Pure water demand in rural India creates a growing industry

In a humble one-storey house in a sparse village in the south of the Indian state of Maharashtra, an entire room of Promodini Jhamble’s home is dedicated to a high-tech piece of machinery.

The apparatus is a reverse osmosis plant, which can filter up to 1,000 litres of water per hour.

Ms Jhamble, 39, is trying her hand at using the plant to grow a business out of selling purified water to homes and shops in nearby villages, inbetween carrying out the household chores.

For Eureka Forbes, an Indian firm with an annual turnover of more than US$300 million, which specialises in selling home water purifiers under its Aquaguard brand, this is just one of 120 “water shops” it has installed in rural ares of India.

There are potential returns on multiple levels. Through this initiative, the company is sowing the seeds to eventually be able to penetrate the potentially highly lucrative rural market with its products. At the same time, there is a great need for safe drinking water in Indian rural communities. Some 96 million people in India do not have access to clean water and more than 186,000 children under the age of five die from diarrhoea caused by unsafe water and poor sanitation each year in the country, according to the international charity WaterAid. Groundwater supplies in many rural areas have been found to have harmful high contents of arsenic or fluoride. Pesticides used in farming and iron ore mining have also had an impact on the safety of water, while surface water supplies are often contaminated with faecal matter in rural India.

Inadequate sanitation in the country is estimated to cause economic losses that are equivalent to $53.8 billion because of consequences such as health-related impacts and lower productivity, according to the World Bank. Of this, the cost of the drinking water-related impact is $4.2 billion.

In response, Eureka Forbes is working to develop a sustainable business model from which villagers can benefit as they are offered the opportunity to participate in sales – what it describes as “water entrepreneurship”.

The rural market is becoming increasingly important for Indian and international companies as they target growth.

Consumer demand in rural India has been growing at a faster pace than urban India for the first time in two decades, according to Crisil, a ratings and research firm in India. “Between 2009 to 2010 and 2011 to 2012, additional spending by rural India was 3,750 billion rupees [Dh221.69bn], significantly higher than 2,994bn rupees by urbanites.”

Eureka Forbes has a lot of work to do before it can think about selling its products extensively in rural communities, however, as it first aims to change the mindset of villagers through its water shop initiative, which it started three years ago.

“The growth for future markets is going to be through those 70 per cent rural areas,” says AV Suresh, the president of international operations and chief executive of the Forbes Professional, Eureka Forbes. The programme is “in line with our big vision of providing safe drinking water to every Indian”, he says. “Today they are not aware of the need for safe drinking water in the first place. So if you try dumping a product on them, they will say: ‘I don’t need [it]’. When people get aware there is the need for safe drinking water, their health is better, productivity is better, then the answer of providing water purifiers in the houses comes. We work on advocacy to create the understanding and mindset.”

Other companies are also focusing on the need for clean water in rural areas. The French food company Danone – which produces Evian water – through its danone.communities initiative has partnered with an NGO, the Naandi Foundation, to set up water treatment solutions in villages in India. Danone provides investments and expertise.

“The programme runs on a hybrid model, with governments and investors contributing up to 70 per cent of its initial capital, according to danone.communities. “The model has shifted toward social business to expand the number of treatment units from 500 to 2,000 sites. In a second replication phase designed to raise the number of sites from 2,000 to 5,000, the programme will seek out an increasing number of investors with clearly defined social goals. Today operations are run by Naandi with danone.communities as an active partner, assisting the programme’s teams with issues related to quality, marketing, human resources, the program’s supply chain and IT.”

Sarvajal, an Indian company, sells clean and affordable drinking water to tens of thousands of rural Indians, using technology such as solar-powered water ATMs, where villagers can use a prepaid smart card to buy water.

Eureka Forbes also offers a similar ATM system in many of its water shops. It explains that its plants across the country are based on different models, in some cases tying up with the government and in other cases private individuals in return for a monthly fee. They have had differing degrees of success as the company uses these projects to understand how it can get rural communities to move towards adopting safe drinking water.

“We found out that if we worked with the government or with the NGOs and private players, it could become a sustainable approach,” says Rajesh Roy, the head of strategic partnerships, community fulfilment, at Eureka Forbes. He says they have already noticed an impact of improved school attendance and lower expenditure on medicines in some of the areas where they have plants.

In the case of Ms Jhamble in the village of Viratnagar, not far from the city of Solapur, the plant was secured through a company which promotes entrepreneurship among women in rural communities, Sakhi Unique Rural Enterprise (Sure). It tied up with Eureka Forbes, which provided the 500,000 rupee plant – half the cost of which was covered by a charitable fund and half of which will be repaid in small instalments from the profits.

With two sons, aged 15 and 17, and a husband who works as a cashier in a local cooperative bank for 25,000 rupees a month, the extra income would come in handy.

Three months into having the plant, she is discovering the challenges of running such a business, however. She explains that transporting the 20-litre containers of water to her clients is costly because she has to hire a small truck, which costs her 10,000 rupees a month. She sells 400 litres of water a day at the moment at 1 rupee a litre, including delivery. This means that her profits levels on selling the water are currently very low.

“I’m getting good orders but I’m unable to meet the demand because of the transport,” she says. An unreliable electricity supply and a lack of proper roads is also a challenge, she adds.

The water in the area has high levels of total dissolved solids, which has resulted in health problems including gastric conditions and kidney stones in the communities.

But Ms Jhamble says there is stiff competition from other water treatment plants that have cropped up in the area, which are selling chilled water – perceived as preferable by many of the villagers. It would cost more than 200,000 rupees to set up such a chilling facility, she says.

Upmanya Patil, the director of Sure, has noticed a significant shift towards Indians in the villages around Solapur increasingly demanding pure drinking water.

“Two years ago there was not a single plant,” he says. “Now there are 30 to 40 plants. They also close down very quickly. The demand is huge. People are becoming aware that water-borne diseases are very high in the area and they want pure water.”

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