24 Good Businesses 2012

Pole vault

Wonder Grass is looking at gaining scale by making bamboo houses more affordable

Nilotpal baruah

We won’t blame you if you have not heard of Vinoo Kaley. This lesser known soul from Maharashtra is credited for bringing to fore the potential of India’s most under-utilised natural resource — the bamboo. Kaley, who gave up his lucrative architectural practice in Mumbai in the late 1970s, worked with bamboo artisans to not only make this forest grass an integral part of the handicrafts industry, but also advocate its commercial proposition. Ironically, just days after the architect-turned-activist put together his first draft of Venu Bharati — a compendium on the nature and various aspects of bamboo — he succumbed to a stroke. That was June 1998 when his son Vaibhav Kaley was 22 years old. Today, 14 years later, Vinoo’s legacy thrives in his eldest son’s five-year old start-up, Wonder Grass.

It’s no coincidence. Inspired by his father, Vaibhav envisioned his future early in life — he had to pursue his father’s unfinished work. After graduating from the School of Interior Design, Center for Environmental Planning and Technology, Ahmedabad in 1994, Vaibhav worked as an architect for a bamboo housing project called Venu Gram in Wardha. Then, went on to pursue a research programme in urbanism from Germany, before he got drawn to India’s Silicon Valley. “Bengaluru is not just the hot-bed for innovation in IT, it offers a vibrant environ for ideas to flourish,” Vaibhav says. 

After a one-year stint with BCIL, a real estate development company that integrates green-technologies into mainstream realty development, Vaibhav was sure that bamboo had a larger role in making greener and aesthetically pleasing homes. In 2007, things began to fall in place. The tide started to turn for Vaibhav when his business plan won the second prize in a competition organised by the Netherlands-based Business in Development. “The ₹2 lakh prize money was our seed capital,” says Vaibhav. But the boost came when Wonder Grass got selected for incubation support at the NS Raghavan Centre for Entrepreneurship learning at the Indian Institute of Management, Bengaluru. “Besides getting an office, it was the mentoring that gave me an insight into running a start-up,” he recalls. 

 Green shoots

It’s a tough act locating Wonder Grass’ office in the sleepy HSR Layout — a suburb in south-eastern Bengaluru. The reason: Vaibhav is yet to put up any Wonder Grass signage. We go through an obstacle course comprising unfinished buildings and small industrial galas after a bit of GPSing, and finally come face to face with Vaibhav. It’s a spartan office made of just bamboo cladding and fences. “We have just moved and want our office to be simple,” says Vaibhav preempting our question. “This,” he says, waving at the claddings, “is for customers to get a look-and-feel of our products.” 

From its maiden project of building a pergola (a shaded sitting area) for NS Raghavan, Wonder Grass has so far clocked business worth₹90 lakh, spanning some 30,000 sq ft. the firm is the only organised player in the business. “We have consciously avoided customised solutions because our objective is to create models that would allow us to replicate and build scale,” explains Vaibhav. Over the past five years, Vaibhav has focused on just that — getting the product portfolio right. Now, the firm has a portfolio that caters not just to the elite but also offers cheap housing solutions for the rural masses. And if Vaibhav has his way, he would choose to sell more to the latter. He is hopeful of QuB — the ready-to-build or pre-fab cottages that he has developed. These cottages ranging 175 sq ft to 350 sq ft are priced between₹1 lakh to₹2.5 lakh. “QuB’s proposition lies in its appeal for those who wish to own a farm house right down to the marginal farmer who lives in a mud house,” says Vaibhav. 

Rural way

What Wonder Grass is betting on is the cost advantage that bamboo offers. “Our housing cost is 40% cheaper compared with conventional concrete and steel structures,” explains Vaibhav. Besides, bamboo is actually a superior material: its strength-to-weight ratio is better than that of teak wood and mild steel. Bamboo’s tensile strength (resistance to being pulled apart or break) is 28,000 pound per square inch versus 23,000 for mild steel. It is resistant to termites — a big threat in rural households. It seems termites can’t digest bamboo, as it has a high content of silica in its fibers. There’s more: its ability to withstand natural calamities. According to some studies, bamboo houses can withstand Zone 5 earthquake (equivalent to over 7 on Richter scale) — the worst in India. Also being a bad conductor of heat, the grass doesn’t heat up easily in the summers.

Though Wonder Grass has set its sight on rural housing (estimated at 60 million units) which will give it the desired scale, presently, it’s catering to customers of every size and hue. One big impediment for Wonder Grass in cracking the rural market, of course, is the lack of mortgage financing. And then, bamboo-houses, although cheaper than traditional brick and mortar houses, are still more expensive than the mud-houses in rural areas. Currently, a low-cost brick and mortar house in the hinterlands would cost anywhere between₹60,000 and₹70,000. “I still need to get my cost right and bring it down to a level that will make a bamboo house the preferred choice for rural households,” says Vaibhav. Given that an average rural household earns a monthly income of just₹5,000 per month or even lesser than that, an EMI for a₹1 lakh loan still means a lot. Wonder Grass is using every project that it executes as an exercise in costing.

So far, Vaibhav has executed 25 projects for a wide variety of customers that include people who are willing to pay top-dollar to small enterprises that are continuously looking for low-cost options. For example, the firm has done up a part of Cisco’s office in Bengaluru, where bamboo structures are used as a play on aesthetics. At the other end, it has built an energy kiosk for Selco Solar in the slums of Thubarahalli on the outskirts of Whitefield. “We rent out solar lanterns at₹5 per day to these slum inhabitants. Since these slums could be demolished at any time, we needed a structure that was cost effective and can be dismantled or transferred in the event of us moving out,” says Anant Aravamudan, senior technical manager at Selco Solar, which got Wonder Grass to built the unit for₹70,000. Selco is contemplating building five more kiosks this year. 

For now, Wonder Grass has a manufacturing unit in Nagpur, which has the capacity to produce 40,000 sq ft of bamboo structures and employs 25 artisans. But then, having manufacturing in a single location limits its ability to cater to a diverse geography — after all, transportation costs are substantial. Not just that, it also makes the firm dependent on just one region — forests of Maharashtra — for sourcing raw material.  Getting supplies from the North-East, which is home to over 50% of the country’s bamboo plantations, would be a tedious and costly affair. But Vaibhav is no hurry. “I want to cater to markets in the south and western region before I spread out to other markets.” 

To expand, Vaibhav wants to take the franchise route — not just for distribution but for manufacturing as well. But that’s the tough part. “The franchisee has to buy into the idea that bamboo is as good as any commercial venture and should be ready to stick with the business,” he says. Maintaining quality standards will also be tough. 

Over the last three years, Wonder Grass has seen revenues grow three-fold from₹9 lakh to₹25 lakh as of FY12. Today, the firm is working on projects with a cumulative value of₹40 lakh and hopes to end the fiscal with a topline of₹75 lakh. While the first year of operations saw Wonder Grass slip into the red, it has managed to stay in the black, albeit with modest profits. “Our overall margins are very modest at 10% as we first want to ensure that the business gets a good traction rather than chase profits. Besides, we are still in the investment phase and will remain so for some years,” says Vaibhav. He has set himself an ambitious target — more than trebling the turnover to 1 lakh sq ft by FY14. Still a one-man show, Wonder Grass will need more helping hands apart from capital to meet that tall target. 

 Capital concern

Roping in outside investors, however, comes with its own set of issues. In 2010, Wonder Grass was close to sealing a strategic deal with Planet Habitat, a US-based venture capital company. The fund, which was picking up a 20% stake, had valued Wonder Grass at₹2 crore. “While I was desperate for capital, they were not too keen on rural housing,” recalls Vaibhav. With a heavy heart, Vaibhav backed out. But as luck would have it, Wonder Grass received interest-free loans of₹20 lakh from the central government-sponsored National Mission for Bamboo Application, and₹10 lakh from the Chennai-based Villgro Capital. Besides helping tide over the capital crunch, the company got enough leeway to fine-tune its product strategy. 

Vaibhav is looking for angel investors who can invest anywhere between₹5 lakh and₹10 lakh, but is clear of what kind: he would rather have investors who will allow him the time he needs to make his rural dream come true. “We will be ploughing back all the profits into infrastructure building and improve our technology. So, there won’t be any payouts for the next three years,” explains Vaibhav. 

While finding the right investors may take a while, the lack of one has not dampened Vaibhav’s zeal to make it big with Wonder Grass. “The pain of losing your parents and surviving a failed marriage is nothing compared to the issues that I face in business. I have nothing to lose,” sums up Vaibhav.


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