Rural Energy Network Enterprise (RENE), an incubatee company of IFMR Ventures, is focused on enabling sustainable access to energy for people living in rural areas of India. Towards such aims, RENE analyses, designs and pilots specific interventions across the country.
In line with this RENE has been working on establishing a last mile distribution channel in Thanjavur for energy efficient products (improved stoves, solar lights etc.) in order to identify ground issues.
It is experimenting with a multi-level marketing structure involving a referral and commission mechanism for distribution of such products. Also is engaged in identifying viable channel financing mechanisms to support working capital requirements of various players in the supply chain.
Further it is exploring the possibility of establishing a private electricity distribution network to cater to the requirements of niche customer segments in rural areas. Preliminary feasibility study for this has been completed and a detailed study is being planned along with IIT Madras.
View the RENE presentation below:
Follow RENE on:
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For more information about RENE contact Anu.Valli [at] ifmr.co.in
On January 29, 2010, IFMR hosted a seminar by renowned social worker and Ramon Magsaysay Award winner, Padmashri Deep Joshi. He is a postgraduate from MIT who had got back to India to work towards poverty alleviation and is the co-founder of PRADAN.
The seminar started with welcome remarks and introduction of speakers by Madhukar, with Bindu then delivering the opening address by giving a brief about IFMR and its work.
From left: Bobby Srinivasan, Bindu Ananth, Deep Joshi
Mr. Deep Joshi commenced his presentation on the topic Removing Poverty: Role of HR & POs. The topic adds relevance to the present Indian scenario that faces an imbalance between urban and rural development.
He defined poor people in terms of ‘Person’, ‘Place’ & ‘Position. Talking about poor people as ‘Person’, he indicated about social groups who are historically and structurally isolated and excluded from the society. These groups lack ‘self-efficacy’ and are stranded due to structural changes in society, economy and polity. Likewise he gave similar contexts to define the poor in terms of Place and Position.
He also presented a few shocking data on poverty in India – As per the Tendulkar committee (2009), 41% of population in rural India lives below the poverty line. He supported the figures with more data on the poorest states in India stating that the “poor “ are heterogeneous and explained about the kinds which are ‘Declining poor’, ‘Coping poor’ and ‘Dynamic poor’. He outlined that by understanding the kind of poor, strategies are to be framed, his model of a strategy:
In terms of Human resources and the approach towards the poor, he insisted on the enhancement of self-efficacy through human capital that works on being empathetic, promotes inter-dependence, treating them as citizens rather than as clients or beneficiaries and finally building relationships.
On the role of people’s organization, he highlighted the need to learn from and with peers and also to aim for scale economies so that their services could reach to a larger population. He also emphasized upon working for constructive collectives and to be working against tragedy of the commons.
Audience in rapt attention
Finally, he outlined the important aspects that act as roadblocks to development. In this context he felt that the prevalence of complexity in understanding rural India curtails the understanding of the concept of “development”. He ended his speech by pointing out that rural–oriented course and institutes like IRMA are scarce in India when compared to the prominence given to IITs and IIMs.
His talk was filled with many real life examples that were vivid and simple. These examples and insights were derived from his work with Ford Foundation’s project on international case studies that are to be published soon.
Teams interacting with Deep Joshi
Later, IFMR Ventures & IFMR Rural Finance teams had a chance to talk about their work during separate sessions with him. He carefully listened and appreciated different works of the teams and gave valuable advice.
At the formal close of seminar, Anu Valli gave the vote of thanks, and Deepthi Reddy on behalf of the IFMR Ecosystem presented a memento to Padmashree Deep Joshi. To conclude, Padmashri Deep Joshi is truly a visionary and it was a privilege to have him amongst us.
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Priyanka, Intern, Human Capital Team and Madhukar, IFMR Ventures, CAFNE Team contributed to this post.
Last week a group of microfinance practitioners and investors gathered in New York City at the 2nd Microfinance Summit to discuss recent developments within the microfinance industry, as well as opportunities in providing healthcare, clean water, and renewable energy to low-income populations. Panelists discussed topics such as the prospect of MFI mergers in some regions and industry consolidation, the importance of foreign exchange hedging & risk management by MFIs and foreign investors, and the role that government & development finance institutions have played the past 18 months as many MFIs required timely refinancing.
When discussing evolutionary steps within the industry, Michael Hokenson of Minlam Asset Management, a fund providing local currency debt to MFIs, referenced IFMR Capital’s recent multi-originator securitisation of micro-loans into tradable securities (Mosec I), as a promising advancement toward a secondary market for microfinance assets.
During a panel on the state of private equity (PE) in microfinance, panelists posited that when considering the microfinance landscape for equity investment, “there is India, and then there’s the rest of the world.” What the panelists alluded to is that India’s microfinance opportunity is relatively unique and makes it a highly attractive investment destination for a combination of reasons. The potential size of the Indian microfinance market (“demand for microfinance”), in addition to access to large pools of educated professionals, a robust public equity market, and a banking sector compelled to lend to MFIs via priority sector lending (“capacity” and “supply”), makes for a highly attractive opportunity. And it is largely these ingredients that have compelled investors to give Indian MFIs valuations that seem relatively high versus international peers.
Bhakti Mirchandani of Unitus Capital, the Bangalore-based financial advisor to MFIs, did point out that even though Indian MFIs continue to receive relatively high price-to-book value multiples, on a price-to-earnings basis Indian MFIs are being valued in-line with their international peers. (To read more about MFI equity valuation and pricing, see this in-depth analysis by Nitin Chaudhary of IFMR Rural Finance and Suyash Rai of IFMR Advocacy Unit.)
As with any discussion of India’s microfinance opportunities, the topic of multiple-borrowing and other risks came up in more than one panel. The self-regulatory steps taken by Indian MFIs, such as the establishment of a credit bureau serving the microfinance industry, named Alpha, is one sign of how MFIs are reacting to the risks of over-lending in select regions of the country. (More on the topic of “Microfinance Credit Bubbles and Self-Regulation” available over at Microfinance Focus.)
The presentation below was delivered during a panel entitled, “Innovative Solutions for New Financing,” in order to highlight some of the structured finance techniques IFMR Capital is utilising to allow MFIs to tap domestic debt markets in an orderly and efficient manner. Participants were also given an intro to ATMNE’s commodity trading and financing pilot program in Kadi, Gujarat.
Following the presentation, Nancy Barry, former President of Women’s World Banking, noted that the securitisation transactions described are particularly encouraging because they point to the development of local, domestic capital markets with the capacity to fund the growth of its own microfinance sector over the long term. (Likely a prerequisite if India’s 100+ million unbanked households are to be reached in a timely manner.) There are certainly benefits to having access to international funding sources as well, but the ability for Indian MFIs to fund their operations by tapping into a variety of domestic investors (mutual funds, treasury desks at banks, a guarantee company such as IFMR Capital), allows MFIs to avoid currency risks, capital flight in times of international crisis, and other risks derived from depending disproportionately upon international financing.
Emboldened by the lessons from the recent financial crisis and encouraged by its early successes, IFMR Capital is continuing to work to ensure that its partner MFIs will have efficient and reliable access to debt capital, while seeking to grow its model to reach more MFIs and eventually other high-quality asset originators serving low-income households.
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Peter Bremberg of IFMR Capital contributed to this post.
Recently, a profiling exercise was carried out at the Sanjay Nagar Branch of Pudhuaaru KGFS to understand and estimate the size of the economic and financial system of the branch service area. Apart from a general demographic profiling, it included a study of the existing financial infrastructure, various businesses, income-generating activities, health, education, etc.
The study gives us a fair idea of the market we are operating in and its underlying potential. Some interesting findings include the extent of saving activities the SHGs are involved in, the milk and the coconut economy, the informal settlement systems, the huge insurance and remittances market and the immense borrowing capacity of the people in the area. The presentation talks in detail about the entire profiling exercise.
This study was done by two of the Wealth Managers, Mr. Ramjayakumar and Mr. Gopalakrishnan. A similar exercise will be carried out for other branches as well.
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Arun Kumar & Nitin Chaudhury from IFMR Rural Finance – Business Intelligence team contributed to this post.
Dr. Nachiket Mor gave a presentation talk at the India-Europe workshop on Innovation and Partnership on 14th Dec 09. The topic of the presentation was “Technology and product innovation at KGFS”. The presentation broadly covered product and technology innovations in the rural space and how we are leveraging these at the Kshetriya Gramin Financial Services (KGFS).
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Kumari Kanak, from IFMR Rural Finance, contributed to this post.
The annual forum on social entrepreneurship organized by Nand & Jeet Khemka Foundation and hosted by the Indian School of Business, Hyderabad was held on the 8th and 9th December 09. The event saw wide spread participation by organizations that are working in the social entrepreneurship space including IFMR Trust, which was one of the forum partners.
The forum proved to be a perfect platform for discussing issues pertaining to social entrepreneurship and brought together thought leaders, institutions, academicians, the government and social entrepreneurs under a single roof – paving way for an intense series of interactions across stakeholders to address issues and bring out solutions to carve out a roadmap for Social Entrepreneurship in India.
After the opening remarks on the first day, the forum kicked off with the theme “Working Scaling Issues ‘Fingers burnt, lessons learnt’”. The panelists for this theme were Mr. Manish Sabharwal (Co-Founder of Team Lease), Dr. Pawan Patil (CEO of the Global Partnership for Youth Investment) and Dr. Nachiket Mor (President of ICICI Foundation).
Mr. Sabharwal categorized start-up organizations into two types – ‘a baby’ or ‘a dwarf’ – both start small but the dwarf doesn’t attain growth due to inherent differences. Dr. Patil talked about creating jobs, especially for the growing youth population, while Dr. Mor talked about India type scale which may require replications in the midst of diversity rather than scaling up for a single large population of the country.
Next theme discussed was “SCALERS” which stands for Staffing, Communicating, Alliance-building, Lobbying, Earnings generation, Replicating, and Stimulating market forces. These factors have a critical role (each factor with varying levels depending on the case and context) in affecting social impact. Matthew Nash, Managing Director of the Center for the Advancement of Social Entrepreneurship at Duke University, discussed this new model.
Parag Gupta, Founder of Waste Bank, presented his analysis using the SCALERS model on SELCO, a social enterprise that provides sustainable energy solutions and services to under-served households and businesses and identified its accomplishments and challenges. Similarly, Prof. Madhukar Shukla of XLRI presented his analysis of the SCALERS model on Nidan, a not for profit enterprise which organizes the unorganized worker including migrant workers, street vendor, waste pickers and other informal sector workers.
The forum also saw a series of Tracks (Sessions) that addressed a variety of issues; Bindu Ananth, President, IFMR Trust, chaired and led one such track on “New Financial Instruments for Social Enterprises” which addressed the theme of new financial instruments available to social entrepreneurs. The track managed to get a very good response and was widely appreciated on how it was moderated and the deliberations that resulted, from the session. IFMR Trust played an instrumental role from identification of session’s topic to moderation of the session.
The discussants for IFMR Trust’s track on ‘New Financial Instruments for Social Enterprises’ included Ms. Subhasri Sriram (Shriramcity Union), Mr. Subir Nag (ICICI Ventures), and Dr. Reuben Abraham (Centre for Emerging Market Solutions at ISB).
Some of the other tracks were Intellectual & Human capital, Performance Metrics and Partnering with the Government.
Also ‘Consultancy Clinics’ were organized for social entrepreneurs to help them get answers to their questions related to funding, legal issues and knowledge creation. The consultancy clinic on law was particularly useful for enterprises that can take the benefit of hybrid structures for getting funds and tax rebates. It also highlighted the importance of good corporate governance for social enterprises.
Overall the forum provided insights into the challenges which social enterprises face in scaling up – both financial and non-financial – and ways to deal with it, through a series of discussions and work sessions focused on re-inventing and innovating solutions to such scaling up issues.
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Shikha Jindal from IFMR Ventures, contributed to this post.
