First published by Money Spent Well by Conor Brennan Burke
India’s ongoing growth has had a dramatic impact on the nation. Since economics reforms were passed in 1991, ending decades of low growth, India’s per capita income has risen by almost 400%, with more than 300 million Indians joining the middle class. The nation’s poverty rate has decreased from 50% in 1990, on track to reach 22% by 2015. Eight Indian companies have joined the Fortune 500 list, and the country is now the world’s fourth largest economy.
However, many citizens of India, especially in rural areas, have been left behind by this growth. Despite being the world’s sixth largest consumer of electricity, 25% of India’s population are still left without access to electricity, primarily in rural areas. 97 million Indians lack access to clean water. A huge segment of the population is not involved with the formal economy with less than 40% of Indians having some form of meaningful employment. While India’s growth has had an enormous beneficial impact, the basic amenities enjoyed in Indian cities have yet to spread to many rural areas, where over 65% of the population lives.
In the north of India, a company called Boond has created a business model that may hold promise for much of rural India. Boond sells products to improve the lives of rural Indians. These include solar lighting options, water purification products, as well as items for pest control. With these products, Boond hopes to improve life in rural India. The company’s name (meaning “a drop”), comes from the Hindi phrase “Boond boond se sagar bharta hai” which loosely translates as “Drop by drop, you can fill the ocean”. Boond’s model aims to create change, one village at a time.
These products are available for purchase in many Indian cities, but there are many barriers for rural Indians. Traveling the distance for purchasing and servicing the products is inconvenient, and few can afford the expensive up-front costs for products. However, Boond solves these problems by bringing the market to villages: constructing distribution centers in villages and employing locals as sales representatives (paid through commissions on sales) for their village. Boond also trains local people to service the products, and offers full service post-sale for each product they sell. Boond also gives financing options to villagers, allowing them to buy on credit and purchase at relatively low rates of Rs. 200-300 ($3-5) per month.
Boond’s model is a unique, hybrid model with for-profit and non-profit branches that operate in parallel. The non-profit branch is the Boond Foundation. While Boond sells the products, the Boond Foundation provides market research, job training and community outreach. This keep margins high for Boond, and allows Boond Foundation to receive grant funding.
Boond was founded by Rustam Sengupta, an Indian native with global experience. Rustam received an MBA from INSEAD in France, and has worked across the globe. From being a consultant for Deloitte in the United States to working at Standard Chartered bank in Singapore, Rustam found considerable success in the corporate world. However, after visiting the poor villages of West Bengal in northern India in 2009, Rustam began to feel a need to solve the problems in India. The initial idea came from a project he had done at INSEAD, a business to be called “Singlepoint,” which would be a single place to give Indians access to all the services they needed in their daily lives. These would include travel, healthcare, social and domestic services. After quitting his finance job in Singapore, Rustam began to develop Singepoint from a London office, before finally returning to India to implement his plan there. However, the focus had migrated to serve the needs of poor rural Indians who had few or no other options.
Boond was soon founded, with Rustam fronting the initial Rs. 700,000 ($11,200) in personal savings. Since then, the company has shown huge growth. Boond is currently valued at Rs. 100 million (US$1.59 million), and had revenue of Rs. 12 million (US$200,000) from April to December 2013. The company is currently seeking Rs. 25 million (US$400,000) in equity investment to add to its existing Rs. 4 million in seed funding. With sufficient capital, the company expects to break-even between August and October 2014.
The company has impacted 50,000 people thus far, and has provided power to over 6000 homes through its solar energy sales. It has engaged in community outreach, helping to finance fishermen in West Bengal and a school in Manipur, as well as projects to support women’s health. Boond also has created a service for individuals to sponsor villagers, and pay for lighting kits and water purification for those who can’t afford it. The company has attracted interest and publicity as a finalist in the Unreasonable Institute business incubator, the Economic Times Power of Ideas award, and a finalist in the Artha Venture Challenge.
There are however considerable challenges that Boond must still overcome. Working with rural areas has inherent difficulties, among them the lack of infrastructure such as poor road quality, which delays product deliveries and increases costs. Other areas, especially in the north, where the government has limited control and influence, have security concerns. Implementation of the business model, even with a large target population of poor residents, can be difficult in such circumstances. However, Boond is beginning to solve significant development problems that the government of India has struggled with since independence. If bringing change to poor villagers was easy, Boond wouldn’t need to sell them solar lights today.