Drishtee: Balancing Social Mission and Financial Sustainability in Rural India

Abstract

This case follows the early developments of Drishtee, an Indian social enterprise, and the evolving thoughts of its CEO – Satyan Mishra. Drishtee, founded in 2001, was initially developed to address opportunities in information and communications technology (ICT) in rural India and scaled to serve people in over 9,000 villages. While the initial social opportunity appeared to be fairly straightforward (to provide fee-based digital government documents to rural citizens), a deeper analysis of the social problem leads the reader into the tangled world of social business. The venture faces regulatory and disintermediation challenges when trying to scale the provision of government services. As the venture starts to scale, it faces two distinct pivot points: first, when deciding whether to maintain a partnership with the government and, second, when trying to create a financially viable business model. The reader bears witness to the underlying tensions between social mission and market pressures as the company evolves from a government service provider to a commercial kiosk operator.

This case was prepared for inclusion in Sage Business Cases primarily as a basis for classroom discussion or self-study, and is not meant to illustrate either effective or ineffective management styles. Nothing herein shall be deemed to be an endorsement of any kind. This case is for scholarly, educational, or personal use only within your university, and cannot be forwarded outside the university or used for other commercial purposes.

2024 Sage Publications, Inc. All Rights Reserved

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Resources

Appendix A

Table A1. Drishtee income statement, 2000–2003 (in rupees; US$1 = Rs46, c 2003).

2002–2003

2001–2002

2000–2001

INCOME

1 Sales

1,876

2 Expansion (kiosk registration fee/one-off franchise fee)

2,006,556

1,183,645

3 Project income

90,900

60,720

231,000

4 Other (software development, consultancy fees, processing fees)

398,639

266,200

26,052

5 Total revenue

2,497,971

1,510,565

257,052

6 EXPENSES

7 Manpower (salaries, bonuses, staff welfare)

683,073

656,340

475,870

8 Telecommunications (corporate usage – phones, mobile, Internet and Web hosting)

284,405

277,592

14,453

9 Research

69,910

50,374

10 Marketing

222,925

38,115

11 Bank charges & interest

152,731

63,835

1,707

12 Administration (rent, travel, stationery, insurance, maintenance)

1,354,132

1,086,446

25,020

13 Depreciation

530,357

291,814

21,999

14 Total expenses

3,297,533

2,464,516

539,049

15 PROFIT/(LOSS)

16 P/(L) before taxation

(799,562)

(953,951)

(281,998)

17 Subtotal

(799,562)

(953,951)

(281,998)

18 P/(L) after taxation

(799,562)

(953,951)

(281,998)

19 Deferred tax assets (liability)

246,694

20 P/(L) after deferred tax

(552,868)

21 Balance brought forward from previous year

(803,367)

(281,998)

24 P/(L) carried forward

(1,356,235)

(1,235,948)

(281,998)

Appendix B

The principals (c 2003)
Management

Satyan Mishra (Founder and CEO, Director). Satyan Mishra has extensive experience in software development. After completing his Master’s in Business Administration at Delhi University, his entrepreneurial zest, coupled with managerial and technical expertise, led to the creation of this organization.

Nitin Gachhayat (co-founder). Nitin has an MBA (International Business) from the FORE School of Management and his work experience includes time with Yeti International as Project Manager. He has been an invitee or a guest in various forums including the Punjab Administrative Academy. He is responsible for developing new services and applications for rural India that can then be sold through Drishtee and other franchisee entrepreneurs.

Nirdesh Singh (Head, Expansion Strategy). Nirdesh has a Bachelor’s degree in Electrical Engineering and a Master’s in Marketing from the University of Wisconsin. He has 15 years of experience in marketing and business development. He has worked with companies including the Ford Motor Co, Hindustan Motors and Mahindra & Mahindra.

Board of Directors

Shailesh Thakur (co-founder). With his rural background, Shailesh adds focus on cost minimization in Drishtee. He is also the Managing Director of Cyber Infodev, a rapidly expanding company that provides a range of IT solutions to public, private and development organizations.

Anantha Nageswaran (Regional Head, Credit Suisse Singapore). Anantha worked as a Senior Analyst, Investment Research, at Credit Suisse Private Banking in Zurich, and as a currency economist with UBS in Zurich. Anantha holds an MBA from the Indian Institute of Management, Ahmedabad, and a doctoral degree in Finance from the University of Massachusetts, USA.

Varun Sahni (Country Manager, Acumen Fund). Varun worked in the area of social enterprise for seven years, including his recent participation in Hindustan Lever Ltd’s Project Shakti, which worked to create sustainable livelihood opportunities for women across rural India. He has a Master’s degree in Political Economy from Columbia University, USA.

Appendix C

Table A2. Populations served, and monetized costs and benefits for computer kiosk projects (rupees).

Venture name

Region

Number of kiosks

Regional population (census 2001)

Target population for a kiosk

% of population served by a kiosk

Akshayaa

Malappuram district, Kerala

630

3,629,640

5,761

0.16

Drishteeb

Sirsa district, Haryana

35

1,116,649

31,904

2.86

MSSRFc

Pondicherry, Union Territory

10

229,289

22,929

10

Rural e-Sevad

West Godavari district, Andhra Pradesh

47

3,796,140

25,308

0.67

Sustainable Access in Rural India (SARI)e

Melur taluk, Tamil Nadu

51

251,919

4,940

1.96

Bhoomi

Karnataka state

177

52,733,958

297,932

0.57

Venture name

Capital costs (one-off)

Operating costs (monthly)

Revenue (monthly)

Central hub

Each kiosk

Central hub

Each kiosk

Central hub

Each kiosk

Akshaya

132,000,000

278,000

NA

7,500

NA

12,550

Drishtee

730,000

66,500

25,000

2,600

38,083

4,250

MSSRF

NA

375,000

45,000

NA

NA

1,100

Rural e-Seva

1,623,000

50,000

7,000

2,400

10,000

1,450

Sustainable Access in Rural India (SARI)

4,000,000

60,000

41,667

2,500

22,560

2,440

Bhoomi

80,000,000

640,000

NA

37,683

NA

56,497

Sources: aPanchayat statistics 2001; Government of Kerala official Web portal, http://www.kerala.gov.in/. bFor 2000–2001, official website of District Sirsa, http://sirsa.nic.in/htfiles/ataglance.html. cDirectorate of Economics and Statistics, Government of Pondicherry, http://www.pon.nic.in/ecostat/area.htm. dAP online, http://www.aponline.gov.in/Quick%20links/apfactfile/info%20on%20districts/westgodavari.html. eDirectorate of Census Operations – Tamil Nadu, Primary Census 2001, http://164.100.167.45/census/pca2001.aspx.

Private providers in the rural services segment

Comat. Comat launched e-government services in 1999, and relies on a branch model rather than a franchise model. Comat offers land records, birth certificates, pension documents and other records to rural citizens.

Services and business model

Comat focuses on providing government and education services in rural areas. In some states, such as Karnataka, Comat has obtained an exclusive agreement to offer government services such as providing land records, birth and death certificates. In the absence of this service from Comat, rural residents would typically have to spend a day travelling to the district headquarters to obtain government records.

Comat requires employees who are local residents to operate these kiosks. It also has a new model for hiring staff to operate the rural kiosks: training to operate these rural kiosks is offered at a community centre where job aspirants pay for the training. Comat selects one or two operators from each class, and the others are offered job positions in retail stores which need trained manpower. Comat is also a participant in the Government of India’s Common Service Center program, a public/private partnership, to offer a range of services including e-government, education and healthcare services to rural residents, and is in the process of setting up rural kiosks in the states where it has been awarded a franchise to operate them. The large number and reach of the CSC kiosks enables Comat to gain economies of scale in its operations.

The key difference between Comat and Drishtee is the business model and organizational structure. Comat largely depends on e-government services for which it has a monopoly. Comat does not franchise kiosks and has employees who staff the rural kiosks. Employees are limited in the services they can offer to their customers and do not participate in a revenue-sharing agreement with Comat. This tightly controlled structure, in contrast to Drishtee’s loose confederation of kiosks, enables Comat to provide a highly standardized set of services.

Technology

Connectivity to the Comat kiosks is provided by VSAT, which offers a low bandwidth connection that is sufficient for obtaining government records. In addition, Comat, in partnership with Hughes Satellite Systems, provides educational services to rural communities. These educational services include coaching for competitive examinations and English-speaking lessons based on bidirectional video conferencing. The educational services that require higher bandwidth are provided in a revenue-sharing model with Hughes which provides the bandwidth and the educational content.

VSAT-based technology, while easy and fast to deploy, does not enable the kiosk operators to offer interactive services due to the delays involved. It is ideal for transactional services (such as booking tickets, or accessing government services) or one-way services in which latencies are not a critical issue.

nLogue. nLogue was one of the early entrants into the rural connectivity and services segment. The organization was incubated at the Indian Institute of Technology’s TeNET, with the primary objective focused on enabling rural entrepreneurs by providing low-cost communication networks for Internet connectivity and payphones.

Services and business model

nLogue has a 3-tiered model, with nLogue at the top responsible for the management of the network. nLogue also facilitates the relationship with partners and the government. The second tier of the nLogue model consists of the local service providers (LSPs). The local entrepreneurs are hired by the LSPs and are responsible for purchasing the equipment required to set up an Internet kiosk.

Technology

nLogue provides its franchisees with a low bandwidth connection based on Wireless Local Loop that offers 35–70 kbps (equivalent to a dial-up connection). The LSP sets up and manages an ‘access centre’ that is responsible for providing last-mile access to the bottom tier – the local entrepreneur.

The nLogue model faces a number of challenges – the low bandwidth restricts the range of services that can be delivered, and there is no migration path to newer high-speed services. LSPs have a critical role in the network – the success of the programme depends on the entrepreneurs selected by the LSP and the services that the LSP can enable. nLogue’s model worked well when telephony services were not available in rural areas, but the recent push by mobile operators into rural areas has reduced the value of the services offered by nLogue.

This case was prepared for inclusion in Sage Business Cases primarily as a basis for classroom discussion or self-study, and is not meant to illustrate either effective or ineffective management styles. Nothing herein shall be deemed to be an endorsement of any kind. This case is for scholarly, educational, or personal use only within your university, and cannot be forwarded outside the university or used for other commercial purposes.

2024 Sage Publications, Inc. All Rights Reserved

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