Making a Clean Sweep of a 'Dirty' Business in India
A new kind of "dirty" business is becoming the latest frontier in the bottom-of-the-pyramid market in India, with a number of start-ups seeing a huge opportunity in building and maintaining toilets as more than 600 million Indians still defecate in the open, according to the World Health Organization.
Bindeshwar Pathak, who launched India`s first paid toilet way back in 1974 told CNBC that there were just not enough toilets in a country of a billion people.
"You need private companies to take on the mantle and there is money to be made here," said Pathak whose non-profit organization Sulabh International runs 8,000 toilets in 23 states in India, of which 5,000 are profit-making paid toilets that subsidize the others in the network.
Pathak thinks it is a viable business given the huge demand-supply gap in this sector. For example, almost 50 percent of all households in India lack toilet facilities, according to latest Indian Census figures. Now contrast this with another fact: more than 60 percent of households have a telephone connection, of which 52 percent have mobile phones.
This anomaly has caught the attention of a few entrepreneurs who are smelling cash in the toilet business. When entrepreneur Rajeev Kher started his portable toilet business Saraplast in 1999 he faced not just social ridicule from family and friends but also from banks, financiers and potential recruits. "I had no products to show, collateral to give or proven financial model to argue the case for the toilet business," he told CNBC.
It did not help either that traditionally the work of cleaning toilets in India has been culturally and socially considered the lowest form of menial labor. But Kher remained undaunted, initially sourcing demo portable toilets from Germany for free and touring the country on a pick-up truck to showcase them personally to potential customers.
The persistence paid off. After 14 years, his company has a country-wide network of 3,000 `3S Shramik` brand of toilets with 250 maintenance staff. The company had a turnover of 135 million rupees (USD 2.5 million) in 2012.
Early Mover Advantage
Delhi-based Dipesh Bhutani spotted the opportunity in portable toilets as early as 1996 when he noticed the difficulty faced by family members while shopping or attending an outdoor wedding or religious ceremony. "If this was the situation in the capital of India, I could sense that portable toilets would work and make money," said Bhutani. Today his portable toilet business under the brand `Super Loo" are available in 12 Indian cities and range from single commodes to air-conditioned toilet vans.
According to Business Innovation Facility (BIF) an international facilitator of social enterprise, in urban Indian slums alone, an estimated 75 million people have no access to individual or shared toilets. This puts the immediate demand in 2013 for urban slum toilets at 1 million seats based on a ratio of 80 per seat.