Richard Branson’s tie-breaker Pg 18
JULY 2012 VOLUME 3 ISSUE 11 `100
4(%
-/.%9
LILLIPUT: THE INSIDE STORY PG 60
-%.
5 HOT STARTUPS PG 107 MRS. BECTOR’S BAKES IT RIGHT PG 80
3TORIES OF VISION GRIT AND PASSION PG 40
ANAND RATHI
RASHESH SHAH
ASHOK WADHWA
ANAND RATHI FINANCIAL SERVICES
EDELWEISS
AMBIT
RANA KAPOOR
MOTILAL OSWAL
C PARTHASARATHY
YES BANK
MOTILAL OSWAL FINANCIAL SERVICES
KARVY
TABLE OF CONTENTS INSIGHTS
COVER STORY 40 High Finance
16 Connecting the Dots R. Jagannathan
explains why Greece’s fortunes are affecting the Indian economy.
18 Don’t Tie 'Em Down Richard Branson
explores the relevance of company dress codes.
19 Picking Opportunities Manish Sabharwal
Some of India’s finest financial entrepreneurs have faced challenges, weathered downturns and built successful businesses. From investment bankers to entrepreneurs providing various financial services, these businessmen have grown their ventures rapidly, despite the growing economic uncertainty and choppy markets. By Team Entrepreneur
says that there is no such thing as the perfect opportunity.
20 Curious 69
Bharat Banka talks about how inflation and GDP numbers are changing.
IN CONVERSATION 30 ‘Sellers try to put a nice toy together’ David Derain, the global head of Hay Group’s Business Solutions speaks about mergers, acquisitions and where India stands in creating entrepreneurs.
21 Rules of the Game
Vivek Desai shares how healthcare startups can become successful.
22 Startups and the Slowdown
By Avanish Tiwary
Ganesh Natarajan on the startup environment.
32 ‘I want to be the monk who bought the Ferrari’
24 The Microentrepreneurs
Serial tech entrepreneur and founder of Contests2win and Games2win, Alok Kejriwal speaks about the e-commerce boom, the mistakes entrepreneurs make and more.
25 How Big Can a Company Get?
By Sourav Majumdar
Tara Thiagarajan looks into how microentrepreneurs can be successful.
Munesh Khanna explores Apple Inc.’s growth story to find an answer.
WOMAN ENTREPRENEUR
Murali Vullaganti’s venture RuralShores is bringing jobs to the bottom of the pyramid through its national network of rural BPOs.
IN FOCUS
talks about scaling up.
60 Lilliput’s Giant Problems
27 Bucket List for the Hereafter
What was once a success story in Indian retail turned into a bitter dispute with investors and came under a sea of trouble.
Nandini Vaidyanathan writes about her personal icons.
By Pranbihanga Borpuzari
64 Riding The Trough
28 Quit Pro Quo
6 Intelligent Entrepreneur July 2012
38 Rural Route
By Shonali Advani
26 Why Do you Want to Grow? Ravi Kiran
Muki Regunathan explains why this is the best time to start something new.
SOCIAL ENTREPRENEUR
Uma Balakrishnan has built a multi-crore company in a male-centric industry.
Can investing during a downturn be beneficial? What are the risks involved? We look at three companies which invested during the downturn of 2009 to find out.
By Shonali Advani
By Pranbihanga Borpuzari
36 Reality Checks
OFF BEAT
82 A Global Foothold Agra-based Virola has seven footwear factories around the world and manufactures 12,000 units of footwear in a day.
TECH DEPARTMENT
By Shonali Advani
GETTING THERE
101 A New Entrée
68 Cellar Magic
More expensive than the Curve 8520, the Curve 9220 is also much better on many grounds.
Nikhil Agarwal has turned his love for wines into a business. By Sriya Ray Chaudhuri
70 Purple Cows in India
By Ankush Chibber
Purple Cow thinking can give your startup some useful perspectives to create customer awareness in one swoop. By Harsh Pamnani and Shekhar Gurav
STRATEGY 72 How to Brainstorm a Great Business Name Picking a name can be the hardest task for your startup. Try and plan out a process that will be fun and productive. By Emily Heyward
79 When Employees Become the Competition There are some steps you can take to make sure that your employees don’t become competition for you. By Mikal E. Belicove
SUCCESS INC
86 Testing Times Second generation woman entrepreneur Ameera Shah is searching for a cure for India’s unorganized diagnostic care segment. By Shruti Chakraborty
89 Winning, One Text at a Time ValueFirst, one of India’s largest digital media companies, is probably one of the most below-the-radar ones as well. By Pranbihanga Borpuzari
GO FRANCHISE 93 On the Road Well-Traveled A number of companies in India’s rapidly growing travel industry are expanding at a quick pace based on the franchise model.
103 V for Victory The second from the ‘One’ range of HTC phones is one that stands at the top of its price segment, alone and unchallenged. By Ankush Chibber
By Pranbihanga Borpuzari & Shruti Chakraborty
ONLINE IDEAS 96 Master Social Media Multitasking Read about five ways to communicate your message effectively on multiple social media platforms. By Jonathan Blum
99 Monitor your Employees Online Find out how you can monitor your employees’ web activities legally and ethically. By Riva Richmond
80 Our Daily Bread
100 Supercharge Fan Engagement on Facebook
Mrs. Bector's began in 1978 as a hobby in a backyard. The venture has now become one of India’s top food sector players.
Engaging customers on Facebook can be a challenge for many ventures. Find out how you can get better results in three simple steps.
By Pranbihanga Borpuzari
By Amy Porterfield
104 No ‘Secret Sauce’ for Tech Success Just create a prototype and get it to the market fast, Guy Kawasaki advises entrepreneurs. By Jason Fell
Intelligent Entrepreneur July 2012 7
TABLE OF CONTENTS
MONEY
STARTUPS
HOW TO
105 Getting the Best Yields when Inflation is High With the weakening economic scenario in the country, effective financial planning and the need for investing wisely have gained higher importance than at any other time. By Shruti Chakraborty
120 Make Best Use of Startup Workshops 108 Hire Street Entrepreneurs Vivek Ravisankar and Harishankaran K. have developed a hiring tool that candidates and companies are taking to in droves. By Shonali Advani
110 Fresh Picks Joby Joseph’s venture Freshersworld.com is a onestop-shop for fresh graduates in India.
REGULARS
By Shonali Advani
10 FEEDBACK 11 RESOURCES 12 ASK ENTREPRENEUR 14 CAPSULE 134 BACKSTAGE
112 A Green Flame
COVER CREDITS
Two MBA grads are making products to strengthen rural infrastructure, fighting a thousand years of inefficient rural technology in some cases.
Startup workshops can help you nurture your business idea and grow your venture. By Pranbihanga Borpuzari
123 Fix Problems with Co-Founders Nurturing your relationship with your co-founder requires close attention for any startup. By Ramanujam Sridhar
124 Set Up your Own Online Brand Indian e-commerce companies are increasingly talking of building niche online brands. By Gaurav Singh Kushwaha
127 Secure Series B Funding
By Bindi Shah
Getting Series B funding needs some serious thought for any company.
114 In the Know
By Shonali Advani
Ambarish Gupta and Pallav Pandey’s venture Knowlarity helps companies know what their customers want.
128 Promote Your Creative Business
By Pranbihanga Borpuzari
Creating and promoting a brand in the creative field requires a focused cost-effective initiative. By Shruti Chakraborty
SPEND IT 129 Size Doesn’t Matter A small coffee shop Cuppa Joe in Mumbai has big dreams. By Sriya Ray Chaudhuri
131 Wine & Dine Vinoteca by Sula is a unique wine and tapas bar in Mumbai.
COVER DESIGN
Arko Provo Mukherjee
By Sriya Ray Chaudhuri
IMAGING
Chaitanya Dinesh Surpur
COVER IMAGE
Neha Mithbawkar, Suresh Vengapally 8 Intelligent Entrepreneur July 2012
116 A Hole New Ball game As golf gains popularity in India, there is an opportunity for entrepreneurs to enter the space and facilitate the growth of the sport. By Shruti Chakraborty
132 The Bold & the Beautiful The Audi A7 and Q5 are more than just benchmarks in luxury. By Pranbihanga Borpuzari
Want to Scale Up?
Subscribe to Entrepreneur today to find out how. BOOM OR BUST: IN SEARCH OF THE ELUSIVE IPO PG 44
STATE SPECIAL: PUNJAB IS OPEN FOR YOUR BUSINESS PG 80
ANIL KUMBLE SPINS IT RIGHT WITH TENVIC PG 40
Frederick DeLuca
JUNE 2012 VOLUME 3 ISSUE 10 `100
ALSO
on how his $17 billion SUBWAY redefined fast food PG 26
BUDGET ANALYSIS 41 PG
The Impact of Leadership PG 84
FOOD ISSUE
APRIL 2012 VOLUME 3 ISSUE 8 ` 100
EXCLUSIVE
BUDGET 2012 IMPACT
SANJIV GOENKA’S SECOND INNINGS THE BUSINESS OF GYMS
THE BUSINESS OF FOOD STATE SURVEY: PUNJAB
Sanjiv Goenka's second coming A more aggressive gameplan has changed him as a leader PG 52
PG 97
THE BIG
MAY 2012 VOLUME 3 ISSUE 9 `100
5 Hot Startups
India’s top restaurateurs tell you their recipes for success
Harsh Mariwala Wants You to Scale Up The Marico boss launches a mega mentoring project PG 56
PG 54
5 HOT STARTUPS PG 99 LESSONS FROM THE TOP 10 U.S. BRANDS PG 46 INSIDE
The ultimate how-to guide PG 112
A NURSERY FOR YOUR NEW VENTURE PG 40
Avoiding Titanic mistakes PG 84
MAKING A SUCCESSFUL IT PRODUCT PG 80
5 hot startups to watch out for PG 107
Back to Books with Hippocampus
Stemade puts the tooth fairy out of work PG 36
FRANCHISING: THE BUSINESS OF GYMS PG 70
UFO Moviez gets digitally disruptive PG 50
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38
Don Ward on the Business of SHAUN KENWORTHY Comedy Restaurant PG 66 consultant and chef
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IN CONVERSATION
32 Intelligent Entrepreneur ď‚„ July 2012
Photo Shiresh R. Karrale
‘I want to be the monk who bought the Ferrari’ He is a maverick if there ever was one. Serial tech entrepreneur and founder of Contests2win and Games2win, Alok Kejriwal goes by the middle name Rodinhood, an amalgam of Rodin and Robin Hood. Kejriwal, who is in the process of turning a mentor and ‘entrepreneur capitalist’, speaks to Sourav Majumdar about the e-commerce boom, the mistakes entrepreneurs make and lots more. Excerpts: Q: You say these are surreal times. After the internet boom and bust, now there’s this whole e-commerce wave. How long will it last? A: It’s actually z-commerce, because the grades have now come to z! ‘E’ was the before-fail stage. Now it’s z. Q: So what’s the formula for success in these times? A: The first thing is to be absolutely innovative and not lazy. In my humble description, the e-commerce sector perfectly fits the description of a lazy entrepreneur: I will take someone else’s business model and replicate it till I can’t count the stars anymore. I will take someone’s goods and sell it to someone else, on a platform where I can buy from someone else and use someone else’s courier and someone else’s gateway to deliver. So everything is someone, right? You’re ‘someone’. Then you’re getting funded for someone… and I’ll use someone else’s money and hire somebody else to do that something. Then you’re nothing. So that’s the formula of nothingness. You’ll never succeed. You have to be able to first solve a problem which hasn’t been solved. Don’t create problems to solve. Find real ones. The second thing is a total lack of business knowledge. I see a lot of technocrats, a number of salaried employees, a lot of munnas as I call them and maybe some munnis too who are saying, ‘Mama told me to become an e-commerce
entrepreneur, so I’m going to be that’. They’re not thinking from a business point of view: am I creating value? So, to summarize it in a language which is more befitting Entrepreneur, where’s the thinking for value creation? There’s a lot of thinking for execution. But there’s no need to execute if there’s no value. Business acumen cannot be taught in an MBA course. It has to be realized like the Buddha. You have to meditate in a company or companies. You have to graduate from being a student to an employee to a manager and figure out, why do people pay me salary? When that realization comes under the Bodhi tree or in your cabin, then you shall step out and bless the world with your creation (laughs). Q: Do you think that’s happening increasingly now? A: No, the negative is happening. The reason is, unlike Buddha who had to starve and almost die, a lot of these venture capitalists are also in the fray, telling people that you’re Buddha, didn’t you realize it? Here are the clothes, flowers and fruits. Now set forth. There’s a big mismatch. So the third reason is, there is irrational money chasing irrational minds which are creating irrational businesses. In private equity, for instance, we keep hearing someone tried to invest but the deal didn’t go through. Because somebody is rationally saying get lost, I don’t want it. Or someone in the VC/PE side
To read more, grab the July 2012 issue of Entrepreneur Intelligent Entrepreneur July 2012 33 To Subscribe, visit www.entrepreneurindia.in
COVER STORY
()'( ()'(
40 Intelligent Entrepreneur ď‚„ July 2012
&).!.#% (OW )NDIAkS ÏNEST ÏNANCIAL ENTREPRENEURS FACED CHALLENGES AND WEATHERED DOWNTURNS TO BUILD VALUABLE BUSINESSES 4%!- %.42%02%.%52
To read more, grab the July 2012 issue of Entrepreneur Intelligent Entrepreneur July 2012 41 To Subscribe, visit www.entrepreneurindia.in
OFF BEAT
[ TOAST TO YOUR TASTEBUDS ]
CELLAR MAGIC Nikhil Agarwal’s business premise is enviable: It deals with All Things Nice SRIYA R AY CHAUDHURI
T
hirty three-year-old Nikhil Agarwal is a wine aficionado. So are many of us. But the suave and savvy entrepreneur has turned his passion into a successful business model, combining other similar preferences into a marketing model. Agarwal’s All Things Nice (ATN) helps different brands market their goods and services to prospective clients. The route is by introducing and educating the Indian consumer on items ranging from wines and single malts to cheese, chocolates, teas, coffees and cigars. 68 Intelligent Entrepreneur July 2012
“ATN is a taste experience. Our tasting events are hosted at well-known restaurants, hotels and art galleries, attended by High Networth Individuals who are then possible converts to the brands they taste,” explains Agarwal, Director, ATN. The company also offers consultancy to restaurants and hotels to compile special wine lists, how to best pair wine with the food on offer, staff training etc. ATN also provides global F&B players with their marketing and distribution solutions, especially aiding
them in dealing with India’s complex import and export systems. It works with wineries and importers of wine, beer, other spirits and gourmet food companies in their marketing efforts.
The spin-off Starting off in the sales department of Sula Vineyards at the age of 22, Agarwal was quickly promoted to the import division of the Indian wine giant. Just one and a half years later, he joined the export/sales division of the company. As he gained experience and was
TWIST IN THE TALE One of Agarwal’s unique offerings is the Twisted Decadence evenings. Held at top city restaurants, during these sessions guests eat a multi-course dinner while blindfolded or in a blacked-out room. The concept is very popular as part of Europe’s experimental cuisine movement. ATN adds wine and food pairings and sometimes even performing artists to the events. "The idea is to reveal the power of our sense of smell and taste by cutting out distractions. We want people to taste ingredients, the delicate flavors in their food and drink, to experience taste," says Agarwal. ATN’s first Twisted Decadence evening was done in partnership with Audi Mumbai West and Dome, Intercontinental Marine Drive. Guests were led to their seats in a partially-lit room, given a silk scarf which was wrapped around their eyes to temporarily blind them before the courses started. Agarwal hopes to conduct many more Twisted Decadence evenings for private groups.
TASTE CASE: Nikhil Agarwal at Dome, InterContinental Marine Drive
exposed to all the major wine brands across the world, Agarwal’s passion for his subject grew in leaps and bounds. “I am a Punjabi, so I love my food and drink. I have been a sommelier for 11 years. I realized a few years back that loving all things nice myself, I would be in a good position to market products that brands in this space offer,” explains Agarwal over a simple cup of steaming cappuccino at a Mumbai café. All Things Nice was launched in 2010, with the then 30-year-old entrepreneur putting in `20 lakh of his own savings Photo Neha Mithbawkar
(some of this was savings he made from stock market forays). With its revenue coming from the consultancy services it offers to hotels, restaurants, retail chains and airlines, the ATN portfolio also includes brand launches, events and other programs, which are sources of income for the company. With a team of seven personnel, ATN today has a community of 7,500 members. Starting up was not a tough ask for Agarwal as he knew most of the people in the industry since his Sula days and even later as a sommelier. “My clients are High Networth Individuals who have the means to afford the luxuries of life. They are well-traveled, understand the different qualities of wine and liquors they consume and prefer gourmet food to regular fare. It helped that hailing from a business family, I knew many of these people at a personal level. They have implicit trust in my judgment and know that if I am offering them a product, it is not just because I have to sell and earn a living. I am as passionate about the good things as they are,” explains Agarwal.
Rise ’n’ Shine ATN organizes Shine Nights, where prospective clients are introduced to a particular product/brand. If they like it, there are various ways in which sales can be later made. Till date, ATN has organized hundreds of such Shine Nights, both private ones and those that are thrown open to the public. He has also organized 55 private tastings
till date. “My USP is that I am not selling anything to anybody. I am just introducing you to a particular product which I feel you would prefer to purchase. People trust my judgment because of my past experience in this field. Of course, there are tangible benefits for the brands whose products are tasted at our sessions, because it results directly in more sales for them,” claims Agarwal, whose portfolio includes hands-on experience with industry giants like Moet Hennessy, Diageo and, of course, Sula. The entrepreneur acquired his sommelier degree in wine and spirits from UK’s Wine & Spirits Education Trust. Almost as a natural offshoot of his present business, Agarwal hopes to open his own restaurant some day soon. “The logistics and funding options have to be carefully sorted before I can think of selecting the menu and the venue. It’s all in my head, of course, but once everything falls into place, I will open my own restaurant,” he says. Of course, he also pays for his extreme love of all things nice. “Every time I go to a restaurant for a quiet drink & dinner with my wife, I check if the wine has been served in the correct glass, if the pairing has been suggested correctly and sometimes spend more time staring at the menu than at my wife. But these situations are most welcome. When my business is all about dealing with the good things in life, how can I not feel good about life too?” he says.
To read more, grab the July 2012 issue of Entrepreneur Intelligent Entrepreneur July 2012 69 To Subscribe, visit www.entrepreneurindia.in
SUCCESS INC
[ PERFECT RECIPE ]
OUR DAILY BREAD
Mrs.Bector’s started as a backyard hobby 34 years ago, but has grown to become one of India’s top food sector players
PRANBIHANGA BORPUZARI
T
he year was 1993. The country had embraced liberalization and policymakers were opening up the economy to multinationals. And true to its me-first nature, McDonald’s Corp. decided to make a beeline for India before its traditional rivals could. But that was easier said than done. Unlike a manufacturing unit, McDonald’s relied heavily on sourcing from vendors on an everyday basis, vendors that were almost impossible to find for even local players, let alone a foreign newbie. That is when the folks at McDonald’s stumbled on Mrs.Bector’s, a small food processing company, which started as a hobby project for its founder Rajni Bector in her backyard in the nondescript town of Phillaur in Punjab. 80 Intelligent Entrepreneur July 2012
A small town beginning The story of Mrs. Bector’s started much before the opening up of the economy in 1991. Akshay Bector, Managing Director, Mrs. Bector’s Food Specialties Ltd., says his family had been into various businesses for four generations. “When I was in college, my mother
MRS. BECTOR’S IS THE THIRD-BIGGEST PLAYER IN THE KETCHUP MARKET IN INDIA. started developing a hobby in cooking. The family was very involved in agri-commodities and my mother got into her hobby of making ice-cream in
a very small way in our backyard in 1978,” he says. The hobby soon became a backyard business of sorts and the family also started a bakery selling breads locally in Ludhiana. “It was more about passion and making money was never the main objective,” says Bector. What Rajni Bector achieved in 1978 makes her one of the first women entrepreneurs in the Punjab and India. As her three sons graduated, each of them got into the business. “Making breads and ice-cream was more appealing instead of going to the mandi and dirtying our feet. When I graduated, I took upon myself to transform the business and started by setting up a new bread plant,” says Bector. That plant became a reality and by 1989, the business started doing well with most of the Photo Joshua Navalkar
towns in Punjab growing as well. One thing led to another and the company soon got into biscuits around 1992. Akshay Bector’s younger brother joined the business and set up a biscuit plant worth `2 crore. That year the company reached revenues of about `10 crore. In the process, it broke even within the first year in the biscuit business.
‘I’m loving it’ McDonald’s had started scouting for its operations in India much before its first store opened in 1996. In 1993, Bector got to know of this and decided to try his luck. “I had no idea who was calling the shots for McDonald’s in India and I did not have any fancy propositions or pitches to make,” he says. He sent a small letter introducing his company and stating that he would be happy to work with McDonald’s. Days later, an unannounced visitor came to his office for an audit, a part of many unannounced audits that lasted through the long due diligence period at the end of which Mrs. Bector’s became a trusted supplier of McDonald’s. “When the McDonald’s team first came to India, they were looking for suppliers who could deliver high quality ingredients,” says Vikram Bakshi, Managing Director, McDonald’s India (North & East). “Although it was a small enterprise then, the team sensed their [Mrs. Bector’s] potential as passionate food enthusiasts who could deliver high quality.” Bector says that his company was baking breads at that time and when he first approached the food multinational, he was hoping he could supply breads to them. Much to his surprise, he was awarded with three parts of the business: buns, battering and bread pre-mixes and liquid condiments. “The ketchup part was a very big surprise and we had to start a ketchup plant by 1996 just in time to support McDonald’s,” says Bector, adding that the business of ketchup was started first as a 50:50 joint venture with Quaker Oats. Bakshi says that McDonald’s was impressed by the supplier’s professionalism, ability to
manage costs and commitment to quality and food safety. What further impressed the McDonald’s team was their entrepreneurial streak, which turned a small setup started by their mother into the large business enterprise that it is today, he adds. “In short, it was their eagerness to learn and evolve that convinced McDonald’s,” says Bakshi.
Spreading the mix By the time the first store opened in Delhi in 1996, Bector had the full plant
FOOD FORCE Condiments: 100 products Condiment Revenues: `120 crore Condiments Market size: `1,200 crore Biscuits Revenues: `500 crore Biscuits market size: `10,000 crore Target growth: 25-30 percent
operational. Buns were being transported to Delhi everyday. The demand was not huge since there were only so many buns one store can take. “The first few years were very difficult but McDonald’s helped us in a big way when we started off. Of all those who started with McDonald’s, Mrs. Bector’s is one company which has maintained the relationship and in many ways enhanced it too,” he adds. While the next five to six years were mainly concentrated around McDonald’s, the biscuit business of the company was also quietly expanding at the same time. In 2000, Quaker Oats was sold to PepsiCo and Mrs. Bector’s bought the joint venture out from the new partner. Freedom from the constraints of a multinational partner meant Mrs.
Bector’s could now sell openly in the market to the consumer. Mrs. Bector’s today markets its products under the brand name of Cremica. “Getting into the markets is tough and it tests your caliber. It was a tough journey but we pioneered marketing mayonnaise and were able to develop the mayonnaise retail market in India,” he says. The two businesses continue to grow year-on-year based on the fundamentals of affordability, quality and value, he claims. “Thanks to the McDonald’s business, we had the luxury of time and could ensure that the formulations for all our products took as much time as we needed to perfect,” says Bector.
Future ready The numbers are there for everyone to see today. Mrs. Bector’s is the third-biggest player in the ketchup market and the largest in the mayonnaise business in India. With revenues of `650 crore, the company is easily one of the larger food processors in the country. About 15 percent of its revenues come from the McDonald’s business while retail accounts for the rest. For this fiscal, Bector is looking at an annual growth of 20 percent. The company has also entered into fruitful relationships with other big Indian chains like Domino's, Café Coffee Day and Barista. It is also engaged with the Indian Railways and even the Indian Army. Bector, however, says that while McDonald’s alone drives about 10 percent of the volumes, other key business lines collectively contribute only about 15 percent. The company is also looking at an IPO for the biscuit part of its business. It currently has three plants in Phillaur, a factory in Gurgaon for biscuits, two plants in Greater Noida for buns and packed food and a factory in Mumbai for buns. With plans drawn up for more facilities in Bengaluru and Mumbai, Mrs. Bector’s has come a long way from Rajni Bector’s backyard.
To read more, grab the July 2012 issue of Entrepreneur Intelligent Entrepreneur July 2012 81 To Subscribe, visit www.entrepreneurindia.in
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GO FRANCHISE
[ PROFITABLE TOURS ]
ON THE
ROAD
WELL-TRAVELED India’s burgeoning travel and tourism industry is looking at ways to cement its position and lap up all opportunities. Franchising is one of the key components in the matrix of growth for companies in this sector PRANBIHANGA BORPUZARI & SHRUTI CHAKRABORTY
I
t is very likely that at some point you would have been called by a Club Mahindra or Sterling Holidays representative asking you to come and claim a free holiday you have won from their side. The people busy at work behind this sales call are most likely operating franchise outlets for a chosen brand and waiting keenly to unleash the wandering spirit within you. To tap India’s growing travelrelated demand, many travel services companies have started exploring the franchise route. According to travel research firm PhocusWright, the Indian travel market grew 14 percent in 2011 and is poised to continue growing in double digits through 2013 to `1.23 lakh crore. Online Travel Agencies (OTAs) grew faster than the industry—their gross bookings grew at more than three times the rate of the industry, climbing to `10,500 crore in 2011. This is expected to reach `17,000 crore by 2013. “Tourism is the largest service industry in India, with a contribution
of 6.23 percent to the national GDP and 8.78 percent of the total employment in India. More than 80 lakh Indians enjoyed their holidays abroad and over 56 crore Indians enjoyed domestic holidays last year,” says Keyur Joshi, Co-Founder & Chief Commercial Officer, MakeMyTrip (MMT). Additionally, the country witnessed the arrival of over 50 lakh
MOVING AHEAD Travel market growth: 14 % in 2011 Expected size in 2013: `1.23 lakh crore ($24.6 billion) OTA market size: `10,500 crore ($2.1 billion) in 2011 Expected to reach: `17,000 crore ($3.4 billion) by 2013 Major franchisers: MakeMyTrip Kuoni India Club Mahindra Cox & Kings Ezeego1
foreign tourists over the past year. “Foreign tourists spend more in India than in almost any other country worldwide. Tourist arrivals are projected to increase by over 22 percent each year. With domestic tourism also growing by the day, the tourism industry will continue to boom and see meteoric growth rates over the next decade. It is one of the most exciting industries to be in as a corporate and as a budding entrepreneur,” says Joshi. According to the World Travel and Tourism Council, India will be a global tourism hotspot from 2012 to 2018. “The tourism industry is one of the most flourishing industries in India. It is experiencing a strong period of growth driven by the burgeoning Indian middle class. It is contributing a good amount of foreign exchange also, which has made it one of the most profitable industries,” says Rajiv Duggal, Managing Director, Kuoni India.
The franchise option MakeMyTrip has followed a unique hybrid business model wherein the
Intelligent Entrepreneur July 2012 93 To read more, grab the July 2012 issue of Entrepreneur To Subscribe, visit www.entrepreneurindia.in
START UPS
[ STOKING A CLEANER FIRE ]
A GREEN FLAME
Two MBA grads are fighting a thousand years of inefficient rural technology—the Great Indian Chulha BINDI SHAH
N
eha Juneja and Ankit Mathur opted out of high profile placements upon graduation from reputed Indian MBA institutes and became famous overnight in 2008 for doing so. But that fame was not to last. Their first startup idea, aisapaisa. com, a futures and options portal offering insight and advice to retail investors failed completely. “Our portal had no revenue model. And there was no accountability or defined division of responsibilities,” says Juneja, now Co-Founder and CEO, Greenway Grameen Infra (GGI). Mathur and Juneja were a part of a larger team of four. Over time, the other two partners moved away while this duo stayed on to form a new company catering to rural infrastructure needs through innovative, holistic and sustainable products and services. Greenway Grameen Infra currently “works on products that have an immediate and high positive impact on rural lifestyles,” says Juneja. Its flagship product is the Greenway smart stove in rural markets that is helping to enhance the health, lifestyle and productivity standards of rural households, especially its women.
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DREAMS AFIRE: Ankit Mathur and Neha Juneja 112 Intelligent Entrepreneur July 2012
Post aisapaisa.com, the duo started a firm called Greenway Ecodevelopment where they offered consultancy for projects related to carbon finance and carbon credits. “We wanted to do something that would create an impact,” says Mathur, GGI’s Co-Founder and Photos Neha Mithbawkar
COO. It was their work with Greenway Ecodevelopment that gave them a lot of exposure to rural households. They realized that many households had a cable connection, a motorbike, and, of course, mobile phones. However, their women were still cooking on traditional mitti ka chulhas (mud stoves) with fuel emissions harming everyone, including young children.
The smart stove The 27-year-olds found the chulhas were highly inefficient due to improper combustion and heat transfer. The thermal efficiency of traditional mitti ka chulhas is often as low as 6 to 8 percent. The Greenway smart stove consumes only one-third the amount of fuel that a traditional chulha does. Above all, health benefits such as reduced infant mortality, premature deaths and lung disease occurrence due to low carbon emissions and high thermal efficiency of the stove outweigh everything else. According to statistics offered by the company, over 2.84 billion people worldwide still cook on biomass i.e. wood, dung and agricultural waste. This includes over 70 percent of India's population i.e. over 145 million households. Talking about market potential, Juneja says, “Even if one were to assume that the entire below-poverty-line population is within this 70 percent, that still leaves us with over 100 million households that have the purchasing capacity and need for improved cooking methods.”
Cause selling is the tougher bit GGI worked on eight prototypes before finalizing the current design. The income that came from Greenway Ecodevelopment cross-subsidized the travel and product development cost for GGI. Carbon consultancy is nonfunctional now as the market for carbon credits sank in 2010. The team was sure that it wanted to directly sell to the customer without being a part of any subsidy-linked scheme. They knew that their product would have to fare high on the user
LIGHT UP Startup cost: `10 lakh Stoves sold till date: 5,700 Selling in states: Karnataka, Bihar & Rajasthan Potential states: Jharkhand, J&K & Andhra Pradesh Turnover for 2011-’12: `40 lakh Started selling in: December 2011 Breakeven expected by: September 2012 Team strength: Five Angel investment: `20 lakh Stove MRP: `1,250
desirability index if they had to achieve this and build a brand from scratch. For this, GGI adopted a strategy of co-creation. They organized several design camps in rural India, where users were invited to give inputs. “Initially, only the men folk would turn up for the design camps and offer irrelevant inputs. Later, we ensured the women came in too,” says Juneja.
A tough village road Among the main challenges the founders faced were building a strong distribution network and overcoming registration and paper complexities for smooth inter-state trade within the country. On the distribution front, the company sells its products through grocery and kirana shops, retail outlets, utensil stores, and hardware shops in addition to putting up independent booths and doing live selling. The Greenway smart stove today enjoys Bureau of Indian Standards (BIS) recognition for its safety, stability
and emission standards. Muneer Alvi, Co-Founder and Programme Coordinator, Rural Communes, says, “GGI came to Khopoli for a demo. We bought 20 stoves from them and our tribal users were delighted. They all wanted to use them.” Alvi remarks that he has seen more than 1,000 different types of chulhas in the entire span of his career as he works with a lot of IIT students and designers, but the GGI stove is one of the best models he has come across so far, though the tribals may not be able to pay the maximum retail price of `1,250 in one go.
New products to lead the way GGI’s pipeline of innovations includes a product called ‘Jugnu’ that will convert waste heat generated during cooking into electricity. “Jugnu will capture this heat and transfer it as electric charge to a battery. Essentially, the device will act as a battery charger,” says Juneja. This product has got recognition from the Swedish government under its Innovations Against Poverty (IAP) Programme. The Swedish International Development Cooperation Agency (Sida) has given GGI a grant of 11,000 euros (`6.5 lakh) for travel to Africa and test the product there. GGI plans to launch a higher-end version of the stove with a fan attachment whose cooking flame will be cleaner. Sunder Hemrajani, MD, Times Innovative Media Ltd (TIML) taught Juneja during her MBA and has gone on to become a mentor and angel investor for the founding team of GGI. He says the GGI product performs its primary role of a stove, which is cooking, but simultaneously reduces carbon emissions to a large extent and expenses as well, adding value to the lives of rural people. “GGI needs to build an inexpensive distribution network, scale it up and get good people on board if it really aims to grow,” he adds. Juneja and Mathur are aware of this. For now, though, they are happy that they are not stuck in boring corporate jobs and are enjoying real value with their venture.
To read more, grab the July 2012 issue of Entrepreneur Intelligent Entrepreneur July 2012 113 To Subscribe, visit www.entrepreneurindia.in
START UPS
GOLDEN TOUCH : Rishi Narain
As more and more Indians begin playing golf, there is an opportunity for entrepreneurs to enter the space and facilitate the growth of the sport SHRUTI CHAKRABORTY
IF
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terms like a tee off, a handicap or par are all you know of golf, it is likely that things won't remain that way for long. The sport is catching on in India amongst companies and aspiring players. And if you're so much as buying a house, don't be surprised to find that you live overlooking a golf course as more and more real estate developers include a golf facility while building housing colonies and townships. A KPMG survey found that there are 1 lakh people affiliated to golf clubs in the country and the same survey estimated that about 1.5 lakh people in India actively play golf. There are 196 registered golf courses and only about 0.8 percent of the potential target market of golfers actually play the game. The sector, however, faces significant challenges that it must overcome to grow. Mita Gowande (41), a professional golfer, says, "There are very few golfers who are looking to play the sport competitively; lack of infrastructure and access is one of the biggest reasons for this." She adds that in Mumbai there are no driving ranges to practise golf and not enough trainers available to those who are keen to learn the sport.
Holiday fetish One of the main challenges the sector faces is lack of space and the high cost affiliated to playing golf. An 18-hole golf course needs over 100 acres of land to build. It is often a challenge to find large spaces to build golf courses even if one wants to. Gowande cites an example. "Just becoming a member at the Bombay Presidency Golf Club (BPGC) in Mumbai costs someone `32 Photos Amit Kumar
lakh." This makes it tough to involve a larger number of people in the sport. This high cost, however, doesn’t deter Americans, Canadians and the British, followed by the Scandinavians (mainly Swedish) and Germans, who, KPMG found, are the biggest golf travelers in the world. The general trend of people traveling to different parts of the world to play golf at destinations that have good golf courses, are accessible and have a good golfing tradition is also picking up. KPMG found that golf tourism has grown significantly in 2011 after slowing down in 2008 and thereafter following the economic slowdown. While India doesn’t feature in the list of most preferred golf destinations yet, entrepreneurs in the space are trying to change that as well. Rishi Narain (50), who won an Asian Games gold medal in golf for the country in 1982 and also served as a national coach for a while, writes on his blog: “With 50 million golfers around the globe and Asia being the fastest growth area for the game, golf tourism is a multi-billion dollar industry and India, despite being a late entrant, could become a significant niche player in this market.” Aashish Vaishnava, a golf entrepreneur says there are a number of opportunities for startups in the sector. “Startups could open golf academies, provide golf coaching, coaches can get certified at the National Golf Academy of India and then offer training; there is also golf event management, a space that a few startups are actively exploring,” he says. Vaishnava adds that investments in corporate and professional golf are helping the sector. The 29-year-old feels that setting up retail houses to sell golf equipment will also have immense potential as with the popularity of the sport catching on, the demand for equipment and tools will only go up. Startups could also help with golf facility development as consultants. For those who don’t have expertise in golf but want to be associated with the sector, there is Photos Neha Mithbawkar
SPORTING TOURS: Mita Gowande and Arun Iyer
the opportunity to play the hospitality card. Some of the well-known ventures in the golfing space are Rishi Narain Golf Management and Touche Golf. A few golf startups spoke to Entrepreneur about their business:
Rishi Narain Golf Management Narain began his venture in 2004 after a stint at IMG Sports Marketing with startup capital of `5 lakh. His stint at IMG taught him the business aspect of sports. He began his venture by organizing golf tournaments and events. He tried to deliver maximum value to the brands that sponsored the events and the properties he built in the first few years of the business rode him in good stead later on. Some of the events he has organized include the $300,000
SAIL Open with the Asian Tour & the Professional Golf Tour of India, the India Golf Festival with about 450 players, and the $120,000 DLF Womens Indian Open 2008. About four years ago, Narain also began consulting real estate developers on how to build golf courses with the towers they were building. The company has designed and built three golf courses for Emaar MGF, Cambay Hotels and Resorts and M3M in different parts of the country. The firm is also consulting for other real estate companies like the Ansal group to build golf resorts. Narain is also a marketing partner for a golf course to help make it commercially sustainable. For the real estate developers, the company charges a fee of about 5-6
To read more, grab the July 2012 issue of Entrepreneur Intelligent Entrepreneur July 2012 117 To Subscribe, visit www.entrepreneurindia.in
BACK STAGE
THE ECONOMY OF FACEBOOKISTAN We analyze new revenue channels that can drive the economy of the world’s third-most populous country in this decade A NKUSH CHIBBER
GIRLS JOIN FREE. MEN PAY Well, it works in the club scene, doesn’t it? Make the girls join for free and let the men pay to join up. Because truly, why else do you men join Facebook if not to hook up with some pretty lasses? Not ‘networking’ for sure. CHARGE THE CARMAKERS If only we had a penny for every time some braggart bought a car and put its picture up to show off to the world and its third cousin. Charge the carmakers every time a numb nut shows off (spin it as promote) one of theirs. Problem solved. MAKE PARENTS PAY Our greatest fear…the parent who embarrasses the hell out of you in front of the entire world. Can we escape “who is that girl with you” questions or the daily aspiring quote? No, but Facebook can make it expensive to do so. PENALIZE BABY PICTURES We fear for the babies whose mothers are documenting each day, actually each second, of their lives on Facebook. How will they get through their teens is beyond us. Save them, Zuck! Charge those mommies! JUST BUILD A PHONE ALREADY Because that is the one thing keeping the complete Facebookization of humanity at bay, which will make us all wired, socially-inept nuts with zero IQ or social skills. Think Zombieland, but Zuckerberg in control.
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Illustration Chaitanya Dinesh Surpur