The Real Gap:
After doing some research of the sanitation space in India, I realised that there was a huge demand for toilets in India but there were many hurdles in fulfilling them. If households were prepared to build toilets, the first hurdle was finance for toilet construction. In cases where households were able to bring in amounts for construction at any interest rates, the next problem was in getting quality building materials at affordable rates and the third hurdle is in getting good masons to construct quality toilets.
We had taken up some construction work and it was during that time that we realised that there was a need to scale up as the demand was huge and there was a need to have sustainable solutions by way of ensuring the quality of the toilets. We realised that there was a conspicuous absence of market aggregation at the grass root level that would result in reduction of costs. We then decided to act as market aggregators by negotiating affordable rates with cement, steel rod, cement ring, pan, door, and plumbing & electrical materials manufacturers.
Fortunately we struck a deal with a company for building 34 toilets through their CSR funds in four districts. We had a chance to build one government school toilet (6x1), one government aided- school toilet (6X1) and one community toilet complex (6x1) in the rural areas and the rest of the 16 were individual household toilets in four districts in Tamilnadu. We realised that when we take up such small orders we were not able to negotiate affordable rates with local cement and steel distributors/retailers.
What we want to do:
Through Ashwatham we got involved in demand creation at the community level, companies, institutions, small entities, and individuals. In most of the cases, though the demand creation was done by us lack of finance both at the household levels as well at our level were the main hurdles in taking the work forward. We had approached many banks and financial institutions during the last three years but none of them were prepared to assist us. We could neither get a term loan nor a working capital loan. Despite the hurdles we went forward with our own resources and took orders for construction of toilets.
In order to focus on scale, we have now decided to look at proposals from MFIs in the five states of south India. Based on the popular CEMEX model, when we have economies of scale, we ourselves will take up wholesale marketing of cement and steel in such a way that we can make a local demand for cement ring manufacturers and pre-fab manufacturers as per our specifications, quality and need. By doing so, the cost per toilet will come down and help in eventually scaling up and as well as ensure sustainability.
We have also decided to approach banks directly to support our prospective customers by extending loans at affordable rates as sanitation has come under the Priority Sector List of the RBI. Since the demand is huge and there is a scope for many players like us we believe that many more market aggregators will emerge in other areas too. Right now we may be a pioneer and a path breaker but eventually we want to be a competitor in the emerged market of market aggregators. Though the present focus is on pit toilets, we are also open to looking at emerging markets for alternate methods of waste management.