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Commercial Re-use in Bengaluru
Elisabeth Kvarnström, Joep Verhagen, Vishwanath, Karan
Singh, and Subha Ramachandran
Sanitation Service in Bengaluru

    - 36.7% of properties connected to
      sewerage network

    - 55% of the waste water gets treated

    - STPs work at one of third of their
2
      capacity Title
          Presentation
What about the remaining 60% of the population?




3                      Presentation Title
“Waste is a resource in the wrong place”
               Mahatma Gandhi




4                 Presentation Title
Farmers know this for a very long time


Policy makers, administrators, sanitation specialists don’t
Key Actvities                            Customer Relations
                                                                     Customer Value
                   Key Partners                                                                             Customers
                                                                       Proposion
                                                                                      Distribution/Marke
                                            Key Resources
                                                                                         ting Channels

                                           Costs                                            Revenue Model


                A new topic, a bit sensitive, small explorative case study that brought
                more questions than answers




Figure Business model building blocks (Osterwalder, A. and Pigneur, Y. (2010)
Two Markets




    Primary Market                        Secondary Market




7                    Presentation Title
Originally 9 building block

Key partners                     Customer       Customer
                Key activities                                 Customers
                                    value        relations
                                 proposition
                                               Distribution/
                Key resources                  Marketing
                                                 channel

                Costs                          Revenue model
Cell phones                    Households
      Enabling on-site
                                       Provide services
               Business Model Structure
      sanitation for
                                       at when needed
      customers
                                       and doing a neat
                                       job
    E&E
                                  Customer       Customer
                 Key activities                                 Customers
                                     value       relations
Trucks, driv                      proposition
ers, networ                                     Distribution/
ks and           Key resources                   Marketing
networks?                                         channel

                 Costs                          Revenue model   Farmers
                             Providing nutrients to
                             agriculture at low cost
• Profitable but varying profitability
                                              Person-to- More long-term
• Cost for legal dumping => revenue           person
for emptying on farmland                                 business
                                                         relation, trust
•
Some key findings

     • Over 100,000 houses are estimated to be currently served.
       Households pay between INR 800 and 1,400 for emptying

     • The honey suckers run a mostly small and profitable but somewhat
       illegal business.

     • Farmers save costs (€ 130 and 3,000 annually), their crops are fine
       and consumers don’t know.

     • One farmer started selling dried sludge to other famers.

     • The practice is not safe but risks depend on the kind of crop, the
       time the sludge is left in the crop, and the way it is applied.



10                                 Presentation Title
Business Model
Institutional                    Technology and
environment                      environment
The regulatory framework


• Somehow it has escaped policy makers that people do not stop
  using a toilet if they don’t have a sewerage network.

• The framework is weak and unclear and not enforced unless it
  happens to suit someone’s interest.

• Dumping is not allowed but still happens.

• Current practices will continue and grow but economies of scale are
  hampered.
Thank you




     Credits
     • Pictures by Vishwanath
     • Data collection by Vishwanath, Karan Singh, and Subha Ramachandran
     • Research design, case study by Elisabeth Kvarnström, Math Nilsson and
        Joep Verhagen
     • Financial support: IRC and IWMI


13                                  Presentation Title

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Commercial productive use of faecal sludge in Bengaluru

  • 1. Commercial Re-use in Bengaluru Elisabeth Kvarnström, Joep Verhagen, Vishwanath, Karan Singh, and Subha Ramachandran
  • 2. Sanitation Service in Bengaluru - 36.7% of properties connected to sewerage network - 55% of the waste water gets treated - STPs work at one of third of their 2 capacity Title Presentation
  • 3. What about the remaining 60% of the population? 3 Presentation Title
  • 4. “Waste is a resource in the wrong place” Mahatma Gandhi 4 Presentation Title
  • 5. Farmers know this for a very long time Policy makers, administrators, sanitation specialists don’t
  • 6. Key Actvities Customer Relations Customer Value Key Partners Customers Proposion Distribution/Marke Key Resources ting Channels Costs Revenue Model A new topic, a bit sensitive, small explorative case study that brought more questions than answers Figure Business model building blocks (Osterwalder, A. and Pigneur, Y. (2010)
  • 7. Two Markets Primary Market Secondary Market 7 Presentation Title
  • 8. Originally 9 building block Key partners Customer Customer Key activities Customers value relations proposition Distribution/ Key resources Marketing channel Costs Revenue model
  • 9. Cell phones Households Enabling on-site Provide services Business Model Structure sanitation for at when needed customers and doing a neat job E&E Customer Customer Key activities Customers value relations Trucks, driv proposition ers, networ Distribution/ ks and Key resources Marketing networks? channel Costs Revenue model Farmers Providing nutrients to agriculture at low cost • Profitable but varying profitability Person-to- More long-term • Cost for legal dumping => revenue person for emptying on farmland business relation, trust •
  • 10. Some key findings • Over 100,000 houses are estimated to be currently served. Households pay between INR 800 and 1,400 for emptying • The honey suckers run a mostly small and profitable but somewhat illegal business. • Farmers save costs (€ 130 and 3,000 annually), their crops are fine and consumers don’t know. • One farmer started selling dried sludge to other famers. • The practice is not safe but risks depend on the kind of crop, the time the sludge is left in the crop, and the way it is applied. 10 Presentation Title
  • 11. Business Model Institutional Technology and environment environment
  • 12. The regulatory framework • Somehow it has escaped policy makers that people do not stop using a toilet if they don’t have a sewerage network. • The framework is weak and unclear and not enforced unless it happens to suit someone’s interest. • Dumping is not allowed but still happens. • Current practices will continue and grow but economies of scale are hampered.
  • 13. Thank you Credits • Pictures by Vishwanath • Data collection by Vishwanath, Karan Singh, and Subha Ramachandran • Research design, case study by Elisabeth Kvarnström, Math Nilsson and Joep Verhagen • Financial support: IRC and IWMI 13 Presentation Title

Editor's Notes

  1. Key partnerships - activities that are for example outsourced and/or acquired outside the enterprise. For example, A mobile phone manufacturer may choose to have a strategic alliance with a operating system developer. In our case it could be that the ”honey suckers” shared some facilities, e.g. garage or lorry maintenance with some other transport company. In the long run one could think of partnerships between the honeysuckers and the builders of latrines to develop smart solutions. But we have not found anything in this area in our pilot study and thus we leave it for now.Customers – For whom are this entity, the honey suckers, creating value? Who are the most important customers?In a sense the honeysuckers serve a geographical segment but it is a mass market within the geographical area. The customers who want their latrines emptied broadly face the same needs and problems. However, this business also could and in some instances do, face a second set of customers, the farmers. Thus we can talk about a multisided business model . The market for emptying latrines actually creates the possible markets for nutrition in agriculture. When the business advances to this phase, it in a sense is facilitating the ”interaction” between households and farmers. For our purposes we can talk about the emptying of latrines as the primary market and the farmers as the secondary market
  2. Key partnerships - activities that are for example outsourced and/or acquired outside the enterprise. For example, A mobile phone manufacturer may choose to have a strategic alliance with a operating system developer. In our case it could be that the ”honey suckers” shared some facilities, e.g. garage or lorry maintenance with some other transport company. In the long run one could think of partnerships between the honeysuckers and the builders of latrines to develop smart solutions. But we have not found anything in this area in our pilot study and thus we leave it for now.Customers – For whom are this entity, the honey suckers, creating value? Who are the most important customers?In a sense the honeysuckers serve a geographical segment but it is a mass market within the geographical area. The customers who want their latrines emptied broadly face the same needs and problems. However, this business also could and in some instances do, face a second set of customers, the farmers. Thus we can talk about a multisided business model . The market for emptying latrines actually creates the possible markets for nutrition in agriculture. When the business advances to this phase, it in a sense is facilitating the ”interaction” between households and farmers. For our purposes we can talk about the emptying of latrines as the primary market and the farmers as the secondary marketCustomer Value proposition, the CVP – What value do the enterprise deliver to the customer? Which one of our customers problem are we helping to solve? Which customer needs are we satisfying? Well, in the primary market our customers want cleanliness and working latrines. In the secondary market the farmers want nutrition. In a general sense when we talk about CVPs we can talk about the value creation as quantitative (price, speed of delivery) or qualitative (design, customer experience). This is more or less an infrastructure service so some focus on the quantitative values seems not to be unwarranted. However, for the long run (very long run?) a continued service in a developing and increasingly richer community may put increased emphasis on the cleanliness of the operation, design or perceived cleanliness of trucks, appearance of the drivers/personnel etc. however, we do not see this in the near future. Rather price, convenience and swift service seems to be key values for the customers.Channels – Through which channels do our customer segments want to be reached? How are they reached? It seems that the main channel now are posters => mobile phones. This seems to be how the Households reach the honey suckers. The other channel, i.e. to the secondary market seems to go through the drivers. In their strife to find somewhere to empty the lorries the farmers may be targeted. We have some evidence of farmers paying for the load but it is unclear if it goes into the business or if it is part of the drivers earnings. The channel and how the farmers are really reached could be of interest if we want increased interaction. One of the obstacles to getting this interaction really working is the obstacle of having these markets outside of the legal framework. If that is the case???Customer relations – What kind of customer relations does each customer expect to be established and maintained? Well, the households only expect to get their latrines emptied on a need basis. If this basic need is fulfilled to a ”reasonable” price and with good speed of delivery of the service, it is in a first step hard to speculate about more development of the business of emptying latrines. In a future world, with honeysucking as the main source of sewage infrastructure, LEGALLY, we could of course speculate of developed services as building ”smart latrines” i.e. latrines that accommodates handling of the waste and protect that environment yet fits housing etc, offering ”maintenance” of latrines etc. However, at this stage this seems more visionary than mapping what is really going on. However, with the farming communiy we expect more relationship marketing with at least implicit contracts for delivery. This customer base could be enlargened by activities to inform farmers of how to create a sound nutritional product without harmful consequences (sickness, etc). However, this would probably be easier if a simple legal framework supported this by making it legal so that contracts could be enforced, simple monitoring possible etc.The revenue stream – The revenue stream is a simple P*Emptying. However, the farmers do in some occasions pay the drivers to access the waste. It is not clear to us in reality what kind of money we are talking about and if the honey sucking enterprise as such gets any of these revenues. Again, in a better legal framework we could expect the honeysucking entities to be able to make money on services surrounding the latrine activities as they would build tacit knowledge on the pros and cons of different solutions. However, that is again just an visionary discussion point. To some extent we believe that prices are fixed but there may be instances of dynamic pricing i.e. bargaining. However, since the market is ”below the radar” it is hard to know how much bargaining power each party really have. Our small survey of the customers indicate that the customers feel the get value for the money.Key resources – What key resources do our CVP require? Oour distribution channels? Customer relations?Well, there is no doubt that the fleet of lorries are crucial. And the drivers to operate these. Seemingly, a network of farmers willing to accept the ”waste to become nutrition” should be considered an asset. However, this seems to be highly dependent on the drivers??? However, and whcih we really haven’t been investigating but think is of interest for further investigation is how these enterprises are financed and how the financial possibilities may be an obstacle to growth. As extralegal services often are outside the ”normal” financing system we can expect there to be some ”premium” on the financial resources used which means that this market would grow to slowly jsut because the property or capital (for example fleet of lorries) are growing to slowly. Key activities – Emptying latrines, emptying lorries. One key activity is/could be the relationshipbuilding with farmersCost structure – The fixed costs for the lorries is an important cost. And the salaries to the drivers. However the costs for being extralegal is hard to perceive. We see some bribes. We are not clear of whcih licence permitting costs ought to be there and which are currently absent. We do not know the costs in time and efforts that are due to the fact that they operate in a legal uncertainty. However we can make an educated guess that infrastructure services like this should operate under scale economies and none of the operators identified by us was really large. This may also be caused by the financing issue briefly mentioned earlier.Numbers: Cost:Revenues, varying from 1:1.2, to 1:4. In per truck 1 million Rs (15000 euros), running costs per truck 500000 rupees (7500 euros), HIGHLY varying. Without capital costs. Profiting business.
  3. The business model we have mapped is in all simplicity mostly affected by the real demand for the services. We can work more with the identified customer groups, and to some extent increase the already existing value creation. However, It is the legal environment, the the tecnology and the institutional setting that may offer the larger bang for the bucks. For example, a legalized may be able to contract with some lorry rentals, market and develop services differently and more openly reach out to the agricultural community. A legal business can also act as if the business entity is recognized as valuable property and some financing issues may become simpler. A recognized market may also develop technology as investment horizons can be longer.Grow slowly due to extralegal statusNo control due to non-recognition institutionallyQualitative CVP can be an interesting point in future for business development (quality control etc, supported by interview with consumers where more than half were willing to pay 50% if that would make sure that the FS went somewhere env sustainable)Utility as viable way forward