation such as wind energy and solar energy. Renewable sources of energy provide a huge base of opportunities in power generation sector. Are you energized enough to tap it? (Photo taken in Delhi) Author: Vivek Kumar
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FEBRUARY 2010 | PHOTO BLOGS | DARE.CO.IN
sp sphotoblogs Passengers increasingly line up at Delhi’s Indira Gandhi International Airport
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he International Air Transport Association (IATA) has indicated that 2010 would be a better year for the global airline industry, with net losses pegged at $5.6 billion as against an estimated $11 billion in 2009. It has also said that passenger traffic is likely to grow 4.5 percent in 2010, ringing in some good news for airlines badly hit by the global economic slowdown. Author: Vimarsh Bajpai
Monument Conservation and Preservation
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ndian history and different cultural eras of the country provide a plethora of architectural variety in the form of monuments and buildings. These might include temples, mosques, tombs, churches, cemeteries, forts, palaces, step-wells, rockcut caves, and secular architecture as well as ancient mounds and sites which represent the remains of ancient habitation. Conservation and preservation of these monuments remains in the hands of Archaeological Survey of India (ASI), some NGOs like The Indian National Trust for Art and Cultural Heritage (INTACH) involving specialists and experts that might include architects and consultants. There are opportunity areas in salvaging, transplantation, reconstruction and restoration of monuments; material used in conservation ranging from brick, lime to wood and metals; labor and masonry work-force; scaffolding, water-proofing and foundation laying materials, architectural consultancy and monitoring services. Would you be interested in conserving the heritage of India? (Photo taken at World Heritage Monument, Humayun’s Tomb, Delhi) Author: Vivek Kumar
DARE.CO.IN | PHOTO BLOGS | FEBRUARY 2010 51
photoblogsp ogsp An artisan sells handicrafts in New Delhi
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he Union government has started a handicraft mega cluster in Moradabad in Uttar Pradesh. This is aimed at making handicrafts more innovative and export-friendly. Other such clusters in Mysore, Jaipur, Jodhpur, etc will also be taken up for development. Author: Vimarsh Bajpai
Garden Sprinklers and Watering Equipments
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he main job of a sprinkler or watering equipment is to water effectively in the least amount of time and trouble. It is about saving water and increasing the efficiency. Sprinklers can cover small to large areas and are used for irrigating soil and various types of crops depending on their discharge rate. The usage of sprinklers can be extended to wheat, gram, pulses, vegetables, cotton, soya bean, tea, coffee, and other fodder crops. The application domain of these sprinklers is not simply limited to gardens but can be extended to residential area, industrial area, hotels, stadiums, grounds, resorts, public and government enterprises, golf links, and race courses. Do you like rain? These sprinklers induce a similar feeling and tapping this opportunity can make you “dance in the rain”. (Photo taken at the Old Fort, Delhi) Author: Vivek Kumar
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FEBRUARY 2010 | PHOTO BLOGS | DARE.CO.IN
investor of the month
Reliance Technology Ventures Ltd is the corporate venture capital arm of the Reliance ADA Group. RTVL was recently ranked No. 30 in the Red Herring Top 100 Global VC list and was the only corporate VC to be ranked from India. Harshal Shah, the CEO of Reliance Technology Ventures is an MBA from the Wharton School of Business and a Truman Gray Scholar from MIT where he earned two Bachelorsâ&#x20AC;&#x2122; degrees in Management and Electrical Engineering & Computer Science.
Harshal Shah CEO, Reliance Technology Ventures
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FEBRUARY 2010 | BIO | DARE.CO.IN
We invest anywhere from $1 million to $15 million in a deal. In the life cycle of a company, we could invest up to $15 million in case the company needs that amount of funding.
hama Apparel is one of the companies in your portfolio and it comes from an incubator at NID. Do you actively scout for potential investment opportunities in incubators? Yes. We do. We are opportunistic. We are stage-agnostic, sector-agnostic and geography-agnostic. We believe that ideas can come out of the most unusual places at times. So, we are on a lookout for ideas anywhere, whether it is an incubator or whether it is from a direct contact with us or whether it is through one of our referrals in our ecosystem. The key thing that we look for is the idea, and the way in which the company comes about. As far as Dhama is concerned, what got our attention was the fact that Kranti Vistakula, the CEO of the company, is a graduate from MIT. He holds the patent of the technology in the US. When we spoke to him, he was ready to relocate here to India and then put himself into the NID incubator. So, we have been in touch with him from that point. When he did the transition, it was along with our guidance and encouragement, because the company that he is the CEO of, has the combination of technology as well as apparel design. So, we have best of both the sides.
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comes our way and be able to go ahead and take a call in the first instance whether it is a prospective deal or not. If it is, then we continue with our next step. So we look at all the deals. On one side there are deals that come directly to me as well. I am responsible for deal generation as well as deal analysis, due diligence, and deal management just like everyone else, but at the same time when it is about taking the final decision, what captures my attention is the following. One is the quality of the management team, number two is the quality of the idea, and number three is the prior experience as well as the potential startup and deal execution. I also look for the sanity of the business and the financial plan, and the willingness of the entrepreneur to work together in a team. We believe that we are able to offer an edge that nobody else can offer. We also believe that we can bring the entire Reliance ecosystem to the need of the entrepreneur so that instead of taking a company from level one to level two, we can take it from level one to level 100.
How big is the fund? How many companies have you invested in so far? We are working out of the blank cheque book of the Reliance ADA Group. There is no set fund over there. We have invested in 11 companies, and this does Most prospective entrepreneurs wonder what is the best way to grab the not include the companies that we have advised upon. attention of a VC, who is flooded with business plans. What's the way out? Have you set a target on the number of We do have lots and lots of plans that come in from all different sources. If investments you would make in 2010? No. We don’t go about doing that. It is you ask me in terms of KRAs of every single person in the team, one of the a fruitless exercise to go about doing big KRAs is the ability to do quality deal something like this. That sets you up screening. It is our job to make sure that for failure from day one itself because we go through every opportunity that then you are chasing numbers, not
quality. The way I look at this is when we are doing a deal we don’t consider ourselves as an investing company. The culture that I have created within the team is to believe that we are in a customer servicing business. We look at investee companies as our customers. When we decide to invest in a company, we try to see whether we can keep our customer happy or not. By looking at it from that perspective, we are setting our entrepreneurs for success with our help. What kind of mentoring comes from your side along with the money? It depends upon the stage of the company and also on the need at that point of time. For example, Yatra.com was a seed-stage investment from our side. We practically invested into the idea, even prior to investing into the sharepurchase agreement. Once we did that, we partnered with them in every aspect that they needed help for. This included anywhere between 15-20 calls a day from their side to us and from our side to them. We also supported them across other functions like getting office space, hiring, marketing plan, etc. As the company grew, they started moving up the value chain in terms of various kinds of advice and contacts they needed. That is where we brought in our network, and we even started providing them higher value-added services. What is the typical size of the investment that you make? We have been opportunistic and also stage-agnostic. We invest anywhere from $1 million to $15 million in a deal. In the life cycle of a company, we could invest up to $15 million in case the company needs that amount of DARE.CO.IN | BIO | FEBRUARY 2010 55
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We are working out of the blank cheque book of the Reliance ADA Group. We have invested in 11 companies, and this does not include the companies that we have advised upon.
funding; and we are there at the fair market value that the company is being pitched across to other outside investor as well. How much stake do you take? Stake-wise we don’t have any numbers that we work out. It could be anywhere from 5 percent in a company to even a majority stake in the company. We are not bound by that. Normally we don’t end up insisting that we want a board seat. It usually comes from the entrepreneurs themselves if they want us to be there to add value to their company. In a way it is something that has automatically happened across all of our companies, where either we have a board seat or we have a board observer seat, depending upon the stake in the company and the investment. Sometimes we have both, and sometimes we have more than one board seat as well.
they looked at, our key message was that we are open to discussing business 24 hours of the day, seven days a week, and 365 days a year. And at the same time we are willing to work with the entrepreneur where we respect the entrepreneur and ensure that they end up getting fair value. We realized that India is not the only country in the world which is an attractive market. So very often as part of the discovery process, many companies would end up evaluating multiple markets at the same time. We are quite open to their going ahead after talking to us, possibly looking at the Chinese or the Brazilian market in terms of capital efficiency. They may come back to us again and if we see that our expectations match, we are happy to continue talking to them.
a result of that, if you look at the period between 2008 and 2010, the valuations of all of our companies have gone up manifold. Everyone is now going even more aggressive because of the efficient capital utilization. We want to tell everyone in our team that we loved downturn, and it has been a great opportunity for us.
What’s the focus on innovation? Innovation is very important in any stage in any company’s life. Innovation cannot be defined narrowly. A lot of people end up looking at innovation as incremental innovation but this kind of innovation happens in our daily lives as well. For a company, incremental innovation is a given fact but what happens along with that is the out-of-thebox thinking, so innovation can happen around business processes also. It can happen in terms of management skills How were your investments affected or finding newer markets. during the economic slowdown? To give an example, when we chose Do you reconsider proposals that have There is a reason why we got ranked to invest into Dhama, which calls been rejected by you once? at number 30 among all the venture itself an apparel innovation company, We would do that. Very often we end capital firms of the world. This was where we were creating jackets which up finding that in certain startup that because we ended up getting such maintain a standard temperature, the we have spoken to, entrepreneur has phenomenal IRRs last year that we are unrealistic expectations and once they at this point among the top ten venture key markets that popped up in front of us were the defence and the sports have gone out into the market and they capital firms of the world today, this is have realized that the reality is somein returns terms. There are other things markets. Interestingly, when the CEO of the company was visiting the Amul thing else, they come back to us. We are as well like legacy of the company, etc Cooperative Society in Gujarat, he happy to talk to them provided there but unfortunately we don’t have two is willingness at their end to come to decades of history behind us but within found that one of the reasons why the realistic expectations. the last five years itself, we have created productivity levels of the cows over We are India’s first venture capital a phenomenal track record that we are there was varying dramatically was befund which is going abroad. We are see- among those top 30 firms. Returns-wise cause of the temperature gradient that ing so many firms from abroad coming we are among the top ten. Now in addi- happens over the course of the years. to India but how many firms from India tion to that, last year when the markets So he thought of putting the jacket on one of the cows and found that the have gone abroad and have established were down, we had already got all our companies tremendously well-funded. yield got stabilized and at an increased themselves among the top firms? So So we went aggressive instead of going value of 40 percent. Now this is a new when we got ranked among the top market and what a brilliant innovation defensive, and captured the market 100 firms and that too at number 30 to have. R share from a lot of our competitors. As among a total of 1800 VC firms that 56
FEBRUARY 2010 | BIO | DARE.CO.IN
A new model for early-stage venture capital investments The emerging entrepreneurial India needs a newer VC model to be added than just the timetested high investment, high involvement model currently in place. We need a system that can quickly identify and invest smaller amounts in a very large number of ideas and prepare them for growth stage investments /Krishna Kumar
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FEBRUARY 2010 | ANALYSIS | DARE.CO.IN
V
enture capital has an aura around it. It has helped create some of the largest business blockbusters on this planet. But as the Indian Republic turns 60, venture capital has not managed to even scratch the surface of the entrepreneurial spirit that is bubbling up from all corners of the country. The Directory of the Indian Venture Capital Association lists 142 members, including advisors, PE firms and consultants. We can assume that about 200 VCs are operating in the country. Even this small number is further segmented into early-stage, mid-stage and late-stage investors amongst other things. And they are to meet the investment hunger of 200 million entrepreneurs (see blog entry at http://bit.ly/ 8Q5SFS)! Obviously, there is a huge gap in supply and demand.
How venture capital works today The average venture fund—and a firm will have more than one fund over its life time—has a life of five to seven years and a bankroll of a few hundred million dollars, which get invested into anywhere between 15 to 50 companies. Most Indian venture teams are small operations with the staff on board being countable on the fingers on one hand. The line of entrepreneurs wanting a share of this fund is long and the courtship is
long and protracted. Even after signing on the dotted line, the involvement of the venture team continues and is rigorous. The standard exit options that VCs seek, namely IPO or M&A, bring their own set of problems to the entrepreneurs’ table, with many not able to reach IPO size and a sell-off not being universally liked. Within the entrepreneur community itself, there is considerable confusion about VC funds, including on basic questions, like whom to approach, how to approach, when to approach and how much to ask for. On the other hand, venture funds complain about the huge number of proposals they get that are not related to their investment area, do not have basic requisites filled in and are not even properly drafted. And then there is the constant VC refrain that good investments are hard to find. What all this ends up doing is to create a very small and exclusive club of venture fund investees in the country. How exclusive is this club? A quick estimate that I was able to make put the number of active VC investments (including PE) in India currently under 500!
Limitations with today’s model The top reasons why the current VC model is unable to reach out to more entrepreneurs are size, scale and awareness. VCs, however early stage they may be, cannot make investments below a certain size. And they need the investee company to scale up significantly in a 3-5 year time frame so as to enable an IPO or a merger. What this means is that good ideas at the very early stages or which are not capable of scaling to IPO levels miss the funding bus. Finally, even after all the hype and media coverage about everything VC, there is an acute lack of awareness of how VCs operate and
what all they need to know before they make an investment. Often, entrepreneurs are confused even on the most obvious things, like which VCs are interested in their industry. From the entrepreneurs’ perspective, the secrecy that VCs maintain about almost everything acts as a major hindrance and the due diligence requirements for a VC investment are daunting, particularly for someone in the early stages of the entrepreneurship cycle.
The angel scene The typical VC answer to entrepreneurs seeking very small (below the million dollar mark) funding is that they should approach an angel investor. The angel investment scene in India is even more unorganized than the VC industry and all the issues that entrepreneurs face in getting VC funding only get magnified in an angel investor environment.
Incubator seed fund The department of science and technology of the government of India has a seed fund for entrepreneurs registered with the technology business incubators under NSTEDB. This fund has so far sanctioned just under Rs. 20 cr. to the incubators and out of this slightly less than half has been disbursed to 78 incubatee companies according to information available at the NSTEDB website.
The proposed model It is in this context of the yawning gap between available venture financing slots and the need for a more scalable, cost-efficient mechanism that invests in entrepreneurship and innovation. While not placing as significant a premium on the investees’ ability to scale to IPO-able size that we are suggesting a new model of investment that alongside the current one can give a significant fillip to entrepreneurship and venture development in the country. DARE.CO.IN | ANALYSIS | FEBRUARY 2010 59
The idea is simple: A number of VCs (say 5) come together and create an angel fund by pooling a minor part of their resources. This angel fund could be run by a team drawn from the investee companies plus other dedicated general staff, with specialized resources available on a need basis. The fund will have the mandate to invest in a minimum number of companies every year. The investment will be a minority stake (say 20 percent), with the shares being sold back to the entrepreneurs or the next round of investors (usually Series A) at the end of the investment period. Investments would be in the 5 lakh to 50 lakh range and both investment and buyback will be based on valuation of the project. The valuation, particularly at the point of exit could be done against pre-agreed and transparent parameters by an independent agency, ensuring fairness to all investors as well as investees. Exit would be at the end of three years, with one extension of two years in deserving cases, where the project has a longer gestation period or in case entrepreneurs are not able to buy back stake at valuation price or are unable to organize the next round of funding. In the case of extension, buyback could be at the valuation at the end of the third year or at the end of the fifth year, whichever is higher. Or it could be at the valuation at the end of third year plus market interest rate for three years if the entrepreneurs are unable to buy back the stake at the end of the third year. There would be a transparent and simple process for the evaluation of investment proposals, with clear milestones, like give a definitive yes or no within three months of getting a proposal. The early stages of this evaluation could be Web-based and even automated, so that the entrepreneur gets instant feedback. There could even be an empanelled list of agencies and experts 60
FEBRUARY 2010 | ANALYSIS | DARE.CO.IN
limitations for the proposed angel fund could be done away with if VCs with multiple sectoral interests come together. Further, the graduates of this angel program, the companies that achieve their targets, could be easily considered for Series A investments by the sponsoring VCs themselves. In effect this angel program could end up creating a stream of good investment opportunities for the VCs!
Within the entrepreneur community itself, there is considerable confusion about VC funds, including on basic questions, like whom to approach, how to approach, when to approach and how much to ask for.
No. of investments
Total investments
x returns per year
60 15 10 5 5 5
60,000,000 15,000,000 10,000,000 5,000,000 5,000,000 5,000,000
negative
100
100,000,000
.25 1 2 4
who could be approached by the entrepreneurs who get investments for issues like accounting, packaging design, advertisement and marketing collateral design, legal paperwork and so on. Why am I suggesting that a group of VCs pool together? Many reasons. That way the risk for each would be minimized further. Also sectoral
The numbers To talk to a VC you need numbers; so here goes. I have worked out a year’s investments’ return profile. The assumption is that 10 VCs join together and put in Rs 1 crore every year into the investment pool. Expenses are separate. I have also assumed that this fund is invested across 100 companies at an average of Rs 10 lakhs per investment. That is, there is a mandate to invest in 100 entrepreneurs/companies every year. A typical returns profile could be something like this:
Returns / investee / year
Total returns
Repayment of capital
250,000 1,000,000 2,000,000 4,000,000
7,500,000 15,000,000 30,000,000 60,000,000
15,000,000 10,000,000 5,000,000 5,000,000 5,000,000
112,500,000
40,000,000
Total recovery
152,500,000
Now, if there are five funds like this, that would mean investments in at least 500 ideas every year, a far cry from the paltry numbers we have going now. In ten years, you could virtually rewrite the future of entrepreneurship and business in India, not just at the entry and small scale level, but also at the early and middle venture investment levels. Any takers? R
http://www.dare.co.in/blogs.htm
from the Opportunity for new players in the used vehicle market Posted by: Vimarsh Bajpai in Ideas on Jan 18, 2010 Tagged in: Seedfund, opportunities, Nano, Federation of Automobile Dealers’ Association, carwale.com, automobile
W
hen Seedfund, the early-stage investment fund put its money into carwale.com in 2006, it was the first VC investment in this space. Carwale now claims to have served more than 10 million Indian car consumers and have influenced approximately $3 billion of car transactions in India. The automotive sector is one of the most lucrative in India and no wonder global car makers are making a beeline at the doorstep of the Indian consumer, trying to influence them with everything from advertising to efficiency. The recent Auto Expo that concluded in Delhi saw very interesting launches in the mid-market segment. Although the launch of Nano last year created a big buzz at the expo, this year was all about fancy vehicles with world-class features and lower price points. While the market for new cars is growing, that of used cars still has a lot of steam in it. The following are some of the quick pointers to gain opportunity from for new players in this business, courtesy Federation of Automobile Dealers’ Association: • Used car market has been growing at a CAGR of 20 percent in the last five years. • About 90 percent of car sales in US and Japan take place through exchange. • 34 percent of new car sales in India are replacement car sales. • There is a huge potential from used car sales as the replacement cycle has shrunk from 10 years to 5 years. • Only 16 percent of used car sales take place in the organized sector; hence, a big business opportunity awaits players in this sector. • Used car business and exchange programs help in increasing new car sales, acquiring new customers and retaining existing customers, thereby reducing the sales promotion costs.
Rural roads and business opportunities Posted by: Vimarsh Bajpai in the news on Jan 11, 2010 Tagged in: World Bank, roads, opportunities, Nitish Kumar, Bihar
B
ihar’s 11 percent growth in GDP has left several economists stunned but Nitish Kumar, the state’s chief minister is having the last laugh. The state has been languishing under the burden of poor governance that led to hardly any development in the last decade. But thanks to the change of guard, Bihar is now bouncing back to grow second only to Gujarat. A lot of credit for the state’s stupendous growth has been due to the roads both in urban and rural parts of the state. Bihar Road Construction Corporation (BRCC) will hold its head high at the upcoming review meeting. BRCC is being aided by the Asian Development Bank (ADB), and has been largely successful in implementing various projects. The state had taken $ 420 million load from the ADB to build 820 km road. Good road are imperative to economic growth and Bihar is no exception. According to the World Bank, prior to the year 2000, 40 percent of India’s over 8 lakh habitations lacked all-weather roads, and around 74 percent of rural population was not integrated to the economy. But after the Prime Minister’s Rural Roads Program was launched in 2000, things have changed fast. Around 1 lakh kilometer of road had been built until 2007, and 20,000 habitations have been connected, according to the World Bank. Thus with better and more roads, the economic activity has grown at a fast pace. Schools can now see more children joining in as roads have connected remote villages with small towns and big cities. School attendance has improved and teachers also are more regular at reaching to village schools. The best has been that villagers can take their produce faster to nearby markets than they did in the absence of good quality roads. DARE.CO.IN | FROM THE BLOGS | FEBRUARY 2010 61
The Taj Mahal: A 16.8 crore rupee opportunity for India post Posted by: Krishna Kumar in Ideas on Jan 02, 2010 Tagged in: visitors, tourist, Taj Mahal, postal department, postage, India, entry ticket, ASI, Agra
T
his year, somewhere close to six million paid visitors will visit the monument of love, the Taj Mahal. About a kilometer away from the entrance to the Taj, they will queue up for their entry tickets. Entry to the Taj costs Rs. 20 for Indians and Rs. 750 for foreigners and you get a fairly good entry ticket, one of the best for a monument in India. Now, the entry fee is not a single item. Out of the twenty rupees, 10 goes to the Archeological Survey of India (ASI) and 10 is toll by the Agra municipality. Similarly, out of the 750 paid by foreigners, 250 goes to the ASI and 500 goes to the municipality (which gives them a bottle of mineral water and a pair of shoe covers for free). And the beautifully printed ticket is very much like a picture postcard (and that is what gave me this idea). The idea is like this. Convert that entry ticket into a picture post card and set up a special Taj Mahal post office with its own stamp and cancellation seal that is not available elsewhere. The reverse of the ticket becomes the place to write the address and a message. It will also carry the special Taj Mahal stamp, which is available nowhere else. Once you enter the Taj and the stub from the ticket has been torn off, the rest of it becomes the post card, a memento that is posted from within the Taj complex to a near one, an incredible reminder of a visit to the monument of love! The post office could place letter boxes color coded by destination just inside the entrance gates of the Taj where visitors could deposit these postcards. Think of it, a special letter posted from within the Taj complex itself to tell someone about your visit to the monument! Now, the postal department should do a deal similar to what the Agra Municipality has done and add a charge of Rs. 10 per domestic ticket and Rs. 100 per international ticket for collecting and delivering this mail. So, for 6 million paying visitors, out of which 20 percent are foreigners, the postal department could net a cool Rs. 168 million (Rs. 16.8 crore) every year! And for all you know, people may end up buying extra postcards (at Rs. 10 and Rs. 100 respectively) as they may want to send more postcards from within the Taj! Of course the postal department would have to treat these as priority mail and ensure that they are delivered. After all, they will be charging better than premium rates for this service.
Marriage, Modeling or Masters? Posted by: Krishna Kumar in Ideas on Jan 19, 2010 Tagged in: women entrepreneurs, woman, Twitter, social networking, modeling, masters degree, marriage, LinkedIn, Gita Dang, female, Facebook, entrepreneurship, college
O
ne of my meetings recently was with a young lady, who had just graduated from the arts stream of one of Delhi’s premier colleges. And amongst the many things we discussed was of course the chances that graduates from her class would choose the path of entrepreneurship.
What are your classmates likely to do in life, I asked. The answer was something of a surprise. According to this young lady, her peers would end up in one of three choices—modeling, masters or marriage. Data shows that less than 20 percent of entrepreneurs in this country are women. A number of reasons—cultural, historical and genetic have been touted for this small number. If what I heard that day is true for most colleges around the country, then this ratio is not going to change significantly any time soon. Further, many businesses started by women tend to be small and based out of home. Gita Dang puts down the lack of business networking and peer support mechanisms as among the key reasons why many businesses started by women do not scale. And empirical evidence seems to validate the networking part of this, with most social networks like Twitter and Facebook having more male members than female! Perhaps, there is a need for a social network exclusively for women to help build up woman entrepreneurship in this country. 62
FEBRUARY 2010 | FROM THE BLOGS | DARE.CO.IN
Who is your role model? Select Poll
Who is your role model?
Who is your role model? A business person 113 60.1% I have no role models 38
20.2%
A family elder 15
8%
A sports person 11
5.9%
A political leader 6
3.2%
A film star 5
2.7%
Number of Voters : 188 First Vote : Thursday, 29 October 2009 17:59 Last Vote : Friday, 22 January 2010 12:13
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 DARE.CO.IN | FROM THE BLOGS | FEBRUARY 2010 63
blogs/opinion
Rethinking the Indian Strategy /Vijay Anand
With the rising middle class, globally, it is this population that will have to be targeted, and India is poised and set in the stage to be able to look at these markets strategically and plot the roadmap.
Vijay Anand is an entrepreneur who has experience starting and building various technology startups, starting at the young age of 16. He is currently the Incubation Manager at RTBI, an incubator in IIT Madras that focuses on building rural-focused businesses. He is also the founder of Proto.in, India’s premier technology showcase event and is involved in various initiatives that are shaping up the emerging entrepreneurial scene in India. He blogs as The Startup Guy at www.vijayanand.name and tweets regularly at www.twitter.com/vijayanands.
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FEBRUARY 2010 | COLUMN | DARE.CO.IN
The next generation of companies that are and will be formed, should not focus on the goals of the companies built in the last decade, but focus on the path to lead the industry
A
lmost a decade ago, the
be formed, should not focus on the
growing Indian population
goals of the companies built in the
was felt as a burden to a
last decade, but focus on the path to
country that was barely getting on
lead the industry.
the race track of economic development. And then at the turn of the
Redefining Standards:
millennium, the world did not come
A lot of technology companies to-
to an end as many feared—in fact, a
day strive to compete with compa-
new era began. While the outsourc-
nies from the west and the Silicon
ing industry boomed and billion
Valley hoping to get a breakthrough
dollar companies were built in India
in being able to leapfrog through
leveraging the carefully crafted
time and catch up. What most com-
decisions in development in years
panies rarely realize is that unless
past, a new realization dawned—the
you are also there, competing on
knowledge economy was born. But
the same grounds, we will forever
much of that is old history now.
play the catch-up game. The basis
It’s important to understand the
for that technology, the inspiration,
background because it ties in an im-
the need and everything that sur-
portant fact that more or less holds
rounds creation of new IP is heavily
the key to the future of the Indian
favored towards the Silicon Valley.
innovation ecosystem. Product
If that is the case, what then will
companies, and the next genera-
our strategy be? There is an easier
tion of companies that are and will
answer to that.
We are a country of a billion in
We are in a position today to define new standards that suit our standards, environment, needs and market conditions and given that we are also one of the fastest growing economies, the rest of the world will follow suit.
population, and we are five-sixth
Redefining the Innovation Pathway:
the world. Our population is our
While the world expects us to
strength. We are in a position today
build the next Mercedes, we go
to define new standards that suit
ahead and innovate on the Nano.
our standards, environment, needs
And then the same company
and market conditions and given
also buys a brand that is known
that we are also one of the fastest
for luxury. While it is mind-
growing economies, the rest of the
boggling that the same group
world will follow suit. If that sounds
holds both, the most economical
like sheer madness, this is exactly
and one of the top lines of luxury
the route that China has taken in a
vehicles, the vision is clear. The
lot of sectors, and so did Japan in
innovation in the economical
the telecom space. NTT Docomo
version—the constraints under
today drives the telecom sector in
which it is built—will give rise to
standards that drive high experi-
the technology that will power the
ence mobile communications. If
next generation of luxury vehicles,
they did it, so can we.
which, while offering comfort, will also be economical, enjoy high
Redefining Technology Lifestyles:
margins, be environment-friendly
History has shown that in every
and leverage alternate
instance that a developing nation
fuel systems.
catches up to a developed nation,
All these are just some of the
it leapfrogs in technology, escapes
examples of innovations that have
the burden of archaic infrastruc-
happened around us in the past.
ture and embraces the new and
While the whole world, including
drives new value creation. India
countries such as Israel and Singa-
never saw landlines take up as
pore have competed aggressively
they should have, but we jumped
against developed economies
straight to mobile communications
trying to hold the position of being
and embraced it to the point where
the innovation hub, the inevitab-
we can deliver quality network
lity has been in the high cost of
service at a cost that the world
innovation and the lack of focus
envies us for. This phenomenon
in the emerging markets, which
will happen time and time again,
today form five-sixths of the world
for most technologies that touch
population. With the rising middle
everyday life. We might never see
class, globally, it is this population
PCs, but with the proliferation of
that will have to be targeted, and
the mobile network it is not hard to
India is poised and set in the stage
imagine that we will leverage that
to be able to look at these markets
network and hardware architec-
strategically and plot the roadmap.
ture. Think ahead - even beyond
If we ignore this opportunity, who
the SaaS and cloud computing
knows when we will get another
jargons of today.
opportunity as such!
R
DARE.CO.IN | COLUMN | FEBRUARY 2010 65
future
emerging
design action
analysis
policy
NEW
prototype
market
cost
add
value
risk customer
Innovate
time
change compete
COST
TRY
Innovation prototype
FUTURE
product
ďŹ rst
MONEY
process
try
technology
value idea design
process
business
technology
effort
FUTURE
economics
planning
MONEY
process
value
develop
effort
RISK
customer
economy emerging
productivity
idea
vision
options
technology
India 2010
market
analysis new
MIT@
options
action analysis
plan
effort idea market value competition economy growth
product
money
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Showcase the most important emerging and transformative technologies and explain their impact on you, your customers and your business.
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Network with close to 500 leaders in business and technology, including CEOs, CTOs, CIOs, policy leaders, innovators, entrepreneurs, and venture investors.
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Vijay Chandru CEO Strand Life Sciences
Headstart
Startup Saturday 2010 Startup Saturdays are monthly networking meets organized on the 2nd Saturday of every month at six Indian cites by HeadStart Network. Conventionally, Startup Saturdays have been a platform for local entrepreneurs to demo their products, exchange knowledge and general networking. Here is a snapshot of the latest startup action from Pune, Delhi, Bangalore, Hyderabad, Mumbai and Kolkata! Pune We start with Pune—the city that is giving competition to Bangalore in technology startup innovations, which had the theme of “Mobile VAS & Applications”. A panel discussion was led by Harshal Dubli and Rajesh B. Chavan, the former being a mobile geek and the latter a marketing consultant, both having vast experience with a multitude of startups. Mobikon Technologies and SMSONE were the startups invited to make lightening pitches about their ventures. They were appropriately grilled by the panelists and the audience. Mobikon provides mobile-based products and services to retailers and corporate organizations. SMSONE focuses on providing local news and commercial messages in villages and tier-III towns. Its concept is to appoint 10th or 12th class failed boys in villages, who will first collect mobile numbers of their villagers and then feed them with local news and events. Ravi Ghate, a 12th standard dropout who started SMSONE, stole the show with his anecdotal humor.
Bangalore Bangalore had S.R. Raja, GM-Strategy, Sasken and co-founder of MoMo Bangalore Chapter, share his insights on applying business strategies to early-stage ventures. There was also a talk on ‘Validating Business Models’ by Dr. Shridhar Lolla, a management consultant and entrepreneur. This was followed by two very well enjoyed startup demos. The first was by Hariprakash Agarwal of OpCord, which focuses on optimizing processes of an organization and the second by a micro-finance startup named MILAAP.
Kolkata Startup Saturday Kolkata was focused on two new startups in the legal field and consequently saw a comprehensive deliberation on entrepreneurial opportunities in the sector. Several other followers of Startup Saturday as well as first time attendees were present at the event. It brought together Rohit Das, an alumnus of National University of Juridical Sciences who left India’s top law firm to start his own firm RDA Legal, which has been slowly and steadily establishing its offices in major cities of India and already has offices in five major cities; and Kian Ganz from UK, who initiated legal journalism in India by starting the first ever niche legal news web portal, legallyIndia.com that caters to a widely approving crowd of lawyers, law students and law aspirants. Kian has been providing legal news of every kind and color varying from college moots, bar election results to major law firm mergers and deals. The discussion was moderated by Ramanuj Mukherjee, a fourth year law student at NUJS, who works as an independent consultant and runs CLAThacker, a forum for students aspiring to crack the entrance tests to the best law schools in India. 68
FEBRUARY 2010 | EVENT | DARE.CO.IN
The discussion was focused on the challenges faced by startups in the legal field, the services that law firms and lawyers require from the technology industry as well as the personal experiences of those who have made it through initial hiccups. A major focus was the role of technology in law firms of the future in India and how it can be used to increase productivity and functionality. Kian Ganz stated, “It is clear that in the coming years there will be plenty of new opportunities opening up and it is heartening to see that entrepreneurs are sensing this and are turning their eye on the legal sector.” A group of students of IIT KGP also presented their own solution targeted at the online marketplace called SRAPT, which they claimed will fill the void in the present market ruled by Amazon and E-bay. The audience was active in its questions put to them regarding economic viability and success of the product.
Hyderabad Hyderabad had an interesting theme on “Virtualization for Efficiencies”, the objective of which was to discuss the technology trends today in the context of server and application virtualization, especially for companies in the software services/integration space. The opportunities range from packaged products to IP leveraged services, technology being a major differentiator and enabler here. It had two interesting startups—SocialTwist represented by VP-Engineering, Vivek Lakshman and Setooz represented by founder, Prasad Pingali. Two important announcements about HydCubator—a startup incubator and on the upcoming Hysea Products Showcase were made.
Mumbai Mumbai had an Open House full of lightening pitches and startup demos. But it didn’t miss out on the routine demos too. The first company to demo was ShopForChange.in. Simply put, the Shop for Change label helps consumers differentiate ‘fairer’ products from others. Shop for Change has developed a set of standards for producers and companies that require adherence to its strict social, economic, and environmental principles. When products are produced and traded according to these standards, companies may display the Shop for Change certification label on the product. This was followed by another interesting startup demo by Aditya Sanghi of Salaree. com, which is an online payroll application. The lightening pitches were made by Piyush Nanda who spoke on ‘Events and Artist Management’, YouPid.in a social networking based matrimonial website, Greener Planet Solution that uses bio-dynamic farming and PowerSpa—a ‘Spa On the Move’. It was culminated with a talk by Anand Kumar who spoke on the legal issues while starting a company and common pitfalls for a startup.
Delhi Delhi too had a legal twist with Anand Dayal talking about the legal issues faced by startups, as well as the kind of legal knowledge that should rest with the startups. He discussed various subtle aspects like employee compensation that an entrepreneur often has no clue about. The first company to demo was MapMyIndia, a popular local startup. Rohan Verma spoke about the business of location-based services as well as the way people have been building models around this information. His talk was full of anecdotal insights on managing and nurturing a startup. Next in line was Rudhir Sharan who gave a very informational talk on why cloud computing and cloud sharing have become buzzwords and how startups have tried to exploit this technology in order to become more functional as well as cost-effective. He gave a glimpse of the technology itself. R DARE.CO.IN | EVENT | FEBRUARY 2010 69
Mergers and acquisitions in times of
ďŹ nancial crisis
Does a global financial slowdown increase the number of mergers or decrease it? Do you think that bad times should see an increase in the number of mergers, but at vastly reduced deal values? If you do, then you are not alone, but you are unfortunately wrong. We analyzed data put out by Mergermarkets, Business Standard and VC circle on M&A deals for the last three years, from 2007 to 2009 to understand what the trends in this business are /Nimesh Sharma
A
cquiring, selling or merging companies is big business globally. Even in a bad year, this business hits turnovers in the thousands of billions of dollars, earning commissions, salaries and bonuses in the hundreds of millions for many of the individuals involved. Does a global ďŹ nancial slowdown increase the number of mergers or decrease it? Does the size of an average merger increase or decrease because of a slowdown? Do you think that bad times should see an increase in the number of 70
FEBRUARY 2010 | ANALYSIS | DARE.CO.IN
mergers, but at vastly reduced deal values (purchase prices)? If you do, then you are not alone, but you are unfortunately wrong. The global slowdown that we have just started coming out of, throws up statistics that are just the reverse. The number of mergers across the globe has gone down, while the average size of a deal has seen only a minor dip (ok, minor when compared to the billions of dollars we are talking about).
The global picture In 2007, Mergermarkets estimated
the global M&A market to be doing around US$ 3,600 billion worth of mergers in about 15,700 deals. Over the next three years, as the ďŹ nancial markets in the West melted and many industries and geographies witnessed negative growth, the number of mergers as well as the total value went down, to hit $1,800 billion in 9,400 deals in 2009. In short, the total value of deals struck globally halved, while the number of deals came down by 40 percent, indicating that value per deal or the price paid per acquired company
has more or less stayed where it was and had not come down dramatically from where it was in 2007, even as the number of deals came down to half.
In India Compared to the global M&A scene, the Indian M&A market is not even chickenfeed. Compared to the $1,800 billion global figure, Indian M&A activity in 2009 stood at just $17 billion from 650 mergers and acquisitions. Going back in time, in 2007, India had witnessed 860 deals valued at $59 billion. A quick calculation can easily tell us that the valuations have fallen drastically.
What happened in India in 2007? It is not for no reason that the deal values in India have come down. In
2007, we find that a number of Indian companies exercised their ambitions of domestic and global acquisitions. Three deals alone involving Tata-Corus, Vodafone-Hutchison-Essar and Hindalco-Novelis involved a total of $29 billion. These were amongst the biggest deals India has ever seen. Essar Global, United Breweries, Suzlon Energy, Vedanta Resources and GSK had combined deals worth $6 billion. In the global scene, there were some really big deals in 2007. Among the top deals, RBS Group with Fortis (not the Indian company by the same name) and Santander outbid Barclays to purchase ABN Amro for $96 billion, Altria Group spun off Kraft Foods for $61 billion while Enel-Acciona took over Endesa for $55 billion. Four other deals includ-
ing two private equity deals involved another $150 billion.
Global geographical trends The world economy has been witnessing some significant geographical shifts away from Europe and to a lesser extent from the Americas, towards Asia. And the M&A scene has not been immune to these. While valuations in Europe more than halved in 2009, Asian economies actually registered growth in valuations. America had already seen almost an equal decline in 2008 to what Europe saw in 2009. Deal values in North America are still comparatively larger than in the rest of the world. In 2009 they were approximately one-fifth higher than in Asia and four-fifths larger than in Europe. DARE.CO.IN | ANALYSIS | FEBRUARY 2010 71
Global M&A Activity
Value (in $ bn)
Volume (exact numbers)
Size of average deal (Value/ Volume) ($ mn)
2007
3635
15675
231.8979
2008
2425
12775
189.8239
-33.2875
2009
1770
9390
188.4984
-27.0103
Industry trends The impact of the recession has not been uniform across sectors. In 2009, the pharma sector saw the highest increase of 103 percent in actual values over 2008-09, largely because of a giant deal of $63 billion (Pfizer buying Wyeth). Three out of the top five deals based on value of 2009 came from the pharma sector, adding a total valuation of about $150 billion. In energy, mining and utilities, just two deals involving Rio Tinto-BHP Billiton and Exxon MobilXTO Energy added a combined price tag of $98 billion. No wonder energy deals had icing on the cake in terms of best pricing. In 2008, in comparison, it was the consumer sector that witnessed two of the biggest deals in history, with Altria Group selling off Philip Morris and InBev buying Anheuser Busch Companies for a combined total of $165 billion. In keeping with the theme of the times, in 2009, in terms of average deal size, the consumer sector was the worst affected if you ignore the miniscule contribution of the defense industry, with deal sizes halving. The financial services sector saw average deal size lowering from $477 million to $287 million (40 percent down). Consumer and financial services make up about 24 percent of total volume of M&A.
Did valuations actually fall because of the recession? One interesting fact after all these discussions and analysis is that in spite of the economic depression, 72
FEBRUARY 2010 | ANALYSIS | DARE.CO.IN
% change in value across year
there has been no apparent decline in the average valuation when all geographies are considered as a whole. The decrease in the average valuation of a deal is only a miniscule $1.3 million. What this seems to indicate is that valuation losses in one sector or geography was made up by increases in another. When Europe lost, Asia gained; when BFSI lost, pharma, energy and chemicals gained. In fact, it was 2008 that had seen a major decline in valuation, of an average of $42 million per deal, which means that the big impact in the M&A market had already happened in 2008. Reaction to the developing situation was immediate and there was no waiting to see how things would play out. This fact has significant learnings for those contemplating M&A action.
India industry split In value terms, it was the energy sector that led the show with $3.5 billion worth of deals including the high-profile RIL-RPL merger, other deals involving Sanofi-Aventis, Suzlon and Oil India. Telecom followed with the Quippo-TTSL and UnitechTelenor deals. However, it was the manufacturing sector that had the most number of deals at 76. IT/ ITeS followed with 50 deals. Outbound deals declined in 2007 by 17 percent, grew by 48 percent in 2008, and declined again in 2009 by 53 percent. One fact which may seem to defy all notions of falling valuations is that domestic M&A deals, with a 48 percent share of the
Indian M&A pie have been negligibly affected by recession, with just 10 percent decrease in number of deals since last one year. In fact the average valuation has increased from $5.5 million to $6 million in 2009. And the same trend has also been noticed in inbound deals, which have only grown over last five years, and now that the downturn is becoming upturn, they are likely to grow up at a higher rate.
Top deal makers The top merchant banker in 2009 was Morgan Stanley with $585.9 billion worth of deals while Goldman Sachs was the top dealmaker in terms of value, with 244 deals. They have claimed the top positions by knocking off JPMorgan as top dealmaker by value with $726.4 billion worth of deals and UBS, which facilitated 271 deals in 2008.
Quarterly trends The financial markets place great store on quarterly trends, particularly when looking for changes to bad ones like the markets going down. Traditionally, Q4 is the time when most deals are done. It is quite possible that most of the deals get announced in Q4 to catch the yearend deadline. Value wise, every Q4 showed a growth over the previous one starting 2003 till 2006. 2007 was the best year for M&A and the worst, as Q2 set a new record for both the number of deals and their value. And then the slide started. Q4 of 2007 could not retain its traditional spot as the best performing quarter of the year and in fact could do only half the value of Q2. In 2009 again, Q4 was the best quarter in the year, but the whole year is behind 2008 in terms of both volumes and values. The fact that 2009 is a normal year in terms of the quarterly patterns lends hope that the M&A markets are on recovery mode. R
sp sphotoblogs White Ibis at Nehru Zoological Park in Hyderabad
I
t is no secret that many of the zoological parks in the country are in bad condition. There is a huge opportunity in maintaining and owning zoological parks. According to the Central Zoo Authority, the forest department owns 82 zoos while 29 are in the private sector. Zoos are also owned by NGOs, state governments, universities, etc. Author: Vimarsh Bajpai
Billboard Marketing and Advertising
M
arketing and advertising through billboards and electronic signs have become quite popular recently. Companies provide services for outdoor advertising planning, billboards/hoardings, neon signs, back-lit and front-lit vinyl hoardings, glow signs, and billboard fabrication services, etc. Very recently, Google also went for advertising Google Apps through billboard advertising in the US. Bus stands, railways stations, airports, shopping malls, buildings and other structures provide a lot of space for billboards. On highways, you can often notice telecommunication and electronics companies advertising by displaying big graphics on billboards. Banks and other ďŹ nancial institutions also go for it. Are you looking to tap the opportunity in providing material, space, labor, printing and installation services for billboards? (Photo taken on NH-8, Gurgaon, Haryana) Author: Vivek Kumar
DARE.CO.IN | PHOTO BLOGS | FEBRUARY 2010 73
photoblogsp ogsp Metro Railways of Delhi
T
he construction of the Metro rail in Delhi is in full swing. In other parts of the country like Mumbai and Bangalore also, the concept is picking up. Apart from providing business opportunities to architects, construction, and manufacturing industries, there are a whole lot of business areas that are benefitting from it. Take the case of IT, logistics, maintenance and food industry—they all get multiple opportunities of business around the Metro. With the rapid growth of the economic sector and to provide better means of transportation, Metro rail is chugging into other cities across India as well. Are you looking to board a train full of opportunities? (Photo taken near Indian Corporate Centre, Delhi) Author: Vivek Kumar
What is the value of a cloth?
I
recently visited an NGO in Delhi—Goonj. This NGO works for the re-use and recycling of various objects but its main focus is on clothes. The founder of Goonj, Anshu Gupta, talked about how he noticed the acute need of a piece of cloth when, as a journalist, he came across people who slept with dead bodies to keep them warm. During the presentation about his NGO, he displayed some pictures and slides that showed how clothes can change the appearance and value of a man. This picture shows a man who lived like a beggar on whom nobody would like to cast an eye. But when he was provided with clothes, he appeared like the wise, old chieftain of a village. The business of recycling and increasing the life cycle of products is something that not many people get attracted to. However, at the same time, it offers lots of opportunities on social entrepreneurial scale. Are you looking to cloth an opportunity that has been discarded for long? (Photo taken in the office of Goonj in Sarita Vihar, Delhi) Author: Vivek Kumar
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FEBRUARY 2010 | PHOTO BLOGS | DARE.CO.IN
sp sphotoblogs Business of fleets of tourism vehicles
R
ecently, during the Tata Jagriti Yatra, the group had to hire around ten buses everywhere they halted. Though they were traveling in a specially allotted train, but to move to places in chosen cities they hired local transporters. Sometimes, they had to hire more buses because there are different rules of traffic in different states for tourism vehicles. Like in Rajasthan, only 35 passengers are allowed in a bus. Tourism generates a considerable amount of revenue for any city and different types of business benefit from it. Owning a fleet of tourism vehicles right from bicycles, mobikes, taxis, vans, and buses provides lots of business opportunities. Apart from providing transportation services to schools, corporate houses, parties, shows, tourism also requires some good and sustainable sources that could be banked upon by visitors. Groups traveling in trains and airlines often need to move together in cities. Catering to their needs could give very good options for fleet owners. (Photo taken at Safdarjung Railway Station, Delhi) Author: Vivek Kumar
Tapping the solar energy
S
olar energy is the call of the day. Given the power shortage faced by our country, tapping solar energy for power needs is one area where opportunities can be tapped. A staff member of Barefoot College, Tilonia mentioned in his speech that the college is solar powered for 24 hours, which is an unheard remark at least for rural areas of this country. He also mentioned that they have trained women to solar power their villages almost throughout India and from countries like Afghanistan, Kenya, Cameroon and other African countries. Solar energy sounds a technical word, but the functioning and operations of using solar equipments could be taught to village folks even without making them literate. This ensures that tapping villages for this market should not be a problem because manpower and resources would be garnered from villages itself. (Photo taken at Barefoot College, Tilonia, Rajasthan) Author: Vivek Kumar
DARE.CO.IN | PHOTO BLOGS | FEBRUARY 2010 75
The Tata Jagriti Yatri is all about exploring a world of opportunities that lies untapped in the nook and corner of the country while celebrating the spirit of entrepreneurship.
A journey of W
hope
hat comes to your mind when you read this line: Tata Jagriti Yatra? Something related to awakening for some sort of a social cause, right? Yes, it was so, but with a difference. Tata Jagriti Yatra aims to motivate young minds about entrepreneurship with a flavor of social service. It is an annual odyssey that selects four hundred young people and takes them to meet few unsung heroes across India. The journey is completed through a train. The ‘Yatris’, the selected passengers, come from different states and from overseas also, but their age group is 20-25 years. They could be students, working professionals, budding entrepreneurs or someone who is enthusiastic about doing something entrepreneurial. Jagriti Sewa San76
FEBRUARY 2010 | EVENT/TATA JAGRITI YATRA | DARE.CO.IN
sthan organized the yatra in partnership with Tata group. The ‘Yatris’ were selected on set criteria where they were assessed on their ability to think or act out of the box; a knowledge of challenges/ opportunities in India; a genuine desire to “be the change”; an ability to take risks; an enthusiasm, drive or commitment towards enterprise; and a genuineness of purpose and ethical frame of mind. While talking to many among these ‘Yatris’, I came to know that many of them students, professionals, entrepreneurs, NGOs and the ones who are looking to start their own ventures.
From Delhi to Tilonia I joined this jou rney from Safdarjung railway station in Delhi. Their previous stop was in Deoria, Uttar
Pradesh, which happens to be the headquarters of Jagriti. The arrangement for fleet buses was already made and the troupe of ‘Yatris’ and facilitators moved quickly setting banners on the buses to mark their arrival in Delhi. The troupe moved to Indian Corporate Centre in Delhi, where there we were supposed to attend a panel discussion. We attended the Q&A session of this discussion involving Sanjeev Bhikchandani, co-founder of Info Edge Solutions, and Sunil Handa, professor—IIM Ahmedabad and fouder of Eklavya Foundation. Though the ‘Yatris’ were enjoying their time joking with each other during travel, they sat engrossed in the Q&A session. They posed questions ranging from problems faced by rural India to policies of the government. The troupe had a ‘Jagriti’ song which was written by Prasoon Joshi, composed by Adesh Srivastav and sung by Babul Supriyo. The troupe eventually sang this song everywhere they made a halt. When they waved their hands and joined their voices with the recorded version, one could see spirited youth saying that they are up and ready to make it happen! After attending this session, we moved to Goonj in Sarita Vihar. Goonj is an NGO founded by Anshu Gupta. This NGO focuses on cloth as a necessity for everybody. Anshu talked about his experiences as how being a journalist, he came across some incidents in Delhi where he felt that lots of people in India suffer from acute shortage of a piece of cloth. He then goes on telling moving stories how women of India suffered from lack of sanitation napkins and how in some areas of rural India, women suffered diseases and even death due to this. In the morning, we reached Tilonia and were welcomed by a village band and big puppets. For around 15-20 good minutes, music was played and the troupe danced with much fun and frolic. The music band
and the puppets lead the troupe to the old campus of Barefoot College started by Sanjit ‘Bunker’ Roy.
Barefoot College, Tilonia Barefoot college is based in Tilonia in the Ajmer district of Rajasthan. As we moved into the sprawling campus of Barefoot College, we were ushered into a large canopy where staff members of Barefoot College had organized a small function to welcome the ‘Yatris’ and provide a synopsis of activities that they were doing. Apart from mentioning how they use solar power to get 24-hours supply for their college, they mentioned that they trained women to solar power their villages situated alongside the highest lake in the world, up in the Himalayas. They mentioned that they were starting a community radio, which would provide information to the village folks on various topics including education, health and social issues and governmental policies including RTI act and NREGA program etc. In the college campus, using solar cookers, food is cooked for 45 people on daily basis. While visiting various workshops and rooms of the college, I met a group of women who looked curiously waiting for somebody. An attendant told me that these women belong to African countries like Kenya, Cameroon and Nigeria. During the Q&A session, Bunker Roy mentioned that Barefoot College brings grandmothers from these countries to get trained. These women hardly know how to communicate in English but they still manage to learn the techniques. Bunker Roy mentioned that in these countries, grandmothers age between 35-40; so one should not suppose that training these grandmothers would not be optimal for practical reasons. He mentioned that these grandmothers are more committed and dedicated than men from the same area. R
DARE.CO.IN | EVENT/TATA JAGRITI YATRA | FEBRUARY 2010 77
Exchange Submit exchange requests at: website: http://www.dare.co.in/ marketplace.htm OR email: dare@cybermedia. co.in or SMS ‘DARE <your msg>’ to 56677
P
Response I own a fitness club for women and I am looking out for franchisees. I would be glad to discuss the opportunity with you. Vishnu Saraf
aerospace sector for defencerelated applications. All my ideas are related to the next generation weapon systems. I am looking for investors to present my idea and make my dream venture come true. Please help me on the same. Raj Kishor
N
I
reetha Devi wanted to start a gym in Bangalore.
ayan Shah wanted to start an import-export business in the African continent. Response I am also looking for some opportunity to start an import-export business. I can invest some money provided I’m convinced about the business. Aayush Madhogaria
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umit wanted to start a food venture in Delhi/NCR area.
Response I am a post graduate from Sinhgad Business School, Lonavala campus. I belong to a farmer family and since childhood I have been passionate about being an entrepreneur in the field of food and fruit processing. I am looking forward to work with like-minded people who understand rural India. And I am fortunate to take this initial step through you. I need more information regarding your venture and which field are you targeting. You may directly send details at my mail ID. Rajesh Patidar
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nantha was looking for people who can provide him with information on starting a business of making handmade paper using agri-waste. Response I am from Mangalore and even I am planning to start handmade paper business here. Rajesh Shetty
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am working as a software engineer in Bangalore. I have an aspiration to become an entrepreneur. I have ideas in the 78
FEBRUARY 2010 | EXCHANGE | DARE.CO.IN
am representing a small IT strategy consulting company in Gurgaon. We are interested in entering the US market and looking for partners/resources for the same. I would be happy if we can get in touch. Saahil Goel
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e are architects and interior designers based in Vadodara. Our client base is growing from South of India to East and North. We are looking for freshers or experienced people who have worked in similar fields. We would like to share the over all projects in terms of designing, site visits and execution of the projects. The exchange of design, ideas and drawings can be online and through video/webcam conferencing. Nilesh
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e are an Indian company looking for trading opportunities between South Africa and India. Product line has not yet been decided, and we are currently conducting surveys. Interested parties may contact us. Monavarthi Venkateswara Rao
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am currently working on a plan to set up an e-waste management project in Bangalore. If somebody is interested and would like to join me, kindly contact me giving brief details of your experience and strengths. Raj Kishor
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am a CA intending to set up a firm and looking for like-minded CA professionals to join hands. Those interested can contact me. Nishant Choudhary
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am interested in the mango kernel extraction business and would like to have more details on the same. If found lucrative, I should be able to put up the project in the next six months. I have the entire infrastructure to set up a factory. G Das
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e are a software development company dealing and developing software(desktops and web-based) for logistic industry. We can design websites and e-portals using the latest features. We are in this field since last eight years. Please contact us with your requirements. Porwal Vishal
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nshuman had started an e-newspaper and was planning to introduce ten other revenue verticals to a newly launched e-newspaper. Response Please give more details and the expected investment. Sanjay Kumar Gupta
J
S Sandha was looking for franchisees for a soya-based product. Response Could you send me more details? Pardhasaradhi I would like to know more about the products and other details. Hari Krishna
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mang was starting an ewaste management project in Bangalore. He was looking for partners. Response I’m interested and have a similar setup in Mumbai, let me know the details so that we can take it further. Hemanshu Shukla
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aravanan was running a BPO concern in the vertical of publishing. He was looking for a
partner who can hold 49 percent of the share. Response I am very much interested. I am based at Ahmedabad. Vikas Shah
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hri was planning to launch a start-up, which is into retail services or consulting. He was looking for partners. Response I am also looking for opportunities in the retail consultancy segment. I am an MBA in retail management from Welingkar Institute. I am basically from Rajasthan and want to start my firm in Ahmedabad. Harsh Rao
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uruprasad was planning to start a bank. He was looking for mentors who could guide him and assist him in how to go about this. Response I can help you out as I have good knowledge of the banking industry and even can connect you to a senior banking official. Please share some information with me. If I find it interesting, then I can connect you with the right contacts. Kushal Parmar I am also working in Bangalore and am starting an online retail venture. I am looking for payment gateways and would like to discuss this with you. Acharya Hara
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ahendra is a social entrepreneur and founder president of Milaan, an organization working for quality education and vocational training in rural India from 2007. He was looking for investors, partners and mentors for the project. Response I am interested and need to know more details. Hari Krishna
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ogesh was planning to open a chain of cafes in India. He was looking for investors who can invest a minimum of Rs15 lakh. Response I am interested to partner or invest in your venture. Please let me know more. Parmar kushal
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ohit is running a food catering company called “Sakkat food”. He is looking forward for a right investor to be a part of our business journey. Response I am interested in your idea. Can you share some more details about the idea? You can contact me. Sandeep Kumar
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anjay had a concept on remote healthcare services and was looking for people who want to be a part of the core team and also angel funding to kick off the pilot. Response I am a Chartered Accountant by profession, I would like to understand your model and discuss how we can bring value addition to it. Please feel free to contact me. Jagdish Tadasad
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arag was looking for funding for his matrimonial website.
Response Could you please let me know the details of your business model and revenue projection of your site? I would also like to know the current turnover details of the company. Amit Kayal
Exchange DARE.CO.IN | EXCHANGE | FEBRUARY 2010 79
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aghavendra had a one and a half-year old company working in the solar energy space. He was looking for an enthusiastic entrepreneur to drive it aggressively to the next level.
iddharth was into a newly formed travel services provider with a special focus on innovative tours. He was looking to associate with other service providers in the respective domains.
Response Could you please send me the details, I am from Hyderabad. GK Kotaiah
Response We are running special tours for Vaishno Devi, Jammu. We have our hotels in Katra. Please contact. Vijay Puri
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e are an executive search firm based out of Bangalore and Pune; we can help your organization to find the right candidate with the right cultural fit. Jagdish Tadasad
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K Janjua had a play school/ preschool concept with daywise curriculum. He was looking for a channel partner to promote franchiser/franchisee module. Response I’m interested in your concept; please send me further details. Hemanshu Shukla
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ayal is a post graduate and was working as HR Head for an IT firm in Pune. She was planning to take a franchise of a day care and pre-school. Response I have started an executive recruitment firm in Pune and Bangalore and plan to venture in the education sector. I look forward for a discussion with you, if we can bring any value addition. Jagdish Tadasad
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ddie was looking to start a bamboo business in the US. He needed ideas and opportunities to help him out with this. Response We are two youngsters from Chennai are looking forward to start our own firm. We want to talk to you in person or through phone. We are planning to get into the media business and plan to set it up in August 2010. Also, we are looking for investors. Since we do not have any knowledge in this kind of an initiative but we still think we can make it big. Athul Kumar
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s I have great interest in this beautiful game of football/ soccer, I have designed a business plan to open a cafe/pub based on the concept of football and I have named it ‘The Goal Café/Pub’. I see this as a great opportunity since football is a growing sport in our country. I wish to discuss/evolve more about this concept in detail and so I am looking for partners to make this concept a big success. Guruvishnuvardan. M
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Exchange 80
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have always been interested in the retail sector, especially in garments. I have a good location which has the potential to grow but I need resources for it. Would love to discuss the same and get started hopefully. Please contact me. Preity Sharma
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e are looking for a private equity for major expansions in the processed foods and tetra pack juice industry. The brand is already well-established in North India and is the first company to manufacture canned foods since1944. Loaded with orders, the company now needs support of the private players. Raghav Kalra
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am keenly interested in making investments to bring innovative business models as well as low-cost technology in the green technology sector. This area is still less explored and holds good market potential. Snehal Tated
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e are coming up with our second portal based on matrimony and education and are looking forward for the BTL promotions for the same within the specific regions. For the matrimony portal we are looking to explore the metros and for the education one, we are also looking to explore the tier II and III cities. So kindly update me on how to proceed further. Vinay Sood
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ooking to invest between 25 lac to 1 cr in promising new start-up companies based out of Mumbai. Interested entrepreneurs should send a brief copy of the business plan with the profile of the management team. Would be interested in any services, internet or healthcare related business. Ashish
SMS “DARE <your comments, questions or suggestions>” to 56677 or Drop us an email: dare@cybermedia.co.in
CONTEST Roof top garden and coolers Written by Asher Ben, January 16, 2010 In the tropical areas of the Konkan belt, the months of February, March, April and August are hot and humid (around 38-42 degree Celsius). 1) To counter the heat, pumpkins can be grown on the terrace to work as a shade on the roof and it will have the natural cooling effect thus bringing down the temperature of the rooms by 4-5 degrees. 2) Pumpkins like other climbers would easily cover the terrace because they grow upwards, they are very good in limited areas, and narrow walkways that are difficult to landscape. 3) The landscaping of terrace and walls can bring out the beauty of the yellow flowers and add to the aesthetic value of the house. 4) Pumpkins can also be used as a vegetable, cattle feed or manure. So with a little artistic sense anyone can start a business of setting up gardens and natural roof shades.
Rent show plants/flower plants for various events for decoration Written by Hirave.Avdhut, January 20, 2010 Business Idea: Renting interior show plants/flower plants for various events like marriages, conferences, annual corporate events, parties, interior decorations for client visits and any event that needs temporary interior design. Option 1 For various functions like annual corporate event, conferences, marriages and parties it’s a good idea to keep show plants/flower plants like golden palm tree, rose and other interior show plants/flower plants for decoration and to create ambiance. A company can tie-up with various nurseries to grow and maintain various types of show plants/ flower plants. The company will get orders from event management firms/individuals or from corporates and manage logistics and rent show plants on daily/weekly basis. Option 2 Instead of a tie-up with nurseries, the company can give plant maintenance work to senior citizens (retired people) in cities who are interested in gardening and can maintain 15-20 plants per person based on space and time availability. The company can create network of such senior citizens and pick plants from them and deliver it to customers. Other arrangements to collect orders and logistics will be same as explained in option 1. This will give one option for senior citizens to earn some extra money, utilize their time and maintain their health.
Delicious pumpkin flower pakoda Written by Ranjith Kumar S, January 14, 2010 Restaurants around the cities can add this delicious pumpkin flower dish in their menus. The advantages are as follows: 1. It is high on nutrition. 2. New dishes will attract people towards it. 3. It can be procured easily and can turn out to be a profitable venture. 4. Farmers can benefit out of it.
DARE.CO.IN | CONTEST | FEBRUARY 2010 81
CONTEST Paper-recyclable printer/copy machine Written by Sannidhi Ravi, January 19, 2010 Wow what a greenery!!! How nice it would be if every inch of cultivatable land is covered in greenery. Unfortunately it’s very hard to make it a reality. Thus it is very important to recycle every possible thing that comes out of deforestation. The major products we get from cutting plants and trees are food, medicine, paper, land and wood. Of these products food, medicine and wood can not be recycled; land can be recycled to some extent by building skyscrapers. Where as paper can be recycled over and over. But many don’t know the importance of paper, leave alone recycling it! Here is the way to go green. The need of the hour is to invent a new kind of a printer and a copy (xerox) machine. This new machine will work normally (i.e. print on the paper) when a blank paper is inserted. But when an already printed paper is inserted, the machine will absorb the ink from the paper thus making it a blank paper so that the new matter can be printed on the very same paper using the ink absorbed earlier. This is instant recycling of the paper as well as the ink! Once such a machine is ready, I don’t think it will be hard to sell it to markets like corporate companies, publishers, news paper agencies, government offices, banks, schools, colleges etc. Thus every printer that is out there can be replaced by the much efficient and cost effective paper-recyclable printer, at the same time helping the earth maintain its greenery. As Mahatma Gandhi said, “Earth provides enough to satisfy every man’s need, but not every man’s greed.” So, go green, be recyclable.
Inviting “Biotechnopreurs” Written by Mansi Sharma, January 05, 2010 Here is an invitation by some leading cosmetic companies and paint companies to the “Biotechnopreurs.” One shall be invited to the shared private farms of these companies to produce some special and unique colours for the respective companies for their new lipstick, nail polish and paints range. The “Biotechnopreurs” shall use different hybrid technologies to produce plants and flowers that blossom out in producing these new and different colours. Every new colour that is currently not in the shade card shall be entitled to 10% of the sales of the products in that particular colour. Wish there was such a factory for the colours of life!
Medicinal plant farming of Pumpkin Written by Rajesh Nambiar, January 04, 2010 Pumpkin is a very common herb which is cultivated in many parts of the world. Though pumpkins are mainly cultivated as a vegetable, there are numerous medicinal benefits of the plant which are untapped currently. Most of the useful parts of the plants go unutilized as there is very little knowledge about its benefits. The leaves, stem, roots and the seeds are goldmines of medicinal components. If cultivated on a professional basis and one can tap medicinal properties of the entire plant and it can create great income opportunities. The medicinal values of the plant include being an antirheumatic, a demulcent, a diuretic, a nervine and a taenifuge. It was used in folk medicine to treat kidney inflammation and intestinal parasites. It is also used to treat irritable bladder and prostate problems. Its seeds are said to help relieve dizziness. Pumpkin is also used to treat boils, carbuncles, fever, measles, pregnancy, skin ailments, smallpox, sprains, tumor, urinary ailments, warts and women ailments. We should cultivate pumpkin solely for tapping therapeutic properties.
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CONTEST WINNERS
LAST MONTH'S BUSINESS IDEA CONTEST
CONGRATULATIONS! Please allow 30 days for dispatch of prizes.
The Village Rahul V Shah Business Idea: “The Village” is a unique resort/theme park to get you in touch with the real India. Theme parks are very famous and not only used as a picnic place, but also for team building, relaxing and can be used also from an education point of view. We can take a large piece of land and make an actual village in the same. The village will consist of the following: 1) Huts (at different levels for small, medium and large families). 2) Actual farms with vegetables (as shown the picture). 3) Water well, banyan trees. 4) Cows and buffaloes for providing milk. 5) Other places which are typical in a village like temples etc. The farms will grow seasonal vegetables and visitors who are staying in the village can visit the farms and pick up fresh vegetables as per their taste and availability. All the huts will be providing traditional kitchen and utensils. You can either cook on your own or you can rent a cook who will cook for you. The following will be few of the major service offerings: 1) You can visit “The Village” and just have dinner or lunch. 2) You can visit with your family and rent a hut (like renting a room in a hotel) and live the experience of a village. We will also provide suitable clothes to our guests as worn by the village dwellers (if required). 3) You can have a family gathering for joint families in large houses available in “The Village” just like the old days. 4) You can have a team building session with your corporate employees in a natural environment. 5) You can have a school picnic to teach kids about villages, cows, farms etc.
Terrace and Home horticulture consultancy services Arch Consultancy firm that provides services to homes/apartments to build their own small garden at home. Organically grown food can be consumed at home and also cools the house. Dead leaves/plants can further be used as compost/manure for the plants. Local gardeners can be employed to render this service. The consultancy firm itself can be set up by a micro-entrepreneur who employs others from low-income households.
DARE.CO.IN | CONTEST | FEBRUARY 2010 83
CONTEST
Write a business idea around this picture at http://www.dare.co.in/contest/feb10 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: February 21, 2010.
One winner will be 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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blogs/opinion
Insights from a visit to the Auto Expo 2010 /Rupin Jayal
Events like the Auto Expo are fantastic opportunities for brands to build the single most powerful communication force in the purchase of any durable, especially automobiles – word of mouth.
The author is Director-Strategic Planning at M&C Saatchi.
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party can say a lot of things about the people hosting it. Are they generous or tight-fisted? Are they liberal or control freaks? Are they thoughtfully organised or mindlessly bureaucratic? Do they really want you or is it mere formality? The Auto Expo is a party in every sense. There is networking, entertainment, a festive atmosphere and lots of different cuisines to choose from. The only difference is that there are many “hosts”. How they treat their guests, the kind of environment they create to welcome them (or not) and how much they engage their guests when they call upon them is an interesting lesson on how various brands view the people they seek to attract. Before progressing any further it is important to state that the visit was made during “business hours”. This is when the guests are supposed to be more valuable and therefore lucrative. So a “guest” would expect to be treated with a little extra care during the hallowed business hours. Therefore one was expecting to visit every pavilion and spend the kind of quality time with each exhibit that the price and time of entry warranted. The first observation was that brands were split down the middle in one very significant way. This was not based on whether they were premium or nonpremium brands or the size of the pavilion or the anticipated interest expected to be generated by a particular model, new launch or means of promotion.
There were some brands that welcomed visitors with open arms, with lots of information; knowledgeable and enthusiastic exhibitors and representatives from the companies were answering questions and there was enough space to move around and really appreciate the cars on display. Brands like Audi, BMW, Mercedes, Skoda, Maruti Suzuki and most of the motorcycle brands exhibited this open-hearted approach. What did this say about these brands? Well for one thing they were really interested and committed to the models on display. But even more importantly every person, irrespective of what they looked like or their apparent level of affluence, were important to them. They were able to increase the interest of the guest and who knows how many people were inspired by their level of engagement enough to become advocates rather than just observers. Then there were those who seemed to be at the Expo under some kind of duress. Interestingly most of them were brands that were relatively new entrants. One set of premium brands— one that positions itself as a sexy feline and the other that combines ruggedness with luxury; informed us stringently that the pavilion was only open to the media. In other words people who were visiting this brand during business hours were not considered important enough and they clearly believed that media trumps word of mouth. Given that the brands are not even available in the “car capital” of the country, Delhi, DARE.CO.IN | COLUMN | FEBRUARY 2010 85
and this was business hours when most visitors should be worth addressing, their exclusionary behavior spoke volumes about how these brands view people. Their attitude seemed to be reminiscent of the five-star hotels in the seventies and eighties where exclusion allegedly drove value. As times have changed, that attitude has evolved along with the democratisation of their clientele. Clearly these two brands are still living in the past especially when their key competitors were welcoming far greater numbers of visitors with far greater levels of enthusiasm. The biggest lesson is that an exclusionary attitude, in a marketplace that is evolving so rapidly with new potential customers pouring in, will mean the likely ejection of the brand from the wish lists of the people. The end result was them being a postscript unable to draw the thronging people visiting the display right next to them. Another brand that prides itself as the “people’s car” brand of Europe and that is seeking to make a very ambitious entry into the mass hatch marketplace had all the ingredients in place. A large space, lots of models to choose from and what appeared to be a very welcoming environment. However this brand seemed to suffer from a rather bureaucratic attitude to hospitality. Entry was being controlled to enable the people already in the pavilion to “appreciate” the models on display. Nothing wrong with that. However the execution was far less than satisfactory. The barrier would be opened at various places arbitrarily and those pushing forward would be allowed entry. People waiting patiently were simply ignored. So, clearly what this brand was saying was that it only recognises you when you act aggressively. If it really was interested in rationing entry to control the crowds (which were no more than any of the other popular brands), then they should actually have demonstrated their “thoughtfulness” by having well-defined and regulated entry and exits so those who cared enough to wait patiently 86
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were enabled to “appreciate” the models on display and allowed in by a specific person designated to do so. How will this brand react if it has to deal with crowds of customers? Will it reward those who push and ignore those more patient? Will it have clear-cut policies that are haphazardly executed on the ground? It is easy to cater to a small, exclusive, affluent customer base—the acid test is to cater to large numbers. India’s most popular “people’s car” brand was able to cater to huge crowds without heavy handed and arbitrary regulation. Not surprisingly this is also a brand that continues to top the reputed JD Power Consumer Satisfaction Surveys – coincidence? Then there were those brands that brought their essence to life by a very imaginative display while others lost the opportunity. Placed close to each other was the American “bad boy” of motorcycle brands and our own home grown version. The latter professed “Selfism” but the spirit remained in passive images alone. The pavilion was a standard display that in no way brought all the highly evocative mass media communication around the brand, the richly nostalgic designs and the cult-like status that the brand enjoys in this country, to life. This may still have been okay had the “bad boy” not been located in its immediate vicinity with a live rock band and a display that powerfully captured the essence of the watering holes where this species thrive. Perhaps all that was missing was a band of 600 lb enthusiasts in leather jackets and lots of beer! This wasn’t just an opportunity lost for our home grown bad boy brand, it was a rout. While the brand did not need to ape its imminent competitor, it had a wealth of heritage to draw upon—the feats of its fanatical riders, the music and the romance of the momentous years that it has lived through. The sights and sounds of India and the brand’s fanatical riders were a fantastic canvas to draw upon. It had the opportunity to bring its unique culture to life. Yet all it had to reflect this
was a time line printed and pasted on a panel. Walking out of that pavilion left one with a disappointed sense of what might have been and what was lost. Media is supposed to understand the nuances of communication. Yet two publications that were seeking to attract their customers by subscription blandishments very clearly demonstrated the leader and the wannabe. Promotion can be a great brand tool but when the brand seeks to attract savvy enthusiasts it should not let its desperation show. Also imagination always trumps sheer scale. So while one had relatively modest offers but was much more accessible and imaginative, the other was offering a luxury SUV. If I was really interested in cars, which one would I choose—the one who understands me or the one who is seeking to bedazzle me? Apart from the fact that larger the “prize”, the less likely most people believe they have any chance of winning it. Hence it is far more effective to reward as many as possible with something that is imaginative rather than hold out the (remote) possibility of winning something spectacular. It also helps to differentiate your brand in a meaningful way. So clearly this round went to the leader and not to the brand that is allegedly on overdrive. Events like the Auto Expo are fantastic opportunities for brands to build the single most powerful communication force in the purchase of any durable especially automobiles – word of mouth. To stand apart needs imagination, relevance and thoughtfulness. It also needs hosts that are welcoming, magnanimous and prepared. Put these ingredients together and you will have carved a very precious space in the minds and emotions of the people. Arrogance, indifference, tokenism and heavy-handedness results in the worst outcome of all – indifference. The former will have created an unseen but powerful wave of positive word of mouth. The latter will have lost more than just an opportunity—they would have missed out on invaluable emotional real estate, who knows at what cost. R
Help With Business Plans When starting a business, the second thing that an entrepreneur has to worry about is the business plan, the first being what business she or he wants to transact in. The Internet abounds in resources for making and researching crisp and cogent business plans. There are several portals and blogs that seek to aid a budding entrepreneur or a business school academic in this all important task. DARE delves into such resources and gives you a lowdown on the best that are available. /Aman Malik DARE.CO.IN | STRATEGY | FEBRUARY 2010 87
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plans (bplans.com): One of the most comprehensive online resources on business plans, it has several useful sections that tell you everything from how to write out a business plan to how to pitch a business idea and secure funding to doing complex financial calculations. With free and paid sections, blogs, videos and sections that allow users to network with others, this site offers a holistic mix of usable information to its readers. Center for Business Planning (businessplans.org): Apart from offering services like the ones offered by Bplans, this site is an excellent aggregator of some very good online resources. My Own Business (myownbusiness.org): This is largely a paid tutorial site that offers several features and tools on starting a business and a section on business plans is just one of the several sections on the portal that offer a step-by-step course on starting a business. Funded Plans (fundedplans. com): This site is managed by an organization that offers paid services that help you make a business plan and secure funding for the same, claiming that over threequarters of the plans they helped make received partial or total funding and that over nine-tenths of such funded businesses are still in operation. The only sore point is that the site is primarily relevant to US-based businesses. Business Plan Archive (businessplanarchive.org): Set up in 2002, this was a public repository for business plans till 2007, when it became a non-commercial, academic-research-oriented resource. So, if you are a business school academic and want access to some of the finest business plans for your research, you have to submit a proposal on the basis of whose
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merit you will be granted access to the contents of the site. Conversely, you can also submit cutting-edge content you might have had access to. Fundable Plans (fundableplans. com): This site offers you software that lets you make a good business plan in a step-by-step fashion, for US $40. There are no guarantees, however, of any funding or any other help coming your way from this site after you have prepared your business plan. The Best Business Plan (fundableplans.com): This site offers end-to-end solutions including free customer support, when it comes to the process of making a business plan, but again does not guarantee funding. They help you make custom-made business plans depending on your need and the pricing varies on a case-to-case basis. Plan Magic Corporation (planmagic.com): Another site that offers comprehensive softwarebased solutions for making and monitoring a new business process from the planning to the marketing stage, the business plan being a central part of the process. The Business Plan Blog (thebusinessplanblog.com): This is a nifty blog that offers a ‘chapterwise’ approach to making business-plans. The content on the site is free. A slight downside: Andrew Smith, the author comes across as preachy. Yet, that is a small deal for some good free advice. Business Plan Master (businessplanmaster.com): This is essentially a marketing site for guide-books focused on ‘tutoring’ budding entrepreneurs on the art of making a good business plan. Each guide book covers one particular sector in a nuanced manner and helps its reader write a well fleshed out plan specific to that sector. R DARE.CO.IN | STRATEGY | FEBRUARY 2010 89
Entrepreneurial India’s biggest event comes to town Campuses and entrepreneurship organizations across the country have joined hands to celebrate Entrepreneurship Week India 2010, from February 6 to 13
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t’s a campaign like no other. Entrepreneurship Week India 2010, from February 6-13, will see over
FEBRUARY 2010 | NEN | DARE.CO.IN
4,00,000 people joining hands to celebrate entrepreneurship. This is the one time when participants reach
out en masse to the “unconverted” – parents, friends, and key members of the society – to build their aware-
ness and support for entrepreneurs. Led by the National Entrepreneurship Network, and supported by the Wadhwani Foundation, the weeklong campaign will engage over 400 NEN member academic institutes and 23 leading entrepreneurship organizations.
in Chennai is hosting a TedX conference on the theme; an institute in Bangalore is organizing a Startup Day to attract internship opportunities; Pune institutes are connecting with neighboring villages to promote agri products and handicrafts.
Partners spread the E Week spirit Open, Vibrant and Engaging E Week India’s uniqueness rests on its ‘Wiki’ factors: It is both open and collaborative. Participants network and engage in their own creative ways to spread the message of entrepreneurship - from taking the E Week pledge to organizing intercollege competitions, startup-interaction sessions, movies screenings, bazaars, workshops and more. Little wonder then that students are already abuzz with excitement. Exclaims Ramachandran of PSG Institute of Technology, Coimbatore, “E Week pushes us to unleash our talents and skills like no other event!” Across campuses, plans for over 4000 events around the theme ‘India: Opportunities Within’ are already afoot. An engineering college
E WEEK IMPACT During Entrepreneurship Week India 2008, Naya Nadargi was introduced to entrepreneurship in Mount Carmel College. She was hooked. When her mother saw Naya’s growing excitement and skills, she became a keen supporter. Naya’s mom even encouraged her to leave her MNC job and start something on her own. Shailendra Pal of ISBR, Bangalore was ignorant about entrepreneurship till he participated in E Week 2009. Today he spots business opportunities everywhere. “When I travel on a Volvo bus, I think of solar panels to run it. I look at streetlights and think of LED. I never thought of entrepreneurship before, but now I am motivated to become an entrepreneur someday,” he says.
But it isn’t just academic institutes that are celebrating the spirit of E Week. A large number of entrepreneurship-related organizations have also joined this year’s celebrations with a variety of programs. While TiE Chennai is holding panel discussions on education and healthcare, The Chennai Fund will be conducting a business plan competition. Headstart is merging its second anniversary celebrations with E Week, and dedicating the Startup Saturday meets in six cities to local entrepreneurs who are working on solutions to India’s key challenges. Open Coffee Club, Bangalore, will run a brainstorming session to explore business solutions to issues like infrastructure and traffic during the week. For Proto.in’s Kausikram Krishnasayee, who had organized two E Weeks before he graduated from Chennai’s Vellamal Engineering College last year, this year’s E Week is an opportunity to get members of Proto.in to collaborate with student entrepreneurs. In fact, on January 30, two student-run startups from NEN member institutes were invited to present at the Proto.in Startup Showcase event, without going through its rigorous selection process – a first in Proto.in’s history. “My two E Weeks in college have been powerful experiences for me. It triggered my passion for entrepreneurship, opened new doors and made me achieve more than I ever imagined I could have. I have witnessed the challenges student entrepreneurs face when they are starting up; E Week gives us at Proto.in an opportunity to show support to new entrepreneurs,” shares Kausikram.
E WEEK PARTNERS • • • • • • • • • • • • • • • • • • • • •
TiE NASSCOM New Ventures India Venturewoods Open Coffee Club Proto.in Headstart Mumbai Angels EDI India WIB – Woman in Business Indian Angel Network The Chennai Fund EMERG Junior Achievement Villgro Watblog DARE MBA Universe Cool Avenues JAM Pagalguy
• Smart Techie Amarinder Singh of OCC, Bangalore claims to be strongly attracted to E Week because of its “inherent simplicity”. “It is not adhoc, it is not formal and it doesn’t have a rigid structure. More importantly, it carries a message that is so close to our hearts,” he says. Laura Parkin, Executive Director, National Entrepreneurship Network and Wadhwani Foundation, views E Week as one of the rare events that brings the entire entrepreneurial community together. “E Week India plays a transformational role among students, faculty, and college managements, as well as parents and the wider community. This will be the fourth E Week India, and it’s gearing up to be the biggest yet – this would not be possible without the support and efforts of all the partner organizations,” she says. R More articles on www.nenonline.org. Content provided by NEN DARE.CO.IN | NEN | FEBRUARY 2010 91
Organizations DARE.CO.IN
covered in this issue, in alphabetic order; first appearance
ABN Amro..............................................................71
IIM..........................................................................37
Proto.in ..................................................................91
Acciona ..................................................................71
IIT ..........................................................................37
Quippo ...................................................................72
Actis Biologics .......................................................45
IMT ........................................................................15
Raj Trading.............................................................46
Altria Group ...........................................................71
InBev .....................................................................72
RBS Group ............................................................71
Amazon .................................................................69
Infosys ...................................................................15
RDA Legal .............................................................68
Anheuser Busch Companies .................................72
Instituto Hispania ...................................................14
Reliance Technology Ventures...............................54
Audi .......................................................................85
International Labour Organization (ILO) ................17
RIL .........................................................................72
Aventis ...................................................................72
International Monetary Fund (IMF) ........................17
Rio Tinto ................................................................72
Bharat Biotech .......................................................30
ISB .........................................................................37
RPL........................................................................72
BHP Billiton............................................................72
ISBR ......................................................................91
Salaree ..................................................................69
BMW ......................................................................85
iTrust ......................................................................43
Sanofi ....................................................................72
Bombay Stock Exchange.......................................37
JPMorgan ..............................................................72
bplans.com ............................................................88
Kraft Foods ............................................................71
businessplanarchive.org ........................................88
legallyIndia.com .....................................................68
businessplanmaster.com .......................................89
MapMyIndia ...........................................................69
businessplans.org..................................................88
Maruti Suzuki .........................................................85
Cisco......................................................................44
Mercedes ...............................................................85
CLAThacker ...........................................................68
MILAAP .................................................................68
Corus .....................................................................71
Mobikon Technologies ...........................................68
Eastern Tar ............................................................45
MoMo.....................................................................68
E-bay .....................................................................69
Morgan Stanley .....................................................72
Endesa ..................................................................71
myownbusiness.org ...............................................88
Enel .......................................................................71
National Stock Exchange ......................................37
Essar Group ..........................................................71
National University of Juridical Sciences ...............68
European Union.....................................................17
NIT .........................................................................37
Exxon Mobil ...........................................................72
Novelis ...................................................................71
Federation of Small Scale Industries .....................44
NTT Docomo .........................................................65
Fortis......................................................................71
NUJS .....................................................................68
fundableplans.com ................................................89
OCC.......................................................................91
fundedplans.com ...................................................88
Oil India ................................................................72
Goethe Institute .....................................................15
OpCord ..................................................................68
Goldman Sachs .....................................................72
Open Coffee Club ..................................................91
Greener Planet Solution ........................................69
Pepsico ..................................................................20
VP-Engineering .....................................................69
GSK .......................................................................71
Perfetti Van Melle India ..........................................20
Wadhwani Foundation ...........................................91
Hindalco.................................................................71
Pfizer .....................................................................72
Whaleman Advertising...........................................47
Hindustan Unilever ................................................20
Philip Morris ..........................................................72
Wipro .....................................................................15
Hutchison...............................................................71
planmagic.com ......................................................89
Wyeth ....................................................................72
HydCubator ...........................................................69
PowerSpa ..............................................................69
XTO Energy ...........................................................72
ICICI Bank .............................................................44
Progressive Engineering .......................................45
YouPid.in................................................................69
Sasken...................................................................68 Setooz ...................................................................69 Skoda ....................................................................85 SMSONE ...............................................................68 SocialTwist .............................................................69 Spencers Hyper .....................................................19 SRAPT...................................................................69 Suzlon Energy .......................................................71 Tata .......................................................................20 TCS .......................................................................44 Telenor ...................................................................72
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The Chinese Language Institute............................14 thebusinessplanblog.com ......................................89 TTSL ......................................................................72 UBS .......................................................................72 Unitech ..................................................................72 United Breweries ...................................................71 Universal Consulting..............................................43 Vedanta Resources ...............................................71 Vodafone................................................................71
People DARE.CO.IN
covered in this issue, in alphabetic order; first appearance
Abdul Rehman .....................................................................................................46 Aditya Sanghi ......................................................................................................69 Amarinder Singh ..................................................................................................91 Amit Mukherjee....................................................................................................20 Anand Dayal ........................................................................................................69 Anand Kumar.......................................................................................................69 Bharat Sharma ....................................................................................................44 Carl Jung .............................................................................................................28 Chironmoy Chatterjee..........................................................................................20 Dr. Krishna M Ella ................................................................................................30 Dr. Shridhar Lolla .................................................................................................68 Fahim Maniar .......................................................................................................46 Ganesh R ............................................................................................................45 Hariprakash Agarwal ...........................................................................................68 Harshal Dubli .......................................................................................................68 Harshal Shah .......................................................................................................54
DARE is not an acronym. It represents the daring spirit of the entrepreneur.
K Kumar...............................................................................................................42 Kartik Verma ........................................................................................................43 Kausikram Krishnasayee .....................................................................................91 Kian Ganz ............................................................................................................68 Laura Parkin ........................................................................................................91 Manoj Tiwari ........................................................................................................45 Manoj Yadav ........................................................................................................18 Naresh Kumar .....................................................................................................46 Naya Nadargi .......................................................................................................91 Pranab Dutta .......................................................................................................45 Prasad Pingali .....................................................................................................69 Pravin Patel .........................................................................................................44 Purnima Garg ......................................................................................................14
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.
Pushpa Sharma...................................................................................................14 Rachna Aggarwal ................................................................................................14 Raghuram Krishnan.............................................................................................44 Rajesh B. Chavan ................................................................................................68 Ramanuj Mukherjee ............................................................................................68
The entrepreneur dares to do things. (S)he dares to do things differently
Ravi Ghate...........................................................................................................68 Rohan Verma .......................................................................................................69 Rohit Das .............................................................................................................68 Rudhir Sharan .....................................................................................................69 S.R. Raja .............................................................................................................68 Sachin Kaushik ....................................................................................................19 Sanjay Jha ...........................................................................................................45 Sanjeev Bali ........................................................................................................47 Sanjeev Saxena...................................................................................................45 Satyajit Dutt .........................................................................................................45 Shailendra Pal ....................................................................................................91 Suchitra K. Ella ....................................................................................................30 T K Cherian .........................................................................................................45 Tom Peters...........................................................................................................28 V K Mehta ............................................................................................................45 Vaishali Karmarkar ..............................................................................................15 Venguswamy Ramaswamy ..................................................................................44 Vivek Lakshman ..................................................................................................69
SMS “DARE <your comments, questions or suggestions>” to
56677 dare@cybermedia.co.in
DARE.CO.IN | INDEX | FEBRUARY 2010 95
A conversation with an ordinary farmer Ramesh Waman (55) is just another farmer and there is nothing special about him as such. But spend a day with him, like I did, and you realize the commonalities between an entrepreneur and a farmer /Binesh Kutty
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t is a pleasant January morning and we take a walk in the farmlands located in Adgaon, which is about 20 kilometres away from Nasik, Maharashtra. In 1988, he had
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purchased this piece of land stretching about four acres. “It is only in 1996 that I actually considered taking up farming as a serious occupation,” says Waman, “You see, my father was
a farmer and so were everyone in the side of my in-laws. They mentored me into becoming the farmer that I am today.” Interestingly, Ramesh had worked at a photo studio, had set up a
pan shop, and also run a small autotransport company and managed a hospital’s canteen, before actually taking up farming as a full time occupation. Ramesh tells me he had decided to go organic with his grape vineyard about two years back. He says, “It is the challenge in producing desired quality of grapes that interested me the most.” There is a lot of cost and labour that needs to be invested in organic way of farming. For instance, Gobar (cow dung comes from Mumbai at Rs 10,000 per truckload. For 1 acre one needs 4 truckloads of Gobar and Rs 5000 worth labor. Besides this, organic certification is required for
Ramesh had worked at a photo studio, had set up a pan shop, and also run a small autotransport company and managed a hospital’s canteen, before actually taking up farming as a full time occupation.
being in the exporters list of farmers. I ask him about how he got into organic farming, and he tells me, “My brother in law, who has done his higher studies in Agriculture, told me about organic farming and I really liked the concept. There are people who are doctorates in Agriculture who advice us on a weekly basis. The evaluation includes scrutinizing bills, spraying schedule, wind direction during spraying, and so on. Then they check samples of grapes, soil, etc in the labs to find out what is going right and how to maintain it, what is going wrong and how can it be rectified.” As for the quantity of produce; as with regular grapes, about one quintal of grapes is produced in one acre of land. While normal grapes for local market are sold at Rs 15-20 a kilo; the export quality ones are sold at Rs 3540 per kilo. As for organic produce, it is sold at as much as Rs 70-80 per kilo. Apparently, it is the government organized funds and subsidies that actually help the farmers in procuring loans for setting up farms to loans for cultivating crops. He talks about the importance of diversification in the line of products, when he says, “People who only do grapes are more vulnerable to losses. It makes sense to cultivate other crops elsewhere, to maintain the balance. With grapes, 10 years back, we were selling it at Rs 20 a kilo and it still remains the same. However, the cost factor which was at Rs 30,000 has now increased to Rs 90,000.” Even if there is loss, farmers borrow from wherever possible and clear the loan, and keep pumping funds into the farms. He has no options. He has to keep working on the farm for a good harvest next year. According to Ramesh, a small farmer with about two acres of land can survive losses for two years, after which he can get himself into a situation which is difficult to get out of. As for challenges, Ramesh tells me that producing grapes is like nurturing a new born baby – you are
always on your toes. For instance, if there is fog that is setting in at three in the morning, he has to get up and make sure that he sprays his entire plantation with recommended sprays right then. He shows me samples of dying leaves and grapes. They have succumbed to the cancer of grapes, apparently. Downy mildew (Parasites), as it is called, will surface in about 45 days inevitably, but it can be contained with specific sprays. Bhuri (Uncinula necator; fungus) is another trouble that sets in after 45 days till 90 days. One thing after the other, like he had mentioned before, they are kept on their toes. To add to their troubles, there are many companies that produce spurious bio-products. These products are bought by farmers looking at the word “Bio” and little do they know that these products contain chemical residue, which for an organic farmer can mess up everything. Of course there are labs that can test these products for you, but they charge as much as Rs 5,000 which not every farmer can afford. As it happens, these farmers use multiple products, so there is no way to pinpoint which one was spurious. This is another risk that they prefer to assume. There is so much more information that I gathered that day. But here is the saddest part of it all. There was a shower of unseasonal rain on Ramesh’s farm. This caused 90 percent of almost ready grapes to go rotten. About one kilometre away from this farm, his brother in law has a vineyard, which was lucky enough to not come under the rain. Such is luck. Ask Ramesh about how he is going to deal with this loss, and he replies with a smile, “There are certain things that are simply beyond our control – it is called fate. What we need to do is to keep doing our best, and never ever give up. There are always ways sustain losses, be patient, work hard, and later make good profits” That is called being enterprising! R DARE.CO.IN | SOCIETY | FEBRUARY 2010 97
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