POM ASSIGNMENT

Leader Selected: Irfan Alam Organisation: Business: Sammaan Foundation Social Enterprise

Year of Inception: 2007

SUBMITTED BY: SATISH SAURAV ROLL: 265, IM-17 SECTION C NITIE,Mumbai

PEDALLING TO SUCCESS -IRFAN ALAM

At the international Summit called by US President Barack Obama in April 2010, India was represented by a man from a state which is little known for business and the corporate activities. This emerging leader of India is Irfan Alam, chairman of Sammaan Foundation which works for the socio-economic uplift of the rickshaw-puller and their families. IRFAN AS A LEADER Irfan Alam is a graduate from Begusarai district of Bihar and alumnus of prestigious IIMAhemdabad. But unlike the trend of taking top job in top companies of the world he chose his own way to start his venture aimed at inclusive growth. In 2007 he launched Sammaan Foundation which aims at bringing a structure to the Rickshaw industry and making rickshaw a visible panel for brands to reach out to customers. Like a true leader he proved to be twice-born i.e. first he prepared himself to be among the best in the management field to fit into the existing model of society and then struggled for the physiological and social change. In the present market scenario where IT revolution has dominated the entrepreneurial activities and has blinkered the vision of whole generation of entrepreneurs Irfan came out with a unique business model. The model based on inclusive growth has found resonance with the market and taking the non-profit route which is highly sustainable. The great idea of making rickshaw as an advertising and utility vehicle popped up in his mind randomly. While travelling on rickshaw once he was very thirsty and asked the rickshawpuller for water but he told there was none. Then it came to his mind why cannt rickshaw be made more comfortable if they carry water, snacks, newspaper. Etc. Slowly the idea was extended to recharge cards and then using rickshaws as an advertising medium. MODUS OPERANDI 0F SAMMAAN In our country there are around 10 million rickshaw-puller and most of them illiterate and poor. Over 90 percent of them are farm worker who migrate to cities for want of employment .They hire rickshaw and pay the daily rent of around Rs 30 to Rs 50 and end up with a little money for themselves which is consumed for the rent of the house. In this manner the rickshaw-puller never has the sufficient saving to purchase his own rickshaw

and their economic condition remains pathetic. The relation between the fleet owner and the operators dont grow beyond this exchange level. Sammaan foundation follows the system of microfinance and gives rickshaw to the operators for a nominal rent of Rs 10 to Rs 20 per day (depending upon cities).It also gets banks to finance for the rickshaw at a much lower rate and by paying the daily rent regularly the operator will own the rickshaw in less than a year. Apart from this it designed rickshaw in such a way that it can shelve newspaper, waterbottles, newpapers, magazines, snacks and other such items if the customers need them. The rickshaws have been specially designed by IIT K, Delhi School of Architecture and are 50-60 kg lesser in weight than the traditional rickshaws. Thus company generates the revenue by advertising of the brands and this revenue is shared equally between the operator and the Company. The revenue and the nominal daily rental help the operator to repay the loan amount in very less time and they become the owner of the rickshaw quickly. With the expansion of business It has achieved new glory of success. Some of the success story of Sammaan Foundation: Today More than 300000 rickshaw-puller are registered with Sammaan Foundation. The business has grown from one city to 10 in four states. The capital raised is Rs 1.25 crore. Expecting 400 percent growth this year which will increase the turnover manifold. Client list includes PNB, Hindustan Times, Bharti, Bisleri, Idea etc.

RICKSHAW AS ADVERTISING MEDIUM: Sammaan Foundation focussed on organising the rickshaw-pullers which consists of 30 percent in the urban transport and to modernise the cycle rickshaw pulling with small but innovative changes. The rickshaw is designed in such a way to advertise different brands. The places where government has put restrictions to put the billboards, posters rickshaw can easily advertise the brand there. Moreover it follows OOH (out of home) advertising medium and in comparison to other modes of outdoor advertising, this one is 90 percent cheaper. If a company hires 100 rickshaws for promotion for a given town and if one rickshaw covers average of 10 km a day then the advertised product will be seen by half of the town. Since rickshaws are the best medium for the short distances so our client can reach the residential streets and even rural streets where no other mode can penetrate. CHALLENGES FACED BY IRFAN: 1. WORKING WITH UNORGANISED SECTOR AND MARGINALISED PEOPLE: In answer to the question why rickshaws the IIM Alumnus says I realized that of all forms of urban transport in India, the cycle rickshaw sector was the most unorganised. Also the idea has the potential

to serve as a logistics solution in the cities, towns and the rural market which the corporate sector finds difficult to penetrate.Moreover working with the marginalised section of the society was quite difficult for Alam. He remained extremely patient to give them the clear perspective of the company. Operators liked the idea of sharing revenues by the sales of the products and the ads along with the company thus it brought the feeling of pride among them. Sammaan also provides free uniform to all the registered pullers and covered the insurance of 1 lakh both for the traveller and the operator. It gave the sense of organisation to the puller community and faith for the foundation. Sammaan helped to get the licenses for the rickshaw operators as well for the rickshaw which gave the rickshaw operators an identity. Earlier they had to give a part of their earning to the traffic police in absence of the licenses.

2. CONVINCING THE BANKER TO BANK UPON THE UNBANKED: In the words of Irfan Convincing the banker to bank upon the Unbanked was the greatest challenge being faced by Sammaan Foundation. Since most of the operators didnt have their own rickshaw and they used to pay a large chunk of their earning to the rickshaw owner hence they continued to live in poverty. His idea was to give the rickshaw free to the operators and only a nominal amount of maintenance fees to be charged. For this he required the financial help of Banks. It was very difficult for him to convince the banks to fund for rickshaw. In the beginning, Alam had to pool his own resources to collect seed money of Rs 10 lakhs. Then the strategies followed by him are below: He used financial inclusion mandate of Reserve Bank of India for all the banks as a tool to finance rickshaw to the poor rickshaw operators and he succeeded to get the loan from banks. When the rickshaw operators started earning money from advertisement and the direct sales they started paying the instalments faster so the confidence of Bank grew. It has been made compulsory for every operator to open a saving account with bank the day he is registered with Sammaan. In this way bank also get the long term customers.

With the success of this business model he has got the list of banks like Punjab National Bank, Dena Bank, SBI etc. as his clients.

3. LOSS OF CLIENTS IN EARLY STAGE DUE TO GLOBAL ECONOMIC CRISIS: In Late 2008 when growth slowed down in the Indian Economy the young social start-up in Patna almost died.

It lost almost 80 percent of its clients in the three months but then Irfan Alam did not give his heart and decided to overhaul the business model completely so that advertising revenue would no longer be the mainstay of the company. He went on diversification and finally introduced many new concepts that added to its revenue. Below are the current revenue generation methods by Sammaan Foundation: Commission on recovery of loans by Rickshaw operators which consists of 30 percent of its revenue. Opened up the R & D centre for rickshaw manufacturing and provides training and support for the rickshaw manufacturers across the countries which accounts for 40 percent of its revenue. For this innovation 3 engineer and more than 15 workers has been employed. Remaining 30 percent of the revenue come from advertising

Apart from these Sammaan Foundation is planning to enter into other ventures and some of them are below: Enter into the joint venture with the builder to buy land and houses which will be sold to the rickshaw operators at a reasonable price later. Exploring carbon trading opportunities Launched on call rickshaw service Negotiating with Delhi Government for a proposal of 1000 battery-operated rickshaw during commonwealth games in Delhi which will have driver-cum-tourist guide, newspapers and fruit juices. The social Programme Saamman Gyaan provides books to the children and conducts evening classes for pullers and their children. Moreover it gives training in the occupational skills to the wives of operators in embroidery, stitching and tailoring. Public offer by 2012