Through energy hubs, local entrepreneurs, consumer finance and products that are relevant, Boond looks at electrifying India’s dark villages once and for all.
Energy access solutions are not new in India. Delivering to rural customers through a consolidated solution based approach is where the innovation lies, says Rustam Sengupta. The founder and CEO at Boond talks about bringing affordable renewable energy products to the BOP market across the 80,000 villages that still remain non-electrified.
“I took a life-changing trip to India in 2007, as part of my ‘building social companies’ course at INSEAD. I witnessed the basic living conditions of the rural poor on home soil and devised a practical and realistic solution to tackle the obvious lack of electrification solutions,” says Rustam Sengupta, an INSEAD Singapore alum. Sengupta wanted to take usable and quality products to the rural masses at a price point and service level that they would appreciate. And he knew that this would involve working on the whole chain and setting up all the critical linkages to bring relevant products.
While at business school, he and a few friends devised a model that won much appreciation and validation. However, it was not until a few years later that, having enjoyed a prolific career across different locations in the world, Sengupta decided that the draw to India was too strong to ignore. “I knew right away that I would have to apply every bit of business school learning to create a robust and scalable solution to address the needs of the population I was targeting. In 2010, the idea became a real adventure in the form of Boond.”
Central Idea: better solar for rural India
Even with increased awareness, there is a huge barrier to adopting solar products among rural markets. Affordability is a key question as the initial cost of purchase and installation is expensive. Added to these two issues is just poor product design and negligent post sales support service. “These three inefficiencies offered us an opportunity to innovate. Boond’s solution to these problems of awareness and affordability, is through the development of locally managed distribution centres and agents who sell these items on credit. We ensure that products match the needs of the community through rural feedback based product design and a commission based peer to peer sales model.”
“Our speciality in energy access lies in service and logistics support and managing affordability. We believe clean energy products and services need creative mechanisms for financing, service support and awareness in order to be sustainable enterprises. Public and private partnerships along with inclusive business models are the potential solutions,” says Sengupta.
To fix the product design and affordability issue, Sengupta and his team took time in the villages to understand the context and purchase patterns. “We discovered that rural customers wanted all the same things a regular urban consumer would want.”
Boond today opens distribution centres in remote rural areas and trains local youth to sell and service renewable energy products, thereby also providing them forms of sustainable livelihood. They have an active product design feedback methodology. Some products are bundled together (as the Boond Development Kit) to reduce logistical and transportation overheads.
Boond has, in the past two and a half years, already set up three energy centres (servicing units) and sold over 6,000 products impacting the lives of over 50,000 people.
Boond partners with Seva Mandir in Udaipur on loans and gets financial support from Baroda Rajasthan Kshetriya Gramin Bank. The enterprise is actively mentored by SELCO’s Harish Hande. “With 20 motivated employees, we do what we do. As a business, we did about Rs. 54 lakhs in 2012-2013 and are projected to cross Rs. 1.5 Crore this year,” says Sengupta.
Reality Check: solution, not product
“Our assumption to lead with a product instead of a solution led to our first big reality check. Educated in the West, we thought the product was the solution. We had this weird shaped lantern, that we wouldn’t use in our own houses, but I want a poor person to buy it? None of this has really been tested before. Today’s better designed lanterns were paid for by these poor people – they covered the research cost. That was a pretty bad approach, because the better solar lantern designs that are accessible to the upwardly mobile segments, started off as bad designs tested on the poorest sections of society.”
Sengupta and his team worked most on iterating over the product designs and testing them before trying to sell it to rural markets. They realised that rural homes had very similar lighting and electrification needs as an average household in a city and this drove the product and distribution strategy.
Secret Sauce: persisting at building inclusive business models
“Our team at Boond has developed an eye for looking at market challenges in rural areas and creating an inclusive, sustainable and demand-based solution. We have been consistent and creative at this and believe in allowing business approaches and decisions to be shaped by on-ground insights rather than centralized thinking at the top.” Sengupta believes that initial players like them have to have the perseverance and patience to stick to a business model in this space and ultimately create the critical mass, breaking through innovation and adoption barriers. The end results is an expansion of markets for everyone to enter – increased consumption and sophistication in technology.
“The guy in the village home wants some basic things; keeping his kids safe from kerosene related injuries, lighting his home sufficiently and saving on diesel expenses are his key priorities. Keeping this basic tenet in mind is core to our business solution. We plan to expand to 20 energy hubs (from 4 at present) in the next two years in the States of Maharashtra, Uttar Pradesh and Madhya Pradesh.”
The Alternative is an online media publication focused on sustainable living and social impact.