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27 June 2008 -
News Updates
Getting Indian railroads on track - TIME
Street banks run by homeless kids - LA Times
Lighting up rural India - Forbes
Reverse Imperialism - Forbes
Getting India's
Railroads On Track
27 June 2008, TIME magazine, By Simon
Robinson
Until the past few
years, Indian Railways (IR) itself was sunk in a languorous snore. The
state-owned company, the monopoly owner-operator of the country's rail
system, runs 12,000 trains a day over 39,000 miles (62,750 km) of routes,
making it the world's largest railroad under a single administration. It was
also notorious for being slow, inefficient and requiring constant government
bailouts. But over the past six years, India's most important form of
transport — "the lifeline of the nation" as it is often called — has
undergone a remarkable turnaround. In its fiscal year ending March 2007,
Indian Railways made more than $5 billion. Services are improving and rail
bosses have announced plans to spend billions on new rolling stock, faster
lines and new stations. Though it still gets government funding, IR is now
India's second most profitable state-owned company. "Earlier we were
dragging the economy down," says Sudhir Kumar, whose official title is
officer on special duty to the Railway Minister, and who has helped oversee
the revitalization. "Now we are leading the economy from the front."
The resurrection of
India's railroads was a three-step process that has been so successful it is
studied by visiting business students from places such as Harvard, Wharton
and INSEAD. The first step: speed things up — not the trains themselves but
the turnaround time between the end and beginning of each new trip. In 2001
the average time to unload, repair, refuel and reload a freight train in
India was 7.1 days. Now it is just five days, which means that 800 trains
leave on a new journey each day, rather than just 550. Given that an
additional trip can earn up to $15 million, the improvement made an
important contribution to IR's bottom line. IR also made sure each freight
locomotive carries more cars, hence more cargo. That brings in an extra $1.5
billion a year, according to Kumar, who compares the railroads under old
management practices to "a Jersey cow that we forgot to milk fully."
Finally, passenger
trains have also been increased in length. Until a few years ago a typical
train had about 15 carriages. IR officials discovered that a passenger-train
journey could earn a profit with 24 carriages, which became the target
length. By pushing the "quicker, heavier, longer" mantra, rail bosses have
also been able to improve services. For example, in 2006 IR began offering
special express trains on certain routes such as the run between New Delhi
and Agra, home of the Taj Mahal. Tourists making day trips to India's most
popular tourist attraction now can book online and sit in comfortable seats
during a trip that takes less than two hours instead of almost three. Even
on longer, slower trips the catering, which is now outsourced, has improved.
The man many people
credit with rail's comeback is Minister Lalu Prasad Yadav, a controversial
figure, as his term as Chief Minister of Bihar was characterized by
mismanagement and corruption. Yadav is certainly lucky that he's heading
Indian Railways during a period of tremendous growth in India. The company
is minting money hauling freight for mines thanks to the massive demand for
iron ore in China, to cite just one example. Contracts with mining firms are
now linked to the price of ore rather than "set in concrete like in the old
socialist fashion".
Hoping to grab more of
the long-haul freight business lost to truckers in recent years, rail bosses
plan to borrow at least $15 billion to build a dedicated fast-freight
corridor between Mumbai, New Delhi and Kolkata. They also have big plans for
some of the 1 million acres (420,000 hectares) of land that IR owns along
rail lines and around stations and shunt yards. Real estate developers are
currently bidding to overhaul the first of 16 major stations. At New Delhi's
central station, which is likely worth billions of dollars, developers plan
hotels, wireless Internet services and food courts.
Still, IR has miles to
go before it can be called a first-class operation. Train travel in India
remains infuriatingly slow for the 18 million Indians riding a train on any
given day. A 1,378-mile (2,217 km) trip from New Delhi to Goa just before
Christmas, for instance, took me 35 hours, almost a day longer than a train
trip over a similar distance in Europe would take. Because of a lack of
equipment and tiny station platforms, freight is sometimes thrown from
trains in heaps. The heavier loading, critics charge, has caused more
breakdowns. Older carriages can be dirty, shabby and full of cockroaches —
and that's in upper class.
"Railways were in a
denial mode, living on past glories from when we were a natural monopoly,"
Kumar says. "Now we have to compete — and we are."
Street banks run by
India's homeless kids
15 June 2008, Los Angeles Times, By Henry Chu
The bank manager's
tone was crisp and efficient. "Name?" he asked.
"Amit," came the reply
from beneath a grimy white baseball cap.
"Father's name?" asked
the manager, 14 years old and all business.
"Sanjay," said the
customer, 13.
With his identity thus
established, Amit Kumar Tripathi withdrew 330 rupees, or about $8.25, from
his savings account, which Ajay Singh Choudhury, the skinny manager, fished
out of a drawer, handed over in a wad of rumpled notes and dutifully
recorded in a ledger almost as big as his torso. Then it was on to the next
boy in line at one of the more unusual financial institutions in
India's
capital.
Run almost entirely by
and for street children, the bare-bones bank sponsored by a local charity
offers youngsters a safe place to stash the bits of money they earn picking
through trash for recyclables, hawking magazines and fruit at intersections,
or busing tables at wedding banquets.
India
has the
world's largest population of street children, conservatively estimated at
10 million. Their lives are far removed from the country's growing image as
an economic juggernaut powered by software engineers and ornamented with
Bollywood babes. Theirs is a parallel world of where adolescent angst is
about whether another meal comes your way or whether you can sleep through
the night, unmolested, on a hard patch of pavement.
In New Delhi alone,
more than 100,000 youngsters live on the streets. Many remain with their
poverty-stricken families, but thousands do not. A large number cluster
around the city's main railway stations - heavily trafficked areas where
they can sell their wares and where passengers leave behind detritus they
can pick through.
Boys scooting between
train tracks, darting in and out of newly empty railway carriages, are a
common sight. Many are harassed or beaten by police, or sexually abused by
predatory adults. A fair number resort to sniffing glue. Some beg, others
steal. Many of these "railway children" are runaways who have come to the
Delhi metropolis to escape abusive households or the monotony of life in the
countryside.
Rohit Kumar Prasad, a
sweet-faced 13-year-old who wears a silver talisman of the monkey god
Hanuman around his neck, said he fled nearly two years ago from his home in
the impoverished state of Bihar, in eastern
India, because his father beat him. He now
spends three to four hours a day hawking slices of fresh coconut at the main
Delhi railway station, in the crowded precincts of the Old City. He can make
about 100 rupees, or $2.50, a day; as an occasional treat he will spend some
of it on a plate of his favorite food, chicken and rice. Slender and small
for his age, Rohit harbors aspirations of becoming a doctor. "I want to look
after poor people and their children," he says.
He sleeps in a shelter
for boys run by a local charity called Butterflies. To help the street kids
plan for a less bleak future, the charity set up its Children's Development
Bank in 2001, a way for the youngsters to learn lessons about money and the
habit saving that for most, their parents aren't around to teach.
About 2,000 children
have accounts at 12 "branches" around Delhi, in shelters or at sites where
the charity runs classes and other activities for homeless youths. Adult
staff members are always present to ensure the safety of the kids and to
collect the takings at the end of each day, depositing the cash at regular
intervals in a dedicated account at one of
India's
private banks.
But in most respects,
it's the children who run the show and set the rules. At each branch, the
account holders, who range in age from 9 to 18, elect two volunteer managers
from among themselves every six months. The youngsters decided that the bank
should do its best not to allow deposits of money made from stealing or
selling drugs and pornography.
The branch inside the
shelter near the main train station is in a corner, looking more like a
lemonade stand than a house of finance. But the long box full of passbooks,
and the earnest expressions of the young managers who staff the branch for
an hour each evening, speak to a serious purpose.
"The children are able
to deposit and save money. If they keep the money on them, it'll get stolen,
or they'll blow it or get addicted to drugs," said one of the two current
managers, 14-year-old Ajay. (Rohit is the other.) Tired of school, Ajay ran
away from the mountainous state of Uttaranchal and washed up in Delhi a year
and a half ago.
He likes the status
and responsibility that come with being manager, although it cost him once,
when he paid out 20 rupees, about 50 cents, too much to a boy making a
withdrawal on a hectic day and had to make up the shortfall with money out
of his own pocket.
Sanjay Kumar, a
serious 13-year-old with his hair carefully combed and his shirt tucked in
pants that looked a size too big, joined the queue of jostling and
roughhousing bank customers one recent evening. He handed over all of the
150 rupees, about $3.75, he had earned that day from serving drinks and
washing glasses at a party, carefully checking his passbook to make sure the
deposit had been credited. He opened his account 2 1/2 years ago. It now
bulges with 3,600 rupees, about $90, and has earned him interest of about 90
rupees, or $2.25 - an enviable sum by the standards of children living rough
and an incentive to keep saving.
"I want to do
something when I'm older," Sanjay said. "I want to open up a teashop." Once
he reaches 15, he can apply for a loan. The bank lets older youngsters
borrow money to start businesses or continue their schooling.
Amit, the boy in the
baseball cap, needed to tap into his savings for a train ticket back to his
village in Uttar Pradesh state because his father was laid up with a broken
leg. But at the same time that he withdrew 330 rupees from his savings, the
scrappy-looking youth thoughtfully deposited 20 rupees into his separate
current account. "What little I have I put here," Amit said. "I'm saving up
because I want to get educated. This money will go to good use."
Lighting Up
rural
India
16 June 2008,
Forbes magazine,
By Kerry A. Dolan
Some 1.6 billion
people around the world live without access to regular electricity. A
start-up company founded by some ambitious recent graduates of Stanford
Business School aims to ease that problem--and make a profit at the same
time. The company, d.light design based in New Delhi, India, has developed a
trio of lights created for a market it calls the "base of the
pyramid"--including people who live on the equivalent of $1 a day. Its
portable Nova light, which it is debuting on Monday, has a high-powered LED
that d.light claims can run for 40 hours on a full charge. It comes with a
solar panel, so recharging costs nothing. The Nova also works on an AC
charger. D.light plans to sell the light for $15 to $30; the higher price
includes both the solar charging panel and the AC charger.
Many people in India
and Africa without electricity currently use kerosene lanterns as a light
source. But kerosene emits unhealthy fumes, is an extremely dim light and
far too often ends up burning people or homes in accidents. "People leave
the kerosene lantern on low all night long as a kind of night light, and
they wake up and cough black soot," explains d.light design President Ned
Tozun. "Our mission is to eradicate the use of kerosene."
This isn't the only
project to try to bring alternative power to rural India. Since 2003, the
nonprofit Light Up The World Foundation has provided some 110 homes in
villages in India with pedal generators and diesel generators. It's also
been testing programs to bring solid-state lightning to villages in a number
of Asian countries. Local projects in India have also tried to introduce
solar energy.
But d.light has a
special emphasis on redesigning solar--and trying to eliminate kerosene.
Replacing kerosene with the portable LED lights offers an array of benefits,
Tozun says: reduced air pollution, improved studying conditions for
children, saved lives from fewer kerosene accidents, reduced spending by
poor families on kerosene and potentially higher income because people (a
tailor, for instance) can work at night with a better light source.
Tozun and two Stanford
classmates, Sam Goldman and Xianyi Wu, have raised $1.6 million in
convertible notes from venture capital firms Draper Fisher Jurvetson, Garage
Technology Ventures, Nexus India Capital and Indian firm, Mahindra and
Mahindra. These funds were enough to come up with several prototypes and
take them for field testing in India.
"This is a scrappy
team with a unique idea and the potential to become huge," says Bill
Reichert, managing director at Garage Technology Ventures. Reichert says he
became convinced it wasn't venture philanthropy--and so became interested in
investing--when Tozun made it clear that the d.light founders believed they
could only have a big impact with a sustainable, profitable company. "If you
want to light up the world, you've got to offer a solution that fits the
needs of the people you're selling to," says Reichert. Other companies such
as SELCO India also sell solar lights. The market is big enough for plenty
of competitors.
Tozun was inspired by
a class he took at the Stanford Design School called "Design for Extreme
Affordability." The class was full, but Tozun kept showing up anyway.
Eventually, the professor let him join the class, which stressed rapid
development of prototypes.
Tozun took that lesson
to heart. The d.light team created three prototype lights in only nine
months. In addition to the Nova, the company is launching a stripped down
version, the Comet, with an LED that shines for seven hours on a full
charge. It also comes with a solar charger and will sell for $8 to $16,
depending on the country where it is purchased. (Customs duties are the main
variable.)
A third light, the
Vega, is a compact fluorescent designed for families who live in areas where
electricity is sporadic. The Vega can replace candles or kerosene lanterns
and will sell for $10 to $16. Even at $8 or $10, the Comet will be
unaffordable to many in the market that d.light is targeting. "We know we
need lower-priced products and new ways to finance purchases," says Tozun.
To keep manufacturing costs low, Tozun is overseeing the contract
manufacturing in Shenzen, China.
And d.light has also
partnered with a nonprofit group in India called REDs, which plans to sell
one version of the LED lights for just $1 apiece to Dalit families in the
state of Karnataka. Donations will cover the remaining cost of the lights.
If all goes as
planned, safe, solar-powered lighting will be the first of many products
Tozun and his co-founders envision selling to the bottom of the pyramid. Up
next: solar-powered mobile phone chargers.
A Case Of Reverse
Imperialism
6 June 2008, Forbes
magazine,
By Benjamin Willson
Though still labeled
an emerging market, one could argue that the Indian economy has already
emerged. According to Forbes' list of international billionaires, four of
the top 10 are Indian. And with an annualized five-year total return of
42.2%, Forbes ranked India second after Brazil in its assessment of the
growth of the world's largest public companies. The U.K., with a growth
percentage of 17.1%, and the U.S., with 11.1%, occupy two of the last three
spots on that list. The balance of power is starting to shift.
This discrepancy is
understandable given the context; it is more difficult for established
companies in the U.S. and U.K. to grow as quickly as those expanding from
nothing, as is the case for start-up companies in India. Nevertheless, these
figures highlight an important trend. As the Indian economy continues to
spread its wings, its companies are turning to new international markets.
Could this be the
beginning of a reverse imperialism? During the 18th century, the British
first annexed and then colonized India, seeking to exploit the
subcontinent's vast natural resources and to expand trade. Tea became an
important commodity and came to symbolize British colonial rule.
How times have
changed. In 2000, Tata Tea--a member of India's Tata Group conglomerate of
27 publicly listed companies--bought Tetley, the UK's largest tea company.
Tata Tea now represents the second largest tea manufacturer in the world by
volume, surpassed only by London- and Rotterdam-based Unilever.
What is driving
India's expansion? "Unlike China where companies are state- and
government-led, in India, it is people's own money," says Tarun Khanna, a
professor at Harvard Business School and author of
Billions of Entrepreneurs: How China and
India Are Reshaping Their Futures and Yours.
In March, another
subsidiary of the Tata Group, Tata Motors, acquired Jaguar and Land Rover
from Ford Motor for $2.3 billion. It's another example of originally-British
brands being scooped up by an old colonial friend. While the two brands will
continue to follow their own business plans, Tata Motors hopes they will
boost the company's ability to be a "meaningful player in the global
market," says Debasis Ray, head of corporate communications at Tata Motors.
The company recently unveiled its Nano model in New Delhi. Touted as "the
people's car," the small four-seater with a price tag of $2,500 is said to
be the least expensive car in the world.
The monetary muscle
behind the quest for new horizons is fuelled by a cheap domestic labor
market and Indian companies' high price-to-earnings ratios, according to
Khanna. Smaller Indian companies can more easily collaborate with bigger
counterparts in other markets--even those in other former colonies.
The shared colonial
past, actually, is an advantage. The British Empire, Khanna believes,
created a legacy whose repercussions are felt in India and in Africa's
eastern and southern regions. "Imperialism is laying the seeds of global
chess, with Indian companies naturally capitalizing on their shared
history," he says. Perhaps other nations should prepare for a new breed of
imperialism. This time, we will be pouring the tea.
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